CBDT has recently released a New Form 12BB to claim tax deduction in respect of Leave Travel Allowances (LTA), House Rent Allowances (HRA) and Interest on Home Loan Interest. The form has to be filed by employees and submit it to their employers along with few other documents and detailed information.
Download New Form 12BB from HERE
House Rent Allowance (HRA)
For claiming House Rent Allowance (HRA) employees needs to furnish details of landlord like his/her Name, Address and PAN number in case the rent where the aggregate rent paid by the employee during the previous year exceeds rupees one lakh.
Let’s see How House Rent Allowance is Calculated?
House Rent Allowance is exempt under section 10(13A) of the income tax act. HRA is limited to the minimum of following 3 amounts:
- Actual house rent allowance received from the employer; or
- Rent paid in excess of 10% of salary including dearness allowances, if any; or
- 50% of salary where house is situated in metro cities i.e. Mumbai, Delhi, Chennai or Kolkata and 40% where house is situated at any other place.
(Here, Salary includes only Dearness allowance, all other allowances and perquisites shall not be considered.)
Home Loan Interest
Similarly, if employee is claiming tax deduction on Home Loan Interest than s/he is required to furnish the name, address and PAN number of the lender. As per section 24, interest on home loan is eligible for deduction if it’s taken from banks or similar financial institutions as well as from any relative of friend. But in case of claiming deduction of home loan principal repayment u/s 80C, the loan needs to be taken from some bank or financial institution.
Rules of Tax Deduction of Interest on Home Loan
- For claiming Home Loan Interest Taxpayer needs to be both owner/co-owner and borrower/co-borrower.
- Deduction up to Rs.2 lakh can be claimed if house property is a self-occupied. In any other case full interest can be claimed without any limit. Further, in case of joint borrowing each borrower can individually claim Rs.2 lakh which sums up to Rs.4 lakh of tax deduction.
- Deduction of interest taken for home renovation of self-occupied house property is also an eligible deduction but the limit is only Rs.30,000. However, for houses which are let-out (rented or second home which is not occupied), there is not limit for tax deduction.
- As per section 24, Interest on Home Loan is deductible on accrual basis i.e. deduction shall be claimed even if no payment has been made. However, section 80C allows deduction only on actual repayment of home loan principal.
Leave Travel Allowance (LTA)
In case of Leave Travel Allowances (LTA/LTC), CBDT made it mandatory for employees to submit travel expenditure proofs to their employers.
Let’s see How Leave Travel Allowance is Calculated?
Leave Travel Allowance/Concession is exempt under section 10(5) to the extent of amount received by employee from his employer for himself or his family towards undertaking a leave to any place in India. The taxpayer can claim exemption for any 2 journeys he undertook in the block of 4 years i.e. the exemption can be claimed twice in four assessment years. The current block is 2014 to 2017.
Many people believes that whatever is spent on leave travel i.e. ticket fare, lodging, taxi-fare etc. is fully exempt but law specified that exemption is available only on travel expenses i.e. ticket fare etc. There are varied rules which need to be considered while calculating leave travel allowance exemption. (Refer: LTA Calculation)
TDS on Immovable Property
CBDT has also extended the time limit of depositing tax deducted at source (TDS) on transfer of immovable property from 7 days to 30 days under the same notification. The law states that if any person purchases an immovable property exceeding Rs.50 lakh than he/she is liable to deduct TDS @ 1% from the sale proceeds and deposit it with the Government before 7th of the following month, failing to which attracts a interest as well as penalty. But now CBDT has extended the time limit of deposition of TDS from 7th to 30th of the following month.
Above amendments shall be enforced from 1st June, 2016.