Income Tax – Tax Declaration To Your Employer: The Changes You Should Be Aware Of

Income Tax – Tax Declaration To Your Employer: The Changes You Should Be Aware Of

In the beginning of every fiscal year, employees are asked for details like
their investment in ELSS (Equity Linked Savings Schemes), insurance
policies, house rent, home loan, education loan etc. by their employer to
arrive at the annual tax liability of an employee. This annual exercise
also helps you do tax planning for the year. Based on the declaration, your
employer calculates TDS or tax deducted at source. The employer will deduct
tax from salary and deposit it with the tax authorities. Starting April 1,
2017, some income tax laws have changed.

ITAX DECLARATION

Income Tax Declaration To Your Employer: The Changes You Should Be
Aware Of 


Here are changes in tax laws you should be aware before submitting tax
declaration:
1) The tax rate on income between Rs. 2.5 lakh and Rs. 5 lakh has been
halved to 5 per cent from 10 per cent. However, rebate under Section 87A
gets reduced from Rs. 5,000 to Rs. 2,500. And no rebate will be applicable
for taxpayers having income above Rs. 3.5 lakh.
2) A 10 per cent surcharge will be applicable for individuals having income
ranging from Rs. 50 lakh to Rs. 1 crore (existing surcharge of 15 per cent
will remain the same for individuals having income above Rs. 1 crore).
However, those with taxable income of above Rs. 50 lakh get the benefit of
marginal relief. The concept of marginal relief is designed to provide some
relief in levy of surcharge to a taxpayer where the total taxable income
marginally exceeds Rs. 50 lakh or Rs. 1 crore.
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3) No deduction will be allowed for investment in Rajiv Gandhi Equity
Saving Scheme, which has been scrapped this year. This tax-saving scheme
was designed exclusively for the first-time individual investors in the
securities market with gross total income below a certain limit.
4) The government has cut down tax benefits borrowers enjoyed on
properties, other than self-occupied. For properties rented out, a borrower
could deduct the entire interest paid on home loan after adjusting for the
rental income. On the other hand, borrowers of self-occupied properties get
a deduction of Rs. 2 lakh on interest repayment on home loan. But from this
year, the borrower can only claim a deduction of up to Rs. 2 lakh per year
after adjusting for the rental income.
5) And the amount above Rs. 2 lakh can be carried forward for eight
assessment years. Since the interest component of home loan repaid in
initial years is higher, experts say that the borrower may not be able to
fully adjust the interest paid as deduction even in subsequent years.
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6) Individuals are required to deduct a 5 per cent TDS (tax deducted at
source) for house rent payments above Rs. 50,000 per month. Tax experts say
that the move will ensure that persons who get a large rental income come
into the tax net. It will be effective from June 1, 2017.
7) The holding period of a property for qualifying as long-term capital
gains has been reduced to two years, from three years. This will help save
tax if a property is sold after two years of buying. If a property is sold
before two years, the profit from the transaction will be treated as
short-term capital gains and will be taxed according to the slab rate
applicable to him/her.
8) Along with the reduction in the holding period to two years, the base
year for calculating indexation of cost has also been changed. The base
year has been shifted from 1981 to 2001.
9) Income tax officials can reopen tax cases for up to 10 years if search
operations reveal undisclosed income and assets of over Rs. 50 lakh.
Currently, tax officers can go back up to six years to scrutinise the books
of accounts of assessees. Taxpayers who do not file their returns on time
will have to shell out a penalty of up to Rs. 10,000 from Assessment Year
2018-19. However, if the total income of the person does not exceed Rs. 5
lakh, the fee payable under this section shall not exceed Rs. 1,000. The
government has also made it compulsory for people to quote their Aadhaar
details in their tax returns.
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10) Under the Pradhan Mantri Awas Yojana (Urban) for middle-income groups,
home loan borrowers buying their first home are eligible for subsidy on
interest repayments. Home loans sanctioned or applications are under
consideration since January 1, 2017, are eligible for interest subsidy
under the Credit Linked Subsidy Scheme for Middle Income Groups. The
beneficiary earlier should not have own a house in his/her name. 
Source: http://profit.ndtv.com

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