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Income Tax Planner For Individuals: FY 2020-21

Budget for FY 2020-21 introduces a new tax regime, which now gives us an option to choose the one that benefits us the most. This amendment somehow benefits certain income taxpayers. Use our Income Tax Planner to figure out if you are better off under the new regime or not. This excel-based Income tax planner for FY 2020-21 can be used for computing income tax on income under the head salary and other income (like- pension, gifts, interest on fixed deposit and savings bank interest. The files calculates your tax liability under both tax regime giving you a choice to choose the one beneficial for you and give a head start for planning your investments.

Highlights of Changes in FY 2020-21 in Income Tax

  • Under Section 80EEA additional period of 1 year is extended for taking benefit of an additional INR 1.5 Lakhs deduction. This benefit is not permitted if you opt for the new tax regime.
  • Dividend Distribution Tax (DDT) is withdrawn.
  • If you opt for New Tax regime LTA, HRA, conveyance, Other special allowances [Section 10(14)], Standard deduction, Interest on housing loan (Section 24), Chapter VI-A deduction (80C,80D, 80E and so on) (Except Section 80CCD(2) ) are not permitted.

Salient Features of the Tax Planner

  • A simple easy to use tax Calculator for resident individual, especially for salaried persons to calculate income tax in both regimes.
  • Once you enter the amount in blank cells other cells calculate data & tax automatically
  • Tax calculation with both regimes simultaneously on same sheet based on your income.
  • Calculation for difference of tax benefit between regimes.
  • Suggestion to choose suitable regime.

Download: Income Tax Planner FY 2020-21

Note: If you find any inconsistency, Please write to us.

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How To Claim 80GG Deduction

An individual who is not in receipt of HRA makes payment towards rent for accommodation (furnished or unfurnished) for the purpose of his own accommodation can claim deduction under section 80GG towards the rent paid by him.

The admissible deduction will be the least of the following:

1) Actual rent paid minus 10% of his total income

2) 25% of his total income

3) Rs. 5,000 per month

Notes:

a) Total Income means assessee’s total income before allowing deduction for any expenditure under this section.

b) The assessee should not be in receipt of HRA

b) The assessee will have to file a declaration in Form No 10BA

The following conditions need to be met to claim deduction under this section:

1.  The assessee or his spouse or his minor child or HUF in which he is a member – do not own any   residential accommodation at the place where the assessee currently reside, perform duties of office, or employment or carry on business or profession.

2.  The assessee should not own any residential property at any place, for which Income from house Property is calculated under applicable sections.

Example:

Mr.Athul, a small businessman, earns Rs. 6,60,000 for FY 2019-20. He paid house rent of Rs. 12,000/month in respect of residential accommodation occupied by him at Bangalore. It is assumed that all the conditions to claim Section 80GG is satisfied by him. The eligible deduction will be the least of the following:

In the above example Mr. Athul can claim a maximum deduction of Rs.60,000 under Section 80GG towards the rent paid by him.

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House Rent Allowance -Section 10(13A)

HRA is a special allowance specifically granted to an employee by his employer towards payment of rent for residence of the employee. HRA can be claimed by people who get HRA in their salaries or by individual tax payer.

How to calculate HRA :

  • Actual HRA
  • Rent paid(-)10% of salary for the relevant period
  • 50% of salary for the relevant period (in metro cities (Delhi, Kolkata, Mumbai, Chennai)
  • 40% of salary for the relevant period (other cities)

Whichever is lower is taken as HRA.

Example:

Mr. Vineesh, employed in Delhi, has taken up an accommodation on rent for which he pays a monthly rent of Rs.15,000 during the Financial Year (FY) 2019-20 i.e. Assessment Year(AY) 2020-21. He received a Basic Salary of Rs 25,000 and DA of Rs.2,000 every month. He also received a HRA of Rs.1,00,000 from his employer during the year. Let us understand the HRA component that would be exempt from income tax for the FY 2019-2020

In the above example,the entire HRA received by Mr. Vineesh (Rs.1,00,000) from his employer is exempt from income tax.  

Notes:

  1. “Salary” for the purpose means basic salary,dearness allowance in terms of employment and commission as a fixed percentage of turnover.
  2. “Relevant period” means the period during which the said accommodation was occupied by the assessee during the previous year.
  3. Exemption is not available to an assessee who lives in his own house,or in a house for which he has not incurred the expenditure of rent. Such an assessee can claim 80GG deduction under Chapter VI-A.