Strict new norm for claiming HRA

Strict Rule for claiming HRA Exemption

A few days back, the income tax department has tightened the norms for claiming tax exemption for house rent allowance (HRA). HRA is the payment given by an employer to an employee for to meet the requirement of house rent.

Now, it has become mandatory to submit the PAN (Permanent Account Number) of the landlord to the employer if annual rent paid by employee more than Rs. 1 Lakh per annum. The central government has lowered the exemption limit for reporting the rent. Earlier, taxpayer had to report the PAN of the landlord, if the monthly rent more than Ra 15,000 or Rs 1.8 lakh per annum.

If the landlord does not have a PAN, the assessee has to submit a declaration to this effect along with name and address of the landlord. Even if an employee pays rent below Rs 8,333 per month, he/she has to produce the rent receipts availing the rent receipts availing deduction under HRA. However, for thos emplyee who are drawing HRA up to Rs 3,000 per month will now be exempted from producing rent receipt. The new norm has come into effect from the financial year 2013-14 or Assessment Year 2014-15.

The new rule is aimed at people claiming HRA exemption for living in their own house and claim HRA exemption. HRA granted to an employee who is residing in a house/flat owned by him is not exempt from income-tax. 

For more detail and any other query related investment, you can contact me through my email

Warm regards,

Arvind Trivedi

Certified Financial Planner

arvind.trivedi79@gmail.com

Important points for tax planning

Some important things about tax planning

According to law every individual are required to file Income Tax Returns, if your total income without allowing deductions (such as Section80C etc) exceeds the basic exemption limit.

This year many relaxation given by our finance minister for assessment year (2013-14), the exemption limit has been increased. 

·         For Individuals below the age of 60 (both men and women),the exemption limit is Rs. 2 Lakh.

·         For senior citizens above the age of 60, the exemption limit is Rs. 2.5 Lakh

·         For super senior citizens (Individuals above the age of 80), the exemption limit is raised to Rs. 5 Lakh

There’s some more good news for Senior Citizens because the eligible age for Senior Citizens has been reduced from 65 to 60 years for:

·         Section 80D (Deductions on Medical Insurance),

·         Section 80DDB (Deduction on Medical Treatment) and 197A

Changes in e-Filing this year onwards:

·         E-Filing is compulsory for people earning more than Rs. 5Lakhs. This refers to the total income amount after claiming tax deductions like section 80 deductions. 

·         You will need to enter the IFSC code instead of MICR code while specifying your account details along with 11-digit Bank Account Number for easy return through ECS. If you do not have an 11-digit bank account number, then you have to request your refund via cheque. 

·         You will have to file the ITR-2 in case of exempt income exceeding Rs. 5,000. Common examples of Exempt Income are PPF interest. Dividend earned from shares etc.

·         Remember to claim Section 80TTA: Everyone should declare their Bank Interest Income and then claim this deduction. 

·         Declaration of Assets and Liabilities for Business people:If you earn Income from Business or Profession and your Total Income exceeds Rs. 25 Lakhs, you have to provide the details of all your personal and business Assets & Liabilities in Income Tax return itself. This is for people filling in ITR-3 and ITR-4 only. 

·         Foreign Income declaration: Income earned from foreign countries has to be declared in the ITR. This is in addition declaration of all foreign assets in your I-T Return.

There are many other aspects which is equially important during tax planning. We will discuss that in our further article.

For more detail about any other query related investment, you can contact me through my email.

Warm regards,

Arvind Trivedi

Certified Financial Planner

arvind.trivedi79@gmail.com