GST Guide – Things you must know

 

What is GST?

GST is an indirect tax reform which seeks to replace all the indirect taxes levied at centre and state levels. GST would replace Excise duty, Customs duty, Service tax, VAT, Sales tax etc. It is a destination based tax on consumption of goods and services. Only value addition will be taxed and burden of tax is to be borne by the final consumer. GST rolled out with effect from 01st July 2017.

Components of GST

  1. CGST – Central GST – IGST is levy of tax on every intra-state supply of goods or services or both by Central Government.
  2. UTGST – UT GST – UTGST is levy of tax on every intra-state supply of goods or services or both by Union territories.
  3. IGST – Integrated GST – IGST is levy of tax on every inter-state supply of goods or services or both by Central Government.

Liability to register for GST

Tax payers supplying goods/services from states of Arunachal Pradesh, Assam, Jammu and Kashmir, Manipur, Meghalaya, Mizoram, Nagaland, Sikkim, Tripura, Himachal Pradesh and Uttarakhand with an aggregate turnover in a financial year exceeding Rs.10 lakhs are liable to register for GST.

Tax payers supplying goods/services from rest of India with an aggregate turnover in a financial year exceeding Rs.20 lakhs are liable to register for GST.

Aggregate Turnover

Includes all taxable supplies, exempt supplies, export supplies, inter-state supplies of person having same PAN and excludes central/state/UT taxes and integrated tax and cess, if any, charged under CGST, UTGST and the IGST.

Composition Levy

A registered taxable person whose aggregate turnover in preceding financial year did not exceed Rs. 75 lakhs (Rs. 50 lakhs in the case of states like Arunachal Pradesh, Assam, Manipur, Meghalaya, Mizoram, Nagaland, Sikkim, Tripura, Himachal Pradesh) can pay tax at the following lower rates on quarterly basis before 18th of the month succeeding the quarter during which the supplies were made:

 

S. No. Category of Registered person Rate of Tax
1 In case of a manufacturers, other than manufacturers of such goods as may be notified by the Government (Ice cream, Pan Masala, Tobacco products etc.) 2% ( 1% Central tax plus 1% State tax) of the turnover
2 In case of supply of goods, being food or any other article for human consumption or any drink (other than alcoholic liquor for human consumption), where such supply or service is for cash, deferred payment or other valuable consideration (services mentioned in Schedule II, Para 6, clause b) 5% ( 2.5% Central tax plus 2.5% SGST) of the turnover
3 Traders or any other supplier eligible for composition levy 1% ( 0.5% Central tax plus 0.5% State tax) of the turnover

Composition levy will not be allowed if the taxable person:

  • is engaged in supply of services except mentioned in Schedule II, Para 6, clause b (restaurant services)
  • makes any inter-State outward supplies of goods
  • makes any supply of goods which are not leviable to tax under GST
  • makes any supply of goods through an electronic commerce operator
  • is a manufacturer of goods notified by the GST council
  • a casual taxable person or non-resident taxable person
  • suppliers whose aggregate turnover in the preceding financial year crossed Rs. 75 lakhs
  • supplier who has purchased any goods or services from unregistered supplier unless he has paid GST on such goods or services on reverse charge basis;

Composition dealer shall not

  • Collect any tax from the recipient on supplies made by him
  • Be entitled for Input Tax credit.
  • Issue Tax Invoices

Other Features of Composition levy

  1. There is no need to file fresh intimation every year.
  2. The option to pay tax under composition levy is required to be given electronically in FORM GST CMP-02, prior to the commencement of the relevant financial year.
  3. A person making application for fresh registration under GST may opt for composition levy at the time of making application for registration in Part B of FORM GST REG-01.
  4. The option to pay tax under composition scheme will have to be exercised for all States, if registered in multiple states.
  5. A person paying tax under composition levy, may withdraw voluntarily from the scheme by filing a duly signed or verified application in FORM GST CMP-04.

Forms for Composition Dealer

  • Intimation to pay tax u/s 10 (composition levy) for persons registered under GST – GST-CMP-02
  • Intimation/Application for withdrawal from composition levy  – GST-CMP-04

Registration

  1. Registration under GST should be taken within 30 days from the date on which a person/entity becomes liable to register.
  2. Casual and NRI taxable persons should apply for registration at least 5 days before commencement of business.
  3. Registration is required in each State/UT from where taxable supplies are made.
  4. A single registration is required in each State/UT.
  5. A person having multiple business verticals in a State/UT may be granted separate registrations subject to prescribed conditions.
  6. A person may apply for Voluntary Registration and all the provisions shall apply to him.
  7. PAN mandatory for obtaining registration except for non- residents.
  8. Registration can also be cancelled.

Persons not required to Register

  1. A person engaged exclusively in business of supplying goods/services which are non-taxable or exempt under CGST or IGST act
  2. An agriculturist

Mandatory Registration

Mandatory registration is required in following cases irrespective of the turnover

  1. Persons making Inter-state taxable supplies
  2. Casual taxable person making taxable supplies
  3. Persons required to pay tax under Reverse charge
  4. E-commerce operator supplying specified services on Intra-state basis and who are required to pay tax u/s 9(5) on those specified services
  5. NRI taxable person making taxable supplies
  6. Persons deducting GST related TDS u/s 51
  7. Agents or other persons supplying taxable goods/services on behalf of others
  8. Input service distributor
  9. Persons supplying goods/services etc. (except specified services u/s 9(5)) through e-commerce operator collecting tax (TCS) u/s 52
  10. Every e-commerce operator
  11. Every person supplying online info and database access or retrieval services from abroad to an unregistered person in India
  12. Any other notified person

Forms for Registration

  • Application for Registration under GST – GST-REG-01
  • Registration Certificate issued – GST-REG-06
  • Application for Amendment in Particulars– GST-REG-14
  • Order of Amendment of existing registration – GST-REG-15
  • Application for Cancellation of Registration – GST-REG-16
  • Order for Cancellation of Registration – GST-REG-19
  • Application for Enrolment of existing Taxpayer – GST-REG-26
  • Provisional Registration Certificate to existing taxpayer – GST-REG-25

Returns

 

Category of Taxable person Frequency of Return Manual/Electronic Time period Return Form Info to be furnished in the Return
Registered Taxable Person Monthly Electronic on or before 20th of the following month GSTR – 3 return on the basis of finalization of details of outward supplies and inward supplies along with the payment of amount of tax
Composition dealer Quarterly Electronic on or before 18th of the end of the quarter GSTR – 4 inward supplies, tax payable, tax paid etc.
Registered taxable person who is a TDS deductor Monthly Electronic on or before 10th of the following month GSTR – 7
Registered taxable person who is an Input Service Provider Monthly Electronic on or before 13th of the following month GSTR – 6
Registered non-resident  person Monthly Electronic on or before 20th of the following month or within 7 days after the last day of the validity period of registration whichever is earlier GSTR – 5
E-commerce Monthly Electronic on or before 10th of the following month GSTR – 8 Details of supplies effected through e-commerce operator and the amount of tax collected on supplies
Govt. Departments and UN bodies Monthly Electronic on or before 28th of the following month GSTR -11 Details of inward supplies to be furnished by a person having UIN


Annual Return

Every Registered taxable person needs to File Annual Return for each financial year, electronically, on or before 31st Dec of the following year.

Forms for Annual Return

  • Form GSTR – 9 for registered taxable person
  • Form GSTR – 9A for composition dealer
  • Form GSTR – 9B for Electronic commerce operator
  • Form GSTR – 9C (Reconciliation statement along with audited annual accounts- if aggregate turnover exceeds Rs. 2 crores).

The following are not required to file Annual return

  1. Input Service Distributor
  2. TDS Deductor
  3. Casual taxable person
  4. Non-resident
  5. E-commerce operator
  6. Govt. Departments and UN bodies

Final Return

Every Registered taxable person whose registration has been cancelled and who is required to file a return as normal registered taxable person shall file the GST return within 3 months from cancellation in Form GSTR – 10

Mode of filing returns

A Registered taxable person can file returns through:

  • Common portal online
  • Offline Utility – after downloading auto populated details and uploading on Common portal
  • Tax Return Preparers (TRP)
  • GST Service Providers (GSP)

Late fee for delayed returns

A Registered taxable person who fails to furnish details of outward/inward supplies or returns by the due date shall be liable to pay late fee of one hundred rupees for every day during which such failure continues subject to a maximum of five thousand rupees.

Penalty for non registration

A taxable person who is liable to be registered under this Act but fails to obtain registration shall be liable to pay a penalty of Rs 10,000 or an amount equivalent to the tax evaded, whichever is higher.

Payment of Tax

  • Deposit made towards tax, interest, penalty, fee etc. through internet banking, credit/debit cards, NEFT, RTG etc. shall be credited to electronic cash ledger.
  • The amount available in electronic cash ledger may be used for making any payment towards tax, interest, penalty, fees etc.
  • The input tax credit as self-assessed in the return of a taxable person shall be credited to his electronic credit ledger which may be used for payment of output tax.
  • The balance in the cash or credit ledger after payment of tax, interest, penalty, fee etc. may be refunded

Accounts and Records

Every registered taxable person shall keep and maintain at his principal place of business as mentioned in the certificate of registration, a true and correct account of the following -

  1. production or manufacture of goods
  2. inward and outward supply of goods or services or both
  3. stock of goods
  4. input tax credit availed
  5. output tax payable and paid
  6. any other prescribed particulars

Audit

There are three types of audits prescribed:

1. Audit by CA or CMA, if turnover exceeds Rs. 2 crores.

2. Audit by Department – The Commissioner or any officer of CGST or SGST or UTGST authorized by him, may conduct audit of any registered person.

3. Special Audit - If at any stage of scrutiny, inquiry, investigations or any other proceedings, if department is of the opinion that the value has not been correctly declared or credit availed is not with in the normal limits, department may order special audit by chartered accountant or cost accountant, nominated by department.

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Top 12 Things to Know Before eFiling Your Salary Income Tax Return

1.      What is Form 16?

Form 16 is a certificate of Salary Income Earned and Tax Deducted on Salary Income. It is provided by employer to employee. It generally contains all the details that an employee needs to file his tax return.

 

2.      What is TDS and Form 26AS?

TDS stands for Tax Deducted at Source. When you earn Salary Income, your employer has a legal obligation to deduct tax from your income and submit the tax deducted to Government treasury. TDS is to be deducted for salary that is taxable i.e, it exceeds the minimum amount not chargeable to tax.

FORM 26AS is the annual statement in which the details of tax credit for each taxpayer by the Income Tax Department. Generally taxpayer can claim credit for taxes reflected in his Form26AS.

3.      I only have Salary Income. Do I have to file Tax Return?

If your Gross Total Income before allowing any deductions exceeds the minimum amount not chargeable to tax then you have to file your Tax Return.

The minimum amount not chargeable to tax is as follows (for both men and women)

Below 60 Years                                                 Rs. 2,50,000/-

Above 60 but below 80 Years                         Rs. 3,00,000/-

Above 80 Years                                                 Rs. 5,00,000/-

Also, if want to claim an Income Tax Refund then you are required to file income tax return.

4.      I only have Salary Income. Which ITR Form to use?

If you only have Salary Income and your Income does not exceed Rs. 50 Lakhs then you can use Form ITR1 also called SAHAJ

However if your salary income exceeds Rs. 50 Lakhs, you will need to file Form ITR-2. ITR-2 is a more detailed Tax Return form and you will also need to disclose your Assets and Liabilities in Schedule AL of this Income Tax Return Form (ITR-2).

5.      Tax Slab for Salaried Individuals

Tax Slab applicable to Individual below 60 years of age (Both men and women)

Income Range                                                Tax Slab

Upto Rs. 2,50,000/-                                           : Nil

Rs. 2,50,000/- to Rs. 5,00,000/-                        : 10%

Rs. 5,00,000/- to Rs. 10,00,000/-                      : 20%

Above Rs. 10,00,000/-                                      : 30%

  • Surcharge: 10% of income tax, where total income is between Rs. 50 Lakhs and Rs.1 crore,  15% of income tax, where total income exceeds Rs. 1 crore.
  • Cess : 3% on total of income tax + surcharge.

Tax Slab applicable to Individual above 60 years of age but below 80 years  (Both men and women)

Income Range                                              Tax Slab

Upto Rs. 3,00,000/-                                         : Nil

Rs. 3,00,000/- to Rs. 5,00,000/-                       : 10%

Rs. 5,00,000/- to Rs. 10,00,000/-                     : 20%

Above Rs. 10,00,000/-                                     : 30%

  • Surcharge: 10% of income tax, where total income is between Rs. 50 Lakhs and Rs.1 crore,  15% of income tax, where total income exceeds Rs. 1 crore.
  • Cess : 3% on total of income tax + surcharge.

Tax Slab applicable to Individual above 80 years of age  (Both men and women)

Income Range                                              Tax Slab

Upto Rs. 5,00,000/-                                          : Nil

Rs. 5,00,000/- to Rs. 10,00,000/-                   : 20%

Above Rs. 10,00,000/-                                    : 30%

  • Surcharge: 10% of income tax, where total income is between Rs. 50 Lakhs and Rs.1 crore,  15% of income tax, where total income exceeds Rs. 1 crore.
  • Cess : 3% on total of income tax + surcharge.

6.      Most Common Salary Allowances

6.1 Conveyance Allowance

Conveyance allowance, also called Transport Allowance is offered to employees to compensate for their travel from residence to workplace location.

Exemption Limit: The exemption limit for conveyance allowance is Rs. 1,600/- per month (Rs. 19,200 p.a.).

The exemption limit for blind and orthopedically handicapped is Rs. 3,200/- per month.

6.2 House Rent Allowance (HRA)

Salaried individuals who live in a rented house can claim House Rent Allowance. This can be partially or completely exempt from taxes. If you don’t live in a rented accommodation, this allowance is fully taxable.

Exemption Limit: The deduction available is the minimum of the following amounts:

  • Actual HRA received
  • 50% of [Basic salary + DA] for those living in metro cities (40% for non-metros)
  • Actual rent paid less 10% of salary

Example: X has received following amount during the previous year.

  1. Basic Salary – Rs. 20,000/- per month
  2. ­­Dearness Allowance (D.A) – Rs. 2,000/- per month
  3. House Rent Allowance (H.R.A.) – Rs. 11,000/- per month
  4. Actual Rent Paid – Rs. 10,000/- per month
  5. Lives in Non Metro City

Calculation of Exempt HRA Allowance: The minimum of the following amount shall be exempt

  • Actual HRA received
    • =  11,000*12 =  132,000/-
  • Rent Paid in excess of 10% of salary
    •  (10,000*12)-[(20,000+2,000)*12*10%] = 120,000-(22,000*12*10%)= 120,000-26,400= 93,600/-
  • 40% of Salary
    • (20000+2000)*12*40% = 105,600/- 
  • Exempt HRA = least of the three above = Rs. 93,600/-
  • Taxable HRA = 132,000-93,600= Rs. 38,400/-

If you are making payments towards rent for any furnished or unfurnished  accommodation occupied by you for your own residence, but do not receive HRA from your employer, you can claim deduction under Section 80GG. This is discussed separately later in the article.

6.3 Children Education Allowance & Hostel Expenditure Allowance

These are further two allowances commonly claimed by salaried employees.

Exemption Limit: For Salaried Individuals

  • Children Education Allowance: Rs 100 per month per child up to a maximum of 2 children.
  • Hostel Expenditure Allowance: Rs.300 per month per child up to a maximum of 2 children.

 

6.4 Leave Travel Allowance

LTA is the remuneration paid by an employer for Employee’s travel in the country, when he is on leave with the family or alone. Exemption is allowed only in respect of two journeys performed in a block of four calendar years. The current block runs from 2014-2017

Exemption is allowed only for actual expenses For example, where an employer provides LTA of Rs. 25,000, but an employee spends only Rs. 20,000 on the travel cost, then the exemption is limited to only Rs. 20,000.

It is for cost of travel and does not include any other expenses such as food, hotel stay etc.

Exemption Limit:

  • Journey performed by Air – Economy Air fair of National carrier by the shortest route or the amount spent whichever is less will be exempt
  • Journey performed by Rail – A.C. first class rail fare by shortest route.or amount spent whichever is less will be exempt.
  • Place of origin and destination place of journey connected by rail but journey performed by other mode of transport – A.C. first class rail fare by shortest route or amount spent whichever is less.
  • Place of origin & destination not connected by rail(partly/fully) but connected by other recognized Public transport system – First class or deluxe class fare by shortest route or amount spent whichever is less.
  • Place of origin & destination not connected by rail(partly/fully) and not connected by other recognized Public transport system also – AC first class rail fare by shortest route (as the journey had been performed by rail) or the amount actually spent ,whichever is less.

  
7.      Housing Loan

You can claim deduction for interest component of Housing Loan and Prinicipal Repayment component both.

  • Interest on Housing Loan is claimed under Section 24 and Section 80 EE
  • Principal on Housing Loan is claimed under Section 80 C

 

7.1 Interest Payment under Section 24:

  • For Self Occupied House

The maximum tax deduction allowed under Section 24 for a self-occupied property is Rs. 2 Lakhs

  • For Under Construction House

Sometimes, taxpayers take home loans for under construction property. Maximum deduction that can be claimed is Rs. 2 Lakhs. Some conditions need to be satisfied for this:

  • The construction of the property must be completed within 5 years
  • If the construction of property is not completed within 5 years from the end of financial year in which the loan was taken, the interest benefit in this case would be reduced from 2 Lakhs to Rs 30 Thousand only.
  • You can start claiming interest deduction in the financial year in which construction of the property is complete.
  • Pre- construction Interest
    • If Loan is taken for purpose of Repair/ Renewal/ Reconstruction: No Tax Deduction allowed for Interest paid for repairs/ renewal/ reconstruction during pre-construction stage
    • If Loan is taken for the purpose of Purchase/ Construction: The Interest that was paid before the completion of construction should be aggregated. The aggregate amount will be allowed as tax deduction in 5 equal installments for 5 successive Financial Years starting from the year in which the construction was completed.
  • For House given On Rent
    • In case the property for which the Home Loan has been taken is not self-occupied the taxpayer can take tax deduction of the interest amount upto Rs. 2,00,000/- under Section 24.
    • It is also important to note that this tax deduction of Interest on Home Loan under Section 24 is deductible on accrual basis even if amounts were actually not paid.

 

7.2 Principal Repayment under Section 80 C

  • Principal Repayments can be claimed under Section 80C. Maximum amount that can be claimed is Rs. 1,50,000/-
  • Tax Deduction will be reversed if property sold within 5 years
  • Tax Deduction can be claimed only for Principal amount actually paid in Financial Year

 

7.3 Interest Payment under Section 80 EE:

Deduction under Section 80EE available if following conditions are satisfied:

  • Value of the property purchased is less than Rs. 50 Lakhs
  • Value of loan taken is less than Rs. 35 Lakhs.
  • Loan was sanctioned between 1st April 2016 and 31st March 2017.
  • This Deduction would be available from Financial Year 2016-17 onwards.
  • No other residential property is owned by the Individual on the date of sanction of loan

Exemption Limit

  • Additional Deduction of Rs. 50,000/- allowed under section 80EE
  • This will be in addition to deduction of Rs. 2,00,000/- available under section 24
  • The benefit of this deduction would be available till the time the repayment of the loan continues.

8.      How do I Declare Interest Earned on Savings Account/Fixed Deposits Account in my salary Tax Return?

Interest earned on Savings Account/ Fixed Deposits should be declared under Income from Other Sources.

Deduction is available under section 80TTA for Interest earned on Savings Account. Maximum deduction that can be claimed under section 80TTA is Rs. 10,000/-.

9.      Deductions allowed from Taxable Income (Reduces your tax liability)

9.01 Section 80 C: Deduction for LIC, PPF, FD etc.

Some of the Investments Qualifying for deduction under section 80C are:

  • Provident Fund (PF) & Voluntary Provident Fund (VPF)
  • Public Privident Fund (PPF)
  • Life Insurance Premiums
  • Equity Linked Savings Schemes
  • Home Loan Principal Repayment
  • Stamp Duty and Registration Charges for a Home
  • Sukanya Samriddhi Account
  • National Saving certificates (NSC) (VIII Issue)
  • Infrastructure Bonds
  • 5 Yr Bank and Post Office Fixed Deposit
  • Senior Citizen Saving Scheme
  • Others

Exemption Limit: Maximum exemption that can be claimed under section 80C is Rs. 1,50,000/- . This deduction is allowed to an Individual or a HUF.

 

9.02 Section 80 CCC: Deduction for Annuity Plan

Available for investment in pension funds

Exemption Limit: The total deduction under 80 C, 80CCC & 80CCD(1) cannot exceed Rs. 1,50,000/-

9.03 Section 80 CCD (1), 80 CCD(1B), 80 CCD (2) Contribution to National Pension Scheme (NPS)

Available for investment in National Pension Scheme (NPS)

NPS Tax Benefits under Sec.80CCD (1)

  • The maximum benefit available is Rs.1.5 lakh
  • For an employee à 10% of Basic + Dearness Allowance contribution will be eligible for deduction.
  • The max benefit under 80 C, 80CCC & 80CCD(1) cannot exceed Rs. 1,50,000/-

NPS Tax Benefits under Sec.80CCD (1B)

  • Addition allowance of Rs. 50,000/- available for NPS under this section
  • This is over and above 80CCD(1) limit
  • So the total amount that can be claimed by employee for own contribution to NPS is Rs. 2,00,000/- (Rs. 1,50,000/- under 80CCD(1) and Rs. 50,000/- under section 80CCD(1B)
  • Both self-employed and employees are eligible for availing this deduction.
    • Deduction allowed is least of the following three amounts:
      • Amount contributed by an employer,
      • 10% of Basic + Dearness Allowance
      • Gross Total Income
    • This is additional deduction which will not form the part of Sec.80C limit.

NPS Tax Benefits under Sec.80CCD (2)

  • Deduction allowed is least of the following three amounts:
    • Amount contributed by an employer,
    • 10% of Basic + Dearness Allowance
    • Gross Total Income
  • This is additional deduction which will not form the part of Sec.80C limit.

9.04 Section 80 CCG: Rajiv Gandhi Equity Saving Scheme(RGESS)

The deduction available is 50 % of amount invested in such equity shares or Rs. 25,000, whichever is lower. The maximum Investment permissible for claiming deduction under RGESS is Rs. 50,000.

Conditions to be satisfied for claiming the above deduction under section 80CCG

  • The gross total income of the assessee for the relevant assessment year should be less than or equal to Rs. 12 Lakhs.
  • The assessee should be a new retail investor as per the requirement specified under the notified scheme.
  •  The investment should be in such listed equity shares or listed units of equity-oriented fund specified under the notified scheme.
  •  The minimum lock in period in respect of such investment should be three years from the date of acquisition .

9.05 Section 80 D: Medical Insurance Deduction

  • Expenses for Medical Insurance, Preventive Health Checkup and Medical Expenditure are allowed as deduction subject to limits. These are summarized in table below:
Deduction in respect of Individual and his family Parents of Individual Individual and his family Parents of Individual
(none of them is a senior citizen) (none of them is a senior citizen) (if senior citizen or very senior citizen) (if senior citizen or very senior citizen)
(a) (b) (c) (d)
  ■  Health Insurance

25,000

25,000

30,000

30,000

  ■  Contribution to CGHS

25,000

-

25,000

-
  ■  Preventive health check-up (refer Note)

5,000

5,000

5,000

5,000

  ■  Medical expenditure if no amount is paid in respect of health insurance - -

30,000

30,000

(only in case of very senior citizen) (only in case of very senior citizen)
Maximum Deduction

25,000

25,000

30,000

30,000

Note: Deduction for preventive health check-up of assessee, spouse, dependent children and parents shall not exceed in aggregate Rs 5,000.

(a) Maximum deduction, if individual or any member of his family or any of his parent is not senior or very senior citizen: Rs. 50,000 [(a) + (b)]

(b) Maximum deduction if individual or any member of his family is not senior citizen but any of his parent is a senior citizen or very senior citizen: Rs. 55,000 [(a) + (d)]

(c) Maximum deduction if individual or any member of his family and any of his parent is senior citizen or very senior citizen: Rs. 60,000 [ (c) + (d)]

9.06 Section 80 DD: Deduction for Maintenance of Disable Dependent

  • You can claim the benefit up to Rs. 75,000/- based on the expense incurred for nursing, training, medical treatment, preservation, and rehabilitation of a dependent with disability
  • In case of extreme or severe disability Rs. 1,25,000/- can be claimed as deduction
  • Dependent could be your parents, children, spouse, or siblings
  • Certificate issued by prescribed Medical Authority required to claim deduction

9.07 Section 80 DDB: Serious Illness Deduction

  • Deduction up to Rs. 40,000/- (Rs. 60,000/- for senior citizens and Rs. 80,000/- for super senior citizens) for medicinal expense can be claimed for expenses incurred for prescribed ailments (e.g. Cancer, Chronic renal failure, Parkinson infection, etc.)
  • Prescription is required from specialist for claiming the deduction
  • Amount (if any) received from medical insurance company will be reduced from total expenses to arrive at deduction amount
  • You can claim for self, spouse, guardians, children, and siblings.

9.08 Section 80E: Deduction on Loan for Higher Education

  • Deduction can be claimed for interest on loan taken for pursuing higher education
  • The loan can be for self, spouse or children or for a student for whom the taxpayer is a legal guardian.
  • The deduction is available for a maximum of 8 years or till the interest is paid, whichever is earlier.
  • There is no restriction on the amount that can be claimed.

9.09 Section 80 EE: Income Tax Benefit on Interest on Home Loan (First Time Buyers)

Deduction under Section 80EE is available if following conditions are satisfied:

  • Value of the property purchased is less than Rs. 50 Lakhs
  • Value of loan taken is less than Rs. 35 Lakhs.
  • Loan was sanctioned between 1st April 2016 and 31st March 2017.
  • This Deduction would be available from Financial Year 2016-17 onwards.
  • No other residential property is owned by the Individual on the date of sanction of loan

Exemption Limit

  • Additional Deduction of Rs. 50,000/- allowed under section 80EE
  • This will be in addition to deduction of Rs. 2,00,000/- available under section 24
  • The benefit of this deduction would be available till the time the repayment of the loan continues.

9.10 Section 80 G: Deduction for Donations to Charitable Institutions

  • The various charitable donations as specified in Sec. 80G (e.g. Prime Ministers National Relief Fund, National Defense Fund etc.) are eligible for deduction up to either 100% or 50%, with or without restrictions, as provided under the section.
  • Donations above Rs. 10,000/- should be paid in Cash, else it cannot be claimed as deduction
  • Donation needs to be monetary donation and not donation in kind
  • To be able to claim this deduction the following details have to be submitted in your Income Tax Return
    • Name of the Donee
    • PAN of the Donee
    • Address of the Donee
    • Amount contributed

9.11 Section 80 GG: Deduction for Rent Paid where no HRA received

  • This deduction is available for rent paid when HRA is not received. Taxpayer or his spouse or minor child should not own residential accommodation at the place of employment.
  • Taxpayer should not have self-occupied residential property in any other place.
  • Taxpayer must be living on rent and paying rent.
  • This deduction is usually claimed by a self-employed person but salaried employees can also claim deduction if no HRA received.

Exemption Limit:

Deduction available is the minimum of

    • Rent paid minus 10% of Total Income
    • Rs. 5,000/- per month
    • 25% of Total Income
  • Thus, a maximum of Rs 60,000/- per annum can be claimed as deduction under this section.

9.12 Section 80 GGC: Contribution to Political Parties

  • Deduction is allowed to a taxpayer for any amount contributed to any political party or an electoral trust.
  • Deduction is not allowed for cash contributions.

9.13 Section – 80 TTA: Deduction for interest on deposits in Savings Account

  • Deduction is available under section 80TTA for Interest earned on Savings Account.
  • Maximum deduction that can be claimed under section 80TTA is Rs. 10,000/- or amount of interest earned whichever is less
  • Deduction can be claimed for interest on deposits in savings account with a bank, co-operative society or post office.
  • Deduction cannot be claimed for interest on time deposits i.e, deposits repayable after expiry of fixed periods.

9.14 Section – 80 U: Deduction for person with disability

  • Deduction of Rs. 75,000/- to an individual who suffers from a physical disability (including blindness) or mental retardation.
  • In case of severe disability, deduction of Rs. 1,25,000/- can be claimed.
  • Certificate should be obtained from a prescribed medical authority (for e.g. a Government Doctor) .
  • This is a fixed deduction and not based on bills or expenses.

10.  Rebate 87 A

If your Total Income (after deductions) is less than Rs. 5,00,000/- you are entitled to a  Rebate upto Rs. 5,000/- on your Income Tax Payable. This section was introduced to provide relief to small tax payers.

Example:

If Total income is Rs. 3,60,000/- . Rebate calculation will be as under (assuming less than 60 years of age)

Tax Calculation:

0 to Rs. 2,50,000/-                              : Nil

Rs. 2,50,000 to Rs. 3,50,000            : (3,60,000 – 2,50,000)* 10% = Rs. 11,000/-

                                                           ————————————————————-

Total Tax                                                : Rs. 11,000/-

Rebate u/s 87A                                    : Rs.  5,000/-

                                                           ———————-

Net Tax                                                  : Rs.  6,000/-

Add Cess @ 3%                                  : Rs.    180/-

                                                           ———————-

Total Tax Liability                                  : Rs. 6,180/-

                                                           =============

11.  What is the deadline for Filing Income Tax return? And what happens if you do not file your return before deadline?

Due Date: The due date for filing Income Tax Return for a Salaried Employee is 31st July, 2017 for current Assessment Year (AY 2017-18). Tax Returns filed after Due Date are called Belated Returns.

Disadvantages of Filing a Belated Return

  • Losses except Loss on House Property cannot be carried forward for set off
  • Most Importantly, if you make any mistake in your Belated Tax Return, you cannot revise it if you have not filed within deadline
  • You lose out on Interest on Refund
  • 1% penalty under section 234A will be levied for missing deadline of tax filing
  • Certain Deduction under Section 80 are disallowed for Belated Returns

Penalty for Late Filing

  • From next Assessment Year (AY 2018-19) a fee of Rs. 5,000/- shall be payable, if the return is furnished after the due date but on or before December 31 of the assessment year and a fee of Rs. 10,000/- shall be payable in any other case.
  • In Current Assessment Year (AY 2017-18) a fee of Rs. 5,000/- shall be payable if tax return is filed after end of assessment year

12.  For how many years can I file my tax return? 

  • In Current Assessment Year (AY 2017-18) you can file Tax Return for two Financial Years
    • FY 2016-17
    • FY 2015-16 (Belated Return)
  • From next Assessment Year (AY 2018-19) you can only file Tax Return for One Financial Year. This is as per the latest amendment brought in by Union Budget 2017.

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For any tax query related to your tax returns you can contact us at info@onlineITreutrn.com. We offer DIY and CA Assisted packages for filing your salaried and other tax returns.

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