If you are working with an MNC in the present financial year 2020-2021 and your salary and earnings from investments add up to a round figure of Rs 7 lac 85 thousand which relates to the Annual year 2021-2022, you can calculate your income easily. In addition to the HRA facility, you will also be making use of the decrements provided within Chapter VI-A.
Now the main question which arises here is:
“If you have to apply for tax reduction for the annual year 2021-22, in accordance with the most immediate changes in the budget, which facilities and privileges do you have to surrender?”
Recently, HUF`s and individuals were availed a new option to carry out their tax payments at a discounted rate, the required terms of which are governed by Section 115BAC of the Income Tax Act. However, to avail such reduction in the tax rate, one is required to give up the eligibility for the under-listed privileges:
- Exemption on leave travel provided under Section 10`s clause (5)
- HRA under Section 10(13A)
- Allowances and deductions with regard to Section 16, which include entertainment, standards and employment-related taxes
- The payable interest, as required under Section 24, on unoccupied or self-occupied holdings and belongings mentioned in Section 23(2)
- Section 32(1)(iia)`s increased asset depreciation, decrements as stated under various Sections as 33AD,33AB, 33ABA,35AD or 35CCC
- Decrements for payments with respect to various funds and premiums as EPF, Life insurance, PPF account, Mutual Fund subscriptions, term deposits, etc as stated in Section 80C
- Decrements on payments made to any insurer to avail or extend the duration of health insurance as mentioned in Section 80D
- Decrements on payments of interest on education loans
- Decrements made on charity or donations as governed by Section 80G
- Decrements availed on interest on money in a savings account as stated in Section
Keeping the specifications of one`s case in view, a facility to practice this right annually is provided under Section 115BAC, which is to be exercised not after the income tax return is filed.
You are entitled to receive a recompense of Rs 5.5 lac and Rs 2.20 lac of accumulated leave when you retire on 30 April 2020. Also, you will be paid some amount from the employer and employee PF.
Another question which arises, in this case, is mentioned below
“Will you be able to stake a claim to the mentioned immunities if you choose to deduce the tax rate?”
Considering the specifications and details of your case, Section 115BAC allows you to apply for a tax rate reduction and you can stake a claim to the immunity you seek on or before filing tax returns for the financial year 2020-21 which is in relevance to the annual year 2021-22 under Section 10(10) governing the gratuity on retirement, Section10 (10AA) prescribing accumulated leave liquefying and Section 10(12) with regard to the PF contributions by insiders.