Tax, Your Money
HRA exemption can be availed up to least of the following:
1) Actual HRA received.
2) Excess of rent paid over 10% of the salary.
3) 50% of salary if house is located in Delhi, Mumbai, Kolkata or Chennai. 40% elsewhere.
Change in Rule
Until now, tax payers did not have to provide landlord’s PAN unless the rent was Rs. 1,80,000 p.a or Rs. 15,000 per month. However, IT department has put its foot forward in this regard and lowered the limit to declare landlord PAN to Rs. 1 lakh p.a or Rs. 8,333 per month. The reason IT department has brought about this new rule is because it believes there are a lot of fake receipts being submitted while claiming HRA exemption.
Landlord needs to report Income
The landlord has to report this income while filing his tax returns. If there is a discrepancy in reporting this income, he/she would face the consequences. Hence, people who are reporting to have paid rent to their parents for the purpose of HRA exemption need to be even more cautious now as they have to declare their parents PAN if rent crosses Rs.1 lakh p.a.
Exemption for Rent Receipts
However, employees who receive HRA up to Rs. 3,000 per month are not required to submit receipts for proof of rent paid. It may not benefit huge number of tax payers, though. This concession is only for the purpose of TDS (Tax Deduction at Source), and, in the regular assessment of the employee, the Assessing Officer will be free to make such enquiry as he deems fit for the purpose of satisfying himself that the employee has incurred actual expenditure on payment of rent.
If Landlord does not have PAN
In case the landlord does not have PAN, employee should submit a declaration stating the same along with the landlord’s details. The new rule is set to trouble the tax payers more as we know that a lot of landlords would be unwilling to submit PAN details or even give a declaration.
What if documents are not submitted?
The documents need to reach the IT department within February month of next calendar year. If it’s not the case, the HRA exemption given will be reversed and the entire HRA amount will be clubbed with the salary and taxed according to the tax slab.
This new rule is definitely a set back for a lot of salaried people since there were many of those who were claiming HRA exemption even without paying rents. But, even the honest tax payers would be hit hard on account of this new rule because of the reluctance of landlords to neither submit PAN nor give a declaration.
Business, Tax, Your Money
The Income Tax Calculator is quite popular among those who are employed and liable to pay taxes. It is also popularly known as Tax Calculator. Such Income Tax Calculators are used by major tax filing portals, personal finance companies. InvestmentYogi provides a very simple calculator for calculating the individual tax liability for the particular assessment year.
Why should you use this calculator?
If you want to know how much tax you would have to pay for the income generated in the year, this calculator is the one for you.
How to use this calculator?
The entries to make are:
Assessment Year – Choose the assessment year for which you want to know the tax liability. Ex: AY 2014-15, AY 2013-14, etc. AY 2014-15 is also known as FY 2013-14.
Income of Individual as – Choose under what status you are filing the taxes i.e. male, female or senior citizen. Tax slabs are different for few categories depending on year of assessment.
Gross Salary – It is the total salary including bonus, perquisites, compensation, etc.
Section 10 Exemptions – There are a lot of exemptions available for the employees depending on the company such as HRA, LTA, Medical, Petrol, Telephone, etc. The total of these exemptions needs to be entered here.
Section 16 Deductions – Section 16 allows a deduction for professional tax /tax on employment, entertainment. The total of such deductions for the year can be entered here.
Other Sources Income – Enter the other sources of income such as family pension, interest income from FD’s and other investments.
Chapter VIA Deductions – Deductions from Section 80C – 80U such as PF, Insurance premium, Donations, etc. Remember that each section has its own limit, like 80C limit is 1 lakh.
Once you enter these values and click on calculate, the result would be stating the total tax liability including education cess and surcharge (if applicable).
When should you use this Calculator?
This calculator is to be used when you are unsure of your tax liability or want to recheck the tax liability for the assessment year concerned.
Can it be used in any other situation?
This is specifically used when looking for calculating the income tax to be paid or being paid. It is also useful when there is a refund involved and you are eager to know how much it would be.
