Many salaried individuals are in the process of
finalizing their tax-saving investments and other deductions they intend to
claim this financial year, as most companies ask their employees to file their
investment declaration along with proof by January. If you fail to submit the details along with the proof, be
prepared for huge cuts from the monthly salary. The company will deduct
applicable tax deducted at source (TDS) from your salary in the remaining months
in the financial year, though you have the option of claiming a refund later
from the Income Tax department.
Here's a list of some new tax rules and deductions you need to be aware of while
submitting your declarations this year:
PAN OF LANDLORD IS
MANDATORY:
Perhaps this is the most important change in
rules this year that could impact many salaried persons who claim house rent allowance. As per I-T
department's circular, you have to
mention the PAN of your landlord, if you are paying an annual rent of more than Rs 1
lakh.
"If your monthly rent is more than Rs 8,333, it
is mandatory to quote the PAN of landlord. If the
landlord doesn't have a PAN, a declaration to stating
this along with the name and
address of the landlord should be filed,"
explains Vineet Agarwal, director, KPMG. The new rule could be bothersome for
many individuals paying rent, as landlords may refuse to part with their
PAN.
EXTRA BENEFIT FOR FIRST-TIME HOME
BUYERS:
First-time home buyers can look forward to some
additional tax savings this year. However, the loan amount has to be under Rs 25 lakh to claim the benefit.
"Also, the value of the residential
house should not exceed Rs 40 lakh. In addition, the deduction is
available, only if the assessee does not own any residential
house property on the date of sanction of the loan," says Suresh Surana,
founder of tax consulting firm RSM Astute Consulting. If you have obtained a
home loan this year (financial year 2013-14), you can claim an additional tax
deduction of Rs 1 lakh on the interest paid on that loan under section 80EEE.
Moreover, if interest paid during the year is less than Rs 1 lakh, the unclaimed
deduction can be utilised in the subsequent year.
ADDITIONAL TAX RELIEF FOR LOWER INCOME
CATEGORIES:
If your annual taxable income is under Rs 5 lakh, you will be entitled to a
tax rebate of Rs 2,000 this year. "The lower of Rs 2,000 or the entire tax
liability (tax payable) will be allowed as a rebate under section 87A of the
Income tax Act," says Agarwal.
TAX BENEFIT ON DONATIONS:
While this is not exactly a rule introduced
this year, many employers and employees are still unclear about tax treatment of
donations. Typically, most employers do not take into account the donations made
by employees, which qualify for tax deduction under section 80G. Because of
this, individuals will have to claim refund when they file their returns for tax
deductions on these donations.
"Over the last few years, TDS circulars were
issued expressly stating the intention of the government to allow deduction by
the employer only if donations were made to certain specific funds through the
employer. However, in the recent couple of TDS circulars, no such restrictions
have been made. This relaxation is a welcome step as employees can provide
donation receipts to the employer," explains Agarwal.
However, not all tax experts are convinced that
the change in rules will help employees immediately. "The employers have been
given an option to factor in the 80G donations. However, it is not mandatory.
Many employers may choose not to give the benefit while deducting tax at source,
as it is not easy to verify whether the donations made are actually eligible for
deduction due to lack of documentary evidence submitted. Not many would want to
take on the liability," cautions Surana. Get in touch with your organisation and
ask about its policy on donations. Also, remember, you will not be able to claim
this deduction if your donation is made in cash and exceeds Rs 10,000
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