into tax computation there is a very high probability to get notice from Income

Into tax computation there is a very high probability

This preview shows page 24 - 27 out of 60 pages.

into tax computation there is a very high probability to get notice from Income Tax Department, which can further lead to extra interest under sec 234A, 234B, 234C & penalty of 5,000 INR. Image 9. Form 26AS Income from Salaries Basis for charging salary: 1. Employer- employee relationship 2. Due and Receipt basis, whichever is earlier. Common fully taxable components of Salary: Basic Salary Dearness Allowance/ City compensatory Special Allowance Bonus/Incentive/Exgratia Components which can be claimed as tax exempt:
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Leave Travel Concession/Allowance House Rent Allowance Reimbursement of car running expenses and expenses on repair and maintenance of car Medical Allowance- not fully taxable. Conveyance Allowance- to extent of INR 1600 per month is exempted. If employer provides free conveyance, it is fully taxable. Reimbursement of telephone/mobile expenses Food coupons- limit is up to Rs. 50 per meal Gratuity VRS- up to INR 5,00,000 exempted. Leave encashment Income from Other Sources The income which cannot be categorized in any of the other four heads of income is categorized and taxed under the head „income from other sources‟. It includes: Interest incomes Interest on Public Provident Fund (PPF) Interest on the balances in employee‟s Provident Fund account. Interest on tax free RBI Bonds. Interest on NRE accounts, etc. Commissions On commissions, TDS is also deducted (@ 10% on other sources of income) and can be claimed back, provided Resident of India. Dividends Received from Indian Companies will be exempted. Received from Foreign Companies will be taxed under the head „income from other sources‟. Deductions- Chapter VIA The aggregate amount under section 80 C and 80 CC cannot exceed INR 150000.
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Section 80 C: Premium paid towards life insurance policy Contribution (investment) towards public provident fund investments. Purchase of National Security Certificate (NSC). Investments in Equity Linked Saving Scheme (ELSS) Repayment of Housing Loan (principal amount). Payment of Stamp Duty/ registration fees. Payment towards children‟s tuition fees - can be claimed for only two children. Contribution to certain Pension Fund (section 80CCC). Contribution to pension scheme of central government by an employee of central government- Additional investment under NPS (80 CCD1B). This section was introduced last year. It is also known as additional benefit under NPS. Maximum 50,000 can be claimed under chapter-VI A (when is over and above the limit of section 80). Section 80 EE: Interest on loan taken for residential house property- This can be claimed only from FY16-17 onwards. Section 80 D: The deduction can be claimed with respect to medical insurance premium.
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  • Fall '17
  • Mahvish ali

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