PROCESS DOCUMENT FOR PAYROLL YEAR END

Transcription

1 PROCESS DOCUMENT FOR PAYROLL YEAR END

2 GUIDELINES FOR PROOF OF INVESTMENT TO BE SUBMITTED FOR INCOME TAX FY Section 10 Exemptions Exemptions Proofs to be submitted Guidelines as per Exemption Criteria as per Sec 10(13A) House Rent Allowance:- 1. Original rent receipts for all the months. 2. PAN of Landlord if rent amount exceeds Rs /- in a current financial year 3. In case the landlord does not have a PAN, then please provide landlord declaration form along with the name, address & signature. 1. Revenue stamp is mandatory if rental amount is more than Rs 5000/- in a month. 2. Rent receipt should contain the details like Licensor and Licensee name, date of payment, month, address of rented house, signature of landlord. 3. No need to produce Rent Receipts having rental expenditure up to Rs 3,000/- per month. However in the regular assessment, the Assessing Officer will be free to make such enquiry as he fits for the purpose of satisfying himself that the employee has incurred actual expenditure on payment of rent. 4. Landlord PAN is mandatory if annual rental amount exceeds Rs /-. Exemption Criteria 1. Actual HRA earned for the year. 2. Actual Rent paid minus 10% of earned Basic 3. 40% of Basic or 50% of Basic in case of Metro cities, (Current Metro Cities -Delhi/Mumbai/Kolkata/Chennai) Least of the above is Exempt for Tax 5. In case the landlord does not have a PAN, then please provide landlord declaration form along with the name, address & signature. 6. HRA Benefit and Interest on Self Occupied House Property cannot be claim if both are in same city, provided if possession of the property is in current financial year then he can claim HRA up to the date of possession. In this case you have to submit the declaration for claiming Both HRA & Housing Loan Interest.

3 Chapter VIA deductions:- Deductions Proofs to be submitted Guidelines as per Deductions Criteria as per 80D Medical Insurance:- 1. Photocopy of receipt issued by the Insurance Company. (Only Policy Premium paid by employee is allowed.) 2. Section 80D should be mentioned on the policy document. 1. Receipts should be current financial year 2. Policy should be in the name of individual, spouse, children. 3. The payment of aforesaid premium required to be paid by any mode other than cash. 4. Rs 25000/- is allow as deduction in case of self/spouse and children. 5. Includes any payment made on account of preventive health check-up of the assessee or his family or parents up to Rs.5000/- in cash or any mode (applicable for only Mediclaim policy holder) 6. Additional benefit of Rs 25000/- in case parents is covered. And Rs 30000/- in case parents covered is senior citizen. 1. Self/Spouse/Children: Rs 25000/- (if payment made by employee) 2. Parents(Non Senior Citizen) : - Rs 25000/- 3. Parents (Senior Citizen):- Rs 30000/-. 4. Actual Premium Receipt or Above Limits whichever is less is the deduction For more details attached 80D IT document for your ref. (Maximum limit is Rs: 55000/-) 80DD Handicapped Dependents:- 1. Photocopy of certificate in Form 10(IA) issued by the competent medical authority in a Government Hospital. (Without Form 10(IA) 80DD benefit not allowed) 1. Where condition of disability requires reassessment then fresh certificate to be obtained after its expiry to continue claiming the deduction 2. Dependent means Spouse, Children, Parents, brothers and sisters of the individual. For more details attached 80DD IT document for your ref. 1. Handicapped Dependent with disability (less than 40 %.) then Nil exemption 2. Handicapped Dependent with disability (more than 40% but less than 80%) then 75000/- exemption. 3 Handicapped Dependent with Severe disability (more than 80%) then /- exemption.

4 Chapter VIA deductions:- Deductions Proofs to be submitted Guidelines as per Deductions Criteria as per 80DDB Medical Treatment of specified diseases 1. Copy of necessary certificate No. 10(I) issued by the Govt. Medical Authority.(It is mandatory) 2. Bills/Receipt stating the actual expenditure made for the treatment of the specified disease or the certificate should include the same. 1. Medical treatment of self/dependent specified disease. 2. Copy of necessary certificate No. 10(I) issued by the Govt. Medical Authority and the bills/receipt stating the actual expenditure made for the treatment of the specified disease or the certificate should include the same. 3. Eligible for Self, Spouse, Children & Parents. 4. Amount of deduction is Rs /- or amount actually paid whichever is lower. 5. In case of Senior Citizen (Above 60yrs of age) & Dependent Sr. Citizen then Rs /- or actual Expenditure incurred whichever is lower. Is eligible for exemption. 6. In case of Very Senior Citizen (Above 80yrs of age) & Dependent Very Sr. Citizen then Rs /- or actual Expenditure incurred whichever is lower. Is eligible for exemption. 1. Amount of deduction is Rs /- or (amount actually paid less amount received from insurance company) whichever is lower is eligible for deduction. 2. In case of Senior Citizen & Dependent Sr. Citizen then Rs /- or (amount actually paid less amount received from insurance company) whichever is lower is eligible for deduction. For more details attached 80DDB IT document for your ref. 7. Bills should be of the current financial year 80U Physically Handicapped Self:- 1. Photocopy of certificate in Form 10(IA) issued by the competent medical authority in a Government Hospital. (Without Form 10(IA) 80U benefit not allowed) 1. Where condition of disability requires reassessment then fresh certificate to be obtained after its expiry to continue claiming the deduction. For more details attached 80U IT document for your ref. 1. Physically Handicapped with disability (less than 40 %.) Then Nil exemption. 2. Physically Handicapped with disability (more than 40% but less than 80%) then 75000/- exemption. 3. Physically Handicapped with Severe disability (more than 80%) then /- exempt.

5 Chapter VIA deductions:- Deductions Proofs to be submitted Guidelines as per Deductions Criteria as per 80E Education Loan Interest Benefit 1. Letter / certificate from the Bank / Financial Institution specifying the following: Said loan is an Educational Loan. Amount of interest paid on the loan in the current year. Loan should be on the name of employee. 1. Interest paid on Loan taken for Higher Education such as Engineering / Medical/ etc. are allowed. 2. Higher Education means full-time studies for any graduate or post-graduate course in engineering, medicine, management or for post-graduate course in applied sciences or pure sciences including mathematics and statistics. 3. This is applicable for education loan, for education of self, spouse and children. 4. Loans availed only from Financial Institution / Bank is eligible (within India). 1. No capping of maximum limit Actual interest paid by the employee in current Financial Year is allowed as deduction. For more details attached 80E IT document for your ref. 5. Only the interest component paid during the year will be eligible for deduction, hence the certificate submitted must clearly state the interest component for the year. 6. The Certificate should be for the current financial year. 7. The deduction shall be allowed in computing the total income for the Financial Year in which the employee starts repaying the interest on the loan was taken and immediately succeeding seven financial years or until the financial year the interest is paid in full by the taxpayer, whichever is earlier.

6 Chapter VIA deductions:- Deductions Proofs to be submitted Guidelines as per Deductions Criteria as per Sec 80CCG Rajiv Gandhi equity saving scheme:- 1. The Assessee shall provide a consolidated statement of details in the electronic format, as specified in Form C, on all the Rajiv Gandhi Equity Savings Scheme beneficiaries. 1. Section 80CCG provides deduction w.e.f. assessment year in respect of investment made under notified equity saving scheme. The deduction under this section is available if following conditions are satisfied: The assessee is a resident individual (may be ordinarily resident or not ordinarily resident). His gross total income does not exceed Rs. 12 lacs. He has acquired listed shares in accordance with a notified scheme. The assessee is a new retail investor as specified in the above notified scheme and opened a demat account. The investment is locked-in for a period of 3 years from the date of acquisition in accordance with the above scheme. The assessee satisfies any other condition as may be prescribed. While making the initial investments up to fifty thousand rupees, the total cost of acquisition of eligible securities shall not include brokerage charges, Securities Transaction Tax, stamp duty, service tax and all taxes, which are appearing in the contract note % of the amount invested and maximum Rs 25000/-. For more details attached 80CCG IT document for your ref. 2. Amount of deduction:- The amount of deduction is at 50% of amount invested in equity shares. However, the amount of deduction under this provision cannot exceed Rs. 25,000. If any deduction is claimed by a taxpayer under this section in any year, he shall not be entitled to any deduction under this section for any subsequent year. 3. Withdrawal of deduction:- If the assessee, after claiming the aforesaid deduction, fails to satisfy the above conditions, the deduction originally allowed shall be deemed to be the income of the assessee of the year in which default is committed.

7 Chapter VIA deductions:- Deductions Proofs to be submitted Guidelines as per Deductions Criteria as per Sec 80TTA Deduction in respect of interest on deposits in saving accounts:- 1. Photocopy of the Interest Certificate from the Bank. 1. Section 80TTA has been introduced from the financial year Interest on saving account is allow as deduction maximum up to Rs 10000/-. 3. Interest on saving account is fully taxable and considered as additional income. 1. Actual interest received on saving account or Rs 10000/- whichever is less. For more details attached 80TTA IT document for your ref. Interest received during current financial year is only allowed. Sec 80CCD (1B) National Pension scheme:- 1. Photocopy of receipt issued by the Insurance Company. 2. Section 80CCD(1B) should be mentioned on the pension policy document 1. Policy from any company approved by IRDA. 2. Late payment fees and other charges will not be considered as premium paid. 3. Photocopy of Receipt should be of the current financial year 4. Photocopy should contain the Name, Date and Premium 5. Policy should be in the name of individual, spouse, & children. 1. Maximum Deduction capped is Rs.50,000 for Sec 80CCD (1B). 2. If invested amount more than Rs. 50,000 then additional amount will be get exempted under sec 80C up to 1.5 L. For more details attached 80CCD IT document for your ref. Proposal Deposit /Acknowledgement slips will not be considered.

8 Loss from House Property:- Exemptions Proofs to be submitted Guidelines as per Deductions Criteria as per Income / Loss on House Property 1. Photocopy of Provisional certificate from the Housing Finance Company / Bank. 2. Photocopy of possession certificate from the builder / Electricity bill / Municipal tax paid receipt (any one document) if property is acquired during the current financial year. 3. Self-declaration by the employee in case he is availing both HRA / Housing Interest benefit without property being let out. 1. An Assessee can avail a deduction on repayment of Interest on borrowed capital for construction, acquisition of a house property. 2. Interest paid in the current financial year is eligible for deduction. 3. Document should contain the breakup of interest and principal component separately, Name of the borrower, date, Loan account number and property address. 4. The benefit of deduction is applicable only after occupancy of the house and Pre-EMI interest (EMI paid before occupation of the house) is deductible in 5 equal installments starting from the year when the construction is completed or property is acquired. 5. Employee has to submit possession letter or municipal tax receipt or electricity bill to avail the interest benefit if the property is acquired during current financial year. 6. In case the Loan taken is on Joint Name, a declaration relating to percentage-wise benefit to be claimed for Income Tax purpose should be submitted. 1. Self Occupied: Capped to a maximum of Rs.2, 00,000/- per annum. Actual Interest or Rs /- whichever is less. 1.1 New Section 80EE Available for first loan buyer where home loan is sanctioned in current financial year & Home Loan does not exceed 35 Lakh & Property value does not exceed 50 Lakh, then additional Rs. 50,000/- interest deduction benefit can be claimed. 2. Let out Property: No limit, Interest to be calculated after considering the let out property income. 4. In case of jointly availed property loan, the employee to declare only the amount paid by him/her in the declaration with co-borrower / coowner's signature. 5. If any newly joined in current financial year then need to be submits Possession letter of house property or Last year Form 16 stated that he/she availed the House loan benefit. 7. In case of self-occupied property, employee cannot claim both HRA exemption as well as Interest on house property where the property is in the same city / region. [e.g., if both properties are at same place/region then you can't claim exemption on both.] 8. In case you are going to claim both the benefits of HRA and Housing Loan and if both the properties are situated in the same place, then the benefit of HRA would be passed on only till the date of possession of house property. 9. You can claim both the benefit, if you can prove that you are staying in the rented house only for the employment purpose and your house property is located at other place which is far away from your place of employment. 10. In case of Let out property, it is mandatory to fill up the computation of Loss / Income. Format attached for computing the net loss. Also submit the Municipal tax receipt & Rent agreement or Receipt.

9 Section 80C deductions (Maximum Deduction capped up to Rs.1.5 Lacs) Deductions Proofs to be submitted Guidelines as per Deductions Criteria as per CC Pension Plan 1. Photocopy of receipt issued by the Insurance Company. 1. Policy from any company approved by IRDA. 2. Late payment fees and other charges will not be considered as premium paid. 3. Photocopy of Receipt should be of the current financial year For more details attached 80CCC IT document for your ref. 4. Photocopy should contain the Name, Date and Premium 5. Policy should be in the name of individual, spouse, & children. 6. Proposal Deposit /Acknowledgement slips will not be considered. Housing Principal 1. Provisional Certificate from the Financial Institution/Bank. 2. Declaration from Coowner and Co borrowers in case property is in joint name and claiming the benefit. 1. Provisional Certificate should be of the current Financial Year. 2. Photocopy should contain the Name, Date, breakup of Interest and Principal Amount, Loan account number, address of the property, Loan amount. 3. Declaration from Co owner and Co borrowers in case property is in joint name and claiming the benefit. 1. Maximum Deduction capped is Rs.1.5

10 Section 80C deductions (Maximum Deduction capped up to Rs.1.5 Lacs) Deductions Proofs to be submitted Guidelines as per Deductions Criteria as per Life Insurance Premium 1. Photocopy of all premium receipts issued by the Insurance Company. 2. Photocopy of Premium Statement from the LIC 3. If premium due in Jan, Feb, March then submit the last year premium paid receipt for the same period and submit the same once received it. 1. Life Insurance Premium must be the name of individual, spouse & children. 2. Policy from any company approved by IRDA. 3. Late payment fees and other charges will not be considered as premium paid. 4. Photocopy of Receipt should be of the current financial year 5. Photocopy should contain the Name, Date and Premium 6. Policy should be in the name of individual, spouse, & children. 7. Proposal Deposit /Acknowledgement slips will not be considered. 8. Policy of Parents is not allowed as deduction. Sec 80C National Saving Certificate:- 1. Photocopy of Certificate or photocopy of the counterfoil given by the post office at the time of paying the amount. 1. Photocopy of Receipt should be of the current financial year 2. Photocopy should contain the Name, Date and Premium 1. Maximum Deduction capped is Rs NSC certificate should be in the name of individual 4. NSC certificate of family members and Parents is not allowed as deduction.

11 Deductions Proofs to be submitted Guidelines as per Deductions Criteria as per Accrued interest on National Savings Certificate 1. Photocopy of all the NSC certificates for which interest is being claimed. 1. NSC Accrued interest will show as income and also as deduction under Section 80 C. 2. Photocopy should contain the Name, Date and Premium 3. NSC certificate should be in the name of individual NSC certificate of family members and Parents is not allowed as deduction. Sec 80C Public Provident Fund 1. Photocopy of the counterfoil given by the bank at the time of making payment. 2. Photocopy of Front Page and Transaction page of the PPF Passbook. 1. Public Provident fund can be in the name of individual, spouse & children. 2. Photocopy of Receipt should be of the current financial year 3. Photocopy should contain the Name, Date and Premium amount. Sec 80C Unit linked Insurance Plan (ULIP) 1. Photocopy of all premium receipts/ or Certificates or Statement issued by the Insurance Company. 1. Late payment fees and other charges will not be considered as premium paid. 2. Photocopy of Receipt should be of the current financial year 3. Photocopy should contain the Name, Date and Premium 4. Policy can be in the name of individual, spouse, & children and parents. 5. Proposal Deposit /Acknowledgement slips should have proper seal & signatures by the Bank/ Asset Management Company (AMC).

12 Deductions Proofs to be submitted Guidelines as per Deductions Criteria as per Mutual Fund (Approved) 1. Photocopy of all premium receipts/ or Certificates or Statement issued by the Insurance Company. 1. Photocopy of Receipt should be of the current financial year 2. Photocopy should contain the Name, Date and Premium 3. Policy should be in the name of individual 4. Policy of family members and Parents is not allowed as deduction. 5. Proposal Deposit /Acknowledgement slips should have proper seal & signatures by the Bank/ Asset Management Company (AMC). Children Tuition Fees 1. Photocopy of the receipts issued by the school, college, university or educational institution. 1. Tuition Fees, whether at the time of admission or thereafter, paid to any university, college, school or other educational institution situated in India, for the purpose of full time education of any two children of the employee. 2. Full time education includes any educational course offered by any university, college, school or other educational institution to a student who is enrolled full time for the said course. It is also clarified that full time education includes play school activities, Pre Nursery and nursery classes. 3. It is clarified that the amount allowable as tuition fees shall include any payment of fees to any university, school, college or other educational institution in India except the amount representing payment in the nature of development fees or donation or capitation fees or payment of similar nature. 4. Photocopy of Receipt should be of the current financial year 5. Photocopy should contain the Name, Date and Premium 6. Maximum up to two children's tuition fee is allowed as deduction.

13 Deductions Proofs to be submitted Guidelines as per Deductions Criteria as per National Saving Schemes/KVP 1. Photocopy of Certificate or photocopy of the counterfoil given by the post office at the time of paying the amount. 1. Photocopy of Receipt should be of the current financial year 2. Photocopy should contain the Name, Date and Premium 3. NSS can be in the name of individual, spouse, & children and parents. Tax Saving Shares / Bond 1. Photocopy of Receipt or Certificate or photocopy of the counterfoil given if bond is not issue. 1. Photocopy of Receipt should be of the current financial year 2. Photocopy should contain the Name, Date and Premium 3. Shares/Bonds should be in the name of individual 4. Shares/Bonds in the name of family members and Parents are not allowed as deduction. Fixed Deposit in Banks / Post Office 1. Photocopy of Receipt or Certificate or photocopy of the counterfoil given by the scheduled banks or Post Office. 1. Photocopy of Receipt should be of the current financial year 2. Photocopy should contain the Name, Date and Premium 3. Fixed Deposit should be in the name of individual 4. Fixed Deposit of family members and Parents is not allowed as deduction. 5. Term deposits for a minimum period of 5 years with a scheduled bank/post office are eligible in accordance with the scheme framed and notified by the Central Government for deduction. 6. Receipt should contained specific clause of IT deduction u/s 80 C. (For the period not less than 5 yrs)

14 Deductions Proofs to be submitted Guidelines as per Deductions Criteria as per Registration/Sta mp Duty 1. Photocopy of Index II & Registration Certificate required. 1. Stamp Duty & Registration fees paid at the time of purchases of new house property. 2. Stamp Duty and Registration should be of the current Financial Year. 3. Photocopy should contain the Name, Date, Amount, address of the property, Loan amount. 4. Declaration from Co owner and Co borrowers in case property is in joint name and claiming the benefit. Post Office Time Deposit 1. Photocopy of Front Page and Transaction page of the Passbook. 1. Any investment as five year time deposit in an account under the Post Office Time Deposit Rule Post Office Time Deposit should be in the name of individual 3. Photocopy of Receipt should be of the current financial year 4. Photocopy should contain the Name, Date and Premium amount. Senior Citizen Saving Scheme 1. Photocopy of Receipt or Certificate 1. Any investment in an account under the Senior Citizen Saving Scheme Rule Senior Citizen Saving Scheme should be in the name of individual 3. Photocopy of Receipt should be of the current financial year 4. Photocopy should contain the Name, Date and Premium amount. Sukanya Samriddhi Scheme 1. Photocopy of Receipt or Certificate 1. Photocopy of Receipt should be of the current financial year 2. Photocopy should contain the Name, Date and Premium amount. 3. The account can be opened by Natural or legal guardian of girl child. 4. The age of the girl at the time of opening of account should not be more than 10 year

15 Previous Employment Income and Tax Deductions Proofs to be submitted Guidelines as per Deductions Criteria as per Previous Employment Income and Tax 1. Form 16 or signed and sealed tax computation sheet along with duly filled Form 12B signed from the employee 1. Previous Employer income includes Gross salary before Profession Tax Previous Employer Profession Tax Previous Employer 80C investment Previous Employer Income Tax Previous Employer Interest on Housing Loan Previous Employer 80 D Previous Employer 80DD Previous Employer 80DDB Previous Employer 80U Previous Employer 80E Attach Previous employer full and final tax calculation sheet along with this form. Treatment of Previous Employment Income Employee who has joined in current financial year has to submit Form 16, or a signed / sealed tax computation sheet, from the previous employer along with a declaration in Form 12B. Previous employment income, as per supporting, will be accounted for computing the tax liability for the year. While generating the Form16, There are 2 options either we can remove the previous employment details. Or we can show the same in the Form 16. However there will be 2 separate Part A for each employer. Part B of Form 16 can be shown as clubbed income of both the employer by the current employer. Deductions Proofs to be submitted Guidelines as per Deductions Criteria as per Form 12 BB This form can be generated after feeding investments on web portal under Actual Investment tab. 26C. Furnishing of evidence of claims by employee for deduction of tax under section 192. (1) The assesse shall furnish to the person responsible for making payment under sub-section (A) of section 192, the evidence or the particulars of the claims referred to in sub-rule (B), in Form No.12BB for the purpose of estimating his income or computing the tax deduction at source. (2) Following information need to fill-up in form 12BB. (A) House Rent Allowance (Name, Address and PAN of the landlord/landlords where the aggregate rent paid during the current year exceeds rupees one lakh. (B) Deduction of interest under the head income from house property ( Name, Address and PAN of the lender) (C)Deduction under chapter VI-A.(Evidence of investment or expenditure) Attached Form12BB copy for your ref. For more details attached Form 12BB IT department notification for your ref.

16 Important Note:- In case the due date of any insurance premium is after schedule date then please attach previous year's/ last quarter receipts for authentication and submit the same once received it. Proposal Deposit receipts will not be accepted in case of insurance/pension/mediclaim policies. Tax Benefit for donations given in personal capacity need to be claimed while filing the indusial tax returns. In the case of Mutual fund investment under Systematic Investment Plan, the installments for the month of Jan to March 2017 will be considered based on the payments till 10th Jan as per the documents submitted (the documents should clearly specify that scheme has been availed). NSC Accrued interest will show as income and also as deduction under Section 80 C.

17 FY TAX SLABS After providing necessary exemptions and deductions as per rules defined above, 'Net Taxable Income' is arrived. On the 'Net Taxable Income' the following tax slabs are applied to arrive at the 'Tax Payable' for the year.

18 Disclaimer 1) The information is compiled from public sources and is provided on an informational only basis. Paysquare does not accept any implied liability or damage 2) The formats and templates are available if you reach any of our sales reps and they are customizable for specific company requirements 3) This is dated document, compiled in Jan 2017, so updates to regulations happening thereafter may not be captured in this document Contact us PAYSQUARE CONSULTANCY LIMITED G-Building, Kunal-Puram Commercial Complex, Opp. Atlas Copco, Old Pune - Mumbai Road, Dapodi, Pune Phone: / , Mobile: (+91) Fax: sales@paysquare.com