The last month of filing income tax returns is starting this week. The last date for filing income tax return for the financial year 2020-21 is December 31.
The last month of filing income tax returns begins this week. Whether employed or professional, everyone is trying to save tax. Salaried people get tax exemption from three such routes, which are not very popular. What are these hidden avenues of tax concession and how can they be taken advantage of, Pramod Tiwari’s report explains the complete mathematics-
Cash Voucher: No tax if spent
Tax consultant Atul Garg says that cash vouchers received by the company for day-to-day expenses to an employee on duty are outside the purview of tax. To claim tax exemption in the return, it is necessary that this amount is fully spent. Through Form-16 received from the company, it can be found out whether the employer has considered this amount as taxable and included it in your salary.
Usually, employers treat this amount as a full expense and do not add it to the taxable amount. Despite this, if you have not spent the entire amount, then it is better to include the remaining amount in your income and pay tax. While filing the return, keep in mind that the voucher amount spent and the unspent amount should be filled separately.
HRA: Benefit on rent if not in salary
Many employers do not give HRA (House Rent Allowance) to their employees and it is not even mentioned in their salary. If such salaried people live in a rented house, then they can claim tax exemption on the amount spent on it every year. The benefit of tax exemption on rent under section 80GG of Income Tax will be available only to those employees who do not pay HRA by the company. Also, even if you have your own house in the city where you work, you will not get the benefit.
Tax exemption on rent is calculated in three ways
- Total amount paid as rent after deducting 10 percent of the total income of the taxpayer (Total rent 1.5 lakh, total income 7.5 lakh then actual tax exemption will be 75 thousand rupees.)
- Average five thousand rupees per month (total tax exemption 60 thousand)
- 25% of the income (income Rs 7.5 lakhs then exemption is 1.87 lakhs)
Note: This relaxation will be subject to the location of the job and the rules of the employer.
Gift: Earnings from your money given to wife
By the way, the amount given by you to the wife is considered as a gift and is not taxed. But, if he has earned a return on this amount by investing it in the stock market or any other option, then the tax liability and rules will change. Under Section 64 of the Income Tax, the gift giver has to include this amount in his earnings, on which liability is created, then tax will also have to be paid according to the slab. On the other hand, if the wife’s return from this money is above the prescribed limit of tax exemption, then she will also have to file income tax return and may also have to pay tax.
Don’t make false claims in haste
While filing income tax return, keep in mind that you should have sufficient documents for claiming tax exemption. If the department asks for documents related to you at the time of assessment and you are not able to give, then you may have to face fine. Fill the returns carefully and stay away from false claims.