October 28, 2020

Itax Software

Income Tax Software

Tax benefits on paying rent & taking Home Loan Interest, Plus Automated All in One TDS on Salary for Govt & Non-Govt employees for F.Y 2019-20

As per the latest Central Finance Budget 2019
have some changed along with the Income Tax Slab for the Financial Year
2017-18. The Tax benefits who have already get the House Building Loan, they
have also good news in this Central Financial Budget 2019. Now look how to get
tax benefits on paying Rent & taking home loan interest:-

Click
to Download automated All in One Tax preparation Excel Based Software
for Govt & Non Govt employees for the Financial Year 2019-20.
[ This
Excel based software can prepare at a time your Tax Compute sheet +
Individual Salary Structure + Individual Salary sheet + Automated HRA
Exemption Calculation + Arrears Relief Calculation with Form 10E +
Automated Revised Form 16 Part A&B and Revised Part B for Financial
Year 2019-20]

 

 The people who are paying rent for their
accommodation or those who have bought or constructed a property by taking home
loans are eligible for certain tax benefits. The Tax Benefits that can be
availed by you have been discussed in this article which is divided into two
parts:



I. If you are paying rent.
II. If you have bought / constructed property by taking home loan.

These are discussed as follows:

I. IF YOU ARE PAYING RENT.

a) Deduction under section 10(13A) for House Rent
Allowance.

House Rent allowance (HRA)
is received by the salaried class. A deduction is permissible under Section
10(13A) of the Income Tax Act, in accordance with Rule 2A of the Income Tax
Rules. You can claim exemption on your HRA under the Income Tax Act if you stay
in a rented house and get a HRA from your employer.

The HRA deduction is based on salary, HRA received, the actual rent paid and
place of residence. The place of residence is important. For Mumbai,
Kolkata, Delhi or Chennai, the tax exemption on HRA is 50 percent of
the basic salary, while for other cities it is 40 percent of the basic salary.

The city of residence is to be considered for calculating HRA deduction.

The least value of these is allowed as tax exemption on HRA:

  • Actual rent allowance
    the employer provides as part of salary in the relevant period during
    which the rental accommodation was occupied
  • Actual rent paid for
    the house, less 10 per cent of basic pay
  • 50 percent of basic
    salary if you reside in Mumbai, Calcutta, Delhi or Chennai,
    or 40 per cent if you reside in other cities.
The following points need to
be kept in mind for availing this deduction:
  • In order to claim the
    exemption, the rent must actually be paid for the rented premises which
    you occupy.
  • Also, the rented
    premises must not be owned by you. As long as the rented house is not
    owned by you, the exemption of HRA will be available up to the limits
    specified.
  • For the purpose of
    this deduction, salary means basic salary and includes dearness allowance,
    if the terms of employment provide it, and commission based on a fixed
    percentage of turnover achieved by the employee.
  • The deduction is
    available only for the period during which the rented house is occupied by
    the employee and not for any period after that.
  • It is to be noted
    that the tax benefits for home loans and HRA are two separate aspects.In
    case you are paying rent for an accommodation, you
    can claim tax benefits on the HRA component of
    your salary, while also availing tax benefits on a home loan.
  • You need to submit
    proof of rent paid through rent receipts, duly signed and stamped, along
    with other details such as the rented residence address, name of the
    owner, period of rent etc.
How it applies :- For example, assume one earns a basic
salary of Rs 20,000 per month and rents a flat in Mumbai for Rs 5,000 per
month. His actual HRA is Rs 8,000. He is eligible for 50 percent of the basic
pay for HRA exemption.

Least of:
Actual HRA received = Rs
8,000
50 percent of basic salary = Rs 10,000
Excess of rent paid over 10 percent of salary, i.e., Rs 5,000 less Rs 2,000 =
Rs 3,000.
As such, Rs 3,000 per month is the least and will be the exemption allowable
for HRA deduction.

Download Automated Income Tax House Rent Exemption Calculator U/s10(13A) in Excel

b) Deduction under Section 80GG for Rent Paid.
Under Section 80GG, an
Individual can claim deduction for the rent paid even if he does not get HRA.
Not many people are aware of this deduction. The Max Limit Rs. 60,000/- P.A. or
Rs. 5000/-P.M.

Section 80GG allows the Individuals to a deduction in respect of house rent
paid by him for his own residence.

Such deduction is permissible subject to the following conditions
:-

  • The Individual has
    not been in receipt of any House Rent Allowance from his employer specifically
    granted to him which qualifies for exemption under section 10(13A) of the
    Act;
  • The Individual files
    the declaration in Form No. 10BA.
  • The employee does not
    own:
1.    
 
1.     
any
residential accommodation himself or by his spouse or minor child or where such
Individual is a member of a Hindu Undivided Family, by such family, at the
place where he ordinarily resides or performs duties of his office or carries
on his business or profession; or
2.     
at
any other place, any residential accommodation being accommodation in the
occupation of the Individual, the value of which is to be determined under
Section 23(2)(a) or Section 23(4)(a) as the case may be.
  • He will be entitled
    to a deduction in respect of house rent paid by him in excess of 10% of
    his total income, subject to a ceiling of 25% thereof or Rs. 5,000/- per
    month, whichever is less. The total income for working out these
    percentages will be computed before making any deduction under section
    80GG. In other words, eligibility will be least amount of the following :-
1.    
 
1.     
Rent
paid minus 10 percent the adjusted total income.
2.     
Rs
5,000 per month.
3.     
25
percent of the adjusted total income.
  • The deduction will
    also not be available to an assessee if any residential accommodation is
    owned by the assessee at any other place, which he is occupying, and the
    concessions in respect of self-occupied house are claimed by him for that
    property. In such a case, no deduction will be allowed in respect of the
    rent paid, even if the person does not own any residential accommodation
    at the place where he ordinarily resides.

Download
All in One TDS on Salary for Non-Govt Employees for the F.Y. 2019-20
With H.R.A. Exemption Calculation U/s 10(13A) +Automated Form 12 BA for
F.Y. 2019-20+ Automated Revised Form 16 Part B andForm 16 Part A&B
for F.Y. 2019-20

 The feature of this Excel
Utility is the following:-
1) This Excel Utility can prepare automatic Tax Calculation as per
new Finance Budget 2019
2) The Salary Structure as per the All of Non-Govt(Private) employee’s
Salary Pattern
3) Automated Individually Salary Sheet for each Employee
4) Automated Income Tax Salary Sheet for each Employee 
5) This Excel Utility calculate your House Rent Exemption
Calculation U/s 10(13A)
6) Automated Income Tax Revised Form 16 Part A&B for F.Y.
2019-20 in New Format
7) Automated Income Tax Revised Form 16 Part B for the F.Y. 2019-20
in New Format
8) Automated Value of Perquisite Calculator with Form 12 BA
II. IF YOU HAVE BOUGHT/CONSTRUCTED PROPERTY BY TAKING HOME LOAN.

a) Deduction available under Section 80 C for Principal
repayment of home loan.


As per section 80C an
Individual and an HUF can claim principal repayment component of a loan along
with other eligible items like Life Insurance Premium, NSCs, EPF, ELSS and
stamp duty and registration charges etc.

  • The overall deduction
    is restricted to Rs. 1.5 lakh in a year.
  • Remember the
    deduction is only for residential house property and not for commercial
    property. Besides it is also available only for purchase or construction
    of a house and not for renovation, additions or repairs on any existing
    house property.
  • You can claim
    principal repayment if you have taken loan from specified entity like
    banks, HFCs, Central & State government, LIC, NHB, Public Company or a
    Public Sector Undertaking. Even a University established by law or a local
    authority or corporation established under State or Central laws also are
    covered under the category.
  • Moreover in case you
    sell the house acquired with home loan, within five years from the end of
    the year in which possession of the house was taken, all the deduction
    allowed for Principal repayment in earlier years shall be withdrawn. This
    shall be treated as income of the year in which this property is sold.
    Moreover no deduction under Section 80 C shall be allowed for principal
    repayment made during the year.
b) Deduction
available under Section 24(b) for Interest payment.

In addition to deduction for Principal, Section 24(b) of the Income Tax Act
allows you deduction for interest payable on loan taken to buy or construct a
house property, or even for repair or reconstruction of an existing property.

  • This benefit is available
    for residential and commercial property as well.
  • It may be interesting
    to note that even processing fee paid in respect of home loan shall also
    be treated as interest so you can claim deduction in respect of processing
    fee paid for taking such loan.
  • Even in cases where
    you prepay your loan, you will be entitled to claim the amount of any
    prepayment fee paid to the bank for such prepayment. Here you can claim
    the benefits in respect of loans taken from your friends and relatives
    besides banks and financial institutions.
  • The deduction is
    available for self-occupied as well as let-out properties too. For self
    -occupied property, the deduction is restricted to Rs. 2 lakhs p.a. For
    let-out property, you can claim full interest. If you have more than one
    self- occupied houses, you have to select one house as self-occupied and
    the other house/s shall be treated as let-out. In this case you have to
    offer notional rent for taxation and can claim the full interest payable.
    So in order to maximize your tax benefits, it is always advisable to treat
    the property on which interest is lower as self-occupied in case interest
    payable on any or all of the property is more than Rs.2 lakhs.
  • For under
    construction property, you can only claim the interest deduction from the
    year construction is complete and possession taken. However in respect of
    interest paid for the period prior to the year for taking possession, you
    can claim aggregate of such interest in five equal installments from the
    year in which construction is completed. There is no reversal of interest
    benefit even if you sell the house before five years as is applicable for
    repayment benefits.

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