Taxexcel

Tuesday, 19 July 2022

Find out about the calculation of income tax 2022-23 for employees. Know the income tax rules for

taxing all components of a CTC or gross salary. The remuneration components mainly consist of:

1) Basic salary

The base salary is always fully taxed.

2) Calculation of income tax - HRA

If a taxpayer receives the Rental Allowance (HRA) and pays the rent for a dwelling, then he can apply for an exemption under section 10 [13A] subject to the lesser of the following limitations mentioned, or he can be claimed a minimum of the following amounts as exempt from tax:

(i) Actual amount received

(ii) 50% of the salary if you live in big cities (eg Mumbai, Delhi, Chennai and Calcutta) and 40% of the salary otherwise.

(iii) Rent exceeding 10% of salary

For the purposes of calculating the exempt HRA amount, Salary will mean the base salary plus the depreciation allowance [if part of the retirement benefits] and the commission earned on the basis of turnover.

NOTE. If a taxpayer who receives the HRA fails to pay the rent, the full amount of the HRA will be taxed.

3) Variable payment

Variable remuneration is part of the remuneration, usually determined by the worker's performance and entirely taxable. Reimbursement (travel expenses, books and newspapers/periodicals, mobile communications, entertainment, etc.)

Pursuant to section 10 (14) of the Information Technology Act, benefits awarded to employees for employment purposes are exempt from tax provided that such expenses are actually incurred by the employees. The employee must have the required invoices and supporting documents as proof to apply for the exemption.

Therefore, the transport allowance is released for the amount of the costs incurred.

Similarly, the refund of books/newspapers and periodicals may be claimed as an exemption under paragraph 10 (14), while the refund of a mobile phone is exempt under rule 3 (7) (ix) of the Computing Rules.

The entertainment allowance, on the other hand, is entirely taxable in the case of private employees. If this representation allowance is granted to employees for the reimbursement of the reception costs of corporate customers, or for commercial purposes, it can be requested as an exception pursuant to paragraph 10, paragraph 14, of the IT law.

4) Leave travel allowance (LTA)

To be eligible for holiday allowance/holiday exemption under Article 10 (5), the taxpayer must meet the following specific conditions:

I. The actual trip is made by the taxpayer

II. Only domestic trips are considered for this exemption.

III. The exemption is granted to the employee alone or together with the family member, the family unit includes the employee's spouse, children, dependent parents, brothers and sisters. However, the exemption does not apply to more than 2 children born after 1 October 1998. This restriction does not apply to subsequent cases of multiple births for the second time after the birth of a child.

IV. The LTA exemption is allowed no more than 2 times, i.e. for 2 trips within 4 calendar years (2022-2025). The amount of the exemption varies depending on the mode of travel. For example, in the case of air travel, lower actual costs or economy class fares will be allowed.

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5) Bonus

The bonus is fully taxable

6) Calculation of income tax - Tips

Any tips received while on the job are fully tax deductible. However, retirement benefits will be subject to taxation depending on whether the employer is subject to the Remuneration Act or not.

If the employer is subject to the pay law, the lesser of the following are exempt from the rules u / s 10 (10) of the IT law:

I. Actual amount received

II. Rupees 20 00 000

III. 15-day salary based on the last salary received for each year of service completed, or part thereof, exceeding 6 months (i.e. 15/26 * pm salary * number of years of service completed)

For the purposes of the above calculations, salary means the basic salary in the afternoon. plus off-road allowance.

If the employer is not subject to the Remuneration Act, the minor of the following is exempted

I. Actual amount received

II. Rupees 20 00 000

III. Half monthly salary for each year of work. (ie ½ * Average salary per day * Number of years after the end of service) Any part of a year is not taken into account in the calculation of full years.

NOTE. For the purposes of the above calculation, the average wage in the afternoon. it will mean the average base salary for the last 10 months plus the off-road allowance [if it is part of retirement benefits] for the last 10 months and the average commission earned based on the turnover of the last 10 months.

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Wednesday, 13 July 2022

Tips to save on taxes|

1. Rent paid but HRA not received:

You typically receive an HRA as part of your paycheck and treat the HRA as a primary tax-saving plan while you file taxes. However, there may also be a situation where it is not part of the employee's salary. In such a situation, the standard HRA deduction cannot be claimed and the taxpayer will not be able to claim benefits even if they are paying rent. Also, in such cases, the taxpayer must claim a tax benefit under Section 80GG.

To provide taxpayer benefits even when they did not receive an HRA, Section 80GG was introduced. Under this section, a taxpayer can claim a rent deduction even if they have not received an HRA. As per the following conditions:

That the individual is self-employed or receives a salary.

The HRA was not received at any time during the year for which the Section 80GG deduction was claimed.

You, your spouse, or the HUF of which you are a member do not own any accommodation where you currently reside.

To claim the deduction under Section 80GG, you must file a 10BA form for the rent payment. Less of the following will be considered a deduction under this section:

Rupee.5000 per month.

25% of total income (excluding long-term capital gains and short-term capital gains under Section 111A and income under Section 115A or 115D and deductions under 80°C at 80 units).

Real income is less than 10% of income

2. Interest paid on the mortgage loan

To claim the interest component of a home loan as a tax deduction, you must meet the following conditions:

You must obtain a loan to buy or build a house.

The construction of the house must be completed within 5 years after the end of the financial year in which the loan was taken.

The interest component paid as part of the loan can be claimed as a deduction under section 24 up to Rs. 2 lakhs This applies in the case of self-occupied properties. In the case of rental property, there is no maximum limit for claiming interest.

In the event that interest is paid on a mortgage loan obtained during the pre-construction period, the pre-construction interest paid may be claimed as a deduction. The discount is available in five equal instalments beginning with the year the property was purchased or construction was completed. However, the maximum is Rs. 2 lakhs

You may also like- One by One Preparation Form 16 Part B for the F.Y.2021-22

3- Bank Savings Account Benefits:

The Income Tax Act of 1961 provides for deductions in respect of interest earned on bank savings accounts. Undivided Hindu individuals and families can claim a tax deduction under Section 80TTA on interest earned. This deduction applies to non-senior taxpayers. In the case of the elderly, article 80 TTB applies.

The maximum limit u/s 80TTA is Rs. 10,000. Limit Rs. 10,000 is applied to the total interest earned on the savings bank account held by the resident. No interest above and above Rs. 10,000 is taxed under the heading “Income from other sources”. The tax rate will correspond to the applicable tax bracket. For example, the total interest Amit earned from his savings bank account was Rs. 15,000. But allowed under Section 80TTA will be Rs. 10,000/-

On April 1, 2018, Section 80TTB for the elderly appeared. Under the 80TB section, seniors can claim discounts of up to Rs. 50,000 or a specified amount of gross gross receipts.

4- Medical expenses for disabled dependents:

Under the provisions of Section 80DD, a taxpayer can claim a deduction if they are caring for disabled dependents. This tax benefit will help reduce the tax liability of a person caring for a disabled person in their dependent family.

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5) Automated Income Tax Revised Form 16 Part A&B for the F.Y.2022-23

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