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Webinar FAQs: Know your taxes right – How to plan and save on income tax in 2020

Posted by: The ADP Team on 31 December 2019 in Compliance

ADP India hosted a webinar on Know your taxes right – How to plan and save on income tax in 2020 on 19 December. The speaker was Rohini Kumari, Legislative Head from ADP India. If you missed the session, you may access the webinar recording here.

There were many interesting questions that came up during and after the webinar. While Ms. Kumari answered several of them during the webinar, there were some questions that she did not have the time to answer. We have drafted these questions and answers into a quick Frequently Asked Questions (FAQ) format, for the benefit of everyone. If you have further questions, please comment below and we’ll answer as soon as we can.

Frequently Asked Questions

  1. What is charging?

Surcharge is additional tax for high net worth individuals who has to pay the same over the normal tax rates.

  1. What all documents to be submitted for 80DD claim..?
  • The affidavit stating that the person is wholly dependent on you.
  • The doctor’s certificate
  1. Hi, can I submit the Receipt of 4 months in one receipt as the actual are asked prior march?

Yes you can but again the company policy also matters in these scenario.

  1. If my relative income is less than 2.5 Lacs, then still do they need to file?

No. But please check their total income and not just rental income

  1. Can an assesse can show the rent amount to his/her spouse

No, under clubbing of income husband and wife cannot be a legal agreement and no such payment can be considered

  1. Can Employee claim HRA and Home loan in same city, as location of my loan property in not near to work place, therefore have taken house on rent near office. Thought both are in same city.

Yes they can but the individual must have a genuine and reasonable reason to show both the claims. Also company policy matters as well

  1. If an employee live in own or jointly owned house, how the HRA calculation computed?

The rent is split in among the tenants.

  1. How much is the limit to claim under HRA?

It depends on your CTC

  1. Should a revenue stamp be affixed on the rent receipt?

It purely depends on the company policy. But as per stamp act, every cash payment which exceeds Rs.5000, revenue stamp must be affixed

  1. If I change my accommodation and have two rented properties in the year and total is 1 Lakh. Whose Pan will be required?

The 1 lakh calculation is payment wise and thus if your rental payment if exceeds 1 Lakh in a year, all the details of all landlord must be supported.

  1. Is it sufficient to submit just one month’s rent receipt?

No 12 months rental receipts are required.

  1. If employee having own house in city and paying the rent for another, can HRA can be claimed? and employee has the option to not to offer for deemed rental income for own house (like of parents are staying in own house)

Yes they can but the individual must have a genuine and reasonable reason to show both the claims. Also company policy matters as well

  1. PG accommodation- can the employee claim the HRA since there won’t be any receipts

You can ask the PG owner to provide you some receipt or signed voucher for such a payment.

  1. Can we claim LTA 2 times in same year?

Once in a calendar year is only to be claimed

  1. Hi, I have a question, when you say 1 lakh as a rent limit, is it for pa or per month?

Per annum

  1. Can we claim unclaimed LTA of last block in the current block?

Yes, 1 trip can be carry forwarded and claim in the first year of next block year

  1. What about employees who are paying rent to Landlord who is not in India and not able to provide signed rent receipt – what will suffice

PAN need to be submitted irrespective the location or age of the landlord

  1. We are 3 boys who share a flat. The rent payment is done by one of my flat mates and we transfer our share to him. The bill is on his name. How can I claim HRA?

Try and get some documentary proof of such rent payment and claim the same.

  1. How do the employer track the two travels if employee changes job?

It’s not employers’ responsibility but employees’ responsibility to show correct claims

  1. We are paying 50K home loan EMI per month. Can we utilize this myself and my wife to submit for tax saving

Yes the same can be claimed by both if both are co-owners and co-applicant of the loan

  1. Is Cruise trip allowed under LTA?

No. As the same also include the package cost and expense

  1. Is an employee eligible if he does not travel and his family travels

No, the employee has to be part of the travel to claim LTA

  1. Can we use petrol bill if travel by personal car

Please check the company policy first

  1. LTA Maximum permissible in CTC (Min and Max)

The maximum amount is not provided as per law. But the amount decided by the company should be reasonable and genuine

  1. How many days and which type of leave is employee needs to avail to get LTA benefit

The act says just leave but the leave is not defined. But as per general practice, the annual or casual leave are considered.

  1. Hi Rohini, I have received a notice from IT dept., as I didn’t show the FD interest as my additional income, they have sent me a notice with 15 days to take action. I did not check the mail that time and the time passed. What should I do now?

You should revise your return and show such income and pay the taxes and interest as requested by the department

  1. Can LTA be claimed even if the breakup of the same is not included in salary of the employee by the company??

No, LTA can be claimed only if it’s a part of CTC

  1. If the travel is in Mar’2020, how can claim LTA? Is it through ITR filing?

Yes surely if you fail to submit LTA to your company please claim the benefit while filing your ITR.

  1. Property under my name as well as my wife also. Joint registration.

Yes both can claim such expenses

  1. My salary is 5lpa, will I’m eligible for tax deduction

Yes

  1. If the property is partially self-occupied and partially let out?

Divide the loan payment, claim part as let out and the rest as self-occupied and claim the benefit accordingly

  1. If a person has taken a house, and currently paying a pre EMI (only interest part as the property is under construction). Can we still claim for the Interest paid in the current year?

No. But such interest can be accumulated and claimed after possession is once received

  1. If the house loan is in the name of spouse, can we still get the benefit of section 24?

No the loan and property must be in your name as well to get such benefit

  1. What about the interest on 2nd home loan?

Allowed but the limit remains the same.

  1. What is the time line to revise the return? Any due date or any fine I need to pay?

By 31st March of the next year

  1. If I have two let out properties in other cities, Can I claim both loan interest without limit?

Yes

  1. Question is I have 3 story building, ground floor given for rent and rest of the floors occupied by me

Divide the loan payment into 3, 1 part as let out and 2 as self-occupied and claim the benefit accordingly

  1. How about under construction house Loan that will be completed in 2021, when can i claim that Loan interest , principal payments

Interest can be claimed after possession. But principal amount paid before possession cannot be claimed

  1. Each person has to claim half in that amount? Am I right?

Actually both are eligible for 2 lac each or amount paid divided by 2 whichever is lower

  1. For 80EEA- Is the house possession is mandatory

Yes.

  1. In case of tax saver fixed deposits (5 yrs.), the total maturity amount is also counted as additional income, and what if I revest the same amount, it would be counted under 1.5 lakh of that year under 80C?

Yes

  1. Can TOP UP FOR Home loan can be considered?

Yes but within discussed limit

  1. I’ve a question related to exemption on interest portion of home loan repayments section 80EEA. Can I get exemption on interest portion of the loan repayment along with HRA, if the home is under construction and I’m staying in a rented house?

Yes

  1. For senior citizen is there any extra benefit?

Senior citizen have higher limit in few section like 80D, 80TTA etc.

  1. If the property is deemed let out then can I also claim deemed profit or loss and deemed expenses like Society Charges

No only municipal taxes are allowed as deduction

  1. Section 80D Med claim, Can I claim the premium amount spent for my sister?

No sisters and brother are not under dependent definition

  1. Can we claim Housing loan interest for under construction?

Yes the interest paid can be accumulated and the same can be claimed after possession

  1. How to calculate notional rent?

It’s the rent prevailing in your location

  1. Can an employee has both self-occupied property in same city?

Yes

  1. Is the possession mandatory for claiming deduction u/s 80EE & 80EEA?

Yes

  1. Any document to be submitted for notional rent?

No

  1. How about 80EEA? In case of joint owners?

1.5 Lac each or interest paid divide for 2 whichever is lower

  1. Please let us know about the pro-rated tax benefits as well for HRA

HRA benefit / number of days worked in your organization

  1. Sukanya sumridhi age 14 years?

10 Years

  1. Currently we are providing car allowance pa of Rs. 28800/and driver allowance of Rs. 10800/p.a and providing the exemption accordingly. Do the standard deduction of Rs. 50000/- is linked to (car & driver allowance). Is it correct?

No. Standard deduction is stand alone and is not affected by any such allowance

  1. If I purchase a home in the name of my wife who is housewife without any earning can i claim the benefit of section 24, if I am paying EMI from my account?

To claim any of home loan benefit, the house property should be in one self’s name

  1. If I employ house maid and driver and open their NPS and contribute to their NPS as employer. Can I also get some benefit?

No

  1. Under section 80EEA, it is not a value of property, it is mentioned as STAMP DUTY VALUE…

It is the value of property (Total)

  1. If my EPFO contribution is more than 1.5 lakhs, the amount over and above 1.5 lakh becomes taxable

Yes

  1. What’s tier1 and tier2 in NPS?

Tier 1 NPS account are account under which there is withdrawal restriction, whereas Tier 2 is similar to saving account wherein there is no such withdrawal restriction. Thus Tier 1 is allowed as tax exemption claim only.

  1. On Stamp Duty and Registration, is there a highest amount that can be claimed? Also, if there are joint owners both can claim the exemption?

Its 1.5 Lac under section 80C for each

  1. What if one parent is above 60 and one below 60 years

You can claim 50,000 for both

  1. For LTA claim, should there be only 1 invoice for whole family or family & employee can travel in gap of a few days for travel route/vacation, thus there are 2 invoices

No it should be one invoice for all

  1. Can I claim preventive health checkup cost for dependents like children and wife

Yes. But the overall limit is restricted to 5000 only.

  1. Preventive health checkup can be for family?

Yes, but the overall limit is Rs.5000 only

  1. If I have dependent parents, what options do I have to claim benefit?

Yes. But the overall limit is restricted to 5000 only.

  1. Preventive health checkup is for family?

Yes. But the overall limit is restricted to 5000 only.

  1. Our Company deduct Medical Insurance premium, shall i provide any document ot payroll will consider for 80D

No, any company deducted medical insurance is not allowed under 80D

  1. 80EEA (max price of house is 45L/ 90 L if it is co buyer?)

No its 45L only.

  1. If i get my wife take women wellness checkup can I claim the 5000

Yes

  1. How is 80CCD (1) and 80CC (1B) different?

There is no such difference, every individual contribution can be split and claimed under both sections

  1. For housing loan interest exemption, this 2 lacs cap includes loan taken for second house purchase also where first house loan is fully paid up, correct?

Yes

  1. There is an exemption of 50K available under 80D for senior citizens not insured for expenses spent on Medical expenditure. Is that correct?

The medical expenditure you are talking about is available only for very senior citizen i.e. 80+

  1. If there are three persons disabled in the family

The limit remains the same

  1. Preventive health checkup will be 5000 for each individual of family, for e.g. my family is having 4 people, then amount will be 20000 or all together 5000/-

No it’s only 5000 for all

  1. please explain NPS section again

We will share the deck and recording, you can go ahead and check the selected area

  1. What does “Basic =10Lac” high-lights in case of NPS?

That’s my assumption that in that example my basic is 10 Lac only

  1. What is the Profession tax limit? if the employee changed the company in Jan for the location Chennai

2500

  1. For LTA ins the Privilege leave is mandatory if the employee journey placed in weekends

Yes

  1. How can we know prevailing rent?

Its market rent in your area, you can google it or check on magic bricks or any similar sites

  1. What is your view on ELSS

It’s very much allowed under 80C up to a limit of 1.5 Lac

  1. Tax on PPF withdrawal within 3 years?

Yes it would be added to your income and required taxes would be applicable

  1. Can we claim Mobile expenses, Food coupons expenses, and Children education expenses in additions to the Standard deduction?

Depends on the CTC

  1. Are Insurance Claims exempt from taxes?

No

  1. for Rent is the agreement is required

Depends on the company

  1. What about Loss / Income from Vacant property which was on rent for 6 months only.

Not allowed

  1. Can employee need to submit the proof again at the present company for the deduction claimed at previous company?

Yes

  1. Can we claim School fee paid for my children?

Yes under 80C

  1. Can i claim the loss on interest paid on home loan against my income from say bank interest earned or FD interest earned

No

  1. If we have two properties one is self and another is used by parents, can we claim Home loan principle for self and interest for both properties?

Yes

  1. What are the rules for the tax on Bank Interest earning?

Yes it would be added to your income and required taxes would be applicable

  1. In SECTION 80E Deductions interest on loan taken for higher Ed any slab is there

No

  1. I took home loan to construct the house in my home town to occupy my parents & I am staying in rent house in my working place. Can I claim both?

Yes

  1. I am a joint owner of a flat along with my wife. Home loan has been repaid completely. Now I have been relocated to other city. Can I purchase another home on home loan?

Yes

  1. Tax saver FD maturity amount comes under total income?

No but the interest does

  1. If intimation u/s 143(1) is received from Income Tax Department and you have some doubts in the calculation, then how to deal with this?

Discuss with a CA.

  1. Sukanya a/c shall be opened before 10 years of age…. but my question is deposit to sukanya a/c is exempted till 14 years of age. Isn’t it?

It has to opened before 10, exemption is up to 21 years of the girl

  1. I am paying NPS of my wife and she is not having any income and is not an income tax payee, can I claim the NPS contribution paid for her in addition to contribution of myself?

No, the same has to be in the individual’s name

  1. My LIC component due is in Feb-March.. How can i can is submit the actual now. Please let me know the solution to declare prior will it work. And the rent component I submit rent for Monthly basis can I submit the receipt with the total amount for 4 months prior with landlord sign on single receipt. Will that work for Tax declaration

If any unclaimed proofs remain, please submit and claim the benefit during ITR filing

  1. In 80cc can i show PPF & LIC for 1.5lac & House rent up to 1 lac (means 2.5 lac?)

Yes

  1. Is house loan principal and interest both eligible for tax deduction?

Yes, principal u/s 80C and interest u/s 24, 80EE, 80EEA

  1. Is it mandatory for employer to retain the actual proofs submitted by employees? As most of us have outsourced our payroll and employee normally submitted the soft copies of proofs against their investments

If the company can, it’s better. But its primary responsibility of the individual to keep these documents intact.

  1. NPS – Can a salaried individual invest in NPS and claim tax whereas his/her employer is not contributing to NPS

Yes

  1. Can we have the exemption for buying a shop as well?

No

  1. Is it required for employer to maintain documents for LTA?

If the company can, it’s better. But its primary responsibility of the individual to keep these documents intact.

  1. Is there any limit for telephone and or internet reimbursement?

No… But the amount must be decided on reasonable basis

  1. Preconstruction interest amount will be divided in to 8 yrs. Right

5 years after possession

  1. Hi Loan from Relatives/individual for house construction/purchase. Will it be OK to allow or is there any risk for employer?

It’s allowed but the documents must be validated more strictly

  1. What is the difference between 80CCD1 and 80CCD2

80CCD (1) is for individual whereas for 80CCD (2) is for employer contribution

  1. Is there any limit for book and periodical, furnishing or training under reimbursement?

No. But the amount must be decided on reasonable basis

  1. I have savings to be paid in March. How should i submit now?

You can submit the same and claim the benefit while filing ITR

  1. If my HRA claim is less than 1 lacs it’s mandatory for me to submit Rental agreement?

Rental agreement is requirement by the company. Please check the internal company policy

  1. Hi Rohini, I have independent house in which some portion self-occupied and rest of the portion occupied by me. Will I get 2 lakhs for self-occupied and 2 lakhs for let out?

Divide equal parts and claim both

  1. Can we do yearly one time payments under NPS

Yes

  1. Sometime even if an Individual got the procession of the house property, builder will not issue the possession letter on time, In that case what to do?

Please submit either electricity bill or property tax details

  1. If i have a business registered along with me being salaried and if I use the salary as capital for business can I compute my tax under independent business holder?

Discuss with a CA.

  1. Hi Rohini, Is there any Leave encashment limit for tax exemptions? What is the maximum Limit?

3 Lac

  1. If have Housing Loan, sale agreement is in joined name with family member, can I claim the 100% exemption for Home loan, whereas ownership in joined name. Also Housing Loan is also in joined name.

Yes, with declaration that the individual is claiming the 100% of such payments

  1. I have a flat in Bangalore (can’t stay due to security issue) given for rent. Currently staying with Parents in BLR. Is it possible to claim HRA?

Yes they can but the individual must have a genuine and reasonable reason to show both the claims. Also company policy matters as well

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