Introduction We are pleased to share the Income tax related guidelines with you. Mentioned at the end are also draft formats for rent related declarations, should you need those. Please feel free to share these guidelines within your organization. Guidelines As a tax payer, please check the slab that is applicable to you. I. Income Tax Slabs General Tax Payer 0 to 250000 No Tax 250001 to 500000 10% 500001 to 1000000 20% Above 1000000 30% Senior Citizens (Aged 60 years but less than 80 years) 0 to 300000 No Tax 300001 to 500000 10% 500001 to 1000000 20% Above 1000000 30% Super Senior Citizens (Aged 80 and above) 0 to 500000 No Tax 500001 to 1000000 20% Above 1000000 30% * Surcharge at the rate of 15% if the total income of the individual exceeds Rs 1 crore. Note: Finance Act 2014 has provided relief in the form of rebate to individual taxpayers, resident in India, having total income not exceeding Rs. 5,00,000. The amount of rebate is Rs.5000 or the amount of tax payable, whichever is lower. II. GENERAL GUIDELINES Incomplete forms are not be accepted Income tax benefit claimed through the declaration will not be approved if the proofs are not available All investments and payments must be made between 1st April 2016 and 31st March 2017 to be eligible for tax consideration. Name, date, amount must be clearly visible in all the investment proofs submitted. Employee name and number is required on all the documents. TopSource Page 1
Wherever applicable, the proof of investment and payment needs to indicate that the Investment payment is eligible for benefit under the Income Tax Act. The subtotals, totals need to be correctly indicated. Only one copy per proof is required for submission, please do not include multiple copies. Check your PAN No. on the form. If wrong, please send an email to TopSource along with a copy of your PAN card for us to make the correction. 80 G (Donation) will not be considered for IT exemptions under the head of salary. III. SPECIFIC GUIDELINES Part A: House Rent Payment Details HRA proofs & Rent receipts Following documents are required for HRA exemption: a. Rent receipts b. Copy of the rent/ leave & license agreement between the employee and the landlord c. Copy of the PAN card of the landlord and property address (where the rent paid is more than Rs. 100,000 for the year). Guidelines: Submit Rent receipts for actual payment made for all months till Jan 2016. Rent amounts for Feb and March should be mentioned in the declaration form. If HRA is below Rs. 3,000/- rent receipt is not required and employee has to give a declaration of the same in the HRA Declaration form. refer attached Annexure -1 Maintenance amount mentioned on the rent receipt will not be considered for exemptions. If rent is paid in cash & amount of rent is more than Rs. 5000/- then rent receipt should be duly signed by the landlord with revenue stamp on it.
Part B: Interest on Housing Loan, Income / Loss from House Property. Interest on Housing Loan Provide Certificate from the recognized body (Banks /Financial institutions / LIC Housing Finance etc) giving the breakup of Principal and Interest repayment in the Financial Year. Schedule of re-payment / Account Statement will NOT be considered as valid proof. If the Housing Loan is a joint loan, the full amount will be considered for rebate only if the Declaration in attached format (Annexure -2) is provided along with certificate of interest on housing loan. Possession letter of the said property is required to avail rebate of Pre EMI interest. If claiming for benefits of HRA exemption & Deduction of Interest on Housing Loan then exemption is allowed if location of employment & location of house property are different. Income / Loss from House Property Please Provide calculation of Income/Loss from house property In case the property is let out. Kindly refer attached sheet Calculation of Income or Loss from House Property Declaration in Form 12C should be submitted with Certificate from the recognized body (Banks/ Financial institutions / LIC Housing Finance etc.) giving the break-up of Principal and Interest repayment in the Financial Year. Please find form 12C (Annex-3) TopSource Page 3
Part C-I : Investment qualifying for Deduction under Section 80C and 80CCC (Rs. 1,50,000/-): Life Insurance Premium (LIP): (for employee, spouse and dependent children shall be considered) Submit LIP receipts. The receipt should pertain to current financial year i.e. 1 st April 2016 to 31 st Mar 2017. Late payments charges / penalties will not be considered for deduction Future premium payments (up to Mar 31, 2017) will be considered on the basis of a declaration (form is available on Portico. Please refer Employee Declaration for Premium due in Feb & Mar 17). This declaration needs to be supported by receipts for the previous month, quarters or the previous financial year, as the case may be. Declarations without these receipts will not be considered for tax exemption. Insurance - Pension Scheme (Policy which is eligible U/S 80 CCC) Submit pension scheme receipts or bank statement which shows the payment of the same Please mention the amount in case of any annual premium is due after 31st Jan, 17 to 31st Mar 2017 in the Investment proof declaration form NSC Sukanya Samriddhi scheme PPF (In the name of employee, spouse or in the name of minor of whom he is guardian) Mutual Fund / ELSS / ULIP Copy of the NSC certificate. Copy of pass book which shows the name, account number, period of deposit and amount. Enclose the first page of the pass book which shows the name and account number of the depositor while submitting the proof for PPF or Copy of the stamped deposit receipt. Copy of the receipt or investment certificate showing the details of the Employee Name, Investment Date, Amount, type of Investment. Only the investments made under Tax Saving Fund / Plan will be considered. This should be clearly mentioned on the mutual fund statement/ receipt. In case of SIP the number of installments will be arrived at & considered up to March 2017. Amount Transferred from other plan to Tax Saving Fund / Plan will not be considered as investment. Acknowledgement of the proposal/application form will not be TopSource Page 4
considered as Proof. Tuition Fees only in the name of school going children Copy of the stamped receipt issued by the educational institution. Tuition Fees shall include any payment of fee to any university, college, school 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 Principal Repayment of Housing Loan Submit Certificate from the recognized body (Banks /Financial institutions / LIC Housing Finance etc.) giving the breakup of Principal and Interest repayment in the Financial Year. Schedule of re-payment / Account Statement will NOT be considered as valid proof. If the Housing Loan is a joint loan, the full amount will be considered for rebate only if the Declaration in attached format (Annexure -2) is provided along with certificate of interest on housing loan. Term Deposit with Post Office or Nationalized Banks. Copy of the Deposit Certificate with remark that the deposit is eligible for tax benefit under the Income Tax Act. Infrastructure Bonds Copy of the infrastructure Bond certificate received from the recognized body with mentioning that the investment is eligible for benefit under the Income Tax Act. Part C-II : Investment qualifying for Deduction under Section 80CCD (Additional exemption of Rs.50,000 over & above Rs.1.50 Lacs u/s 80C) Section 80CCD Contribution to Pension Scheme of Central Government TopSource Page 5
Part D: Investment qualifying for Deduction under Section 80: 80D: MEDICLAIM - Deduction In the name of employee, spouse and dependent children. Maximum limit - Rs. 25000/- (Rs. 30000/- for Sr. citizen) Submit copies of the premium paid receipts of mediclaim policy. Premium paid in Cash is not eligible as deduction as per Income Tax rules Future premium payments (up to Mar 31, 2017) will be considered on the basis of a declaration (Form is available on Portico. Please refer Employee Declaration for Premium due in Feb & Mar 17). This declaration needs to be supported by receipts for the previous financial year. Declarations without these receipts will not be considered for tax exemption 80D : MEDICLAIM - Deduction (Additional for parents) Maximum Rs. 30000/- Copies of the latest Premium receipts issued by the insurance institutions. Premium paid in Cash is not eligible as deduction as per Income Tax rules 80DD : Medical Treatment, training etc. on Handicapped dependent Deduction U/S 80DD is available only for the dependents of the employee. Future premium payments (up to Mar 31, 2017) will be considered on the basis of a declaration (form is available on Portico. Please refer Employee Declaration for Premium due in Feb & Mar 17). This declaration needs to be supported by receipts for the previous financial year. Declarations without these receipts will not be considered for tax exemption. The amount : a) of expenditure incurred by way of medical treatment, training and rehabilitation of a handicapped dependent or b) paid or deposited under any scheme framed in this behalf by the LIC or UTI or any other insurer and approved by the Board for the maintenance of the handicapped dependant, shall be allowed as a deduction up to Rs.75,000 either under (a) or (b) or aggregate of (a) & (b) on the production of a certificate from the Government hospital in the prescribed form and manner, along with the return of income u/s.139 in respect of the assessment year for which the deduction is claimed. Where such dependant is a person with severe disability, the deduction of Rs.1,25,000 can be claimed. TopSource Page 6
80DDB: Deduction in respect of Medical treatment, etc. Benefits are as per below: Person who not a senior citizen - Rs. 40000/- Person who is a senior citizen - Rs. 60000/- Person who is very senior citizen - Rs. 80000/- 80E: Interest paid on Higher Education Loan. Only for Regular, Graduate or Post graduate course incurred for self, spouse and dependent children Where an assessee has, during the previous year, actually incurred any expenditure for the medical treatment of such disease or ailment as may be specified in the rules made in this behalf by the Board for himself or a dependant relative Provided that no such deduction shall be allowed unless the assessee furnishes a certificate in such form and from such authority as may be prescribed. Provided further that the deduction under this section shall be reduced by the amount received, if any, under an insurance from an insurer for the medical treatment of the person Copy of the bank certificate stating that the loan and interest has been paid and amount payable during the financial year AND Declaration from the employee that loan and interest repayment has been made from his taxable income and whether this is the first year of repayment, if not, Nth year of Repayment Schedule of re-payment / Account Statement will NOT be considered as valid proof. 80U: A person with disability or severe disability can claim benefit under section 80U Benefits are as per below: Person with disability - Rs. 75000/- Person with severe disability - Rs. 125000/- To claim a deduction under this section, employee shall furnish a copy of the certificate issued by the medical authority in the form and manner, as may be prescribed, along with the return of income under section 139, in respect of the assessment year for which the deduction is claimed. Person with disability means a person suffering from not less than 40% of any disability as certified by a medical authority Severe Disability is described as a person with 80% or more of one or more aforementioned disabilities. 80CCG: Under RGESS, you are eligible for a tax deduction on 50% of the amount invested The maximum amount eligible for investment in a year for RGESS is Rs 50,000. So maximum deduction is 50% of 50,000 = Rs 25,000 Who can invest in RGESS? This scheme is to encourage New Investors in Stock market. So as per RGESS, you are new investor if: Did not have a Demat A/C before November 23, 2012 OR have not transacted in the equity or derivate segment till November 23, 2012 OR had a Demat account but as second joint holder. Additionally your gross income should be less than Rs 12 Lakh. TopSource Page 7
80TTA : Upto Rs.10,000/- Deduction in respect of interest on deposits in savings account (not term deposits) Copy of pass book / bank statement which shows the name, account number, period and amount. Part E: Investment qualifying for Deduction under Section 10 & 17 Medical Re-imbursement The Medical reimbursement is exempted up to Rs.15000/- To avail this exemption original bills should be submitted. If the bills provided are less Rs. 15,000/-, the remaining amount will be considered as taxable income. Leave Travel Allowance (LTA) The tax exemption is limited to the journey from the place of origin to the farthest point reached in India, by the shortest route. Where no public transport system exists, first class A/C rail fare would be considered as exemption for the distance of the journey by the shortest route LTA can be claimed twice in a block of 4 years. The current block of 4 years is calendar year 2014-2017. The Employee should be on leave in the period for which LTA is claimed. Bills produced must match with your leave dates. If the bills are not provided then the entire amount will be considered as taxable income. If the bills are provided less than the amount spent, the remaining amount will be considered as taxable income. Part F: Income from Previous Employment Previous employment Gross Salary, PF, PT and TDS deductions / exemptions All New joinee s after 1st April, 2016 can furnish pervious employment tax computation which can be Form 16 or TDS computation sheet or Provisional statement of tax computation with seal of the previous employer (s) for the F.Y. 2016-17. Separate forms for each employer should be submitted in case of more than one previous employer. TopSource Page 8
Annexure - 1 DECLARATION BY THE EMPLOYEE FOR CLAMING HRA EXEMPTION WHEN HRA IS UPTO RS 3000/-P.M. I, do hereby certify that during the year 20-20 have taken a house on rent. (Full address of the premises taken on rent) for the purpose of my own residence from to month and have paid Rs per month cash/through cross cheque / Bank draft towards payment of rent to Shri/Smt/Km (Name and complete address of the Land Lord) It is further certified that no other residential accommodation is owned by me / my spouse/minor children. Date: Signature of employee Employee No Employee Name Company Name TopSource Page 9
Annexure - 2 To, The Payroll Department Date: Employee Name Employee No. Company Name Certificate of declaration for availing tax exemption U/s 24 (b) and 80 C in case of Housing Loan borrowed jointly. The attached provisional statement for claiming deduction under section 24 (b) and 80 C of Income Tax Act - 1961 for the period 20-20 relates to housing loan that has been jointly granted. The details of the housing loan are as follows: Housing Loan amount Rs. Interest Rate % PA. Housing loan account no. is borrowed from The names of the joint borrowers are as follows: Joint Borrower 1: Mr. /Mrs. Joint Borrower 2: Mr. /Mrs. Joint Borrower 3: Mr. /Mrs. This is to certify that the exemption in tax due to repayment of Interest and Principal, will be availed proportionately by 1. Mr./Mrs. Share % 2. Mr./Mrs. Share % 3. Mr./Mrs. Share % Sign. of the Joint Borrower 1 Sign. of the Joint Borrower 2 Sign. of the Joint Borrower 3 ( ) ( ) ( ) TopSource Page 10
Annexure - 3 FORM NUMBER 12- C [SEE RULE 26B] Form for sending particulars of incomes under section 192(2B) for the year ending 31 st March 20 1. Name and Address of the Employee 2. Permanent Account Number 3. Residential Status 4. Particulars of income under any head of income Other than Salaries (not being a loss under any Such head other than the loss under the head Income From house property ) received in the financial year : (i) (ii) (iii) (iv) Income from the house property Profit and Gains of Business or Professions Capital Gains Income from other sources (A) (B) (C) Dividends Interest Other Incomes (Pls specify) 5. Aggregate of sub items (i) to (iv) of item 4 6. Tax deducted a Source (Enclose Certificate issued U/s 203 Place Date Signature of the Employee Verification I, do hereby declare that what is stated above is true to the best of my knowledge and belief. Verified today, the day of 20 Place Date Employee No Signature of the Employee Employee Name Company Name TopSource Page 11