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

[isika]

@taylerc5 Dear vkasha,

No!!

 

[crystalnicole]

@quittercheckusa How do I get my landlord to disclose his pan card details so i can claim HRA?

 

[quittercheckusa]

@crystalnicole Dear KnowledgeIsPower979,

1. Its better to get a cross signed PAN (mention for Rent payment) copy self attested if the landlord doesn't feels safe to just give out the PAN.
2. There is a Form 60 declaration. You can use however it might create issues later.(Rent being huge or employer straight away refusing)

 

[flaunge]

@quittercheckusa Hi, could you explain point number 2 - "Interest income/Short Term Capital Gains from Bank Deposits or Mutual Funds" in bit more detail ?

If I transfer my Equity MF to my wife and she sells the unit, she too would have the pay the same capital gains tax (10% LTCG / 15% STCG) .. our tax bracket has no effect on this ..

I guess only STCG on debt MF will be beneficial here .. correct ?

Thanks for all the info btw.

 

[quittercheckusa]

@flaunge Dear Android_Arsenal,

• If you gift stocks/MF units (or any security) you don't incur any tax (Gift tax is abolished)
• As the receiver is Relative by definition (Wife), she doesn't need to pay the tax on the gift received i.e. Fair market value as on the date of Transfer (Closing price on that day) LESS Cost of Acquisition. For that I may want to ask you to refer this from the Income Tax department(Page 9,10).
• Now the major issue is clubbing of Income. To avoid this I would not recommend you to go ahead gifting to your wife but better to gift to your major children or there is other way around but that will involve a loan agreement on paper between you and your wife.
• All provisions of sections 112A and 111 will remain the same, that means for 1 lakh no tax and thereafter 10% on equity stocks or Equity MFs after 1 combined Holding Period, For Debt funds,replace it with 20% with indexation after 3 combined years of Holding or as per her slab rate.
• Cost of Aquisition will be your's Cost(Section 49(1) and thus when she sells them, the difference will be her's sale price minus your cost. Please note if you are using Zerodha they would ask you to enter the COA (showing as a discrepancy when the gift takes place) and I would advise you to not sell the security before entering the price
• Period of Holding will start from your date of Purchase.
• All provisions of sections 112A and 111 will remain the same, that means for 1 lakh no tax and thereafter 10% on equity stocks or Equity MFs after 1 combined Holding Period, For Debt funds ,replace it with 20% with indexation after 3 combined years of Holding or as per her slab rate.

For specific advice on your case and which Debt Fund you own, what slabs you both are in and anything else specific to your case please consult a CA or let me know through mail . Mail @ [conservativealphaLLP@gmail.com](mailto:conservativealphaLLP@gmail.com)

 

[rosieisaposie]

@quittercheckusa This is good info. Thanks for sharing!

 

[chesterthesecond]

@quittercheckusa An important condition for 100% exemption on your HRA is to be located in metro city (Delhi, Mumbai, Kolkata, Chennai). For rest of cities, one can only avail HRA exemption upto 40% of Basic.

OP, you should add this as well

 

[quittercheckusa]

@chesterthesecond

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 and thus the HRA of 21k per month will whole come out to be exempted. 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 condition

Dear dcdeepanshu7,

Already added.

 

[kevin43]

@quittercheckusa Nice information

 

[cln]

@quittercheckusa Hi

Quick query on General points 7 and 8.

Can you kindly advise if i would have any tax liability if Employer contribution to my EPF account is Rs 14000 PM and I equally contribute the same amount every month?

 

[remydarat]

@cln None from 7 and 8. 7 is applicable if the annual interest u get from provident fund investments is more than 2.5 lacs

 

[quittercheckusa]

@cln Dear Sweet_Supermarket955,

No. You are cool there wouldn't be any problem.

As a general rule of thumb if your own contribution including in future you voluntary also decide to contribute along with the 14k you are doing right now, in total, make sure your total amount contributed without including employer's amount should not exceed 20.5k (about) p.m.

 

[cln]

@quittercheckusa Noted. Thank you for responding.
I see that my contribution to PF account, should not exceed 2.5 Lakhs.. If so, I'm liable to pay tax on the amount exceeding 2.5 Lakhs..

Employer's contribution is not considering for calculating tax liability.. Till the point where it is below 7.5 Lakhs (incl NPS contribution)

 

[quittercheckusa]

@cln Dear,

If so, I'm liable to pay tax on the amount exceeding 2.5 Lakhs.

You are liable to pay Tax on interest on exceeded amount. Not the contribution but the income you earn upon it. While in the Employer's case both are taxable.

To simplify,

Contribution from
Towards
Tax upon Contribution exceeding limit
Tax upon Income on that Contribution
Limit
How to get away

Employee
Own PF
Not Taxable
Taxable
2.5L
Limit own contribution to up to 20.5k per month

Employer
Your PF and Your Corporate NPS
Taxable
Taxable
7.5l
The limit is good enough, however if not, Case specific advice

 

[cln]

@quittercheckusa Great.. Thank you

 

[resjudicata]

@quittercheckusa Can you explain points 3 and 4.

I only know of deduction in this category in 80c. Which is EPF. For 150000

 

[quittercheckusa]

@resjudicata Dear tumnajaano,

The post is already too long. I will write a separate post about it. Please stay tuned and follow my account if you wish to.

I would hope to cover all points along with a calculator.

 

[achristianinaction]

@quittercheckusa What if the rent is below 1 lac? I read somewhere that you don't need to provide the PAN or the landlord's signature if that's the case.

 

[quittercheckusa]

@achristianinaction Dear python00078,

I have replied to this previously. Please check that discussion thread.

https://www.reddit.com/r/IndiaInvestments/comments/10v3b8s/_/j7fzyw8

 

[resjudicata]

@quittercheckusa My mother is a government employee (annual 8.5) and a month's salary is deducted in income tax. Apart from ppf which is a good sip to save tax?