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My organisation wants a lot of documents for tax deduction, like doctors' presciption for bills over Rs 500, which I don't have.
They also want the lease agreement form and cheque numbers of rent paid for my house. Since I pay the rent by cash, I cannot provide the latter.
They are deducting tax without considering these exemptions. Are these documents really required when filing the returns?
- Chandra Paul
Companies generally try to cover their liabilities with as much documentation as possible. If your company has the policy of requiring a doctor's prescription, you have no alternative but to provide it.
The general practice is to get medical bills along with a declaration statement from the employee as to the authenticity of such bills.
As for HRA, the general practice is to take the rent agreement and rent receipts with a revenue stamp affixed on the receipts and a signature of the landlord to whom the rent is paid. The employer is not required to take the rent receipts/ other proof if the monthly rental is below Rs 3,000.
The above two deductions can only be given by an employer and not taken independently by the employee.
Can I show HRA and home loan rebate together?
- Sunit Bhargava
Technically, if the conditions for HRA (you are staying in rented premise; you are paying rent and the premise is not owned by you) and the home loan (money has been borrowed and house is constructed/bought) are met, there is no reason why you should not be able to avail of both benefits.
Do remember, though, this is a grey area in terms of interpretation by tax authorities.
I am entitled to conveyance, medical, professional development and house rent allowance in my salary structure, which are given as part of my monthly salary.
With this new tax rule, can I still show all these in U/s 10 exemptions? If yes, what are the max limits for each?
- N Shankar
There has been no move proposed to change the benefits that were available for the heads you have mentioned and the same limits (if any) apply in the new scenario.
I get about Rs 300,000 per annum as salary and my TDS amounts to around Rs 36,000 to Rs 40,000.
I was advised to get my designation changed to a consultant, as I would have to pay only 5.5% TDS every month a saving of Rs 25,000 every year. Is this wise?
- Anand Chawla
TDS signifies only the deduction made by the person making the payment. It does not mean that the person receiving the payment is free of income tax if TDS has been made.
You will need to assess the net income (after reducing expenses from the income) and accordingly work out the taxes to compare whether it is beneficial to remain a salaried individual or become a consultant.
One major criterion to be considered is the impact of service tax that you may be needed to pay out of your pocket.
The current finance bill proposal of an exemption of service tax to small entrepreneurs earning an income of under Rs 400,000 could benefit you.
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Note: Questions may be edited for brevity. Due to the tremendous response, all queries will not be answered.
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