February 25, 2017

Tax ability of Arrears of Salary – Relief u/s 89,With Automated Arrears Relief Calculator + Form 10E For F.Y.2016-17

An employee may receive any arrear or advance salary or salary for more than 12 months etc. In such a case, the assessee might have to pay higher taxes as the arrear /advance salary are taxed in the year of receipt of the same and not in the year in which they are actually due. The difference in tax liability in a due year and in receipt year might be due to changes in the slab rates. For this reason, the provision of relief u/s 89 comes in.

Download Automatic Arrears Relief Calculator U/s 89(1) with Form 10E from F.Y.2000-01 to F.Y.2016-17 

Arrears Relief's Main Data Input Sheet
Arrears Amount to bifurcation
Arrears Relief Form 10E
Relief is available under following cases:
  • Salary received in arrears or in advance;
  • Salary for more than 12 months in one financial year;
  • Family Pension being paid in arrears;
  • Gratuity;
  • Compensation on termination of employment; and
  • Commuted Pension
To calculate relief, the following steps should be taken:
Step 1: Calculate the tax due in the current year, firstly by including the arrears in your total income and then by excluding the arrears from your total income. Then take the difference of these two figures and let’s call the difference as ‘X’.
Step 2: Calculate your tax due (or the actual tax paid) in the year for which the arrears have been received, firstly by including the arrears in your total income and then by excluding the arrears from your total income. Then take the difference of these two figures and let’s call the difference as ‘Y’.
Step 3: The figure you get when you subtract X from Y is your relief amount.
This can be better understood with the help of the example below:
Mr.Niraj earned Rs. 15,00,000 p.a. in FY 2015-16 and also received an arrear of Rs. 3,00,000 p.a. for FY 2013-14. His total salary in FY 2013-14 was Rs. 6,00,000 p.a.
The table below explains the calculation of relief:
Details
Amount
Tax due on the income of Rs. 18,00,000 in FY 2015-16 (including the arrears)
3,75,950
Tax due on the income of Rs. 15,00,000 in FY 2015-16 (excluding the arrears)
2,83,250
Difference between Tax Due (X)
92,700

Details
Amount
Tax due on the income of Rs. 9,00,000 in FY 2013-14 (including the arrears)
1,08,150
Tax due on the income of Rs. 6,00,000 in FY 2013-14 (excluding the arrears)
46,350
Difference between Tax Due (Y)
61,800
Relief under section 89 = X-Y = 92700-61800=30900
Form 10E for claiming such relief has to be submitted to your employer. Your salary slips serve as proof of receipt of arrears and should be kept safely. One important thing to note is that relief can only be claimed if tax paid is actually higher due to receipt of such arrears. If there is no extra tax liability, relief is not allowed.

In the case of VRS Compensation being received by the employee, no relief shall be granted under Section 89 if he has claimed exemption u/s 10(10C) for Voluntary Retirement Scheme. An assessee can claim either exemption under section 10(10C) or relief u/s 89 and not both together.
An employee may receive any arrear or advance salary or salary for more than 12 months etc. In such a case, the assessee might have to pay higher taxes as the arrear /advance salary are taxed in the year of receipt of the same and not in the year in which they are actually due. The difference in tax liability in a due year and in receipt year might be due to changes in the slab rates. For this reason, the provision of relief u/s 89 comes in.

Download Automatic Arrears Relief Calculator U/s 89(1) with Form 10E from F.Y.2000-01 to F.Y.2016-17 

Arrears Relief's Main Data Input Sheet
Arrears Amount to bifurcation
Arrears Relief Form 10E
Relief is available under following cases:
  • Salary received in arrears or in advance;
  • Salary for more than 12 months in one financial year;
  • Family Pension being paid in arrears;
  • Gratuity;
  • Compensation on termination of employment; and
  • Commuted Pension
To calculate relief, the following steps should be taken:
Step 1: Calculate the tax due in the current year, firstly by including the arrears in your total income and then by excluding the arrears from your total income. Then take the difference of these two figures and let’s call the difference as ‘X’.
Step 2: Calculate your tax due (or the actual tax paid) in the year for which the arrears have been received, firstly by including the arrears in your total income and then by excluding the arrears from your total income. Then take the difference of these two figures and let’s call the difference as ‘Y’.
Step 3: The figure you get when you subtract X from Y is your relief amount.
This can be better understood with the help of the example below:
Mr.Niraj earned Rs. 15,00,000 p.a. in FY 2015-16 and also received an arrear of Rs. 3,00,000 p.a. for FY 2013-14. His total salary in FY 2013-14 was Rs. 6,00,000 p.a.
The table below explains the calculation of relief:
Details
Amount
Tax due on the income of Rs. 18,00,000 in FY 2015-16 (including the arrears)
3,75,950
Tax due on the income of Rs. 15,00,000 in FY 2015-16 (excluding the arrears)
2,83,250
Difference between Tax Due (X)
92,700

Details
Amount
Tax due on the income of Rs. 9,00,000 in FY 2013-14 (including the arrears)
1,08,150
Tax due on the income of Rs. 6,00,000 in FY 2013-14 (excluding the arrears)
46,350
Difference between Tax Due (Y)
61,800
Relief under section 89 = X-Y = 92700-61800=30900
Form 10E for claiming such relief has to be submitted to your employer. Your salary slips serve as proof of receipt of arrears and should be kept safely. One important thing to note is that relief can only be claimed if tax paid is actually higher due to receipt of such arrears. If there is no extra tax liability, relief is not allowed.

In the case of VRS Compensation being received by the employee, no relief shall be granted under Section 89 if he has claimed exemption u/s 10(10C) for Voluntary Retirement Scheme. An assessee can claim either exemption under section 10(10C) or relief u/s 89 and not both together.

February 24, 2017

Automatic Advance Income Tax Calculator for F.Y.2017-18 and Ass Yr 2018-19 + Major Highlights Budget 2017, Changes Made by Finance Bill 2017

Major Highlights Budget 2017, Changes Made by Finance Bill 2017. Budget Analysis for Small and Medium Enterprises. Analysis of Finance Bill 2017 for Small and Medium Enterprises. Direct Tax Amendments, Check Key Highlights of Budget 2017-18,  Details Analysis for Direct tax changes in Budget 2017. Now scroll down below n check more details for “Major Highlights Budget 2017, Changes Made by Finance Bill 2017 “

Download Automatic Excel Based Income TaxCalculator for Financial Year 2017-18 and Assessment Year 2018-19 as per the Finance Budget 2017-18


Direct Tax – Personal Income Tax Rates and Surcharge

     ·                          Tax on Total Income between Rs. 2.50 Lacs and Rs. 5 Lacs reduced to half i.e. 5% from 10%
      ·                 Rebate u/s 87A reduced to Rs. 2500 from Rs. 5000; Allowed to only Individuals/HUF with total income less than or equal to Rs. 3.50 Lacs
      ·                     Surcharge of 10% on every Individual/HUF/AOP/BOI having Total Income more than Rs. 50 lacs but less than Rs. 1 Crore
Final Position of Tax Slabs



Donation-related Amendments
    A ·                          Cash donation is allowed only up to Rs. 2000/- in cash for deduction under section 80G [A.Y. 2018-19 on wards]

    ·                          Also, the donation to political parties in cash shall be allowed as the deduction only if made up to Rs. 2000/-
Major Highlights Budget 2017, Changes Made by Finance Bill 2017. Budget Analysis for Small and Medium Enterprises. Analysis of Finance Bill 2017 for Small and Medium Enterprises. Direct Tax Amendments, Check Key Highlights of Budget 2017-18,  Details Analysis for Direct tax changes in Budget 2017. Now scroll down below n check more details for “Major Highlights Budget 2017, Changes Made by Finance Bill 2017 “

Download Automatic Excel Based Income TaxCalculator for Financial Year 2017-18 and Assessment Year 2018-19 as per the Finance Budget 2017-18


Direct Tax – Personal Income Tax Rates and Surcharge

     ·                          Tax on Total Income between Rs. 2.50 Lacs and Rs. 5 Lacs reduced to half i.e. 5% from 10%
      ·                 Rebate u/s 87A reduced to Rs. 2500 from Rs. 5000; Allowed to only Individuals/HUF with total income less than or equal to Rs. 3.50 Lacs
      ·                     Surcharge of 10% on every Individual/HUF/AOP/BOI having Total Income more than Rs. 50 lacs but less than Rs. 1 Crore
Final Position of Tax Slabs



Donation-related Amendments
    A ·                          Cash donation is allowed only up to Rs. 2000/- in cash for deduction under section 80G [A.Y. 2018-19 on wards]

    ·                          Also, the donation to political parties in cash shall be allowed as the deduction only if made up to Rs. 2000/-

February 23, 2017

Leave salary exemption U/s 10(10AA) in Income Tax + Automatic Master of Form 16 Part A and B for F.Y.2016-17 and Ass Year 2017-18

If Leave salary encasement is received by any employee while in employment then it is fully taxable in the hands of an employee. While if leave encasement is received in the case of retirement or superannuation or resignation, then the exemption is available up to the following limits.

Download Automated Income Tax Form 16 Part A & B for FinancialYear 2016-17 & Assess Year 2017-18 [ This Excel Utility can prepare at a time 100 employees Form 16 Part A& B]


In case of Central government or State government employee(excluding employees of a local authority or statutory corporation) – Fully Exempt
In case of any other employee –
Least of the following is exempt:-
·                          Actual amount received
·                          3,00,000
·                          10 months average salary
·                          Average salary x leaves at the credit of an employee (leaves cannot exceed 30 days for every completed year of service, fraction of a year is to be ignored)
Salary includes basic pay, dearness allowance(if it forms part of the retirement benefits) and percentage wise fixed commission on turnover
Average Salary = Average of salary drawn in the last 10 months immediately preceding the date of retirement.
If leave encasement is received by an employee from more than one employer in the same previous year or in different previous years the aggregate maximum amount exempt from tax on account of leave encasement cannot exceed Rs. 3,00,000.
Leave salary paid to the legal heirs of the assessee, who dies during the employment will not be taxable.
If Leave salary encasement is received by any employee while in employment then it is fully taxable in the hands of an employee. While if leave encasement is received in the case of retirement or superannuation or resignation, then the exemption is available up to the following limits.

Download Automated Income Tax Form 16 Part A & B for FinancialYear 2016-17 & Assess Year 2017-18 [ This Excel Utility can prepare at a time 100 employees Form 16 Part A& B]


In case of Central government or State government employee(excluding employees of a local authority or statutory corporation) – Fully Exempt
In case of any other employee –
Least of the following is exempt:-
·                          Actual amount received
·                          3,00,000
·                          10 months average salary
·                          Average salary x leaves at the credit of an employee (leaves cannot exceed 30 days for every completed year of service, fraction of a year is to be ignored)
Salary includes basic pay, dearness allowance(if it forms part of the retirement benefits) and percentage wise fixed commission on turnover
Average Salary = Average of salary drawn in the last 10 months immediately preceding the date of retirement.
If leave encasement is received by an employee from more than one employer in the same previous year or in different previous years the aggregate maximum amount exempt from tax on account of leave encasement cannot exceed Rs. 3,00,000.
Leave salary paid to the legal heirs of the assessee, who dies during the employment will not be taxable.

February 22, 2017

Automatic Form 16 Part B with Arrears Relief Calculator for F.Y.2016-17 + Most Effective Way to Achieve 1,50,000 u/s 80C Without Any Investment

Every person wants to save tax. So, some of the people try to evade tax, which is wrong on behalf of a responsible citizen of a country. For saving tax the most common and best way is the use of section 80C of the income tax act,1962. Section 80C is the section which provides every individual some deductions from the taxable income which helps every individual to save tax. The maximum limit of section 80C is Rs.1,50,000. This much limit could help to save tax a lot as this may help some of the individual to get in lower slab rate.

Download Automated Master of 50 employees Form 16 Part A&B and Form 16 Part B for Financial Year 2016-17 & Assessment Year 2017-18 [This Excel Utility can prepare at a time 50 employees Form 16 Part B for F.Y.2016-17]


People generally take this deduction by investing in some of the prescribed deposits or securities. But there are much more ways to reach the maximum limit other than by investment. Section 80C does not encourage only investment but also offers tax benefits in other expenses also.

Download Automatic 50 employees Master of Form 16 Part A&B for Financial Year 2016-17 & Assessment Year 2017-18 [ Who are not able to download the Form 16 Part A from the TRACES PORTAL, they can use this Automatic Form 16 Part A&B for F.Y.2016-17]


How to reach Rs.1,50,000 limit without investment?

School and College Tuition Fees
The deduction is allowed only for the full-time course in India. This deduction is only allowed for the maximum of 2 children. Payment made for part-time education, distance learning, private coaching and donations, late fees, transport charges are not allowed as deduction.
Repayment of Home Loans
Repayment of loan taken for Purchase and construction of residential property is allowed as deduction. The deduction is allowed only for principal amount. Repayment of loan taken for repair, maintenance, reconstruction is not allowed as deduction. The deduction is allowed only if such loan is taken from Central Government, bank, LIC or National Housing Bank. If the property is transferred before years then the deduction will not be allowed and the deduction allowed earlier is deemed to be income of that financial year.
Expenses paid as Stamp Duty and Registration Charges can be taken as the deduction.

Download Automated Arrears Relief Calculator with Form 10E up to F.Y.2016-17

Payment of life insurance premium are allowed as deduction:- Many of us take Life Insurance Policy as an investment. But if we consider LIC term plans, it can not be considered as investments plans.
The policy must be taken in the taxpayer’s name or spouse’s or any child’s name (whether married/ unmarried or dependent/ independent, minor/ major).  HUF can take policy in the name of its members.

Provident fund contribution by employee
The provident fund contribution by employee accumulated over years could be the major constituent which itself could be more than Rs.1,50,000. 12% of basic pay + D.A. is deducted by the employer and deposited in Employee’s Provident Fund or Recognized Provident Fund.
Sum paid under non commutable deferred annuity for an individual on the life of taxpayer, spouse or child is allowed under this section.
After all these expenditures you may be left with no overall limit of 80C but if it is there it will be too less.
That you can fill up with investment. The investments under section 80C are:
·         PPF
·         NSC
·         Post office Fixed deposit
·         Senior Citizen Saving Scheme
·         ELSS
·         Fixed Deposit Account notified by Central Government
·         Mutual Funds
·         Bonds of NABARD
·         Sukanya Samriddhi Account Scheme
·         Unit-linked Insurance Plans (ULIP)

In this way, one can reach Rs.1,50,000 under 80C with no investment.
Every person wants to save tax. So, some of the people try to evade tax, which is wrong on behalf of a responsible citizen of a country. For saving tax the most common and best way is the use of section 80C of the income tax act,1962. Section 80C is the section which provides every individual some deductions from the taxable income which helps every individual to save tax. The maximum limit of section 80C is Rs.1,50,000. This much limit could help to save tax a lot as this may help some of the individual to get in lower slab rate.

Download Automated Master of 50 employees Form 16 Part A&B and Form 16 Part B for Financial Year 2016-17 & Assessment Year 2017-18 [This Excel Utility can prepare at a time 50 employees Form 16 Part B for F.Y.2016-17]


People generally take this deduction by investing in some of the prescribed deposits or securities. But there are much more ways to reach the maximum limit other than by investment. Section 80C does not encourage only investment but also offers tax benefits in other expenses also.

Download Automatic 50 employees Master of Form 16 Part A&B for Financial Year 2016-17 & Assessment Year 2017-18 [ Who are not able to download the Form 16 Part A from the TRACES PORTAL, they can use this Automatic Form 16 Part A&B for F.Y.2016-17]


How to reach Rs.1,50,000 limit without investment?

School and College Tuition Fees
The deduction is allowed only for the full-time course in India. This deduction is only allowed for the maximum of 2 children. Payment made for part-time education, distance learning, private coaching and donations, late fees, transport charges are not allowed as deduction.
Repayment of Home Loans
Repayment of loan taken for Purchase and construction of residential property is allowed as deduction. The deduction is allowed only for principal amount. Repayment of loan taken for repair, maintenance, reconstruction is not allowed as deduction. The deduction is allowed only if such loan is taken from Central Government, bank, LIC or National Housing Bank. If the property is transferred before years then the deduction will not be allowed and the deduction allowed earlier is deemed to be income of that financial year.
Expenses paid as Stamp Duty and Registration Charges can be taken as the deduction.

Download Automated Arrears Relief Calculator with Form 10E up to F.Y.2016-17

Payment of life insurance premium are allowed as deduction:- Many of us take Life Insurance Policy as an investment. But if we consider LIC term plans, it can not be considered as investments plans.
The policy must be taken in the taxpayer’s name or spouse’s or any child’s name (whether married/ unmarried or dependent/ independent, minor/ major).  HUF can take policy in the name of its members.

Provident fund contribution by employee
The provident fund contribution by employee accumulated over years could be the major constituent which itself could be more than Rs.1,50,000. 12% of basic pay + D.A. is deducted by the employer and deposited in Employee’s Provident Fund or Recognized Provident Fund.
Sum paid under non commutable deferred annuity for an individual on the life of taxpayer, spouse or child is allowed under this section.
After all these expenditures you may be left with no overall limit of 80C but if it is there it will be too less.
That you can fill up with investment. The investments under section 80C are:
·         PPF
·         NSC
·         Post office Fixed deposit
·         Senior Citizen Saving Scheme
·         ELSS
·         Fixed Deposit Account notified by Central Government
·         Mutual Funds
·         Bonds of NABARD
·         Sukanya Samriddhi Account Scheme
·         Unit-linked Insurance Plans (ULIP)

In this way, one can reach Rs.1,50,000 under 80C with no investment.

 
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