Article compiles format of Deceleration to be taken by HR Department of the Company from its Employees for Proper deduction of TDS on Salary for Financial Year 2020-21 related to Saving to be made by Employees and which Income Tax Regime he wishes to Opt for Financial Year 2020-21.
HR/Inter Office Memo No.- Proposed Savings/Tax Declaration Form/01
Subject: Proposed Savings Declaration for Financial Year 2020-21 relevant to Assessment Year 2021-22
1. Under Section 192 of Income Tax Act, 1961, deduction of Income tax equivalent to 1/12th of the annual estimated Income tax is required to be made at source by the employer every month based on the estimated annual income keeping in view deduction/rebates admissible to employees under the Act failing which, penalty provision is there in Income Tax Act.
2. In Finance Act, 2020, the government has introduced a new income tax regime under Section 115BAC that comprises a significant change in the tax slabs rates. Taxpayers have been provided with an option whether they want to pay taxes according to the new regime or if they want to continue paying taxes according to the existing regime.
3. Old Tax Regime:
Under the Old regime, the tax shall be calculated considering all deductions and exemptions allowed under Income Tax Act, 1961, which were hitherto available. The slab rates are mentioned in Annexure 1B.
4. New Tax Regime:
Under the New Tax Regime, tax shall be calculated as per the slab rates as mentioned in Annexure 1C. In this regime, the tax rates are kept lower but no exemptions/deductions are allowed. Major deductions which have been abolished in this tax regime are as per Annexure 1:
1. Chapter VI deductions.
6. Standard deduction of Rs.50,000.
7. Deduction on account of interest under the head “House Property”.
5. It is mandatory for every employee to choose one of the two options so that the tax can be computed and deducted accordingly. This option can be exercised only once in financial year and cannot be changed within that financial year.
6. It is, therefore, desired that option may please be exercised and submitted through this IT declaration form latest by 28th April,2020
7. Employees, opting for old tax regime, are also required to furnish the details of proposed savings to be made during the financial year 2020-21 simultaneously under the Head IT- declaration. The following points may be kept in mind while furnishing details of proposed savings under old tax regime;
a For claiming benefits of Accrued interest on House Building Advance:
(i) Loan taken from Banks/FI’s: – Benefits will be available only after uploading of Possession certificate, Provisional/accrued Interest certificate and PAN of Lending organisation/ financial institutions.
(ii) Loan taken from Govt facilitated Medium: –
Benefits will be available only after uploading of Possession certificate, accrued interest amount and PAN of Lender (XXXXX1234X).
b. For claiming Proposed HRA exemption, where the aggregate rent paid by employees during the Financial year 2019-20 exceeds Rs. 1,00,000/-, Copy of PAN of Landlord, Rent Agreement; is Mandatory.
c. In case of any other income (Other than income from House Property) and Income tax deducted from any other source, employee needs to furnish the details as per the enclosed format as Annexure 1A.
8. Keeping in view the short time and lock down restrictions, those employees who are not able to exercise option of choosing Tax Regime by 28th April, 2020, their salary for the month of April, 2020 shall be processed under old tax regime only as a special case. However, it is mandatory to give option and saving details, if old tax regime is chosen, before 15th May 2020 positively failing which their salary for May 2020 will not be processed.
9. Employees choosing new tax regime are not required to provide details of savings.
10. No manual declaration, except for details mentioned at Para 7 (c), shall be accepted. The manual declaration for other income shall be accepted from 3rd May 2020 onwards as and when the lockdown opens.
Note: All the employees are requested to choose the option of TAX REGIME (OLD or NEW) Compulsorily. Annexure 1B and Annexure 1C are attached below
CEO – taxation/ accounts/ HR