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Thursday, 23 December 2021

Exemption U/s 16 standard deduction of the Income-tax Act, 1961

Section 16 of the Income-tax Act, 1961 provides for deduction from taxable income under the heading 'Salary'. It gives exemption for standard deductions, entertainment allowances and professional taxes. Through this deduction, a salaried taxpayer can reduce his taxable salary income as taxable.

Further, with the recent revision of the standard deduction, the benefits of this section have been greatly increased. Also, there is no hassle of paying bills for travel and treatment, which makes it much easier to claim.

The exemption of Standard deduction is entitled to under section 16(ia) of the Income-tax Act. The standard deduction against the allowances of transport of Rs 19,200 and the medical allowance of Rs 15,000. This was published by our Finance Minister Jaitley in the 2018 budget.

In the 2018 budget, a provision of Rs 40,000 has been made in lieu of transport allowance and medical compensation. A taxpayer does not have to submit any bill or proof of expenses to deduct this money. 40,000 It offers a flat deduction of Rs. 40,000

Subsequently, the amount cut from Rs 40,000 in the interim budget 2019 was increased to Rs 50,000. So Rs 40,000 was deducted for FY 2018-19 and Rs 50,000 will be deducted from FY 2019-20.

You may also, Like- Automatic Income Tax Master of Form 16 Part A&B for the F.Y.2021-22[This Excel Utility can prepare at a time 50 Employees Form 16 Part A&B as per Old and New Tax Regime]

A taxpayer's pension will be taxed under the heading 'salary' received from his former employer. Since the pension received is taxed under the heading 'Salary', the deduction under section 16 will also be available to the pensioners.

The amount of exemption allowable under section 16(ia) for standard deduction is:

Got paid

50000 rupees

Which is less

Note that the standard deduction is not related to cutting 80C or any other section of section VIA.

Entertainment allowance under section 16 (ii)

An allowance should be an allowance that is specifically paid by an employer to the taxpayer in the form of an entertainment allowance.

Entertainment allowance for government employees

For Central Government and State Government employees, the minimum deduction available is among the following:

20% of basic salary

5000 rupees

Entertainment allowance for a private employee

Unlike recreation allowances, discounts are not available for private employees. Only Central or State Government employees are eligible for deduction. Also, employees of local authorities and statutory corporations are not eligible for the cut.

Deduction of tax on employment is allowed under Section 16iii of the Income Tax Act. The amount that the taxpayer pays for employment tax or occupational tax is approved as deduction under section 16.

The following points should be kept in mind when calculating deductions against professional taxes:

The taxpayer has to claim deduction only in the financial year where professional tax is paid to the government

Taxes paid by the employer on behalf of the employee are also deductible. Here, the amount paid by the employer as professional tax will be included as a condition of the first total salary. Article 16 Later under the same amount of deduction

There is no upper or lower limit on exemption under section 16(ia) as per the Income-tax Act. The exemption deem feet to only on the actual amount of professional tax. However, no state government can levy more than Rs 2,500 per year as professional tax. Only payable tax is eligible for deduction and not interest or delay fee for non-payment of professional tax.

Download Automatic Income Master of Tax Form 16 Part A&B for the F.Y.2021-22 [This Excel Utility can prepare at a time 100 Employees Form 16 Part A&B as per Budget 2021 as well as Old and New Tax Regime]

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Wednesday, 22 December 2021

Income Tax Section 80GG is a exemption under Chapter VI-A of the Income-tax Act, 1961. It is intended to provide relief to those who do not receive a house rent allowance but are paying rent to stay. Thus, a person can claim a deduction for the rent paid even if he does not receive a house rent allowance.

An individual must be self-employed or salaried to claim deduction under this section. 80GG allows individuals to claim a deduction in the case of a rented house. This type of house will be rented for his own stay.

Exemption under section 80GG

To claim a deduction under this section, the following conditions must be met:

The person should not be in the habit of receiving any house rent allowance from his employer.

The person has mandatory to submitted a declaration in Form No. 10BA

• The other family member, should not own any residential home property where he normally resides or holds office or has business or occupation reasons.

• The appraiser should not own any other place of residence in his / her profession, the value of which must be determined in accordance with Sec 23 (2) (a) or Sec 23 (4) (a).

Simply put, if Mr. A, in his income tax return, claims a deduction in the case of self-acquired property and pays rent for a place where he normally resides but not his own, he cannot claim deduction under section 80GG

The amount of cuts must be at least one of the following:

Subtract 10 percent of the total income paid for actual rent.

• 5,000 / - per month.

25 25% of the total adjusted income.

Exceptions under section 80GG:

No person can claim a deduction on house rent if the location of the house is where he is employed or conducts business.

A person cannot claim a deduction on house rent if he or she claims the benefit of a proprietary home as self-acquired property elsewhere. If the person lives in one city and has a house in another place or town, it will be considered as rent.

If a person lives in their home with their parents, they can claim the benefit of rent deduction under section 80GG. He has to make a rental agreement with his parents to pay the rent. However, the parents who own the house have to show the rent as income in their tax return. If the house is jointly owned by the son / daughter, they will not be able to claim rent deduction on their taxable income.

Download Automatic Income Tax Revised Form 16 Part A & B for the Financial Year 2021-22[This excel Utility can prepare at a time 50 Employees Form 16]

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Tuesday, 21 December 2021

Difference between Old and New Tax Regime | ITR filing season has started. This is the first year when you can choose between the old tax system with deductions and discounts and the new tax system without deductions and deductions when you file your ITR. Taxpayers are confused about which one to choose. Let us discuss in detail the features of both regimes.

What the new tax system provides

The new tax system option is available to all individuals and HUFs. This is optional. Under the new tax system, income up to Rs 50,000 is taxable at a lower slab rate. 15 lakh compared to the old regime. Under the new arrangement, tax slab rates of 5%, 10%, 15%, 20% and 25% are applicable on each incremental increase. Starting with a basic discount of Rs 2.50 lakh. Total income is 2.5 lakh to 15 lakh rupees.

If you choose the new tax system, you will have to give up the various tax exemptions and rebates available under the old regime. Under the new tax system, salaried employees will not be able to receive items such as standard deduction, house rent allowance (HRA), vacation travel assistance (LTA) and even certain allowances for duty.

You may also, like- Automatic Income Tax Form 16 Part A&B and Part B for the F.Y.2021-22[This Excel Utility prepare One by One Form 16]

Various under Section 80C (including various items like EPF, LIP, School Fee, PPF, NSC, ELSS, Home Loan Repayment etc.), 80D (for Health Insurance Premium), 80CCD (1) and 80CCD (1B) (for). Discount available NPS) will not be available to both categories of taxpayers such as salaried and self-employed. You also forfeit the home loan interest claim to set off or bear the loss in the case of self-acquired property as well as abandoned property. Also you will not be able to adjust any of the losses incurred against the current income under the new scheme.

Similarly, retired senior citizens cannot claim standard deduction in respect of their previous employment pension. Deductions up to Rs 50,000 under section 80TTB will also not be available for senior citizens for interest from post offices and banks.

How the plan works

Since one can claim different exemptions and deductions and the combination of these tax benefits varies greatly from person to person, a comparative calculation chart cannot be given which shows which system is beneficial. However, considering the tax benefits that most taxpayers have to give up, the benefits available under the current regime are more than the benefits of lower tax rates by shifting to the new system. Let's try to understand its effect with examples.

First of all, let's talk about a salaried person. Since most salaried people either claim the benefit of HRA for the rent paid or probably bought a house with a home loan. Assuming that he has bought a house with a home loan, he will have to repay the principal of Rs. 2 lakh for home loan interest for self-acquired home property.

Considering the fact that he has to give up the standard deduction of Rs 50,000 / -, he has to go to spend money. 4,00,000 / - resulting in tax effect Rs. 80,000 if he is in the 20% tax slab whose income is between Rs 5 million to 10 10 million. Previous Net Tax Profit Tax Liability Rs. More than that. 62,500 under the new project. For those living in the 30% tax slab, the tax effect of 30% of the Missed Benefit will result in tax savings of Rs 1.20 lakh. Earned 37,500 by selecting the new system.

You may also, like- Automatic Income Tax Master of Form 16 Part A&B for the F.Y.2021-22[This Excel Utility prepare at a time 50 Employees Form 16 Part A&B]

Difference between Old and New Tax Regime

Now let us take an example for a self-employed person who is fined Rs. 50,000 / - under Section 80CCD (1B) for contribution to the National Pension System for easy understanding of both Rs. 1.50 lakhs and Rs. Assuming total income is Rs. 7 lakh will be tax liability. 32,500 / - under new tax system.

However, if he is able to claim the money discount. From the above 2 lakhs he will be able to reduce his total income to 5 lakhs on which he will not have to pay any tax through discount. 12,500 available under section 87A. One can save money by investing two lakh rupees. 32,500 tax under the old system.

Why don't people choose new tax system

Since the salaried will have to give up various benefits like standard deduction, HRA, LTA and will have many essential items like employee future fund contribution, life insurance premium, school fees, home loan principal payments, most of the salaried means staying with the old system. Even for self-employed taxpayers who have an ongoing home loan, there is no point in switching to the new system.

As per above circumstances, the new tax system is only allow for those who have liquidity problems and are not able to take full advantage of under Chapter VI A including 80C, and who have no health insurance and no ongoing home loan. The new arrangement may only be suitable for a few self-employed or HUFs for which no exemption is available under section 87A.

Download and Prepare at a time 100 Employees Automatic Income Tax Master of Form 16 Part A&B for the F.Y.2021-22[This Excel Utility prepare at a time 100 Employees Form 16 Part A&B]

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Saturday, 18 December 2021

What is salary certificate Form 16? Form 16 is a salary certificate which issued U/s 203 of the Income-tax Act which deducts withholding tax (TDS) from the income from 'Salary'. It is issued after deduction of tax by the employer from the salary of an employee and submission to the government. The form 16 salary certificate includes a detailed summary of the amount paid or deposited to the employee as well as the TDS. The Form 16 issued between one financial year in accordance with the provisions of the Income Tax Act (IT Act), usually after completion.

An employee can use Form 16 as a source of information to file his / her Income Tax Return (ITR) and should be kept as backup evidence for TDS.

The Salary Certificate Form 16 is now two parts, Part A and Part B.

What is Part A of Form 16?

Part A of Form 16 contains details of tax deducted at source.

A Part A of Form 16 includes the following:

Name and address of the employer

PAN Employer's PAN (Permanent Account Number) and TAN

Deductions have been made at the summary and source of the amount paid or deposited as mentioned in the case of the employee

What is Part B of Form 16?

This is an addition to Part A of Form 16 that must be issued by the employer.

Form 16 Part B have details of the following:

Detailed salary breakup

Allowance up to the amount exempted under section 10

Deduction is permitted under section VI-A of the Income-tax Act

Relief under section 89(1)

What do you do when you work with one or more employers?

If you work with one employer per year, that employer will issue Form 16 for the entire financial year. It will contain details of tax deducted and deposited for all quarters of the financial year.

If you received salary more than one employer in a financial year, every employer may issue a Form 16 with each of them for the period you were employed. Part B of Form 16 will be issued by every employer or the last employer as per the choice of the taxpayer.

You should also know that if an employer is late in the deadline or does not issue Form 16, you will have to pay a penalty of Rs 100 per day till the default continues. However, the fine should not exceed the amount of tax deducted.

Download Automatic Income Tax Salary Certificate Form 16 Part B in Excel for the Financial Year 2021-22 and Assessment Year 2022-23 as per Budget 2021[This Excel Utility can prepare at a time 50 Employees form 16 Part B]