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The deadline to file your <keyword id="19948101" type="General" weightage="20" keywordseo="income-tax-returns" source="keywords">income tax returns</keyword> is approaching fast, and Sana is perplexed. All of 23, she's just started earning and working at an MNC, earning Rs 7,00,000 per annum, and can't figure out which <keyword id="20301439" type="General" weightage="20" keywordseo="tax-regime" source="keywords">tax regime</keyword> would work best for her. If you're having the same concerns and can't seem to wrap your head around the <keyword id="19935168" type="General" weightage="20" keywordseo="new-tax-regime" source="keywords">new tax regime</keyword>, here's a ready reckoner for you: When should I choose new tax regime? Think of choosing a tax regime as having to choose a friend in office. The <keyword id="8706677" type="General" weightage="20" keywordseo="old-tax-regime" source="Orion">old tax regime</keyword> is that aged, wise senior who has answers and hacks for everything. Want to get over with a boring project quickly? They will certainly have a trick up their sleeve! On the other hand, the new regime is far more chilled out, lax and is a no-nonsense person who wants nothing to do with long documents and longer meetings. The new regime was introduced in budget 2020 to simplify taxation, and offer lower rate of taxes as compared to the old regime. However, there's a catch. You cannot claim the 70+ exemptions and deductions that help bring down your taxable income and hence, reduce your tax liability. This option is exclusively available under the old tax regime. The main USP of this tax regime? Lower tax rates, and fuss of deductions! Consider this. If your income is within the range of Rs 5,00,000-Rs 12,00,000, and you have no investments, <keyword id="99916" type="General" weightage="20" keywordseo="house-rent-allowance" source="Orion">house rent allowance</keyword> (<keyword id="19944588" type="General" weightage="20" keywordseo="hra" source="keywords">HRA</keyword>), health/life insurance premiums or other such deductions to claim, the new tax regime would obviously make more sense to you, given the significant difference in tax liabilities (just 5% under new regime, and a whopping 20% in old regime for those in the Rs 5-6 lakh bracket!) <div type="image" title="Tax rates under old and new regime" msid="111685908" hostid="261"></div> So, if you're someone who hates complex tax calculations, wants minimal tax deductions, the new regime might just be for you! But remember, there are two conditions under which this new regime will be automatically chosen for calculating your taxes: <ul><li>If you keep procrastinating and don't file your <keyword id="6374875" type="General" weightage="20" keywordseo="ITR" source="Orion">ITR</keyword> till July 31, 2024</li><li>If you do not specifically opt for the old tax regime on your employer's HR portal</li></ul>Also, if you earn less than Rs 3,00,000 per annum, you are completely exempted from paying any tax at all. In the old regime, this basic limit is slightly lower at Rs 2,50,000. Also read: <a href="https://www.businessinsider.in/personal-finance/income-tax/all-you-need-to-know-about-the-new-tax-regime/articleshow/111578840.cms" data-type="tilCustomLink">All you need to know about the new tax regime</a> So, what do I get under this regime? Thanks to a rebate under Section 87A, if you earn up to Rs 7 lakh per annum, your tax liability (and Sana's as well) will effectively be zero. This is limited to Rs 5 lakh under the old regime. While a <keyword id="20429578" type="General" weightage="20" keywordseo="standard-deduction" source="keywords">standard deduction</keyword> of Rs 50,000 is available under both of them (so you can directly deduct Rs 50,000 from your total income before even beginning to calculate your tax liability), there are a lot more deductions and exemptions that this regime DOES NOT allow you to avail: <ul><li>Leave Travel Allowance (LTA)</li><li>House Rent Allowance (HRA) (Comes in handy if you're paying hefty rents in metros)</li><li>Interest on housing loan (on self-occupied property or vacant property)</li><li>Own contribution to NPS (If there's any)</li><li>Interest earned on savings bank A/Cs </li><li>Investments made in ELSS, PPF</li><li>Premiums paid towards life, health insurance policies</li></ul>As for the deductions that are allowed, that makes for a pretty small list: <ul><li>Transport allowances (only if you are specially abled)</li><li>Gifts of up to Rs 50,000</li><li>Employer’s contribution to your NPS account</li><li>Interest paid on home loan only on let-out property</li></ul>But that's the trade-off. You get to pay taxes at low rates, yes, but you also don't get to claim a whole lot other deductions. Notes CA Nitesh Buddhadev, "Which regime is beneficial for you depends upon the allowances and deduction available to you during a relevant financial year. So, if your total income from salary is Rs 10.5 lakh and if the aggregate of any of the deductions / allowances you can claim is less than Rs. 3.15 lakh, you should opt for the new tax regime. If you have not invested in multiple tax-savings scheme, the new regime will work better. So, don't make this decision in any haste. You can choose your tax regime only once in a financial year. And if your income from business or other professions, be even more careful, because this will then become a once in a lifetime choice for you (quite literally!). So, take a good hard look at your finances, and then decide what works best for you!

Confused about the new tax regime? Here's when you should opt for it

With the last date to file your <keyword id="22335084" type="General" weightage="20" keywordseo="IT-returns" source="keywords">IT returns</keyword> inching closer every passing day, it's time you choose your <keyword id="19901478" type="General" weightage="20" keywordseo="income-tax" source="keywords">income tax</keyword> regime-whether you want to opt for the old one or go for the new regime. But why is it important to make this choice carefully? Under what circumstances can the <keyword id="19935168" type="General" weightage="100" keywordseo="new-tax-regime" source="keywords">new tax regime</keyword> benefit you, and how does it differ from the old <keyword id="20301439" type="General" weightage="20" keywordseo="tax-regime" source="keywords">tax regime</keyword>? Let's find out all about it The new tax regime was introduced in <keyword id="22335085" type="General" weightage="20" keywordseo="Budget-2020" source="keywords">Budget 2020</keyword> as a means to simplify tax calculations and offer concessional tax rates. So, unless you do not categorically opt for the old tax regime, the new tax regime is assumed as default, and hence, your income tax liability is calculated according to it. Also, if you fail to file your taxes till 31st July, you will have to go ahead with the new tax regime, since the option to choose old regime will not be available anymore. <h2> What are the tax rates under the new regime? </h2>Here's a quick snapshot of the applicable tax rates under the new regime: <table style="border-width: initial; border-style: none; table-layout: fixed; width: 468pt;" class="redcator-table-advance"></colgroup><tbody><tr><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Income Slab </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Tax rates under the new tax regime </td></tr><tr><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Up to Rs 2.5 lakh </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Exempt </td></tr><tr><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Over Rs. 2.5 lakh to Rs. 3 lakh </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">5% </td></tr><tr><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Over Rs. 3 lakh to Rs. 5 lakh </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">5% </td></tr><tr><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Over Rs. 5 lakh to Rs. 6 lakh </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">20% </td></tr><tr><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Over Rs. 6 lakh to Rs. 9 lakh </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">20% </td></tr><tr><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Over Rs. 9 lakh to Rs. 10 lakh </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">20% </td></tr><tr><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Over Rs. 10 lakh to Rs. 12 lakh </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">30% </td></tr><tr><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Over Rs. 12 lakh to Rs. 15 lakh </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">30% </td></tr><tr><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">Above Rs. 15 lakh </td><td style="border-left:solid #000000 1pt;border-right:solid #000000 1pt;border-bottom:solid #000000 1pt;border-top:solid #000000 1pt;vertical-align:top;padding:5pt 5pt 5pt 5pt;overflow:hidden;overflow-wrap:break-word;">30% </td></tr></tbody><tbody></tbody></table> <h2>What deductions does the new tax regime offer?</h2> Unlike its old counterpart, which had over 70 exemptions and deductions to bring down an individual's taxable income and hence, their tax liability, the new regime does not offer much deductions. Except for a <keyword id="20429578" type="General" weightage="20" keywordseo="standard-deduction" source="keywords">standard deduction</keyword> of Rs 50,000 and deductions for employer's contribution to your <keyword id="19919089" type="General" weightage="20" keywordseo="NPS" source="keywords">NPS</keyword>, there are only a handful of deductions allowed, which include: Transport allowance (if the individual is specially abled) Conveyance allowance (to meet cost of travel and tour) Perquisites for official purposes Interest on home loan paid for a rented property Then, there are specific exemptions with regards to voluntary retirement, leave encashment and gratuity that you can also avail under the old regime. The new regime offers a rebate of Rs 25,000 on income of up to Rs 7,00,000. This means that anyone whose total taxable salary does not exceed Rs 7 lakh annually can claim a rebate of up to Rs 25,000. But remember, you will not be able to avail common exemptions and deductions that are available under the old regime, which include health insurance premiums, investments in tax-saving FDs, ELSS, house rent agreement (HRA), leave travel allowance (<keyword id="20091793" type="General" weightage="20" keywordseo="lta" source="keywords">LTA</keyword>), PPF, EPF and more. So, if you live on rent, or are diligently saving your hard earned money across mutual funds, PPF and more, the new regime will not have much to offer you. <h2>When can new tax regime be better for you? </h2>But in case you do not want excessive deductions from your income, the new tax regime works better for you. It is simple and straightforward, and can work well for those who do not want to face documentation hassles while filing their ITR, since the old regime demands multiple investment proofs. Also, if your income is up to Rs 5,00,000, you can choose the new tax regime, given that the basic exemption limit (income up to which one does not need to pay any taxes) is slightly higher in new regime at Rs 3,00,000, as compared to Rs 2.5 lakh in old regime. Experts also note that if the total of all your deductions does not exceed Rs 1.5 lakh, new regime could be better for you. However, do not make this decision simply by looking at low tax rates. Assess your outflows and then the deductions and exemptions you are eligible under both the regimes. It is a good idea to also compare your income under both the regimes using IT department's tax calculator. Only then, take a final call.

All you need to know about the new tax regime

It's officially tax season! With the July 31st deadline less than 30 days away, it's time to get started on your <keyword id="19897621" type="General" weightage="20" keywordseo="ITR" source="keywords">ITR</keyword>, if you haven't already. By now, most of your employers must have given you a certain Form-16, which is a crucial document you need to have handy while filing your returns. But in case you have not received Form-16 from your employer, there's no escaping filing your taxes. Let us understand how you can file your ITR, with or without Form-16 <h2>What if I have <keyword id="20675983" type="General" weightage="100" keywordseo="Form-16" source="keywords">Form 16</keyword>?</h2> Then you're in luck because you don't have to calculate your tax liability on your own. Form-16 offers you a comprehensive breakdown of your <keyword id="20039947" type="General" weightage="20" keywordseo="salary" source="keywords">salary</keyword>, your taxable <keyword id="20385232" type="General" weightage="20" keywordseo="deductions" source="keywords">deductions</keyword>, and the <keyword id="19948097" type="General" weightage="20" keywordseo="TDS" source="keywords">TDS</keyword> that has been deducted from your income during the year. While the first part of Form-16 contains details of your employer, (their PAN, TAN), it is the second part of Form-16 that is helpful. Here, you'll get a snapshot of your salary, the deductions you've claimed, and your total taxable income after this. So, in case you have invested in <keyword id="103549" type="General" weightage="20" keywordseo="ELSS" source="Orion">ELSS</keyword>, paid health and life insurance premiums, or there are contributions (which you and your employer have made) to a pension scheme, they will all be mentioned in Form 16. This form will also help you see how much tax you have to pay or what is the <keyword id="21144782" type="General" weightage="20" keywordseo="tax-refund" source="keywords">tax refund</keyword> due to you. Long story short, you don't have to go around collecting multiple documents and calculating your tax liability yourself if you have Form 16 handy. Here are a few things you should remember about Form 16: <ul><li>Generally, employers issue Form-16 before June 15th of every year </li><li>If you have changed jobs during the year, be sure to ask both your current and previous employer for Form 16. </li></ul>Here's how you can download your Form-16 from the <keyword id="1258217" type="General" weightage="20" keywordseo="TRACES" source="Orion">TRACES</keyword> (TDS Reconciliation Analysis and Correction Enabling System) website <ul><li>Visit the <a href="https://contents.tdscpc.gov.in/" data-type="tilCustomLink">TRACES </a>site. </li><li>If you are a new user, create a new account. If you are a registered user, fill in your PAN number (User ID) and password to log in. </li><li>Click on Downloads and choose Form 16. </li><li>Select the financial year for which you need Form 16 (in this case, FY 2023–24). </li><li>Verify your PAN details. </li><li>Enter your TDS receipt number and select the TDS date. </li><li>Add the total TDS that has been collected from you during FY. </li><li>Click on the request to download.</li></ul>And your Form-16 is ready. Note that here's how you can get your TDS receipt number: <ul><li>Visit the IT e-filing portal and login to your account </li><li>Select TDS. </li><li>View the filed TDS option on the dashboard. </li><li>Click on the token number. </li><li>Download the provisional receipt.</li></ul><h2>What if you don't have Form 16?</h2>This is where things can get a little tricky. While you can still download Form-16, there's another, manual way to figure out your tax liability. Remember, if your annual income does not exceed the basic exemption limit (Rs 2.5 lakh under the old regime, Rs 3 lakh under the new tax regime), no TDS will be deducted, and hence, no Form 16 will be issued. Here's what you can do in case your employer does not issue a Form 16 : <ul><li>Download all the payslips issued by your employer during the financial year, and see your taxable income. </li><li>Download Form 26AS to match tax deductions. Form 26AS can be downloaded via the IT portal. </li><li>To get your Form 26AS, log on with your account credentials, go to the e-file tab, click IT returns, and select Form 26AS. </li><li>Make a list of all deductions you'll claim (health, life insurance premiums, interest on home, educational loan, investments in ELSS, etc.) </li><li>Include your income from other sources as well, like capital gains on the sale of shares, property etc. </li><li>Check if you are eligible to claim HRA (house rent allowance), to further bring down your tax liability. </li><li>Once you have figured out your tax liability, file for a refund (in case you have paid excess TDS), or pay the deficient amount. </li></ul>Also Read <a href="https://www.businessinsider.in/finance/tax/article/wondering-which-itr-form-is-right-for-you-know-all-about-it-here/articleshow/111406215.cms" data-type="tilCustomLink">Wondering which ITR form is right for you? Know all about it here</a> <a href="https://www.businessinsider.in/personal-finance/income-tax/article/budget-2024-raise-standard-deduction-limit-and-more-whats-in-store/articleshow/111424832.cms" data-type="tilCustomLink">Budget 2024: Increase standard deduction, exemptions and more, an aam aadmi's wishlist</a>

Decoding Form 16: How do you file your taxes if you don't get Form 16?

<ul><li>The property must be owned by the parent or relative to whom the rent is being paid.</li><li>The relative who is getting the rent should disclose it in his income tax file.</li><li>The municipal taxes on the property should be up to date, and a deduction can be claimed on the taxes paid.</li></ul>If you are employed, and receive a house rent allowance (<keyword id="115182" type="General" weightage="20" keywordseo="hra" source="Orion">HRA</keyword>) as part of your salary, you have the option to <a href="https://www.businessinsider.in/personal-finance/news/how-hra-exemption-can-help-you-save-tax-in-2023-24/articleshow/100014412.cms">claim a tax exemption on the HRA,</a> if you live in a rented house. However, it's important to note that this tax exemption is applicable only if you opt for the old tax regime. Even if you are living with your parents, or with a relative, and paying rent to them, you can claim HRA deduction. Here are five things to keep in mind in case you are paying <keyword id="15318001" type="General" weightage="20" keywordseo="rent-to-parents" source="Orion">rent to parents</keyword> or to a relative. Fair market value The rent has to be similar to the fair market value. “It cannot be very high or very low. One has to see that the rent that is being paid to the relative/parent is in consonance with the rent paid to an independent party to another independent party,” says Vivek Jalan, partner, Tax Connect Advisory. The property ownership detail The property must be owned by the parent, or relative to whom the rent is being paid. In case when the rent is paid to parents, the property must be owned by your parents. “It may be owned by one or both of your parents. So, you can deposit the money to any one of the parents in case of joint house ownership, or to the parent who is the legal owner of the house,” says Archit Gupta, founder and CEO, Clear, a fintech company. <keyword id="6580929" type="General" weightage="20" keywordseo="rent-agreement" source="Orion">Rent agreement</keyword> and receipts There has to be a rent agreement between you, and your parents/relative, and you need monthly rent receipts. The rent can be paid either through a transfer to a bank account, or through a cheque. One should also keep proof of payments made. The recipient has to disclose income The relative who is getting the rent should disclose it in his income tax file for taxation purposes. “The Income Tax department can check through data analytics whether the rental income has been declared,” says Jalan. The income should also be declared under ‘Income from house property’. “If it is declared as ‘Income from other sources,’ a red flag will be raised, and also the deduction on taxes paid will not be available,” says Jalan. Further, the municipal taxes should be up to date, and a deduction can be claimed on the taxes paid,” says Jalan. The person who receives rent is entitled to claim a deduction of 30% on the rental income for repair or renovation purposes. Disclose to employer Employees should disclose the rent paying arrangement to the employers as soon as possible, and not wait for the employer to ask for details. If they do not do that, TDS will be deducted, and they will have to claim a refund later.

Claiming tax exemption showing rent paid to relatives? Five things to keep in mind

July's here, and as we inch closer to the budget, which is set to be presented around the latter half of July, there is much talk about how it will affect our pockets. Reports suggest the government is considering raising the <keyword id="20429578" type="General" weightage="20" keywordseo="standard-deduction" source="keywords">standard deduction</keyword> threshold from existing Rs 50,000 to Rs 1,00,000, amidst other things. The most common wish for a salaried employee is to reduce the income tax rates across all slabs, but at the moment, this seems unlikely. That aside, we decode the common man's wish list and what they look forward to in terms of <keyword id="22225988" type="General" weightage="20" keywordseo="income-taxes" source="keywords">income taxes</keyword> as the Finance Minister <keyword id="19916618" type="General" weightage="20" keywordseo="nirmala-sitharaman" source="keywords">Nirmala Sitharaman</keyword> drafts the budget. <h2>Wish 1: Raise the standard deduction to Rs 1 lakh</h2>A standard deduction is a fixed amount that you can deduct from your taxable income right away, to reduce your overall tax liability. You do not need to furnish any proofs for this amount. Currently, this stands at Rs 50,000, under both old and new tax regimes. Raising this threshold to Rs 1,00,000 will mean more disposable income in your hands. And as per the policy experts, this is the most likely change that we can expect under the new budget. <h2>Wish 2: Increase the <keyword id="20228341" type="General" weightage="20" keywordseo="basic-exemption-limit" source="keywords">basic exemption limit</keyword> in new tax regime</h2>As per EY's pre-budget expectation report, an increase in the basic exemption limit from the present Rs 3,00,000 to Rs 5,00,000 would immensely benefit the common man. Earlier, this limit was set at Rs 2,50,000. Note that unless you specifically opt for the old regime, the new tax regime is considered as your default choice starting 2023. If your annual income is equal to, or falls below this basic exemption limit, you do not have to pay any income tax. <h2>Wish 3: Increase tax-free limit of LTCG gains </h2>At present, if you sell any equity mutual fund unit or share after more than 12 months of holding it, you'll have to pay a 10% long-term capital gains (LTCG) tax. However, within one financial year, long-term capital gains below Rs 1,00,000 are tax-exempt. As EY's report notes, raising this extant tax-free limit to Rs 2 lakh would be beneficial, especially in boosting long-term investing sentiment in the country. But will this come true? Only Nirmala Sitharaman knows! <h2>Wish 4: Consider some tier-2 cities as metros for HRA exemption </h2>Residents of Gurugram, Noida, Bengaluru, listen up! HRA, or House rent allowance is a crucial component of our salary, and hence, our tax planning as well. You can get HRA exemption on the lowest amount amidst these 3: 1. Actual HRA received 2. 50% of salary for metro cities (Delhi, Mumbai, Kolkata, Chennai) 3. 40% of salary for non-metro cities 4. Rent paid- 10% of salary But its no secret that residents of nearby cities like Noida, Gurugram, Faridabad, or rapidly developing urban hubs like Pune, Ahmedabad, Ghaziabad, Hyderabad, Bengaluru, Thane bear the brunt of sky-high residential rents that takes a huge toll on their monthly income. Yet, they cannot claim 50% of their salary for HRA exemption. Since these cities has been classified as a non-metro, residents can claim a maximum of 40% of their salary as exemption. In case rent exceeds Rs 1,00,000 annually, you are also required to furnish the PAN details of landlord, along with a formal rental agreement. Consider this. You live in Delhi, and have an annual income of Rs 10,00,000. For HRA purposes, you can claim exemption of up to Rs 5,00,000, since Delhi is considered a metro. But, if you live in Ghaziabad, or Noida, the limit available to you sharply falls down to Rs 4,00,000. This budget, as reports note, considering these cities as metros for tax purposes would provide some relief to the common man's pocket. Per a recent report by ANAROCK research, the top 7 cities in the country (Mumbai metropolitan region, Hyderabad, Bengaluru, Pune, Delhi NCR, Chennai and Kolkata) saw an average price rise between 13-39% on a yearly basis. In fact, it was Hyderabad recorded the highest yearly price rise in residential property last quarter, jumping by as much as 39%. <h2>Wish 5 : Enhance exemption limits under the old regime</h2>The list is endless, but so are our wishes! Experts are also suggesting an enhancement in the existing limit for deduction towards interest on housing loan for self-occupied house. From its present limit of Rs 2 lakh, it should be taken to Rs 3 lakh. Also, the Rs 2-lakh cap on set off of house property loss against other heads in the same year should be done away with. For senior citizens, there should also be greater clarity on how funds received from <keyword id="19919089" type="General" weightage="20" keywordseo="nps" source="keywords">NPS</keyword> (National Pension System) via the systematic lumpsum withdrawal plan should be taxed. Well, we can only hope some, if not all of these wishes come true when finance minister presents the union budget in the parliament this month.

Budget 2024: Increase standard deduction, exemptions and more, an aam aadmi's wishlist

The <keyword id="21180338" type="General" weightage="100" keywordseo="tax-filing-season" source="keywords">tax filing season</keyword> is knocking at our doors, and you have until July 31 to answer it without paying any penalties. But are you confused as to where to start? Does the stack of documents needed to file your <keyword id="19897621" type="General" weightage="20" keywordseo="ITR" source="keywords">ITR</keyword> seem too long? Well, we’ve got you covered. But first off, why do you even need to file an ITR? Simply put, if your <keyword id="21120362" type="General" weightage="20" keywordseo="annual-income" source="keywords">annual income</keyword> is more than Rs 2.5 lakh (if you opt for the old tax regime) or Rs 3 lakh (if you opt for the new tax regime), you are liable to pay taxes and, hence, file an ITR. If you delay filing your ITR, or file it between August 1 and December 31st, you'll have to pay a fine of Rs 5,000. If your annual income is below Rs 5 lakh, then you'll be fined Rs 1,000 for late filing. But in certain cases, you will also have to file an ITR for the financial year, even if your annual taxable income is below the exemption limit : <ul><li>Deposited more than Rs 50 lakh in a savings bank account</li><li>Spent more than Rs 2 lakh on foreign travel</li><li>Incurred expenses of more than Rs 1 lakh in electricity bills</li><li>If your TDS/TCS deducted is more than Rs 25,000 </li></ul>If you’re a <keyword id="22247326" type="General" weightage="20" keywordseo="salaried-employee" source="keywords">salaried employee</keyword>, here’s a handy list of documents you should collect beforehand before you sit down to file your taxes so that you don't have to scramble for them at the last minute. Firstly, there are your regular documents like PAN and Aadhar card. Also, keep all details of the bank account where you want your IT refund to be credited handy. It is advisable to also have your Annual Income Statement (AIS) ready, so that you can cross-verify and match all your income details while filing your ITR. AIS as a consolidated financial summary of your year <h2>Time to get in <keyword id="22247325" type="General" weightage="20" keywordseo="Form-16" source="keywords">form-16</keyword></h2>Up next is Form-16. This gives you a complete overview of your total earned salary and the TDS deducted. This is issued by the employer to their employee. So, if you have switched jobs during the year, or worked with one or more organizations, you'll have to ask both your current and former employer for Form-16. Additionally, along with Form-16, you should also ask your previous employer to give you a statement of full and final settlement. Generally, form-16 has two parts-A and B. While part-A carries details of the employer and a summary of salary payments made during the year, part-B is where you will find your salary breakup, and the deductions made from your salary, which include payment of life and health insurance premiums, contributions made to pension fund and more.<h2>Keep rent, travel proofs handy while filing ITR </h2>In case you are claiming tax deductions under HRA (house rent agreement), you will need a notarized rent agreement as proof of rent payment. Generally, rent agreements are made for a period of 11 months. Next, in case you have availed LTA (leave travel allowance), you should have all travel-related bills handy. You can claim tax exemption on LTA in two ways. One, you can claim exemption on the amount you've actually spent on your travel. Otherwise, within a 4-year time block (2022-2025), you can claim exemption for a maximum of 2 vacations. This is applicable only for domestic travel, and you can claim exemption for your immediate family members as well. But remember, LTA will not cover your accommodation or food-related expenses incurred on the trip. Up next are your investment proofs and capital gains statement. If you've paid premiums for a life or health insurance policy during the year, or invested in ELSS (equity-linked savings scheme), you need to furnish proofs for the same. You can claim an annual <keyword id="20265008" type="General" weightage="20" keywordseo="tax-deduction" source="keywords">tax deduction</keyword> of up to Rs 25,000 on premiums paid towards your health insurance policy. In fact, your insurance company will send you a certificate to that effect as well. As for ELSS, you can claim an annual tax deduction of up to Rs 1,50,000. But you cannot withdraw money from ELSS before 3 years, so invest carefully. <h2> Pay attention to capital gains while filing ITR</h2>If you've redeemed, or sold some of your investments (property, stocks, mutual funds) during the year and earned profit on them, you'll have to pay <keyword id="20301441" type="General" weightage="20" keywordseo="capital-gains-tax" source="keywords">capital gains tax</keyword>. But this is applicable only if your capital gains are over Rs 1,00,000 in one financial year. If you sold a share/mutual fund unit within 12 months of buying it, you'll have to pay a 15% short term capital gains tax. And if you redeemed an investment after 12 months, you'll be charged 10% long term capital gains tax. That is why it would help to have a capital gains statement handy, which will help you understand how much tax you have to pay.

ITR filing: Documents you need to file your income tax return

January is usually the time when salaried employees have a deadline to submit the details of the exemptions they would seek while paying the income tax for the full year. This would include the calculation for house rent allowance, which many find to be complicated. Here is a simple explainer on how to calculate the exemption available on house rent allowance for the purpose of income tax. House Rent Allowance (HRA) is provided to an employee to cut down the income tax liability. The entire HRA cannot be deducted from the taxable income as the rules clearly lay out the parameters to be considered. Depending on what the HRA component of your salary is, the deduction from taxable income will be the lowest of the following: <ol><li>Actual HRA component of salary</li><li>50% of basic salary if he resides in metro cities (Delhi, Chennai, Kolkata, or Mumbai) or 40% of basic salary if his residence is in any other city</li><li>Actual rent paid less 10% of basic salary</li></ol>Here is an example to understand the process. <table style="width: 212pt;"> </colgroup> <tbody><tr> <td class="xl63" style="height:15.0pt;width:119pt">Detail</td> <td class="xl64" style="border-left-width: initial; border-left-style: none; width: 93pt;">Annual amount</td> </tr> <tr> <td class="xl65" style="height: 15pt; border-top-width: initial; border-top-style: none;">Basic salary (before HRA, conveyance, LTA etc.)</td> <td class="xl66" style="border-top-width: initial; border-top-style: none; border-left-width: initial; border-left-style: none;"> ₹50000</td> </tr> <tr> <td class="xl67" style="height: 15.75pt; border-top-width: initial; border-top-style: none;">HRA set by the company</td> <td class="xl68" style="border-top-width: initial; border-top-style: none; border-left-width: initial; border-left-style: none;"> ₹21600</td> </tr></tbody></table> Assuming the person lives in one of the 4 metro cities, and pays a rent of ₹20,000 a month, the deduction from taxable income will be the lowest of the following figures: <table style="width: 548pt;"> </colgroup> <tbody><tr> <td class="xl66" style="height:15.0pt;width:202pt">Detail</td> <td class="xl67" style="border-left-width: initial; border-left-style: none; width: 215pt;">Amount</td> <td class="xl68" style="border-left-width: initial; border-left-style: none; width: 131pt;">Actual deduction available</td> </tr> <tr> <td class="xl69" style="height: 15pt; border-top-width: initial; border-top-style: none;">Actual HRA set by the company</td> <td class="xl65" style="border-top-width: initial; border-top-style: none; border-left-width: initial; border-left-style: none;"> ₹21600 * 12 = ₹259200</td> <td class="xl70" style="border-bottom: 1pt solid black; border-top-width: initial; border-top-style: none;">₹129600</td> </tr> <tr> <td class="xl69" style="height: 15pt; border-top-width: initial; border-top-style: none;">Rental accommodation in metro cities</td> <td class="xl65" style="border-top-width: initial; border-top-style: none; border-left-width: initial; border-left-style: none;"> 50% * ₹21600 * 12 = ₹129600</td> </tr> <tr> <td class="xl71" style="height: 15.75pt; border-top-width: initial; border-top-style: none;">Actual rent minus 10% of basic salary</td> <td class="xl72" style="border-top-width: initial; border-top-style: none; border-left-width: initial; border-left-style: none;">(₹20000 * 12) - (10% * ₹21600 *12) = ₹214080 </td> </tr></tbody></table> You can calculate the exact amount applicable to you by replacing the figures with the ones mentioned in your salary statement. If you live in a non-metro, then the deduction available will be 40% * ₹21600 * 12 = ₹103,680. SEE ALSO: <a href="https://www.businessinsider.in/budget/news/budget-2020-new-income-tax-slabs-proposed-by-direct-tax-code-panel/articleshow/73317952.cms" data-type="tilCustomLink" target="_blank">New income tax proposed by a government panel wants a 35% slab, says a report</a> <a href="https://www.businessinsider.in/income-tax-slabs-for-2020-and-cuts-proposed-by-finance-minister-nirmala-sitharaman-in-next-budget/articleshow/72975148.cms" data-type="tilCustomLink" target="_blank">Income tax cuts and new tax slabs ⁠— here’s how Indian Finance Minister Nirmala Sitharaman wants to make people shop more</a>

How to calculate house rent allowance while computing income tax

<ul><li><keyword id="115182" type="General" weightage="100" keywordseo="hra" source="Orion">HRA</keyword> exemption is available only if you are living in a rented house and opt for the old tax regime. </li><li>If the rent is more than ₹1 lakh per annum, then the PAN of the landlord must be submitted. </li><li>You can claim both HRA and deduction on home loan interest if you fulfil certain conditions.</li></ul> If you are a salaried employee, you may be receiving a house rent allowance (HRA) as part of your salary. If you live in a rented house, you can claim an HRA exemption from taxes. However, remember that the tax exemption is available only if you choose the old tax regime. <cmsannotation type="cmsannotation" annotationid="How is tax exemption under HRA calculated" comment="subhead" text="How is tax exemption under HRA calculated">How is tax exemption under HRA calculated</cmsannotation> The deduction available is the minimum of the following: <ul><li>Actual HRA received</li><li>50% of basic salary for those living in metro cities (Delhi, Kolkata, Mumbai or Chennai) and 40% for those living in non metros</li><li>Actual rent paid minus 10% of basic salary </li></ul>To calculate your HRA deduction, you may use the HRA deduction <a href="https://incometaxindia.gov.in/Pages/tools/house-rent-allowance-calculator.aspx">calculator </a>available on the <keyword id="65338" type="General" weightage="50" keywordseo="income-tax-department" source="Orion">Income Tax Department</keyword> website. <cmsannotation type="cmsannotation" annotationid="Documents required to claim HRA tax exemption" comment="subhead" text="Documents required to claim HRA tax exemption">Documents required to claim HRA tax exemption</cmsannotation> In order to claim a deduction for house rent allowance, the employee needs to provide her employer with documents such as rental agreements and rent receipts. “If the payment of rent is more than ₹1 lakh per annum, then the permanent account number (PAN) of the landlord must be submitted. Based on these proofs, employers will provide exemption for HRA in Form 16,” says Archit <keyword id="6356160" type="General" weightage="50" keywordseo="gupta" source="Orion">Gupta</keyword>, founder and chief executive officer of fintech company Clear. <cmsannotation type="cmsannotation" annotationid="You can claim deduction even when your employer doesn’t pay HRA" comment="subhead" text="You can claim deduction even when your employer doesn’t pay HRA">You can claim deduction even when your employer doesn’t pay HRA</cmsannotation> If an individual pays rent for living in a residential accommodation but does not receive an HRA from her employer, she can still claim the deduction under section 80GG of the <keyword id="6354751" type="General" weightage="50" keywordseo="income-tax" source="Orion">Income Tax</keyword> Act. However, some conditions need to be fulfilled to claim this deduction. First, you must be self employed or salaried and must not have received HRA any time during the year in which you are claiming 80GG. “The other condition is that you or your spouse or your minor child do not own any residential accommodation at the place where you currently reside, perform duties of office, or employment or carry on business or profession,” says Gupta. <cmsannotation type="cmsannotation" annotationid="You can claim HRA if you live with parents" comment="subhead" text="You can claim HRA if you live with parents">You can claim HRA if you live with parents</cmsannotation> If you are living in your parent’s house, you can also claim HRA. “To claim HRA, you have to enter into a rental agreement with your parents and transfer money to them every month as rent. Your parents need to report the rent received from you as income in their income tax returns,” says Gupta. If their other income is below the basic exemption limit or taxable at a lower tax slab, they can save tax on the family income. <cmsannotation type="cmsannotation" annotationid="You can claim both HRA and deduction of home loan interest" comment="subhead" text="You can claim both HRA and deduction of home loan interest">You can claim both HRA and deduction of home loan interest</cmsannotation> If you have a home loan, you can claim both HRA and also the tax benefits that you are eligible to claim if you have a home loan, even if both the houses are in the same city. “For this, you need to prove that the house for which you are paying rent and the house for which you are paying home loan are at different places,” says <keyword id="16333858" type="General" weightage="50" keywordseo="suneel-dasari" source="Orion">Suneel Dasari</keyword>, founder and CEO, EZtax.in, a tax portal. There must be sufficient reasons for not residing in a self-owned house. The possible reasons could be that you have availed a loan for a house but live in a rented accommodation in another city. You may also live in the same city in a rented accommodation for reasons such as work or children’s schooling. Also, the home you have purchased can be under construction and you may be living on rent elsewhere. You may also have rented out your own house and live elsewhere. Such claims are frequently scrutinised by Income Tax officials, who may reject part of the claim if they are dissatisfied, particularly if the claimed amount is relatively high. SEE ALSO: <a target="_blank" class="c-link c-message_attachment__title_link" href="https://www.businessinsider.in/tech/mobile/news/the-vivo-zeiss-story-how-a-covid-time-collab-led-to-the-creation-of-the-x90-series/articleshow/100013619.cms">The Vivo-Zeiss story: How a Covid-time collab led to the creation of the X90 series</a> <a target="_blank" class="c-link c-message_attachment__title_link" href="https://www.businessinsider.in/stock-market/news/sensex-nifty50-tumble-over-1-on-sell-off-in-hdfc-twins/articleshow/100013793.cms">Sensex, Nifty50 tumble over 1% on sell-off in HDFC twins</a>

How HRA exemption can help you save tax in 2023-24

<ul><li>Taxpayers living with their parents can capitalise on the benefits under the <keyword id="6354751" type="UNKNOWN" weightage="20" keywordseo="income-tax">Income Tax</keyword> Act that allows tax deductions on house rents. </li><li>This amount can be paid via cheque or bank transfers, in order to avail tax benefits. </li><li>Under Section 80GG of the Income Tax Act, those who are self-employed can also claim tax deduction on the rent agreement.</li></ul>House Rent Allowance (HRA) is offered to almost every salaried employee. Taxpayers who have been living with their parents too can capitalise on the benefits under the Income Tax Act that allows tax deductions on house rent. This amount can be paid via cheque or bank transfers, in order to avail tax benefits. The employees will have to submit a rent agreement and rent receipts for HRA exemption. According to the Income <keyword id="984607" type="PERSON" weightage="20" keywordseo="Tax-law">Tax law</keyword>, house rent is to be paid to the owner of the property. Hence, in order to claim tax benefits on rent agreement, the housing property should be owned by the parents. "It is mandatory to furnish rent receipts to the employer for claiming HRA exemption for the monthly rent paid more than Rs. 3000 per month,” Pinky Khanna, Director of People Advisory Services, EY India <a href="https://economictimes.indiatimes.com/wealth/tax/10-dos-and-donts-to-ensure-your-claim-of-hra-tax-exemption-against-rent-paid-is-not-rejected/articleshow/59336531.cms?from=mdr">told</a> ET. However, the rent that is paid to the parents is in turn taxable for them under the ‘income from house property.’ They can claim a <keyword id="947001" type="ORGANIZATION" weightage="20" keywordseo="Standard-Deduction">standard deduction</keyword> of 30% from the rent amount. Under Section 80GG of the Income Tax Act, those who are self-employed can also claim tax deduction on the rent agreement. This is applicable for shared accommodation as well. This is applicable to upto 50% of the employee salary, in case of metropolitan areas like Delhi, Mumbai, Calcutta and Chennai. While for the employees living in the non-metro cities, the HRA exemption will be 40% of the salary. Even if the rent amount exceeds ₹1 lakh, the employees can claim it under the HRA — along with the PAN (<keyword id="134255" type="COMPANY" weightage="20" keywordseo="permanent-account-number">Permanent Account Number</keyword>) details of the owner and rent receipts — which is mandatory in such cases. See also: <a href="https://www.businessinsider.in/personal-finance/news/heres-how-sending-your-child-to-school-can-help-you-save-on-taxes/articleshow/73248275.cms">Here’s how sending your child to school can help you save on taxes</a> <a href="https://www.businessinsider.in/personal-finance/news/to-save-tax-use-cheque-and-not-cash-while-donating-to-charity/articleshow/73294218.cms">To save tax, use cheque and not cash while donating to charity</a> <a href="https://www.businessinsider.in/personal-finance/news/heres-how-you-can-claim-medical-expenditure-incurred-on-family-to-save-taxes/articleshow/73270479.cms">Here’s how you can claim medical expenditure incurred on family to save taxes</a>

Rent at your parents’ place to avail the House Rent Allowance and save tax

<ul><li>If you have a <keyword id="6354730" type="General" weightage="20" keywordseo="home-loan" source="Orion">home loan</keyword> you can claim both maximum principal and interest rate deductions, you can save more taxes under the <keyword id="8706677" type="General" weightage="20" keywordseo="old-tax-regime" source="Orion">old tax regime</keyword>. </li><li>Consider consolidated deductions before making a decision. </li><li>Key in your details and available deductions in a tax calculator to know which regime is more suitable. </li></ul>Budget 2023-24 tweaked slabs under the new tax regime and also made it the default tax regime. So, if one wants to stay in the old tax regime and take the benefit of various deductions available, they need to opt for the old tax regime. Employers have now set deadlines for employees to register their choice of a tax regime by the end of April, so those who want to opt for the old tax regime, need to decide soon. While tweaked tax slabs has made the new tax regime more attractive, especially since one does not have to go through the hassle of claiming deductions, when you have a home loan, there is still merit in the old tax regime. A home loan can significantly affect your eligible tax deductions The decision to move to the old tax regime from the new tax regime should be based on a thorough analysis of your overall tax liability under both regimes. “While the new tax regime offers lower tax rates, it does not provide certain deductions and exemptions that are available under the old tax regime, including deductions under section 80C for home loan principal repayment,” says Atul Monga, chief executive officer and co-founder, Basic Home Loan. Under the old tax regime, you can also claim a deduction up to ₹2 lakh on the interest of your home loan if you are self-occupying the house. This will tilt your decision in favour of the old tax regime. “The taxpayer's home loan status has a significant impact on the decision between the old and new tax regimes. The highest amount of home loan interest that can be claimed against any other income, including salary, is ₹2 lakh. If a taxpayer has a home loan, as well as an 80C deduction of ₹1.5 lakh and a standard deduction of ₹50,000, they can save more money on taxes under the old tax regime,” says Suneel Dasari, founder and CEO Eztax.in, a tax filing portal. Consider consolidated deductions before making a decision “You can’t look at just the home loan interest and the principal repayments standalone because the consolidated deductions are to be seen to see whether one regime works better or the other. The level of income also needs to be considered,” says Tapati Ghose, partner, Deloitte India. Let us consider a situation when you do not have any other deduction, but just a home loan for self-occupied property where you can claim ₹2 lakh deduction as interest payment and ₹1.5 lakh as deduction under section 80C on principal repayment. “Here, if you have an income of ₹8 lakh (before considering the standard deduction of ₹50,000, which is available both under the old and new regime), then at a deduction of more than ₹1,62,500, the old regime becomes more beneficial. At ₹10 lakh income, ₹2.5 lakh is the threshold beyond which the old regime becomes more beneficial. At ₹15 lakh, ₹3.58 lakh is the threshold beyond which the old tax regime becomes more beneficial,” says Ghose. Also, in another example, let us consider annual incomes of ₹15 lakh and ₹20 lakh and deduction of ₹2 lakh for interest payment on a home loan under the old tax regime. If we also factor in ₹20,000 as house rent allowance (HRA) deduction, ₹50,000 as standard deduction, ₹1.5 lakh as deduction under section 80C, and a deduction of ₹50,000 under section 80D, one ends up paying ₹19,420 and ₹14,040 less tax respectively when compared to the new tax regime. “Especially in the initial years of taking a home loan, the interest payments are very high and I would have the capacity to exhaust the ₹2 lakh limit, then I would definitely go for the old regime. But as we go towards the end of the tenure of the housing loan, then the interest comes down. Then one needs to look at their income levels and see these thresholds where the old regime is more beneficial,” says Ghose. There are calculators available online where you can key in all the required details and available deductions to arrive at a decision. SEE ALSO <a href="https://www.businessinsider.in/finance/news/rbi-bats-for-borrowers-releases-guidelines-to-lenders-from-levying-penal-interest-on-loan-defaults/articleshow/99461008.cms">RBI bats for borrowers, releases guidelines to prevent lenders from levying penal interest on loan defaults</a> <a href="https://www.businessinsider.in/finance/banks/news/interest-on-home-loans-of-75-lakh-and-above-can-increase/articleshow/99397263.cms">Looking for a home loan of ₹75 lakh or above? The RBI rate hike pause might not bring you relief</a>

Have a home loan? You may want to opt for the old tax regime

The taxation laws in India contain a number of provisions to let the tax payers save on taxes. By taking some informed decisions on how you spend and account, you can save on taxes in a legitimate way. Here we discuss some important deductions under the Income Tax Act 1961. Tips to save on income tax Make the right use of Rs.1.5 lakhs limit allowed under Section 80C Investing up to a limit of Rs. 1.5 lakh in schemes like Tax-Saver FDs, PPF (Public Provident Fund), ELSS Funds, NSC (National Saving Certificate), Life Insurance Premiums, National Pension System (NPS), Home Loan Repayment, Payment of tuition fees of your children, EPF, Senior Citizens Savings Scheme, and Sukanya Samriddhi Yojana can enable you for appropriate tax deductions depending on the case. National Pension System This deduction facilitated by Section 80CCD (1B) allows up to Rs 50,000 for contributing to the National Pension Scheme. The NPS makes it possible to invest in equity and debt pension funds for building a corpus for the retirement life. This can be withdrawn at 60 years of age. Health Insurance Premiums Paying for health insurance premiums can let you qualify for a deduction up to Rs 25,000 under Section 80D. This is permitted on top of all the deductions listed above. In case of senior citizens, this limit is up to Rs. 50,000. The taxpayer contributing towards health insurance premiums for himself as well as for a senior citizen can claim a combined deduction of up to Rs. 75,000 per annum. Deduction on your rent If you are getting HRA, it is possible to claim tax deduction on your House Rent. Though there is no upper limit specified for this, there are some rules that place a cap on the maximum deduction. If you do not get HRA but pay towards rent, a maximum claim of up to Rs. 60,000 per annum is allowed under Section 80GG. Deduction on the home loan interest When you have a home loan running, the interest you pay towards the home loan is tax deductible under Section 24 of the Income tax Act. The maximum limit that you can claim in this regard is Rs. 2 lakh. If the house is rented out, there is no upper limit. Money in your savings account The easiest way to save money on income tax is to keep some money in your savings account. Up to a limit of Rs. 10,000 per year, the interest on savings accounts is tax free under the Section 80TTA. In case of senior citizens, this limit is up to Rs 50,000 applicable in cases of both FD and savings account interest. Give for charity Donations made towards charity enable you for tax deductions. Though there is no upper limit for this, there are different rules that restrict the amount deductible on the contributions towards charities. Across a majority types of donations to the NGOs, this limit is fixed at 50% of the donated amount and up to 10% of the total income that is adjusted. If you want to claim this deduction, the NGOs to which you contribute must have 80 G certificate.

How to save Income Tax in India Schemes to Invest in 2019

Tax saving is a tricky subject and needs a lot of planning. By learning the intricacies in the taxation laws and studying your own situation in relation to the taxation laws will enable you save on your taxes. Here are some easy ways for the salaried employees to save on income taxes. Understand your salary slip first You must understand your salary slip well to know the ways to save on the gross tax you are liable to pay. The salary slip consists of three segments namely earnings, allowances and deductions. These sections will give enough clues on how to save on your taxes. The basic pay reflects on your earnings. Towards contributions, you might receive conveyance allowance, leave travel allowance, dearness allowance, house rent allowance and others. This section will also include deductions including income tax, professional tax and provident fund. Here are a few useful tips to plan for your taxes efficiently. How to save on taxes Income tax is levied on basic pay. Your House Rent Allowance (HRA) is tax exempted if you live in a rented house and pay the monthly rent. A fixed amount received as conveyance allowance also qualifies for tax exemption. Some employers might deduct income tax at the source. In such cases, the taxes paid already can be claimed by producing the necessary supporting documents at the end of the financial year. Also explore some options for investing in tax saving instruments. Understand Section 80C If you can understand the 80C section of the Income Tax Act thoroughly, you can hope to save on taxes and take home more salary. You are allowed to invest till an upper limit in schemes like National Savings Certificate (NSC), Equity Linked Savings Scheme (ELSS), Public Provident Fund (PPF) Bank Fixed Deposit (FD) and many other products. Do not plan for the taxes during the last minute If you will only study the tax during the last minute, it will give you very less room to save. If this happens, you will be overburdened with a need to make a sizeable investment in one time during the last minute. Small regular investments in Mutual Funds and SIPs over the entire year can help you make significant saving on taxes. Meet your financial goals through investments Investments planned in the right way not only enable you save on taxes, they also help you meet some of your cherished goals in life. It is possible to convert all your tax saving investments into ones that will bring you higher returns. For example, if you wish to buy a car, invest regularly in any ELSS. The lock in period will end in three years and after that you can withdraw this amount. Hence many tax saving instruments can help you meet your financial goals easily and effectively. Other ways to save on taxes It is possible to claim tax benefit on LTA once in every two years. To do this, you must submit the proof of travelling. Section 80D contains provisions for you to avail of tax benefits for the premiums paid towards health insurance policies. Section 80E contains provisions for tax exemptions on interest paid towards education loans.

How salaried employees can save on Income taxes

Applying for a home loan usually means you are nearing the prospect of owning your dream property. And taxation laws that let you reap benefits is further encouragement to home buyers. <keyword id="6354553" type="COMPANY" weightage="20" keywordseo="real-estate">Real estate</keyword> buying is a very expensive decision and it can take you near to availing of tax rebates. Hence it is crucial that every aspiring home buyer is familiar with this topic of <keyword id="6354751" type="UNKNOWN" weightage="20" keywordseo="income-tax">income tax</keyword> rebates on home loan. Here we are referring to section 24, 80EE and 80 C of the Indian Income Tax Laws. Tax benefits on repaying home loan principal When you repay the principal amount of your home loan, Section 80 C of the income tax act lets you avail of a tax deduction of about Rs. 1.5 lacs. You are eligible for this benefit only after the construction is completed. If you wish to sell the property within five years of possessing it, the benefit will be reversed. In this case, the amount you claimed will be added once again to your income in the year of sale of the said property. Under this section, you can also claim the amount payable on registration and stamp duty irrespective of whether you are taking a home loan or not. Tax benefits on home loan interest repayment As per Section 24, it is possible to claim deductions with regard to the interest payable on your home loan. When you occupy the property yourself, the amount you can claim to be exempted is Rs. 2 lacs. However, to get this benefit, the construction should have been completed within five years. If the construction time exceeds five years, you the limit you can claim drops and you can claim only up to Rs. 30,000. In case you are not occupying the property, there is no upper limit on how much exemption can be claimed irrespective of the status of completion. Tax benefits for first time homebuyers In addition to claiming deductions on the amount payable towards the principal and interest of your home loan under Section 80 C and Section 24, it is also possible to claim an extra Rs. 50,000 per financial year towards the payment of interest. To avail of this benefit, it is incumbent that the total value of your house is Rs. 50 lacs and the total value of the home loan is less than Rs. 35 lacs. Tax benefits for Joint Owners and Co-Borrowers If you apply for a joint home loan together with your spouse, relative or friend, you can claim tax benefits provided you also co-own the property. Each of you can submit your claims independently up to the full amount under Section 80 C and Section 24. Hence if you wish to go for tax saving, this approach will let you boost up your savings in a significant way. HRS and home loan When you have taken a home loan, but continue to stay in a rental property, it is possible for you to make two claims. You can submit claims to avail of the aforementioned tax benefits and also tax benefits connected to HRA or house rent allowance.

Income tax benefits on home loan principal and interest

Planning a <keyword id="6358021" type="PERSON" weightage="20" keywordseo="budget">budget</keyword> for 2017 and thinking of buying your dream house? If yes, you should definitely not overlook some of the tax benefits that were introduced in Budget 2016. Home loan borrowers can get additional benefits, if they qualify. Also, if you haven’t received <a href="http://www.businessinsider.in/searchresult.cms?query=House+Rent+Allowance&amp;sortorder=effectivedate">House Rent Allowance</a> (HRA), you should also check as to whether you can claim the increased tax break given to them in Budget 2016. 
 
Under Section 80EE of the <a href="http://www.businessinsider.in/searchresult.cms?query=Income+Tax+Act&amp;sortorder=effectivedate">Income Tax Act</a>, 1961, first-home buyers availing home loans in 2016-17 are allowed to take additional tax benefit of up to Rs 50,000. So, a home loan borrower paying interest on the loan can claim deduction of interest so paid from his/her gross total income up to a maximum of Rs 2 lakh per annum under Section 24. However, there are some conditions attached to it and they are: 
 
The additional deduction with respect to interest on loan taken will be applicable only for residential self occupied house property. 
 
It's only for first-time home buyers. 
 
The maximum additional benefit is capped at Rs 50,000 a year. 
 
The value of the house for which loan is taken cannot exceed Rs 50 lakh. 
 
The loan amount cannot exceed Rs 35 lakh. 
 
The loan has to be sanctioned between April 1, 2016 and March 31, 2017. 
 
Illustratively, on a home loan of Rs 35 lakh at 9.6/8.6 per cent interest for 15 years, the first year interest amount comes to approximately Rs 3.3 lakh and Rs 2.96 lakh, respectively. 
 
Other thing that one can look for is the increase in time period for claiming deduction of interest. In a home loan, the interest payable up to Rs 2 lakh gets deducted from gross total income while computing income from self-occupied house property. However, it is only applicable in cases where the acquisition or construction of the house is completed within three years from the end of the financial year in which the loan was taken. 
 
In <a href="http://www.businessinsider.in/searchresult.cms?query=Budget+2016&amp;sortorder=effectivedate">Budget 2016</a>, there was a relaxation in the time period and the <a href="http://www.businessinsider.in/searchresult.cms?query=tax+benefit+&amp;sortorder=effectivedate">tax benefit </a>would hold even if the acquisition or construction is completed within five years from the end of the financial year in which the capital was borrowed. 
 
All those getting house possession this year, this extension gives a relief. With builders not completing projects on time and delivery of homes getting delayed, this change in tax rules will benefit several home loan borrowers and they will not suffer (due to inability to avail tax benefit) because of builder's default in handling over the homes in time. 
 
One can also look for benefit, if they aren’t getting HRA. Section 80GG provides for a deduction of any expenditure incurred by an individual in excess of 10 per cent of his total income towards rent payment with respect to any furnished or unfurnished accommodation occupied by him as his residence if he is not granted HRA by his employer, to the extent that such excess expenditure does not exceed Rs 2,000 per month or 25 per cent of his total income for the year, whichever is less. 
 
In Budget 2016, relief was provided to such employees. The maximum limit of deduction was increased from the existing Rs 2,000 per month to Rs 5,000 per month.

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