FILING OF INCOME TAX RETURN BY SALARIED INDIVIDUAL
A tax return is a form(s) filed with a taxing authority that reports income, expenses and other pertinent tax information. Tax returns allow taxpayers to calculate their tax liability, schedule tax payments, or request refunds for the over-payment of taxes.
All Form-16 for Related Financial Year
Details of Rent Received, Interest on Home Loan, Municipal tax
Details of Short Term/Long term Capital Gain on Share, Security or Property (If any)
Details of Interest on FD and others (If any)
Details of Investment Details U/s. 80C and Mediclaim U/s. 80D (If any)
No. of Days Stay in India in Last One Year and Four Year (For NRI Only)
Section 17 of Income Tax Act define Income included in Salary so whatever amount is received by an employee from an employer in cash, kind or as a facility [eg. perquisite] is considered under the head salary
Allowances are paid by an employer for the purpose of meeting some particular requirements of the employee. Allowances are fixed periodic amounts, apart from salary E.g., Tiffin allowance, transport allowance, uniform allowance, etc. We can classified three types of allowances for the purpose of Income-tax Act - 1. Taxable allowances, 2. Fully exempted allowances and 3. Partially exempted allowances.
Perquisites are benefits received by employee as a result of his/her official position and are over and above the salary or wages. These benefits or perquisites can be taxable or non-taxable depending upon their nature
Standard deduction is introduced from fy. 2018-19 and amount fixed of Rs. 40000/-. The standard deduction would be replaced the existing transport allowance of Rs 1600 per month and medical allowance of Rs 15,000 per annum.
The effect of introduction of standard deduction of Rs 40,000 which replaces medical allowance of Rs 15,000 and transport allowance of Rs 1600 per month i.e. 19,200 per annum, the effective additional benefit on account of the standard deduction would be an additional income exemption of Rs 5,800
The recent clarification issued by the income tax department, if a taxpayer has received a pension and the same is taxable under the head salary than , they shall be entitled to claim a standard deduction of Rs. 40,000 or the amount of pension, whichever is less.
House Rent Allowance or HRA is a part of the salary provided by an employer to his employee for his/her rented accommodation. HRA exemption can be claimed only if the employee is using rented house. HRA is a useful part of salary to save tax
The HRA amount received by employee is not fully exempt only Least/minimum of the following is exempt.
• Actual HRA received • Actual rent paid minus 10% of basic salary
• 50% of basic salary for those living in metro cities
• 40% of basic salary for those living in non-metro cities
Yes you can claim HRA during filing your return and get exemption as per the calculation.
If you are staying in rented house and you are paying your home loan than you can claim HRA and home loan deduction both.
You can claim HRA deduction even if you are paying rent to your parents.
Your landlord Pan is mandatory if you are paying rent more than Rs. 1 Lacs per annual.
Form 26AS is a consolidated TDS statement where you can find all tax deducted and deposited from all sources on behalf of you.
From Assessment year 2019-20 the standard deduction is allowed while computing income chargeable under the head salaries. It is available to all class of employees irrespective of the nature of employer. Standard Deduction is also available to pensioners. Amount of Standard Deduction is Rs. 40,000 or amount of salary/pension, whichever is lower.
Due to standard deduction, other deduction like transport allowance, medical reimbursement discontinue from AY. 2019-20.
i. It is taxable if received while in service.
ii. Leave encashment received at the time of retirement is exempt in the hands of the Government employee.
iii. Leave encashment received in the hands of non-Government employee will be exempt subject to the limit prescribed of Rs. 3 Lacs.
1. In the hands of a Government employee Gratuity and PF receipts on retirement are exempt from tax.
2. In the hands of non-Government employee, gratuity is exempt subject to the limits prescribed of Rs. 20 lacs in this regard and PF receipts are exempt from tax, if the same are received from a recognised PF after rendering continuous service of not less than 5 years.?
Any amount received under a life insurance policy, including bonus is exempt from tax. However, following receipts would be subject to tax:
1. Any sum received under sub-section (3) of section 80DD; or
2. Any sum received under Keyman insurance policy; or
3. Any sum received in respect of policies issued on or after April 1st, 2003, in respect of which the amount of premium paid on such policy in any financial year exceeds 20% (10% in respect of policy taken on or after 1st April, 2012) of the actual capital sum assured; or
4. Any sum received for insurance on life of *specified person (issued on or after April 1st 2013) in respect of which the amount of premium exceeds 15% of the actual capital sum assured.
Following points should be noted.
• Exemption is available only in respect of amount received from life insurance policy.
• Exemption is unconditionally available in respect of sum received for a policy which is issued on or before March 31, 2003.
• Amount received on the death of the person will continue to be exempt without any condition.
Rental income to be taxable under the head “Income from house property”, the rented property should be building or land appurtenant thereto. Shop being a building so rental income will be charged to tax under the head “Income from house property”.
Where the property or any part of the property is rented and was vacant during the whole or any part of the previous year than due to such vacancy the gross annual value will be reduces proportionately for vacancy period, means only rent of occupied period will be taken as Income.
While computing income chargeable to tax under the head "Income from house property" in the case of a let-out property, only following items can be claimed as deductions from gross annual value.
• Deduction on account of municipal taxes paid by the taxpayer during the year.(Deduction can be claimed on payment basic only).
• Standard Deduction @ 30% of Net Annual Value under section 24(a) towards repairs and maintenance of property.
• Deduction on account of interest on capital borrowed for the purpose of purchase, construction, repair, renewal or reconstruction of the property under section 24(b).
Yes you can claim interest deduction, if the loan is taken for purchase, construction, repair, renewal or reconstruction of the house.
While computing house property income, In case of a let-out property, the taxpayer can claim deduction under section 24(b) on account of interest on loan taken for the purpose of purchase, construction, repair, renewal or reconstruction of the property and there is no limit on the quantum of interest which can be claimed as deduction under section 24(b).
However from FY. 2017-18 maximum loss under house property can adjust from other head of Income is limited to Rs. 2,00,000/- and balance loss will be carry forward and can adjust against house property income in subsequent year.
On the other side in the case of self-occupied property the deduction for interest on home loan limit is 2,00,000/-.
Both Joint owners, who are also co-borrowers of a self-occupied house property, can claim a deduction on interest on the home loan up to Rs 2 lakhs each under the head income from house property and principal repayments, deduction can claim under Section 80C within the overall limit of Rs. 1.5 lakhs by each of the joint owners.
Deductions are allowed in the same ratio as that of the ownership share in the property.
You may have taken the loan jointly, but unless you are an owner in the property – you are not entitled to the tax benefits. There have been situations where the property is owned by a parent and the parent and child together take up a loan which is paid off only by the child. In such a case the child, who is not a co-owner is devoid of the tax benefits on the home loan. Therefore, to claim the tax benefits on the property:
Deduction on account of interest is classified in two forms.
Pre-construction period is the period commencing from the date of borrowing of loan and ends on earlier of the following.
31st March immediately prior to the date of completion of the construction/acquisition of the property. Or
Date of repayment of loan.
Interest pertaining to pre-construction period is allowed as deduction in five equal annual instalments, commencing from the year in which the house property is acquired or constructed.
In that condition computation of income chargeable to tax under the head "Income from house property", such a property will be treated as let-out throughout the year and income will be computed accordingly. However, while computing the taxable income in case of such a property, actual rent will be considered only for the let-out period.
Any profit or gain arise from transfer of a capital asset during the year is charged to tax under the head “Capital Gains”.
Any capital asset held by a person for a period of more than 24 months immediately preceding the date of its transfer will be treated as long-term capital asset.
However certain assets like shares (equity or preference) which are listed in a recognised stock exchange in India, units of equity oriented mutual funds, listed securities like debentures and Government securities, Units of UTI and Zero Coupon Bonds, the period of holding to be considered is 12 months instead of 24 months.
Taxability of capital gain depends on the nature of gain, means whether it is short-term or long-term. Hence to determine the taxability, capital gains are classified into short-term capital gain and long-term capital gain. In other words, the tax rates for long-term capital gain and short-term capital gain are different. Similarly, computation provisions are different for long-term capital gains and short-term capital gains.
Indexation is a process by which the cost of acquisition / improvement of a capital asset is adjusted against inflationary rise in the value of asset. The benefit of indexation is available only in case of long-term capital assets and the same is not available in case of short-term capital assets.
Tax on long-term capital gain to sale of equity share/Unit of equity oriented fund being listed share:
From FY. 2018-19 long term capital gains on the sale of equity shares/ units of equity oriented fund will remain exempt up to Rs. 1 lakh per annum. Moreover, tax at @ 10% will be levied only on LTCG on shares/units of equity oriented fund exceeding Rs 1 lakh in one financial year.
Tax on long-term capital gain:
The Long-term capital gain other than equity share and unit of equity oriented mutual fund is taxable at @20%.
Tax on short-term capital gain when securities transaction tax (STT) is not applicable:
These short-term capital gains is added to your income tax return and the taxpayer is taxed according to his income tax slab.
Tax on short-term capital gain if securities transaction tax is applicable:
This short-term capital gain is taxable at the rate `of 15%.
The exemption under section 54 is available when the capital gains from the sale of house property are reinvested into buying another house property.
The taxpayer need to invest the amount equal to long term capital gain arising from sale of property and not the entire sale proceeds into new house property it means tax payer need to purchase new property and minimum capital gain amount need to invest in new property, further new property can be purchased either 1 year before the sale or 2 years after the sale of the property and if invested in the under construction property than construction must be completed within three years from the date of sale. In the Budget for 2014-15, it has been clarified that only 1 house property can be purchased or constructed from the capital gains to claim this exemption. It’s important to note that this exemption can be taken back if this new property is sold within 3 years of its purchase/completion of construction.
Capital Gains Account Scheme (CGAS) allows individuals to safeguard their long-term capital gains till the time they are able to invest it as mentioned in Sections 54 and 54F. Under Section 54, you can invest the LTCG made from sale of an immovable property, in a residential property. Under Section 54F, you can invest the LTCG from sale of shares and bonds, in a residential property.
Taxpayer are allowed to open a CGAS account only if you are unable to invest it in a house before the due date for filing income tax return under section 139(1) (July 31 after the given assessment year).The account can be opened in any of the 28 banks notified by the government.
A capital gains account can be opened by filling in and submitting Form A along with proof of address, PAN card copy and photograph. The amount can be deposited in the account by cheque, cash or demand draft. we can even deposit the amount in instalments. If you have made a deposit in the form of a cheque or demand draft, the date of deposit shall be counted from the date on which the cheque or DD is encashed. Additionally, if you intend to invest both in a house and in government bonds under different sections of the Income Tax Act, you need to open separate CGAS accounts.
Exemption is available under Section 54EC when long term capital gains from sale of property are reinvested into specific bonds.
Exemption under section 54/54F can be claimed if the sale proceeds are utilized within one year before or 2 years after the date of transfer of house property. So when a house is bought one year before the date of transfer by taking loan and you sell your house property and use that amount to pay back these loan, than such repayment should be taken as fulfilling the condition of using the sale proceeds and you can claim exemption user section 54/54F.