- CA Mili Shah
- | Income Tax - Articles
- 24 Jan 2020
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- 3 comments
Investment Declaration’s Dribs & Drabs in tax planning (Proof submission for Income Tax Purposes (Correct TDS on Salary Calculation) by Salaried Employee to His Employer)
Almost all companies have intimated their employees to submit investment declarations or IT proofs for Financial Year 2019-20.This article states about how to conveniently climb ladder till ITR filling by taking these first step cautiously. These step is of paramount importance not only to intimated employees but also to their CA’s who appears after Form 16 & other documents are received from employer.It is one of the “add-on’s” which can explain granually the intricacies of filling ITR.
1) Investment declaration data dynamics
Once employee submits declaration, data is ready to be placed appropriately in Form 16.Dynamics lies w.r.t. documents submitted vs final figures in Form-16. To arrive at these figures, it is material to understand its components, which are:-
|
Form 16 |
||
| Part A: Deals with employer/employee std data like PAN/TAN,etc. | Part B: Basics from which tax is calculated by employer | 12BA : Restricted applicability generated by Rule 26 (Only if salary paid/payable > 150000) |
Part A: It’s very apparent data , from which details are required while filling ITR.
Part B: Details of salary paid & any other income & tax deducted. Total 19 points out of which 6 requires microscopic view. They are:-
|
ADD |
LESS |
| 1. Gross salary as per 17(1)
Valuation from 12BA-17(2) &17(3) |
1. Allowances exempt under Section 10 |
| 2. Any other income reported u/s 192(2B) | 2. Deductions Under Section 16 |
| 3. Deductions under Chapter VI-A | |
| 4. Rebate u/s 87A |
CA’s being always asked as to how to pay less tax , let’s begin with subtracting factor first .i.e. 4 points above which gets “Less” from Gross salary and 2 points gets “Added”.
LESS
1 ) Allowances exempt u/s 10 (2nd point in Form -16)
Section 10 (5) :- LTA/Travel Concession
Keep in mind block “2018-2021”. Carry forward feature of previous block expired, so delete that & focus on following points:-
(a) To claim for domestic travel
(b) For self AND family
In section words like employee AND family are used, hence it’s instructed for proof submission to provide bills/boarding pass for employee & family together, else in case of separate travel, only employees travel will be considered. It’s always awesome to avail allowance along with family by reminding movie” Hum SathSathhai”. So plan your travel tactfully.
(c) In case of switch of job, if unutilized with previous employer, Yes can claim with new one.
(d) Not twice in any year but two journey’s in block of four calendar year carrying c/f feature in first block being booster factor by plus one(+1).
Section 10(10) & Section 10(10A):- They are retirement benefits sections. As per prudence law, we are declaring our investments ongoing concern basis with one assumption of being young at heart always. Section 10(10) Deals with Gratuity Benefits exemption and Section 10(10A) deals with Tax on Pension to Salaried.
Section 10(13A):- House rent allowance
Let’s take totality of house related sections here–
All above sections differ in nature & there are many allied aspects related to purchase, sale ,transfer, residential status & taxation, but drilling down to that extent will end up constructing “House”. So, let’s take normal story to
” It begins with bindass bachelor’s life , one lives in PG , so no rent agreement required, but if highfy PG means rent will exceed Rs 1,00,000 , so PAN card of landlord is a must cooped with rent receipts. Later in golden days period, Engagement<——-> Marriage, one decides to move to 1 or 2 BHK & have to duly display rent agreement to company. After golden days are over, there comes platinum time where income doubles with the luck (Not only by way of earnings but also by conversion of money to wealth by women) & dream of “Own Home Sweet home” gets grander. Have a look how its hatrick w.r.t. taxation if it’s your first home:-
1) Stamp duty & principal repayment can be claimed under Section 80C.
2) Interest up to Rs 2,00,00 can be claimed under Section 24(b).
3) Additional interest under Section 80EEA up toRs 1,50,000 can be claimed subject to certain conditions like loan sanctioned between 01/04/19 to 31/03/20, stamp value less than 45 lacs carpet area, etc. ( Section 80EE was given for loans sanctioned during F.Y 2016-17).
Tax planning , reduction in borrowing rates, gifts on marriage occasion , etc are the things to be taken care of in claiming HRA, HP. One time investment decisions in life & house-property could end enormously in this F.Y. with God’s & Government’s Grace!!!!!!”
Section 10(10AA): – Leave encashment
During employment is fully taxable irrespective of Govt/Non Govt employee. If no such necessity of cash, then better to spend such leaves for healthy being of self, society & family.
2) Deductions under Section 16 (4th point in Form -16)
16(ia):- Standard deduction of Rs 50,000 in lieu of medical & travel reimbursement.
16(ii):- Entertainment allowance as per limits & calculations specified.
16(iii):- Professional tax, levied by State Govt & cap is Rs 2500 as per Constitution.
3) Deductions u/s Ch VI-A (10th point in Form -16)
Deductions & Dribs~ Drabs in tax planning:- The eightee’s (80’s) series is ethnic. It has many bits & pieces which are pivotal. Here, I would like to re-iterate some do’s & don’ts generally missed out as stated in sections. So, it will be in form of Magnify & Refresh i.e. to brought to light some called points & refresh some uncalled ones.
Section 80C‘s:- Magnify
- NSC Interest
- Stamp duty (Home purchase)
- ULIP’s
Refresh
- To give premium paid receipt of past years for claiming premium due in Feb & March & not the “premium due” receipts.
- Not to invest in tax-savers if bucket of 80C is full with other components. These will diversify portfolio along with returns.
- Get CKYC done for investments. It is akin to unique ID instead of multiple ID’s .
- Get all relevant apps provided by respective investments installed for ease of transaction & notification strictly ” on” to review the same at regular intervals.
Section 80CCC‘s:- Magnify (Pension funds)
- NPS, Atal Pension Yojana’s statements & charges levied.
Refresh
- Ever attended “NPS ki Pathshala”?Yes, watch out for portfolio re-structuring, pension agencies report, etc. Aforesaid programs are provided by pension funds itself as investor initiatives; if they initiates’ so…!!
Section 80D‘s:- Magnify (Mediclaim, health insurance premium)
- Hope with varied payment platform’s no premium is paid in cash.
Refresh
- Doctor’s certificate in demand for any disabilities (if any) .
- To claim preventive health check up Rs 5,000 without supplying supportings.
Section 80E:- Magnify (Education loan)
- Only if you & your family members opted education along with loan, kindly obtain interest certificate.
Section 80EEB:- Magnify (Electric Vehicle)
- For tech savvy & environment friendly friends, interest is allowed for electric vehicle purchased via EMI mode( Loan sanctioned between 01/04/19 to 31/03/23).
Section 80G:- Magnify (Donations’)
- Which category it belongs to?i.e. Nature of donation defines deduction extent of 50%, 100% along with 10% adjusted gross total income.
Refresh
- Always check receipt of organization to whom it’s donated.
Section 80TTA/Section TTB:- Magnify (Interest)
- Which category Savings account interest for TTA & all deposits interest for TTB.
Refresh
- If any senior citizen in family sec TTB applies.
4) Rebate Under Section 87A (14th point in Form -16)
If person is resident & income after deduction u/c 80C is <Rs 5,00,000, then rebate = Rs 12500 or tax amount–whichever is lower (before adding education cess)
ADD
1 ) Gross salary (1st point in Form -16)
17(1):- As per normal salary CTC/salary slips/tax computation sheets
17(2) & (3):- As per form 12BA– It’s all paid for perks/benefits availed; nothing comes “free of cost”. Taxable values are filled by employer for this form.
Refresh
- The only thing to be taken care of is to submit documents definite to nature of perks like petrol bills, club memberships , holiday expenses, ESOP etc..based on which values will be arrived as per Sections.
2) Conclusion
Don’t wait for July to come-up for “The ITR season”. Break the bars of becoming the part of the way in which world works. Investment declaration’s dribs & drabs depicted above is just a gist, there is profound picture played to portrait ITR~COMPUTATION ~FORM 16.
Let’s twilight ourselves with twin/triplet benefits of sections in Twenty twenty………….Have a Twinkling2020:-)
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Read. Thanks for the compilation.
Well explained, simple and informative.
Nicely Written article.