Dr. Lalit Setia: Tax Deduction at Source

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Details for e-filing Income Tax Return

The Income Tax Return (ITR) is mandatory to be e-filed by every person whose Gross Total Income is more than his Basic Exemption Limit i.e. Rs. 2,50,000 for Individuals who are not senior citizens, Rs. 3,00,000 for senior citizens, and Rs. 5,00,000 for super senior citizens. The individuals before e-filing the Income Tax Return should prepare details and keep in hand so that no problem appears while filling the desired Income Tax Return Form. What documents should be realized for preparing the details of incomes. Why to provide complete details and how to be assured that every financial earning has been detailed as required by Income Tax Department:

(i) Form 16 from Employers:

The salaried individuals should receive Form 16 from their respective employers as it is a proof of the Tax Deducted at Source by the employer and the details provided in Form 16 should be kept in hand so that the same details are filled in Income Tax Return Form under the head ‘Salaries’.

(ii) Form 16A from Deductors other than Employers:

In case, the tax is deducted by others than the employer/s then Form 16A should be realized from them. Generally, banks and post office deduct tax at source on ‘Interest on Deposits’; in such cases, Form 16A should be taken from them and kept in hand while e-filing Income Tax Return.

(iii) Form 16B from the Buyers:

Sometimes, properties are sold during the financial year and buyers deduct Tax Deduction at Source from the amount to be paid by them. In such case, the buyer deposits such TDS to Income Tax Department and generate Form 16B. Therefore, in such cases, Form 16B should be taken from the Buyers (if any).

(iv) Form 16C from Tenants:

In case, an individual is getting rent form the tenants and it is more than Rs. 50000 per month; in such cases, the tenants are directed to deduct Tax Deduction at Source from the payment of rent to the individual (landlord). Then the tenants deposit the TDS in Income Tax Department and realized Form 16C to be provided to the landlord. Such Form 16C should also be realized and kept in hand while e-filing Income Tax Return.

(v) Tax Credit Statement 26AS / Annual Information Statement - AIS from website of Income Tax:

Apart from Form 16, 16A,16B, and 16C from the Deductors, an individual should also download Tax Credit Statement 26AS / Annual Information System - AIS, from the website of Income Tax Department and match the details of deductions at source with the Tax Credit Statement before e-filing Income Tax Return. In case of mis-match, it should be decided which details are accurate and accordingly the return should be filed. In case, there is any mismatch, the individual should ask the deductor to rectify the mistake and e-file rectified TDS statement so that accurate amount be reflected in Tax Credit Statement / Annual Information Statement. In case, the mismatch is not corrected, then the individual will receive a notice from the Income Tax Department for clarification of mismatch.

(vi) Statement of interest on Deposits:

The amount of interest earned on deposits in Post Office, Banks, and other Financial Institutions should be prepared from the Statement of Interest taken from them.

(vii) Collection of proofs to claim Deductions:

There are a lot of deductions available to be claimed under section 80C to 80U for the individuals and there are a lot of exemption available under section 10 which may be taken into consideration while quantifying the taxable portion of incomes earned during the financial year. An individual should keep all the records relating to claimed exemptions, deductions in separate file as the proofs may be asked by the Income Tax Officers at any time in future.

Generally, tax savings are claimed for investments under section 80C, 80CCC, 80CCD (1) limited upto an amount of Rs. 1,50,000 and additional benefit for NPS investment of Rs. 50000 in 80CCD(1B); and for expenditures under other sections i.e. 80D to 80U. In 80D, the proof of receipt for payment of Health Insurance Premium for self, spouse and/or children and in 80E, proof for payment of interest on education loan should be maintained.

How to claim 80G deduction for contribution in Haryana Chief Minister Relief Fund:

For deduction in 80G, the details of organization come under 80G with name, PAN number, location etc; should be prepared and kept in hand.

(viii) Home Loan Statement with Interest Charged:

In case of home loan taken from Bank or Non-Banking Financial Companies; the statement of home loan principal amount as well as interest amount charged during the year should be taken. The amount of principal amount is counted in 80C for deduction purposes and ‘interest on home loan’ is claimed under the head ‘income from house properties’ under section 24. The maximum amount for self-occupied property for interest is Rs. 2,00,000.

(ix) Income on sale of Capital Asset:

The individuals who sold any capital asset during the financial year, should compute income or loss on the sale of Capital Asset. The details of buyer with PAN number should also be available at the time of e-filing Income Tax Return. In case of sale of mutual funds, equity shares, such details can be taken from the broker.

(x) Details of Bank Accounts:

Before e-filing Income Tax Return, an individual should prepare the list of active bank accounts and it is also required to pre-validate the bank accounts so that the refund (if any) can easily come in the pre-validated bank account. For pre-validation, it is necessary to link the bank account with PAN which is usually linked. For each bank account, the details i.e. Bank Name, Account Number, IFSC Code and type of Bank Account should be ready.

(xi) Aadhaar Details:

An individual should keep the Aadhaar details ready while e-filing Income Tax Return. It is mandatory now to quote Aadhaar number in Income Tax Return; even for e-verification, a message come on Aadhaar linked mobile number for verification of the Income Tax Return at the end of e-filing Income Tax Return.

New portal for e-filing Income Tax Return:

The old portal of incometaxindiaefiling.gov.in has been replaced with new portal incometax.gov.in from FY 2020-21. The ITR forms have also been changed. The process is also changed. What are the major changes, let’s understand in simple words. Firstly, JSON utility is introduced for offline filing of Income Tax Return (ITR) for the convenience of the taxpayers. Secondly, the old return preparation software is replaced with more interactive return preparation software in new online tax payment system, integrated for immediate processing of ITR.

What happens if a taxpayer withdraws amount exceeding a specified limit:

From FY 2020-21, as per the Budget 2020 speech, a new section was introduced i.e. 194N. The taxpayers who have not filed ITR for last three years and withdraw cash in excess of Rs. 20 Lacs, have to pay 2% TDS. For normal taxpayers the limit is Rs. 1 Crore from FY 2019-20, from one bank / post office account. In case, the amount is withdrawn above the limit, 2% TDS is deducted.

Such persons under Income Tax Act, will not be eligible to file ITR-1 and such TDS will also not be carried forward to next year if it is not claimed as refund during the current year.

Tax on Dividend Income in the hands of Recipient:

The Dividend Distribution Tax (DDT) has been abolished from FY 2020-21. If a taxpayer received Dividend from company, it will be taxable in the hands of taxpayers.

Tax Deducted at Source for the payments to Resident Contractors and Professionals:

The contractors with turnover / receipts exceeding Rs. 1 crore and the professionals with turnover / receipts exceeding Rs. 50 Lacs require to get their books audited. The deductors for the taxpayers with audited books, are required to deduct TDS under section 194C and 194J respectively.

In case, the TDS is not deducted u/s 194C and 194J then the TDS at the rate of 5% will be deducted u/s 194M.

In case TDS is deducted u/s 194M, the deductors have to issue Form 16D to the payees / deductees within 15 days of the due date of furnishing the challan-cum-statement in Form 26QD.

Conclusion:

It is mandatory to file the return on time with correct particulars. Suppose a person is working in an organisation and his source of income is Salary. Similarly a person is working in private sector as a professional. The major source of income will be Salary in first case and Business or profession in second case. For Salaried persons, TDS is deducted by employers and on the basis of TDS a certificate is issued known as Form 16. For other source of income, the Deductors other than employers, issue a certificate known as Form 16A. After getting such certificates, download the 26AS or Annual Information Statement from login of income tax. How much money was received from the employers, how much TDS deducted, and how much taxes already paid either by person or on behalf of person, each information is gathered and written on plain paper. All these things are filled in the return. Keep in mind that the information usually provided by a person in ITR should match with Form-16 / Form 16A. Otherwise the notice comes from the income tax department.

Last updated - July 29, 2021

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Duties of DDOs in Taxation Matters

Introduction:

In the Financial Year 2020-21, the new regime of income tax rates be available as an option to the taxpayers. Why Government brought this new regime as an option? After analysing the data it was found that during last two decades due to a great number of deductions and exemptions available to the taxpayers, instead of 62% rise in the number of individuals filing income tax returns; there was only 22% rise in number of individuals paying income taxes. Rest 40% increased return filers were able to prove 'nil' tax liability. It's easy to detect the wrong deductions and exemptions claimed by the salaried individuals because their incomes are credited in their bank accounts but in case of self-employed and businessmen, it is very difficult. Therefore, this option is provided to easily curb the wrong practices of non-salaried individuals.

In Government Departments, a Drawing and Disbursing Officer (DDO) is responsible to ensure the compliance of taxation laws and he is expected to not only submit the tax returns but also to guide and suggest other officers for taking care of various provisions of taxation. The DDO adopts participatory approach and include Accounts Section to enforce the taxation rules. The Government ensure the compliance of financial rules, taxation rules through DDOs. The workshops are generally organized on taxation issues. There are three types of major duties related with taxation matters:

(i) Income Tax Return (ITR):

Who should file Income Tax Return and How:

The DDOs are expected to guide the Government employees with regard to accurate procedure of filing Income Tax Return. Most of the Government employees are salaried individuals, in case their salaries and other incomes exceed Rs. 2,50,000 (Basic Exemption Limit); it becomes mandatory to file Income Tax Return by 31^st July of the Assessment Year. The Income Tax Return can easily be filed either is physically mode or electronic mode. The individuals with total income less than 5 Lacs can file their return in physical form by downloading the Income Tax Return Form from website of Income Tax Department i.e. incometaxindia.gov.in.

Filing of Income Tax Return:

Go to http://incometaxindia.gov.in/ and open the menu ‘Forms/Downloads’ and click upon ‘Income Tax Returns’. Thereafter, download Income Tax Return-1 and its instructions provided along with it. Even if the total income becomes equal or more than 5 Lacs, an individual should download this form and fill it as a preliminary work before filing Income Tax Return in electronic mode. Thereafter, in case of income less than Rs. 5 Lacs, the form may also be submitted in the Income Tax Department. For individuals with income more than Rs. 5 Lacs, it is required to fill the same details by accessing the website https://www.incometaxindiaefiling.gov.in/

Type of Income Tax Return Forms:

Every DDO should be equipped with the knowledge of various types of Income Tax Return Forms i.e. ITR-1, ITR-2, ITR-3, ITR-4, ITR-5, ITR-6, and ITR-7.

Income Tax Return Form No. ITR-1:

This form is suitable only for individuals being a resident (other than not ordinarily resident) having total income up to Rs. 50 lacs, having Income from Salaries, one house property, other sources (Interest etc.), and agricultural income up to Rs.5 thousand. The Government employees who have ownership of more than one house property or who have ownership of agricultural land with agriculture income more than Rs. 5000 should not file Income Tax Return Form No. 1. They should file Income Tax Return Form No. 2.

Income Tax Return Form No. ITR-2:

The ITR Form No. 2 is for Individuals and HUFs not having income from profits and gains of business or profession. This form is used only if an individual’s sources of incomes are only Salary but also house property or capital gains. In case, the individual is also earning from business or profession, then he should file Income Tax Return Form No. 3.

Income Tax Return Form No. ITR-3:

The ITR Form No. 3 is for individuals and HUFs having income from profits and gains of business or profession.

Income Tax Return Form No. ITR-4:

This form is suitable only for Individuals, HUFs and Firms (other than LLP) being a resident having total income up to Rs.50 lacs and having income from business and profession which is computed under sections 44AD, 44ADA or 44AE

Income Tax Return Form No. ITR-5:

This form is not filed by individuals. It is suitable for persons other than, - (i) individual, (ii) HUF, (iii) company and (iv) person filing Form ITR-7.

Income Tax Return Form No. ITR-6:

This form is suitable for Companies other than companies claiming exemption under section 11.

Income Tax Return Form No. ITR-7:

This form is suitable only for persons including companies required to furnish return under sections 139(4A) or 139(4B) or 139(4C) or 139(4D) only.

(ii) Tax Deduction at Source:

A Drawing and Disbursing Officer is also ‘Tax Deductor’ on behalf of Income Tax Department and he is also required to take Tax Deductor’s Account Number (TAN) from the Income Tax Department. Thereafter, he should register on https://tdscpc.gov.in/ with the TAN Number by clicking upon ‘Register as a new user’.

As per the provisions of Income Tax Act, 1961, the DDOs are responsible for tax deduction at source on specified types of payments made by the Government offices. The tax deducted at source should not be less than its requirement and it should be deposited in the Income Tax Department through using appropriate form and thereafter the details of the same should be submitted within the prescribed time. Apart from DDOs, the electronic TDS (e-TDS) return is also required to be filed by Companies, Persons required to get their accounts audited u/s 44AB of the Income Tax Act, 1961; and the deductors reporting more than 20 deductee records for any quarter of the financial year. The Government of India prepared and operate an integrated platform for providing various services to deductors known as TRACES (TDS Reconciliation Analysis and Correction Enabling System). The DDOs and Deductors can easily view the status of challans and TDS-TCS credit for a PAN on this portal. They can also download Conso File, Form 16 / 16A and Justification Report from this portal.

(iii) Goods and ServicesTax:

Every Drawing and Disbursing Officer should be aware of Section 51 of Goods and Services Tax Act 2017 and get registered as a deductor under the Act. Whenever a payment is made or credited to a supplier of taxable goods or/and services it is required to deduct Tax Deduction at Source on GST.

TDS on GST:

As per section 24(vi) of GST Act, a DDO will register himself by using TAN Number at the portal of GST i.e. www.gst.gov.in, and in case, he enters into a contract for purchase of goods or/and services with total value of taxable supply (excluding GST) more than Rs. 2.5 Lacs; he will deduct TDS on GST @2%. After deducting the TDS on GST, the same will be paid to the Government within 10 days after the end of the month in which deduction was made. Thereafter, he will also submit return in the Form GSTR-7 and furnish system generated TDS certificate in Form GSTR-7A to the deductee within 5 days of crediting payment of TDS to the Government (i.e. date of furnishing GSTR-7).

Penalties may be levied upon DDOs under GST:

In case, a DDO fails to make payment of deducted tax within prescribed time limits, he will have to pay the same along with interest imposed by the GST portal at the time of depositing payment of deducted tax with delay.

In case he failed to furnish Form GSTR-7 within 10 days after the end of the month in which deduction was made; late fees will be payable under section 47(1) i.e. Rs. 100 + Rs. 100 per day (maximum up to Rs. 5000) under each CGST and SGST means upto Rs. 10000.

In case he failed to furnish Form GSTR-7A; late fees will be payable under section 51(4) i.e. Rs. 100 + Rs. 100 per day (maximum up to Rs. 5000) under each CGST and SGST means upto Rs. 10000.

Further, in case, an excess payment of GST is deducted by mistake; a refund may be claimed by the DDO or Deductee as the case may be. However, in case excess tax gets credited to the deductee then the DDOs shall not be granted the refund.

You might also be interested in the following:

Introduction to Income Tax Matters

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Implications on Income Tax on Formation and Dissolution of Hindu Undivided Family

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Income Tax Return

Tax Deduction at Source

Tax Planning to Have More Take-Home Salary

Tax Deduction at Source for Deductors

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Penalties for Non-Compliance of TDS Provisions

Penalty for Non-Compliance of TDS Provisions

A Drawing and Disbursing Officer (DDO) works as Income Tax Assessing Officer for the employees working under his supervision particularly in making the payments of salaries and other remuneration. In case any provision of income tax is not followed then the DDO may face the penalty, levy of interest, and even initiation of prosecution proceedings. Let’s understand everything most simply:

Figure: Penalties for Non-Compliance of TDS Provisions

(i) In case, Tax is not Deducted at Source:

A DDO is entrusted for ‘Tax Deduction at Source’ on an average basis as per the estimated tax liability to be paid by the employees. He is responsible for deducting the accurate amount of tax and in case, he failed to deduct tax or it is found that there is a short deduction of tax at his level, interest on the amount deducted at source can be levied upon the DDO.

(ii) Delay in Deduction of TDS and Section 201 (1A) of Income Tax Act:

The section 201(1A) states that any person who is liable to deduct TDS, if makes default in the deduction and/or payment of tax deducted at source; the person will be treated as ‘Assessee in Default’.

In case, there is a delay in deduction of ‘Tax Deduction at Source (TDS)’, the employer will be charged simple interest at 1% per month or part thereof, for the period ‘from the month in which TDS was deductible to the date of deduction’. In case of any part of the month, part of the month will be considered as a full month. For example, if the delay in deduction of TDS is 1 month and 1 day, then it will be taken as 2 months and the simple interest on the ‘amount not deducted as tax’ for 2 months at the rate of 1% per month will be charged.

Example for the delay in deduction of TDS:

Suppose salary is paid on 30^th April for an amount of Rs. 1,20,000 and no tax is deducted at source. The employer deducted the TDS of this payment on 10^th June; making a delay of 1 month and 10 days. Since the TDS was at the rate of 30% i.e. 120000 x 30% = 36000; the interest will be levied for this delay will be = 36000 x 2 x 1% = Rs. 720.

Even if the payment of salary is made on 30^th April and Tax is deducted thereafter on 1^st May, the deductor will be liable to pay 1 month’s interest for delay in the deduction of TDS.

(iii) Delay in Payment of TDS and Section 201 (1A) of Income Tax Act:

In case, the Tax is deducted at source but the deducted tax is not paid to the income tax department by due date i.e. (last day of the month for electronic transfer of payment and 7^th of next month for payment through Challans); then a simple interest at the rate of 1.5% per month and part thereof will be levied for the period ‘from the month in which TDS was deducted to the date of payment of tax’.

(d) Example for Delay in Payment of TDS:

In the above example, the TDS was deducted with delay on 10^th June instead of 30^th April. The TDS was supposed to be paid up to 7^th May while it is paid on 30^th June, therefore interest will be levied for the months from ‘the month in which it ought to be deducted’ to ‘the month in which the TDS is paid’ i.e. 2 Months i.e.

Interest = 36000 x 2 x 1.5% = Rs. 960.

(iv) Penalty and Imprisonment under Section 271C and 276B of Income Tax Act:

In case, the deductor who was supposed to deduct tax and pay within the prescribed time as determined by the income tax department; failed to deduct and pay such TDS in whole or part thereof under the second provision of Section 194B, then the person shall be liable to pay a sum equal to the amount of tax not deducted or paid in form of ‘Penalty’ under section 271C of Income Tax Act. Further, if the deductor failed to pay deducted TDS into the credit of Central Government within the prescribed time, he shall be punishable with rigorous imprisonment for a term between 3 months to 7 years, along with a fine.

(v) Non-furnishing of Certificate of TDS to the Employee or other persons:

Furnishing of Form 16 or Form 16A:

The deductor is entrusted to furnish a certificate i.e. Form 16 or 16A to the persons on whose income, the TDS is deducted by the deductor. Form 16 is issued in case of employees and Form 16A is issued in case of payments to persons other than employees. The date of furnishing Form 16 or Form 16A is 15^th June of the Assessment Year.

Here, the point to be considered is, “The Deductors are entrusted for generating and downloading Form 16 or Form 16A from the website of TRACES i.e. https://tdscpc.gov.in, and after verifying the details, it will be issued to the taxpayers”.

Part A and Part B of Form 16:

Form 16 or Form 16A usually have two parts i.e. Part A and Part B. Part A bore a unique TDS certificate number, PAN of the taxpayer, TAN of deductor, BIN stating deposit of TDS to Income Tax Department, and CIN in case of payments made through banks. Part B was earlier supposed to be prepared manually by the deductors but now, it is also required to be generated and downloaded.

Penalty for failure in generating and downloading Form 16:

Under section 203 of the Income Tax Act, the deductors must issue the certificates of TDS to the taxpayers and in case they failed to issue, a sum which shall be Rs. 100/- for every day during which the failure continues; shall be liable to pay by way of ‘Penalty’ under section 272A(2)(g).

(vi) Penalty for delay in filing Quarterly Return of TDS:

Due Dates for filing Quarterly Returns:

The deductors are responsible for quarterly file TDS return known as 24Q and 26Q to the TIN Facilitation Centres of NSDL (in form 27A) or at website of incometaxindiaefiling.gov.in after registering as Deductor up to 31^st July, 31^st October, 31^st January, and 31^st May for the First, Second, Third, and Fourth Quarter of the Financial Year respectively under section 200 (3) of the Income Tax Act.

Penalty for non-filing of Quarterly Returns by Due Dates:

In case, the quarterly returns are not filed within the prescribed time limits, the deductors shall be liable to pay, a fee equal to the sum of Rs. 200 for every day during which the failure continues subject to the maximum amount of tax which was deductible at source.

Such fee is mandatory to be paid before furnishing such statements.

Penalty for failure in furnishing quarterly returns or furnishing of incorrect information:

In case of failure in furnishing 24Q and 26Q and in furnishing incorrect information, the person shall be liable to pay, by way of ‘penalty’, a sum which shall not be less than Rs. 10000 (Ten thousand) but which may extend to Rs. 100000 (One Lac). The Penalty can be waived off if the person proved that he had delivered such statements before the expiry of one year from the time prescribed for delivering the statements after paying TDS with the fee and interest liable to be paid.

Which Sections of Income Tax Act should be on tips of a DDO?

a. Section 40 (a) (ia) -

For an amount of expenditure disallowed to be claimed as a deduction due to non-deduction of TDS on such expenditure

b. Section 201 (1) -

Generally demand is raised under this section whenever a DDO is treated as assessee in default due to either non-deduction of TDS or failure to deposit TDS in the credit of the Central Government.

c. Section 201 (1A) -

Generally simple interest is charged on the TDS amount not deducted or failed to deposit the amount of TDS. Such interest is charged for the period from the date on which tax was deductible to the date of furnishing of return of income by such resident.

d. Section 271C -

Generally penalty is levied on the Deductor under this section when he failed to deduct TDS or failed to pay TDS in the credit of the Central Government.

e. Section 221 -

The Penalty be levied when an assessee is in default in making payment of the demand raised by the income tax department. However, this penalty is levied after giving an opportunity of being heard.

f. Section 276B -

Punishable with rigorous imprisonment for a term which shall not be less than 3 months but which may extend to 7 years and with fine. It is particularly for the persons who failed to pay tax payable or the TDS deducted; to the credit of the Central Government.

g. Section 271BB -

Penalty of Rs. 10 thousand, for a failure to apply for TAN or non quoting of TAN in the challans or certificates or statements or other documents wherever it should be quoted as per provisions of the income tax act.

h. Section 272 A (2) (k) -

Penalty of Rs. 100 per day, for non-filing of TDS returns, however, if there is reasonable cause for delay in filing of quarterly statements of TDS, then this penalty is not levied.

i. Section 234E -

Fess or Fine of Rs. 200 per day, for the days of failure in the filing of TDS return. It is levied on DDO as long as the default continues subject to the maximum of TDS amount deducted by the DDO.

j. Section 271H -

It is related to penalty for late filing or non-filing of TDS Statement; minimum Rs. 10 thousand and may extend up to Rs. 1 Lac.

However, if the TDS return is filed before the expiry of one year from the time prescribed for delivering such statement; then Fee or fine is charged, but the penalty is not levied.

Hindi Version:

टीडीएस प्रावधानों के गैर-अनुपालन के लिए जुर्माने

एक आहरण और संवितरण अधिकारी (डीडीओ) अपने पर्यवेक्षण में काम करने वाले कर्मचारियों के लिए, विशेष रूप से वेतन और अन्य पारिश्रमिक का भुगतान करने के लिए आयकर निर्धारण अधिकारी के रूप में काम करता है। यदि आयकर के किसी प्रावधान का पालन नहीं किया जाता है तो डीडीओ को दंड, ब्याज लगाने और यहां तक कि उससे रिकवरी के लिए कार्यवाही शुरू करने तक के प्रावधान है। आइए सब कुछ सबसे सरलता से समझते हैं:

(i) यदि स्रोत पर कर नहीं काटा जाता है:

एक डीडीओ को कर्मचारियों की अनुमानित कर देयता के अनुसार औसत आधार पर 'स्रोत पर कर कटौती' करनी होती है। वह कर की सही राशि काटने के लिए जिम्मेदार है और यदि वह कर की कटौती करने में विफल रहता है या यह पाया जाता है कि उसके स्तर पर कर की कम कटौती हुई है, तो उसकी जिम्मेदारी फिक्स करते हुए कम काटी गई राशि की ब्याज के साथ वसूली करने के और दंड देने के प्रावधान है।

(ii) टीडीएस की कटौती और आयकर अधिनियम की धारा 201 (1ए) में देरी:

धारा 201(1ए) में कहा गया है कि कोई भी व्यक्ति जो टीडीएस काटने के लिए उत्तरदायी है, अगर वह कटौती और/या स्रोत पर कर कटौती के भुगतान में चूक करता है; व्यक्ति को 'डिफ़ॉल्टर' के रूप में माना जाएगा।

यदि 'स्रोत पर कर कटौती (टीडीएस)' में देरी होती है, तो नियोक्ता को उस महीने से, जिसमें टीडीएस कटौती योग्य था, उस अवधि के लिए प्रति माह 1% साधारण ब्याज लगाया जाता है। महीने के किसी भी हिस्से के मामले में, महीने के हिस्से को पूरा महीना माना जाता है। उदाहरण के लिए, यदि टीडीएस की कटौती में 1 माह और 1 दिन की देरी है, तो इसे 2 महीने के रूप में लिया जाएगा और 'कर के रूप में कटौती नहीं की गई राशि' पर 2 महीने के लिए 1% प्रति माह की दर से साधारण ब्याज होगा।

टीडीएस कटौती में देरी का उदाहरण:

मान लीजिए कि वेतन का भुगतान 30 अप्रैल को 1,20,000 रुपये किया जाता है और स्रोत पर कोई कर नहीं काटा जाता है। नियोक्ता ने 10 जून को इस भुगतान का टीडीएस काट लिया; 1 महीने और 10 दिन की देरी हो गई है। चूंकि टीडीएस 30% यानी 120000 x 30% = 36000 की दर से काटा जाना था; इस देरी के लिए ब्याज लगाया जाएगा = 36000 x 2 x 1% = रु. 720.

यदि वेतन का भुगतान 30 अप्रैल को किया जाता है और उसके बाद 1 मई को कर काटा जाता है, तो कटौतीकर्ता को टीडीएस की कटौती में देरी के लिए 1 महीने के ब्याज का भुगतान करने के लिए उत्तरदायी होगा।

(iii) टीडीएस और आयकर अधिनियम की धारा 201 (1ए) के भुगतान में देरी:

मान लो, स्रोत पर कर की कटौती की जाती है, लेकिन काटे गए कर का भुगतान आयकर विभाग को नियत तारीख तक नहीं किया जाता है, यानी नियत तारीख - (भुगतान के इलेक्ट्रॉनिक हस्तांतरण के लिए महीने का अंतिम दिन और चालान के माध्यम से भुगतान के लिए अगले महीने की 7 तारीख)। ऐसे केस में 1.5% प्रति माह दर से साधारण ब्याज 'उस महीने से जिसमें टीडीएस काटा गया था से कर के भुगतान की तारीख तक' की अवधि के लिए लगाया जाएगा।

(डी) टीडीएस के भुगतान में देरी का उदाहरण:

उपरोक्त उदाहरण में, टीडीएस 30 अप्रैल के बजाय 10 जून को देरी से काटा गया था। टीडीएस का भुगतान 7 मई तक किया जाना था जबकि इसका भुगतान 30 जून को किया जाता है, इसलिए 'जिस महीने में इसे काटा जाना चाहिए' से 'जिस महीने टीडीएस का भुगतान किया जाता है' के महीनों के लिए ब्याज लगाया जाएगा। यानी 2 महीने

ब्याज = ३६००० x २ x १.५% = रु. 960.

(iv) आयकर अधिनियम की धारा २७१सी और २७६बी के तहत दंड और कारावास:

मान लो, कटौतीकर्ता जिसे आयकर विभाग द्वारा निर्धारित निर्धारित समय के भीतर कर कटौती और भुगतान करना था; धारा 194बी के दूसरे प्रावधान के तहत टीडीएस को पूरी तरह से या उसके हिस्से में कटौती और भुगतान करने में विफल रहा, तो व्यक्ति धारा 271 सी के तहत 'जुर्माना' के रूप में कटौती या भुगतान नहीं किए गए कर की राशि के बराबर राशि का भुगतान करने के लिए उत्तरदायी होगा। इसके अलावा, यदि कटौतीकर्ता निर्धारित समय के भीतर केंद्र सरकार के क्रेडिट में कटौती किए गए टीडीएस का भुगतान करने में विफल रहता है, तो उसे जुर्माने के साथ 3 महीने से 7 साल की अवधि के लिए कठोर कारावास की सजा हो सकती है।

(v) कर्मचारी या अन्य व्यक्तियों को टीडीएस का प्रमाण पत्र प्रस्तुत न करना:

फॉर्म 16 या फॉर्म 16ए की प्रस्तुति:

कटौतीकर्ता को एक प्रमाण पत्र यानि फॉर्म 16 या 16ए उन व्यक्तियों को प्रस्तुत करने के लिए जिम्मेदारी दी गई है जिनकी आय पर कटौतीकर्ता द्वारा टीडीएस काटा गया है। कर्मचारियों को फॉर्म 16 जारी किया जाता है और कर्मचारियों के अलावा अन्य व्यक्तियों के भुगतान के मामले में फॉर्म 16 ए जारी किया जाता है। फॉर्म 16 या फॉर्म 16ए प्रस्तुत करने की तिथि निर्धारण वर्ष की 15 जून है।

यहां, विचार करने वाली बात यह है, "कटौतीकर्ताओं को TRACES की वेबसाइट यानी https://tdscpc.gov.in से फॉर्म 16 या फॉर्म 16A को जनरेट करने और डाउनलोड करने के लिए कहा गया है, और विवरण की पुष्टि करने के बाद, इसे करदाताओं को जारी किया जाता है ”।

फॉर्म 16 का पार्ट ए और पार्ट बी:

फॉर्म 16 या फॉर्म 16A में आमतौर पर दो भाग होते हैं भाग A और भाग B। भाग A में एक यूनिक TDS प्रमाणपत्र संख्या, करदाता का PAN, कटौतीकर्ता का TAN, आयकर विभाग को TDS जमा करने वाला BIN और बैंको से भुगतान के मामले में CIN होता है। पहले, भाग बी को कटौतीकर्ताओं द्वारा मैन्युअल रूप से तैयार किया जाना था, लेकिन अब, इसे भी जनरेट और डाउनलोड करना आवश्यक है।

फॉर्म 16 को जनरेट करने और डाउनलोड करने में विफलता के लिए जुर्माना:

आयकर अधिनियम की धारा 203 के तहत, कटौतीकर्ताओं को करदाताओं को टीडीएस का प्रमाण पत्र जारी करना होता है और यदि वे जारी करने में विफल रहते है, तो रु. 100/- प्रत्येक दिन के अनुसार उतनी समय के लिए जुर्माना देना होता है जिसके दौरान विफलता जारी रहती है; धारा 272A(2)(g) के तहत 'जुर्माना' के रूप में भुगतान करने के लिए उत्तरदायी होता है।

(vi) टीडीएस की त्रैमासिक रिटर्न दाखिल करने में देरी के लिए जुर्माना:
त्रैमासिक रिटर्न दाखिल करने की नियत तिथियां:

कटौतीकर्ता ३१ जुलाई, ३१ अक्टूबर, ३१ जनवरी तक कटौतीकर्ता के रूप में पंजीकरण करने के बाद, एनएसडीएल के टीआईएन सुविधा केंद्रों (फॉर्म २७ए में) के लिए २४क्यू और २६क्यू के रूप में त्राह मासिक टीडीएस रिटर्न के लिए जिम्मेदार हैं।

नियत तारीखों तक तिमाही रिटर्न दाखिल न करने पर जुर्माना:

यदि त्रैमासिक रिटर्न निर्धारित समय सीमा के भीतर दाखिल नहीं किया जाता है, तो कटौतीकर्ता हर दिन के लिए 200 राशि के बराबर शुल्क का भुगतान करने के लिए उत्तरदायी होता है, जिसके दौरान विफलता जारी रहती है, लेट फीस कर की अधिकतम राशि उस राशि के बराबर होती है जितनी स्रोत पर कटौती योग्य थी।

इस तरह के रिटर्न को प्रस्तुत करने से पहले इस तरह के शुल्क का भुगतान करना अनिवार्य है।

त्रैमासिक रिटर्न प्रस्तुत करने में विफलता या गलत जानकारी प्रस्तुत करने में विफलता के लिए दंड:

24Q और 26Q प्रस्तुत करने में विफलता के मामले में और गलत जानकारी प्रस्तुत करने में, व्यक्ति 'जुर्माना' के रूप में भुगतान करने के लिए उत्तरदायी होगा, एक राशि जो 10000 रुपये से कम नहीं होगी। (दस हजार) लेकिन ये रु. 100000 तक बढ़ाई जा सकती है। हां, जुर्माना माफ किया जा सकता है यदि व्यक्ति यह साबित करता है कि उसने टीडीएस का भुगतान करने के लिए शुल्क और ब्याज के साथ भुगतान करने के बाद विवरण देने के लिए निर्धारित समय से एक वर्ष की समाप्ति से पहले इस तरह के विवरण दिए थे।

डीडीओ के टिप्स पर आयकर अधिनियम की कौन सी धाराएँ होनी चाहिए?

ए। धारा 40 (ए) (आईए) -

बी। धारा 201 (1) -

आम तौर पर इस धारा के तहत मांग उठाई जाती है जब भी किसी डीडीओ को टीडीएस की कटौती न करने या केंद्र सरकार के क्रेडिट में टीडीएस जमा करने में विफलता के कारण डिफ़ॉल्ट रूप से निर्धारिती के रूप में माना जाता है।

सी। धारा 201 (1ए) -

आम तौर पर टीडीएस की राशि नहीं काटे जाने या टीडीएस की राशि जमा करने में विफल रहने पर साधारण ब्याज लगाया जाता है। इस तरह का ब्याज उस तारीख से लिया जाता है जिस तारीख को उस निवासी द्वारा आय की विवरणी प्रस्तुत करने की तारीख तक कर कटौती की गई थी।

डी। धारा 271C -

आम तौर पर इस धारा के तहत कटौतीकर्ता पर जुर्माना लगाया जाता है जब वह टीडीएस काटने में विफल रहता है या केंद्र सरकार के क्रेडिट में टीडीएस का भुगतान करने में विफल रहता है।

इ। धारा 221 -

जुर्माना तब लगाया जाता है जब एक निर्धारिती आयकर विभाग द्वारा की गई मांग का भुगतान करने में चूक करता है। हालांकि यह जुर्माना सुनवाई का मौका देने के बाद लगाया जाता है।

एफ। धारा 276बी -

कठोर कारावास से दंडित किया जा सकता है जिसकी अवधि 3 महीने से कम नहीं होगी लेकिन जिसे 7 वर्ष तक बढ़ाया जा सकता है और जुर्माना हो सकता है। यह विशेष रूप से उन व्यक्तियों के लिए है जो देय कर का भुगतान करने में विफल रहे या टीडीएस काटा गया; केंद्र सरकार के क्रेडिट के लिए।

जी। धारा 271खख -

रुपये का जुर्माना। 10 हजार, टैन के लिए आवेदन करने में विफलता के लिए या चालान या प्रमाण पत्र या बयान या अन्य दस्तावेजों में टैन का उल्लेख न करने पर जहां भी इसे आयकर अधिनियम के प्रावधानों के अनुसार उद्धृत किया जाना चाहिए।

एच। धारा 272 ए (2) (के) -

रुपये का जुर्माना। प्रति दिन 100, टीडीएस रिटर्न दाखिल न करने के लिए, हालांकि, यदि टीडीएस के तिमाही विवरण दाखिल करने में देरी का उचित कारण है, तो यह जुर्माना नहीं लगाया जाता है।

मैं। धारा 234ई -

फीस या रुपये का जुर्माना। 200 प्रति दिन, टीडीएस रिटर्न दाखिल करने में विफलता के दिनों के लिए। यह डीडीओ पर तब तक लगाया जाता है जब तक कि डीडीओ द्वारा कटौती की गई अधिकतम टीडीएस राशि के अधीन डिफ़ॉल्ट जारी रहता है।

जे। धारा 271एच -

यह देर से दाखिल करने या टीडीएस विवरण दाखिल न करने के लिए दंड से संबंधित है; न्यूनतम रु. 10 हजार और रुपये तक बढ़ाया जा सकता है। 1 लाख।

हालांकि, यदि टीडीएस रिटर्न इस तरह के विवरण देने के लिए निर्धारित समय से एक वर्ष की समाप्ति से पहले दाखिल किया जाता है; तब शुल्क या जुर्माना लगाया जाता है, लेकिन जुर्माना नहीं लगाया जाता है।

अस्वीकरण:

उपरोक्त सामग्री आयकर अधिनियम की प्रासंगिक धाराओं के अध्ययन के बाद उचित देखभाल के साथ लिखी गई है, हालांकि, पाठकों को आयकर विभाग की अधिसूचनाओं का ध्यान रखना चाहिए और निर्धारित समय सीमा के भीतर मामलों के निपटारे के लिए अधिकारियों से परामर्श लेना चाहिए। परिणाम कठोर कारावास का कारण बन सकते हैं और कटौतीकर्ताओं को नियमों के अनुपालन का उचित ध्यान रखना चाहिए।

Disclaimer:

The above content is written with due care after the study of relevant sections of Income Tax Act, however, the readers should take due care of the notifications of Income Tax Department and should consult the authorities for the settlement of cases within due prescribed time limits. The consequences can lead to rigorous imprisonment and the deductors should take proper care of compliance with the rules.

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11 Must-claim Exemptions and Deductions

Must-claim Exemptions and Deductions under Income Tax

Exemptions and Deductions

The taxpayers compute their income and apply the tax slabs to arrive the tax liability. The tax liable to be paid is required to be deposited through challan and a return is required to be filed to avoid the penalty. The individuals, HUFs, companies are free to plan as per the provisions of income tax to claim the deductions and exemptions. Each taxpayer love to find out the exemptions to reduce the tax liability. The following exemptions should be claimed whenever possible:

(i) Standard Deductions:

· Standard Deduction from Rent Received:

u/s 24 of Income Tax Act @30% is allowed for Income from Rent (Net Annual Value i.e. Gross Annual Value – Municipal Taxes).

It is worth to mention here that this deduction is also available for the taxpayers who opted for the New Tax Regime.

· Standard Deduction from Salary:

For FY 2018-19, it was Rs. 40000 and From FY 2019-20 it becomes Rs. 50000, to be deducted from Income from Salaries. As it is standard deduction, the employee is not required to submit any bill/proofs to the employer for claiming this deduction.

However, in case, an individual opt for New Tax Regime, then this deduction will not be available.

(ii) Exemption for Rent Paid:

In case, an individual resides in a residential accommodation, if he is salaried employee then he may be receiving House Rent Allowance and in case he is either salaried or self-employed person, he may not be receiving the House Rent Allowance. In both cases, he would love to claim exemption or deduction.

However, if the New Tax Regime has been opted by a taxpayer, then he cannot claim exemption on HRA and whole amount of HRA received will be fully taxable in the hands of the recipient.

· In case House Rent Allowance is received:

HRA is exempt to the extent, at least of the following:

(a) HRA Received

(b) Rent Paid – 10% of Salary,

Here Salary = BP +GP + DA.

In case, an employee not submitted rent receipt to the Drawing and Disbursing Officer or Employer as a proof to claim exemption in House Rent Allowance and he had paid rent, he can claim the exemption while filing the income tax return.

· In case House Rent Allowance is not received:

Deduction is available u/s 80GG to the extent, at least of the following:

(a) 25 per cent of the total income

(b) Rs. 5,000 per month

Here total income = Gross Total Income – 80C to 80U (except 80GG)

(iii) Exemption for expenses paid on Leave Travel:

The salaried persons usually get opportunity to claim Leave Travel Concession or Leave Travel Allowance; such allowance is exemption to the extent, expenses are incurred. However, such expenses should be incurred on domestic travel i.e. within India only and mode of such travel should be railways, air travel, or public transport.

In case, a taxpayer opts for the New Tax Regime, he will not be able to claim the exemption on expenses paid on Leave Travel.

(iv) Exemption or deductions covered in various provisions of section 80C (Only for taxpayers with Old Tax Regime):

· Payment of Life Insurance Premium:

If amount is paid for annuity plan of Life Insurance Policy, that can be claimed as a deduction under section 80C. Such premiums paid for self, spouse and children can be claimed under section 80C and the premium paid for policy of father, mother, or others cannot be claimed as deduction under section 80C. Amount received on maturity of the policy will be exempt under section 10 (10D).

· Payments for contributing in Employees’ Provident Fund:

The employee and employer’s contribution to provident fund accumulate a corpus and interest is earned upon the same. Such interest earned up to 9.5% is not taxable in the hands of the employee. The interest earned above the limit of 9.5% per annum will be taxable. Further, if the employer contributes more than 12% of employee’s salary in employee’s Provident Fund Account, then the excess will be taxable in the hands of employee. The interest earned and maturity amount is exempt. From financial year 2021-22, the interest on "portion of PF contribution exceeding 2.5 Lacs in a year" will be taxable and the concerned interest provider will deduct the tax deduction at source (TDS) under section 192A and 194A.

· Repayment of Principal component of Home Loan:

In case, an individual took a home loan for the purchase or construction of residential house and the construction of the property is completed or possession of property is taken during the financial year; then the amount of repayment of principal component of the home loan can be claimed. Any payment made to the Government Development Authorities for purchase of residential house is also eligible.

· Payment of Tuition Fees up to Two Children:

The portion of payment comprises development charges, library charges, and other such charges are not counted as tuition fees. The tuition fees should be paid for children’s education to the school or college or university (Full-time courses) located in India only. Tuition fees does not include amount paid for coaching classes.

· Payment of Stamp Duty or Registration Charges for purchase or construction of residential house:

After completing the construction of house property or taking possession of the same, the charges can be claimed as deduction under section 80C.

· Payments or Investments in Pension Plans

The financial institutions, insurance companies and banks offer various types of pension or annuity plans offering monthly pension after the date of retirement or age of 60; are eligible under this section. The monthly pension received after the maturity of the pension or annuity plan, is taxable in the hands of recipient. In case, the plan is surrendered before maturity and amount is received, that will be taxable including interest or bonus received upon it.

· Payment or contribution to Government Pension Scheme

The salaried people or employees can contribute up to 10% of their salary in notified government pension account (i.e. National Pension Scheme or Atal Pension Yojana). The self-employed taxpayers can also contribute up to 20% of their gross total income or Rs. 1,50,000 whichever is less; to claim deduction under section 80CCD(1). A person who is not salaried person can also contribute in these Government Pension Accounts to claim the deduction under this section.

· Payment or Contribution to Government Pension Scheme under section 80CCD (1B):

The salaried people or employees can also claim additional deduction of Rs. 50,000 above the overall limit of 80C (i.e. Rs. 1,50,000) for their contribution to notified pension scheme (i.e. National Pension Scheme or Atal Pension Yojana) under section 80CCD (1B). 40% amount of sum assured is given to legal heirs while 60% is returned in two instalments i.e. One after age of 60, another after age of 80.

[7/14, 10:04 PM] Lalit Kumar: National Pension System

*Deductions and Exemptions for New Tax Regime Taxpayers:*

*Read Full article*

https://drlalitsetia.blogspot.com/2019/05/11-must-claim-exemptions-and-deductions.html

*Latest news*

Sources in the government said that pension regulator, Pension Fund Regulatory and Development Authority (PFRDA) is considering coming out with a better option for National Pension System (NPS) subscribers under which they would be able to withdraw their entire money at one go if pension corpus is upto Rs 5 lakh.

At present, there is a threshold of Rs 2 lakh upto which a NPS subscriber can withdraw the entire money. Beyond this limit, currently only 60 per cent of pension corpus could be withdrawn while 40 per cent of the contributions has to be mandatorily parked in government approved annuities.

Upcoming Changes in NPS:

Sources said the plan is to increase the threshold to Rs 5 lakh that will offer better liquidity to a certain segment subscribers.

Also, at a corpus of Rs 5 lakh, the regular pension amount would be too insignificant to provide any significant income for life to the subscribers.

However, even with changed withdrawal plan, PFRDA is expected to provide the option of retaining a portion of subscribers pension money for investment in annuities or for investment by pension fund managers itself.

The changes are being thought as returns of annuities at present average around 5.5 per cent. Together with inflation and income tax on pension accumulation, the return for subscribers from annuities falls in the negative territory. Changed would give subscribers wider option to increase returns on their lifetime contributions. The regulator will issue fresh rules to soon allow those saving up to ₹5 lakh in the NPS to take the whole amount at retirement, up from ₹2 lakh at present. The pension fund regulator is also hoping to launch the first guaranteed return NPS scheme in the coming year.

Suppose somebody reaches ₹2.1 lakh at retirement, he will get an annuity component of ₹84,000 which today will fetch an income of ₹400 or ₹450 a month — a pittance. The regulator is keeping in view such cases

(v) Deduction on Payment of Medical Insurance Policy Premium:

• This deduction is available for premium paid on medical insurance for self, spouse, parents and children. For senior citizens, the deduction up to Rs. 30,000 is allowable towards the medical insurance premium and for non-senior citizens, the limit is Rs. 25000. For very senior citizens, additional deduction of Rs. 30,000 on payment of medical expenditure (as the very senior citizens may not covered in medical insurance)

(vi) Exemption on payment of interest on home loan (Only for taxpayers of Old Tax Regime):

· Section 24 of Income Tax Act:

It has provision for max. deduction for self-occupied house property up to Rs. 2 Lacs but if constructed before 1.4.1999 then max up to 30000. In case, house is not self-occupied then no limit on such deduction. If home loan for repairs, then max. deduction is Rs. 30000. The amount is considered on Accrual basis means even if the payment is made in advance or delayed, it can be considered in the year of payment becomes due.

• Further, Section 80EE (effective from FY 2016-17):

The first time home buyers are eligible for additional deduction of Rs. 50000 on payment of interest on home loan provided:

i. The sanctioned loan is less than Rs. 35 lacs

ii. The value or cost of house is up to 50 lacs

iii. The buyer should not possess any residential house is his name

èAfter claiming 80EE, the interest of loan of self-occupied house can be claimed up to Rs. 2,50,000.

(vii) Deduction on payment of interest on education loan (Only for taxpayers of Old Tax Regime):

Section 80 E of Income Tax Act:

If a taxpayer has taken an educational loan for higher education (after class 12) of himself or spouse or children or the student to whom he is the legal guardian, deduction can be claimed only for the repayment of interest component of education loan. The education should be from a school/institute/university recognized by the government.

• Higher Education of Spouse or Children:

Also, effective April 1, 2008, the said deduction is also available where the loan is taken for the purpose of higher education of spouse or children of the individual or the student for whom the individual is a legal guardian. The deduction on interest is allowed for maximum eight years, or till the interest is fully paid.

(viii) Deduction on donations (Only for Taxpayers of Old Tax Regime):

· Section 80G of Income Tax Act:

If a taxpayer makes a donation for charity, social purpose or makes a contribution towards National Relief Fund, then this deduction can be claimed as a deduction. Exempt charities or Donations to specified funds or charitable institutions – 50 or 100% depending on the charity and as per approval. Also, donations must be made to registered institutions only. If donations are made through cash, up to Rs. 10000 would be allowed and for claiming deductions above Rs. 10000 the taxpayer would have to make a donation through cheque.

· Section 80GGC of Income Tax Act:

There is 100% exemption on donation to political party or an electoral trust formed to oversee the election process. Deduction is available u/s 80GGC. Such donation should not be in cash mode.

(ix) Exemption or Deduction for Interest of Saving Accounts (Only for the Taxpayers of Old Tax Regime):

· Deduction under section 80TTA:

The individuals and HUFs Deduction may claim deduction up to Rs. 10000 amount of interest earned as interest on saving accounts with banks / post office / financial institutions. Firstly such income is included in ‘Income from other sources’.

· Tax Deduction at Source by Banks or Financial Institutions:

In case interest of saving bank accounts become more than Rs. 40000, the banks will be bound to deduct TDS on interest except for the taxpayers who filed Form 15G / 15H. This limit was Rs. 10000 before FY 2019-20.

(x) Deduction for disability of taxpayer (Only for taxpayers of Old Tax Regime):

• Section 80 U of Income Tax Act:

An individual who is certified by the prescribed medical authority to be a person with disability shall be allowed a deduction up to Rs. 75,000/- (for disability up to 40%). While if an individual, who is certified as a person with severe disability, shall be allowed a deduction of Rs 125,000.

• Disability Forms:

The disability may be in Blindness, Low vision, Leprosy-cured, Hearing impairment, Locomotor disability, Mental retardation, Mental illness etc.

(xi) Treatment of Diseases (Only for the taxpayers of Old Tax Regime):

• 80DD of Income Tax:

It is related to Medical Treatment of Disabled Dependents (spouse, parents, children or siblings) (Rs. 75000 for disability over 40% and Rs. 1.25 Lac for disability over 80%).

• 80DDB of Income Tax:

It is related to Treatment of Specified Diseases for self or dependents. Amount is Rs. 40000 however in case of Senior Citizen (Age>60), it is Rs. 60000, for Super Senior Citizens (Age>80), it is Rs. 80000. (Furnishing of certificate in Form 10-1 is mandatory).

Apart from it, in case of individuals doing business can claim the expenses incurred in operating business from the income of business or profession. For such purposes, if turnover becomes more than Rs. 10 lac, it is mandatory to have an audit from the chartered accountant.

Deductions and Exemptions for New Tax Regime Taxpayers:

The Budget 2020 introduced a new section 115BAC for new set of lower tax rates if an individual decides to leave various deductions and exemptions. The new tax rates will be 5% from Rs. 2.5 Lacs to 5 Lacs, 10% from Rs. 5 Lacs to 7.5 Lacs, 15% from Rs. 7.5 Lacs to 10 Lacs, 20% from Rs. 10 Lacs to 12.5 Lacs, 25% from Rs. 12.5 Lacs to 15 Lacs, and 30% for the amount above Rs. 15 Lacs.

The individuals who decided to opt New Tax Slab Rates under section 115BAC, cannot claim the standard deduction on salaries, exemption on Leave Travel Allowance (LTA) for the expenses incurred during leave travel, exemption on House Rent Allowance (HRA) for amount of rent paid, exemption on Minor child income allowance, exemption on Helper allowance, exemption on Children education allowance, exemptions available under section 10 (14) for other special allowances, exemption on part of interest paid on housing loan on the self-occupied property or vacant property, and also the deduction under section 80C to 80U i.e. deductions of Chapter VI-A except Section 80CCD(2) and 80JJAA, exemption or deduction on allowances and perquisities, deduction on Family Pension Income.

However, the taxpayers of New Tax Regime will be entitled for Deduction u/s 80CCD (1B) which is up to Rs. 50,000 for the contribution in Tier I Account of NPS. Further, the exemption on received TA, DA, and Conveyance Allowance will also be available. The exemption for Transport Allowance for specially-abled person will also be available.

In case of 80CCD (2), most of the salaried taxpayers be confused because it is also available for taxpayers of New Tax Regime. This deduction is available only if the amount of “employer’s contribution in NPS” is also included in the salaried income and in such cases only, the section 80CCD (2) allows deduction of an amount up to 10% of the salary (BP+GP+DA) can be deducted from the salaries income.

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