I wrote some tax saving measures for every class of salaried employee other than 80C deductions. I'd love your feedback

[seekinghispresence]

@theycallmejt it def will raise eyebrows if someone looks through it. Would someone look through it, I am not completely sure.

Yes if you go ahead with this, do pay her monthly in bank transaction. You can control that bank account and use it for investing in her name too. Keep yourself as nominee.

 

[minsanity]

@seekinghispresence You can use your mom's PAN as landlord. As she has no other income the total tax maybe nil or very less.

 

[seekinghispresence]

@minsanity my mother doesn't have any real estate in her name. So I don't think it's a good idea?

 

[myfaithislost]

@seekinghispresence I'm in the exact same boat and showing my mom as a landlord is illegal if the house is in my dad's name. Contacted multiple CAs and what they say is it's riskier to claim more than the market rate. I stopped claiming HRA as the rent i pay and 10% of my basic is almost equal.

 

[amanda86]

@quittercheckusa Your HRA calculation are completely wrong.
You cannot claim exemption more than what you HRA you get

See this page for more details https://cleartax.in/s/hra-house-rent-allowance

 

[quittercheckusa]

@amanda86 Dear strider_bot,

Where did I say you can claim exemption for more than you have received. Please read carefully before commenting.

Rental amount can be Reverse engineered. However that amount should also fulfill above conditions.

Now the reverse-engineering. If your HRA is say 24% of Basic salary. Then add 10% of basic on it. So a Basic salary of 90k can have a rent p.m. of about 30k per month. If you live in Delhi, Mumbai Kolkata or Chennai then do not exceed you HRA above 50% of Basic. If you live anywhere else, then limit it at 40% of Basic Salary. The (base)rent for the above can be calculated at 60% of Basic and 50% of Basic respectively. Remember that amount should also fulfill above conditions.

The calculation is on the rental amount which can be used as a reverse calculation for paying rent. However its your choice, to read about 10(13A) from cleartax and actually figure out the amount of rent to make exempt the whole HRA are two different things.

 

[defoehorses]

@quittercheckusa Hi salad, didn't understand this point. Could you elaborate?
If 100% of my 21k rent is deductible under HRA, why do I need to show another 9k (totally 30k) in order for my 21k to be actually exempted from incurring tax?

 

[quittercheckusa]

@defoehorses Dear amalthomas_zip,

Suppose you 90k Basic salary which has a 21k HRA(you can take any other figure). (Assuming you don't have any DA, if it is consider Basic plus DA)

As per the law the least of the three should be the HRA exempted from the HRA received

1. 40% or 50% of Basic depending upon location of premises.
   
   If you live in Delhi, Mumbai Kolkata or Chennai then do not exceed you HRA above 50% of Basic. If you live anywhere else, then limit it at 40% of Basic Salary
2. Rent paid less 10% of Basic
3. HRA Received
   

Now back calculate. To get 2=3 you will have to put rent as HRA received pkus 10% of Basic. I have attached my calculator where you can put the figures and check yourselves. https://docs.google.com/spreadsheets/d/1XLJNW24Hpit681sE2\_YqyQfTBG0fDJeswNrK7ApcfGY/edit?usp=sharing

This is a broad line calculation. And it would be better if you want specific advice better consult a CA or us([conservativealphaLLP@gmail.com](mailto:conservativealphaLLP@gmail.com)). It's your choice.

 

[paradisefalls]

@quittercheckusa Although insurance is mandatory for every one, in case there's someone who doesn't have insurance or had one rejected for their parents (like mine), you can save upto 50,000 in taxes under 80DDB for medical treatment availed during the FY.

The catch is that one should not have any health insurance coverage and mode of payment to avail the treatment must be NON cash.

 

[mb57]

@paradisefalls Do we need all treatment and medicine bills to avail 80DDB? Are diagnostic procedures like coronary angiography/whole body PET CT scans and routine health checkups allowed as treatments?

Also if my father is senior citizen and my mother is not, what's the upper limit? 50k or 75k?

 

[quittercheckusa]

@paradisefalls Dear priestishere,

Yes. Excellent point you must have encountered to know. 80DDB and 80U are excellent sections to claim. If you can fulfill its requirements practically.

 

[defoehorses]

@paradisefalls A little off topic, but any idea if ADHD medication & psychiatric visits can be covered under any insurance scheme?

 

[sammie2019]

@quittercheckusa This is good stuff.

 

[princesssss]

@quittercheckusa Hi I'm working from home & I live with my parents in a house owned by my sister (NRI) can I make use of hra deductions ?

 

[quittercheckusa]

@princesssss Dear GreatGuy96,

Please DM us or mail us with your case details. Its in the profile.

 

[zashmaster]

@quittercheckusa I see a big miss in the FD interest part. Clubbing rules have to be kept in mind.

 

[quittercheckusa]

@zashmaster Dear Srinivesh,

By Family member just for this part I prefer major children, parents, HUF, parents-in-law but would avoid spouse and minor children.

I have mentioned this already. However thank you for your feedback. An explicit mention of the word 'clubbing' will be mentioned.

 

[redeemedtomanhood]

@quittercheckusa So there is no clubbing if a person opens an FD in his parents' name? Or if a parent opens an FD in major son's name?

 

[quittercheckusa]

@redeemedtomanhood Dear Acrobatic-Profile365,

Yes. You have to think this way, the income from the Asset transferred(Monetary or not) will be clubbed. There are two workarounds if there is no choice other than to gift it to your spouse/minor children. For rest family which fell under the definition of relative you can gift and there will be no clubbing on the income on the gifted money.

Workaround:

• Give Loan than Gifting. Instead of gifting which again clubbed into your head, you can give a loan to your wife with the nominal interest rate and can be for a indefinite period(there is no such rule that to specify the interest rate or tenure). Then all such income should be your wife’s income. It will not be clubbed with your income. As for accounting purposes its a Loan.The only caution here is that she has to repay the loan and interest to you (OFFICIALLY). But you must have a documentary proof of Loan. A simple letter of Loan with Signatures of both the parties will be enough as a proof.
• Investing in products like PPF-By investing in products like PPF (which is EEE product) in your spouse or minor child name, then as the maturity proceeds of PPF is tax-free, you will enjoy the tax-free income.

Cases where workaround is not needed as you said:

I'll write down some cases:

• My father or mother gifts Money to me and I open a FD with it. The income will not be clubbed.
• Similarly I can invest in name of my siblings, parents or whosover who falls in the definition of relative

Relative as per IT act

Clubbing as per IT Act

 

[taylerc5]

@quittercheckusa Will the security deposit also count as a HRA component? If so where to include it in, monthly rent or annual rent?