Local charge

The local charge is gathered by various districts in the states to guarantee that metro office, like streets, seepage, neatness nearby, and so forth, are kept up with viably and productively. The distinction in the premise of toll, computation, mode, and way of installment emerges from the way that the local charge is represented by the state government and thusly designated to different urban communities.

The private and business building (free), Flats and lofts, Shops, Godowns, empty land, and so forth are for the most part dependent upon local charge for reasons for the expense assessor’s worth appraisal. Because of this intricacy, people in money and assessment arranging ought to be comfortable with the complexities of property tax collection.

We’ll improve on local charges demanded by the Bengaluru district and tax cuts of local charges to help our guests better grasp and plan their local charge installments.

About Bruhat Bengaluru Mahanagara Palike Property Tax

Consistently, landowners in Bengaluru are needed to pay local charges to the Bengaluru Municipality’s body known as the Bruhat Bengaluru Mahanagara Palike (BBMP). These assets are used by the metropolitan body to offer public types of assistance in Bengaluru. The BBMP utilizes a technique called Unit Area Value (UAV) to process local charges. Contingent upon the area and utilization of your home.

 The estimation of local charge depends on the size of the property duplicated by a for every square foot charge rate every month (UNIT), still up in the air based on the property’s (AREA). The BBMP has six worth zones, compared to the Department of Stamps and Registration direction esteems. As indicated by the zone where the property is found, the local charge rate will shift.

Installment of BBMP Property Tax

The local charge period starts on April 1 of one year and finishes on March 31 of the next year, with charges due by April 30 of the following (FY). The current local charge FY is 2021-22.

BBMP additionally offers 5% discount on local charge paid in one portion inside due date specified by BBMP

At 2% each month or 24% each year, a deferred installment of local charge is liable to intrigue.

A local charge required in two sections might be paid ahead of time with no interest or discount.

Calculation of Property Tax

Local charge (K) = (G I)*20% + Cess (24% of local charge)

Where

G = Gross unit region esteem showed up by X+Y+Z and I = G*H/100;

X = Tenanted space of property x Per sq ft pace of property x 10 months;

Y = Self-involved space of property x Per sq ft pace of property x 10 months;

Z = Vehicle leaving region x Per sq ft pace of vehicle leaving region x 10 months; 

H = Percentage of deterioration rate, which relies on the age of the property. 

Accordingly, the local charge is comparable to 20% of the complete space of the property (rented, self-involved, and vehicle parking spot) increased by the per square foot rate set by BBMP for each kind of utilization of property for quite some time diminished by devaluation approved by BBMP in addition to a 24 percent premium on local charge.

BBMP Property Tax Forms

The six structures utilized by the BBMP to gather cash from citizens include:

How to pay BBMP Property Tax

BBMP local charge can be paid either physically or on the web.

Online mode

Go to BBMP local charge entry

The framework will provoke you to enter a past SAS Application Number or PID (the two of which might be found on the last receipt) and afterward click Fetch,’ which will show landowner data.

Snap-on continue’ if the data shown is right, and no progressions have been made to the property; you will be coordinated to shape IV.

If there are any varieties in the property, like utilization, constructed region, or inhabitance, check the case and afterward click on continue’ to arrive at structure V.

Check for mistakes prior to presenting the installment to guarantee that all-important data has been pre-populated in the structure showed, for example, charge estimations. In the event that any progressions are required, alter them and keep on paying either completely or in portions, picking either on the web or through a challan.

If you select the web-based installment choice, you’ll be shipped off an installment page where you can pay utilizing either credit or charge cards or through your ledger. A receipt number will be produced and E-receipts will open up after the exchange is finished. Receipt can be printed/downloaded here

On the off chance that you deal with any issue while paying on the web and installment is fragmented, you can continue the installment utilizing the current SAS Application number here

Further, for any issues confronted while utilizing on the web mode, you can contact BBMP either at contactus@bbmp@gmail.com or raise grievances here

Manual mode

Fill all the relevant structures take them to both of the accompanying and pay either via card or a Demand Draft:

Bangalore 1 focus

Right-hand Revenue Officer workplaces

Following banks likewise have been approved to gather the duty:

• Canara Bank
• Pivot Bank
• HDFC Bank
• ICICI Bank

Here you might connect to the parts of supported banks. Additionally, it’s significant that BBMP has cooperated with the accompanying banks for local charge installments:

• IDBI
• Company Bank
• Indian Overseas Bank
• Indeed Bank
• Kotak Mahindra
• Indian Bank
• SBI
• Maharashtra Bank
• Indusind Bank

On the off chance that you made an installment with a challan while finishing the structure on the web, you might pay it at any of the above areas or banks.

Tax cuts

If the accompanying conditions are met, a local charge paid in the FY where it is paid might be deducted from the gross yearly worth (GAV) of the property while computing pay under house property in the FY wherein it is paid:

• The risk for the property isn’t NIL (self-involved house property)
• The proprietor is liable for settling genuine local charges.

Frequently Asked Questions

Is it conceivable to guarantee the local charge decrease for my rental home on the off chance that I paid them in the earlier year?

Indeed, you can exploit the local charge paid on real installment and there is no restriction on when the local charge was caused. You may likewise guarantee benefits for earlier years.

Is there a cutoff to what amount of your local charge might be deducted?

There could be no furthest cutoff to the measure of local charge that might be deducted as an allowance.

Is it conceivable to guarantee the local charge paid on a self-involved home?

No, oneself involved home’s local charge can’t be deducted from house property pay.

Also Read,

NTR Bharosa Pension
MGT-14: List of Resolutions and Agreements to be Filled

The post BBMP – Bruhat Bengaluru Mahanagara Palike Property Tax appeared first on LegalRaasta Knowledge portal.

For listed shares, if a shareholder disposes of its whole holding in that year and then perhaps acquires it again in the same year, no tax is due because the fractional credit is deemed to have offset the amount of DDT payable. However, in the case where a shareholder disposes of part of its holding in that year, the tax due is calculated using the fractional method which takes into consideration the adjusted cost base.

However, if a shareholder disposes of part of its holding in that year, the tax due is equal to the full amount of DDT payable multiplied by a fraction which determines how many days such shares were held during such year and divided by 365 (days). It should be noted that shares acquired during the year are treated as if acquired on the last day of the year.

When a company decides to pay out dividends, it redistributes its after-tax profits with an element of personal income for investors and shareholders in that company. Hence, the distribution of dividends results in income coming into the hands of its shareholders who may eventually be required to pay tax on it.

The distribution of dividends is subject to two kinds of taxes – dividend distribution tax (DDT) and withholding tax (WT).

Dividend Distribution Tax (DDT) is an indirect tax applicable in India on the transfer of listed equity shares. DDT was applicable at 8% (5% Central Tax + 3% Secondary and Higher Education Cess) with respect to Indian companies, but now it is proposed that this may be raised up to 15%. The Eighth Finance Commission has expressed concern that the Central Sales Tax, Purchase Tax, and Dividend Distribution tax should be abolished because these taxes distort investment decisions.

“Dividends”  means any distribution made by a company, whether in money or otherwise, out of profits arising from the business of the company to its shareholders or members. It includes all interim dividends and also final dividends.

The DDT is applicable to all equity shares which form a part of any listed security and where such shares are transferred by any mode (in other words, the DDT is liable to tax on the transfer of equity share in listed securities), other than transfers under:

Thus, if somebody receives a dividend from any other source, the DDT is not applicable. Dividend Distribution Tax is also not payable when shares are transferred by Gift or in case of succession to the estate of an individual (i.e., when shares are inherited).

Tax payable at various rates on different types of dividends:

A person who receives dividends from a company that is liable to pay DDT has to pay dividend distribution tax himself on the dividend he received. This tax is paid at his income tax rate (plus surcharge and education cess). The person receiving the dividend has also to fill Form No 16 in respect of dividend distribution tax.

The following table illustrates how much tax would be payable on dividends received:

• The tax on dividend income of Resident individuals is levied under section 115BBDA. A company pays dividend distribution tax at the flat rate of 15% of the total amount of dividend distributed by it to its shareholders. This provision came into effect from 1 June 2012, replacing the earlier system where DDT was payable at graduated rates on dividends distributed by a company.
• In the case of a dividend received from a foreign company, when it is present in India, then DDT shall be deducted from such dividends when they are payable out of profits arising from business or profession carried on in India through a branch or agency in India. In other cases, i.e., when a dividend is received from a foreign company not present in India, then DDT shall be deducted when it is remitted to India by the company.

As per section 115BBE, Dividend Distribution Tax at 15% of total dividend paid or credited becomes payable on certain conditions even if no tax was deducted at source. Such cases are-

1. Payment of Dividends through Credit Cards, Debit Cards, and online banking: 15% DDT becomes payable on such dividends even if no tax was deducted at source (i.e., before a credit to the bank account). It is because in such cases it cannot be assured that tax has been paid by the company or intermediary while making payment.
2. Dividend from which tax was not deducted at source: In this case, even though no tax was deducted on dividend while it is being distributed, nevertheless 15% DDT becomes payable when the amount of such dividend is credited to a bank account of a person resident in India or while remitting outside India by the banking company.
3. Dividend from foreign companies: Here tax is payable under section 115BBE as such companies are not required to deduct tax at source before payment of dividend.
4. Dividend on unlisted shares: 15% DDT becomes payable even if no tax was deducted at source when dividends arising from unlisted shares are credited to a bank account or remitted outside India.
5. Payment of commissions on purchase/sale of shares (by broker): 15% DDT becomes payable even if no tax was deducted at source when commission is paid on purchase/sale of shares by any broker, excluding stock brokers and sub-brokers who are not required to deduct tax at source under section 195 .
6. Payment of commission to non-resident brokers: 15% DDT becomes payable even if no tax was deducted at source when commission is paid to a broker resident outside India. This provision came into effect from 1 June 2012 and replaced the earlier system wherein such commission could be paid without deduction of tax only if certain conditions are satisfied.
7. Payment of interest on securities: 15% DDT becomes payable even if no tax was deducted at source when interest is paid in respect of security which does not carry any element of dividend or income from business or profession, but later it is shown that the payment was in fact a disguised dividend. This provision came into effect on 1 June 2012.
8. Payment of interest by NBFC’s: 15% DDT becomes payable on payment of interest on securities even if no tax was deducted at source when such interest is paid to a Non-Banking Financial Company (NBFC). This provision came into effect on 1 June 2012.
9. Payment of fee by mutual funds to distributors: 15% DDT becomes payable on the fee paid, being commission or remuneration, of any kind paid or credited by companies (other than companies registering under section 12AA) which are engaged in the business of collective investment in securities, when it is paid directly or indirectly to a distributor. This provision came into effect from 1 June 2012.
10. Payment of interest by Mutual Funds: 15% DDT becomes payable on payment of interest even if no tax was deducted at source when such interest is paid to a Mutual Fund in the course of business by any person other than a company or institution carrying on the business of banking or insurance or broking  or chit fund. This provision came into effect from 1 June, 2012.
11. Payment of interest by property funds to investors: 15% DDT becomes payable on payment of interest even if no tax was deducted at source when such interest is paid or credited by a company engaged in the business of providing services for acquisition, development, construction, maintenance or management of the commercial or residential property to its investors. This provision came into effect from 1 June 2012.
12. Payment of interest by Business Trusts to investors: 15% DDT becomes payable on payment of interest even if no tax was deducted at source when such interest is paid or credited by a business trust to its investors. This provision came into effect from 1 June 2012.
13. Payment of fees by mutual funds to AMCs or Trustees: 15% DDT becomes payable on the fee paid, being commission or remuneration, of any kind paid or credited by an Asset Management Company (AMC) which carries out the functions of receiving money from investors and depositing it with a trustee for further investment in securities, and which also selects the said trustee, to such trustee. This provision came into effect from 1 June, 2012.
14. Payment of interest by AMCs: 15% DDT becomes payable on payment of interest even if no tax was deducted at source when such interest is paid or credited by an investment manager registered under section 12AA to a mutual fund by way of commission or any remuneration when it is paid directly or indirectly in respect of securities. This provision came into effect from 1 June 2012
15. Payment of interest to foreign venture capital investors: 15% DDT becomes payable on payment of interest even if no tax was deducted at source when such interest is paid or credited by a venture capital company engaged in the business of making investments into small and medium enterprises to a Non- Resident Indian who is a foreign venture capitalist. This provision came into effect from 1 June 2012.

The deduction for Dividend Distribution Tax is not available in the following cases:-

• Where the company is a subsidiary ;
• Where dividend has been deducted under any law or where tax has been deducted by an intermediary on account of a shareholder being a resident other than a company ;
• Where the dividend has been declared but has not been distributed or payment is pending; and
• In a case where a public company has paid excess deduction of Dividend Distribution Tax, it becomes eligible for claiming the refund.

Dividend Distribution Tax can also be used on mutual funds:

• DDT is applied to debt-oriented funds at a rate of 25%. (29.12 percent including surcharge and cess).
• DDT was not applied to equity-oriented funds, however. Budget 2018 included a ten percent levy on equity-oriented mutual funds (11.648 percent including surcharge and cess).
• In the hands of the fundholder, the dividend received by investors is tax-free.

When is Dividend Distribution Tax to be paid?

In case of non-payment within 14 days, the company would be liable to pay by way of interest at the rate of 1% of the DDT from the date following the date on which such DDT was payable till the time such DDT is actually paid to the government. These provisions are contained under Section 115P.

As per Section 115P of the Income Tax Act, DDT payable in respect of a dividend declared or distributed before 1st April 2007 shall be payable within fourteen days from the date on which such declaration or distribution was made, and for this purpose, tax stands collected at the time of making such declaration or distribution. In case of non-payment within 14 days, a company would be liable to pay by way of interest at the rate of 1% per month from the date following the date on which such DDT was payable till the time such DDT is actually paid to the government.”

“In case of dividend distribution after 1-4-2007, DDT shall be payable within thirty days from the due date for filing of return of income. In case of non-payment, DDT stands collected by way on interest at the rate 2% per month from the date following the date up to which it stood collected till such time it is actually paid to the government.”

As per section 115P of the Act, where a dividend distribution tax has not been paid in time, interest is payable by the company on any unpaid dividend distribution tax from the date following the date up to which it stood collected till such time it is actually paid. The rate of interest would be 1% per month of the amount due till the amount is actually paid to the government.”

At the time of paying the dividend, a fund house will deduct Dividend Distribution Tax [DDT] at the rate of 10% on the dividends over & above Rs. 1 Lakh. The fund house will then pay the remaining amount to you, net of all taxes.

Dividends declared but not paid remain taxable in the eye of law whereas Dividend Distribution Tax [DDT] is only deducted at the source when the dividend is declared & final payment is done.

Also Read: 

Impeachment of President in India

Credit Rating Agencies in India

The post Dividend Distribution Tax appeared first on LegalRaasta Knowledge portal.

What is the purpose of Section 194N?

If you withdraw more than Rs 1 crore in cash in a financial year, you’ll be subject to Section 194N. This section will apply to all sums or aggregates of monies withdrawn from a single-payer within a fiscal year. The section will apply to any taxpayer’s withdrawals, including:

• A single person
• An Undivided Hindu Family (HUF)
• A Business
• A limited liability partnership (LLP) or a partnership business
• A municipality is a government entity that governs a specific
• A group of people (AOPs) or a collection of people (BOIs)
• Any financial institution (private or public sector
• A cooperative financial institution

On any sum in excess of Rs 1 crore, the tax will be deducted by the payer while making a cash payment to any individual from a taxpayer’s bank account. The Rs 1 crore restriction each financial year applies to each bank or post office account, not to each taxpayer’s individual account.

A person with three bank accounts with three distinct banks, for example, can withdraw cash of Rs 1 crore * 3 = Rs 3 crores without paying any TDS. Any cash withdrawal made by a taxpayer from a recipient’s bank account will only be subject to TDS under Section 194N.

The recipient of the cash is not the account holder, but a third party in the instance of a payment made by a taxpayer through a cheque bearer issued to a third party in excess of Rs 1 crore in a financial year. In this instance, the bank does not make a payment to the account holder. In the foregoing scenario, it’s unclear if a bearer check handed to a third party (such as a vendor) to collect payment from the bank is protected under section 194N. Is the bank entitled to collect tax from the account holder’s funds in relation to the bearer cheque issued to a third party?

Separately, under section 40(A)(3) of the income tax act, payments paid with a bearer check are not authorised as an expense for business payments. Any payment made in a single transaction or in aggregate that exceeds Rs 10,000 per day is not recognized as a business expense.

The Rs 1 crore limit will apply to cash payments and withdrawals made in the fiscal year 2019-20. Payments made on or after September 1, 2019 will be subject to the provisions of Section 194N.

Why was this section introduced?

Section 194N was included by the government in the Union Budget 2019 proposal on July 5, 2019. The Finance Bill, 2019, introduced ‘Section 194N – TDS on cash withdrawals above and above Rs 1 crore’ to discourage cash transactions in the country and promote the digital economy.

Under Section 194N, who will deduct TDS?

TDS must be deducted by the individual (payer) who makes the cash payment under Section 194N. The following is a list of such individuals:

• Any financial institution (private or public sector)
• A cooperative financial institution
• There is a post office.
• There are some types of people (payees) who are exempt from the provisions of this section. They are as follows:
• Any governmental entity
• Any bank, including cooperative banks, is eligible.
• Any financial company’s business correspondent (including co-operative banks)
• Any bank’s white label ATM operator (including co-operative banks)
• Anyone else who has been alerted by the government

What does TDS have to do with Section 194N?

TDS shall be deducted by the payer when making cash payments to the payee in excess of Rs 1 crore in a financial year. If the payee withdraws money at regular intervals, the payer is required to deduct TDS after the total amount withdrawn in a financial year surpasses Rs 1 crore.

TDS will also be applied to amounts above Rs 1 crore. For example, if a person withdraws Rs 99 lakh in total in a financial year and then withdraws Rs 1,50,000 in the following year, the TDS responsibility is only on the excess amount of Rs 50,000.

TDS rate as defined under section 194n

Section 194N requires the payer to deduct TDS at a rate of 2% on cash payments/withdrawals of more than Rs 1 crore in a financial year. TDS on Rs 50,000 at 2%, i.e. Rs 1,000, would be deducted in the given scenario.

If the person receiving the money has not filed an income tax return in the three years prior to the current year, the tax deduction maximum is Rs 20 lakh. TDS is 2% on cash payments/withdrawals of more than Rs 20 lakh but less than Rs 1 crore, and 5% on withdrawals of more than Rs 1 crore.

Also, read

Section 194C- TDS (Tax Deducted at Source) on Payment to Contractors

Details On TDS Penalty And Interest For Late Payment

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Gone are the days when you would work in an organization for your entire life. According to an overview directed recently, 60% of working professionals in India have changed positions in the new past. 56% are recent college grads who moved to start with one organization. 85% of occupation containers did as such to add a new position to their resume, paying little heed to how long they remained at their past organization.

Another work environment accompanies its own way of life, extra obligations, and another chief and colleagues. There are a couple of significant subtleties that the new workers must know about to credit compensation to their new managers.

To guarantee the progress is smooth and there are no questions about crediting compensation and related taxes, people who mean to change their work should realize how to benefit from Form 12B and fill the equivalent precisely. On the off chance that you move to another association in the year, you may need to fill form 12B for tax purposes.

In case you don’t know about what it is and how to fill form 12B read on to know further.

You should also read this:Tips to Save Income Tax in FY 2020-21

Form 12B

Essentially, it is an income tax form that is submitted according to the rules of Rule 26A. It is generally presented by a joined a renewed person organization in a monetary year.

You have probably been documenting your Income Tax return consistently right? Anyway when you take an action starting with one organization then onto the next, how might your new organization deduct TDS on your solidified compensation? All things considered, they don’t have any earlier subtleties of your past income.

This is the reason according to Rule 26A, another representative necessity to submit Form 12B to uncover compensation subtleties of their past organization to their new manager. Filling Income tax form 12B in time assists your new association with smoothing out their TDS in the wake of considering the TDS allowance made by your past organization.

On the off chance that you also are a first-time work container, you probably won’t know about it.

The essential target is to give subtleties of the profit created by a person from his/her past association. One should take note that another worker is needed to submit Form 12B to the new business.

Moreover, it is the obligation of the new boss to give Form 12B to the new representative. In any case, one can start Form 12B download on the web and thusly fill and submit it alongside Form 16 to the new manager.

Notwithstanding, outfitting Form 12B may not be mandatory in all cases.

What are the Components of form 12B?

It should be noted that the Form must be completed using compensation slips provided by previous employers. The following is a list of the information that should be remembered for this Form. The following are the essential components of Form 12B of the Internal Revenue Service:

• Details of the past association like TAN and PAN.
•  Details giving an exact separation of the past compensation including – dearness allowance, leave travel recompense, house lease stipend, perquisites, and so on
• The past manager made compensation on TDS allowance.
• Workers pay Professional tax in some random circumstance.
• Applicable derivations under Section – 24(b), 80C, 80D, 80E, and so on
• Deductions on lease-free convenience and fortunate assets.

Prominently, on the off chance that an individual joined another organization in August 2018. He/she needs to submit past income subtleties relating to the first April 2018 to July 2018.

What is the Importance of form 12B?

The essential meaning of Form 12B for the new manager and the representative are –

• For employers

It comes helpful for the new boss as it contains subtleties identified with the new representative’s past compensation and allowance. Thusly, it assists bosses with producing Form 16 with the right information.

• For employee

At the point when they present this Form, new managers can deduct the exact measure of TDS from their compensation and along these lines limit the danger of disparities.

Outstandingly, new workers need to submit it alongside other proof of ventures before 31st March. Prior to submitting it, they should document it precisely to finish the whole cycle in a less bulky manner.

It is required when you join another organization or association in the monetary year as for subtleties of income acquired from the past organization. You can request that your new boss give you form 12B and you can finish the subtleties from your compensation slip. It can profit on the web and you can present the filled form to the new manager.

How to fill form 12B?

These pointers beneath feature how to fill Form 12B of Income Tax in a word –

• Provide subtleties like the name and full location of the last boss.
• Enter subtleties like TAN and PAN of the last association from past compensation slips.
• Mention the time of business.
• Provide subtleties like income acquired in a given monetary year prior to joining the current organization.
• Provide subtleties like dearness stipend, rent encashment, house lease, and so on, in section 7.
• Enter the measure of PF credited to the record number in segment 8.
• Add the sum in segments 6, 7, and 8 and enter the result in segment 9.
• Provide derivation subtleties like – extra security premium, PF, and so forth, that go under the domain of Section 80C.
• Subsequently, fill the all-out tax deducted in a given financial year.

One should take note that Form 12B incorporates two pages of annexures. Preferably, the initial segment requires giving subtleties like – worth of lease-free convenience given by the business.

Furthermore, the intricacies of both vacant and furnished facilities are extensive in terms of décor perquisites. Furthermore, the second annexure is concerned with minor details such as transportation reimbursement or comparative benefits provided by the previous company.

When representatives submit Form 12B, their new manager gives a combined Form 16 dependent on the former’s subtleties. It is normally prescribed to confirm the subtleties relating to income and TDS gave in forms given by both the over-significant time span managers. The measure of tax deducted at source in Form 16 ought to be equivalent to the sum referenced in the Form given by the current business. This will assist with disposing of the dangers relating to disparities as far as taxes.

The Difference between form 12B and Form 12BA

However Form 12BA and Form 12B are utilized for various purposes, people often confound between them. This table underneath features the contrasts between Form 12B and 12BA –

• On the basis of point-by-point articulation Form, 12B is an assertion of income from compensation.
• Other side Form, 12BA is a nitty-gritty of perquisites.
• On the basis of insurance, workers give form 12B to their new manager to join the new position in a financial year.
• Whereas in form 12BA managers issue from to their representatives alongside form 16.
• On the basis of the components form 12B contains subtleties like – income from compensation, TDS derivations, and so on.
• On other side forms, 12BA contains subtleties of incidental advantages, profits and perquisites, and so forth, income from pay.
• Besides becoming conversant in Form 12B, individuals should also make it to some extent to think about a couple of factors before switching employment. For instance, they declare their previous income correctly to their new employer.

• Other than that, they ought to also declare their existing loans and details of deductions under Section 80. Above all, they ought to remember to gather Form 16 from their employer if that they had been paying TDS on salary.

The Difference between form 12B and Form 12BB

When a private individual changes jobs in the midst of the fiscal year, he or she must file Form 12B, which includes information on the previous employer’s earnings. Form 12BB, on the other hand, is filed after you start a replacement work or on an expected basis at the beginning of the fiscal year. However, at the year-end, you’ve got to submit proofs/evidence against the tax exemptions, investments, and expenses already claimed by you in form 12BB.

Aside from profiting tax advantage when you submit Form 12B, taking an individual credit to pay towards your lease or for venture purposes, can likewise make you qualified for tax allowance. Individual credits of up to Rs. Finserv MARKETS has a limit of Rs. 25 lakhs that can be accessed in a fraction of a second and require almost no desk labor. There are no problems, and you can access your credit account at any time. Additionally, read how you can profit tax advantage on close to home advance just at Finserv MARKETS. Rush! Download our own advance application to apply for your Personal Loan in only a couple of snaps.

Conclusion

People who join another organization in the year are needed to submit Form 12b under Rule 26A. It is an income tax form that unveils the information with respect to the person’s past income from the past business. Each new worker is needed to fill in and submit Form 12b to their new boss. The worker needs to fill in the revelation in Form 12b alongside Form 16 whenever given by the past business. Be that as it may, outfitting Form 12b isn’t obligatory.

Related Blogs: SECTION 119 OF INCOME TAX ACT DPT – 3 Return

The post Form 12B: A Complete Guide appeared first on LegalRaasta Knowledge portal.

TDS on salary is deducted as per the tax slab rates applied on your income whereas TDS on, for example, interest income from fixed deposits is deducted at only 10%. Also, once the selection of tax regime has been informed to the employer, the employee cannot change the selection of tax regime in that particular financial year. However, the circular stated that an employee will have the choice of switching the tax regime at the time of filing tax return (ITR).

For that, here are some things you need to consider while choosing your tax regime for TDS from salary for this financial year.

Steps to selecting the Tax Regime of your choice:

Step 1: Understand what works best for you

If your tax-free income is less than 5 lakhs or more than 15 lakhs, the tax rates are the same for both; that is why the old regime that allowed liberation is so appropriate

Step 2: Check for exemptions

For all the deleted releases, check how many apply to you and how much you can save by choosing those. This will help you in the next step.

Step 3: Do Math

Depending on the deduction/exemption of your taxable income, calculate the amount of taxable income under the old state and the new state.

Step 4: Go beyond the numbers

Apart from taxable income, lifestyle, stage of your life, short-term and long-term priorities and financial goals are good parameters for deciding which type of tax regime to choose. With inflation, rising purchases, and growing demand, it is important to start saving early and spend money wisely. The power of consolidation plays a major role in achieving your financial goals.

Step 5: Remember to plan carefully

It is important to note that it is possible to change tax regimes every financial year, as both will exist at the same time. First-time taxpayers – can decide to choose a new tax regime as it is easy to follow and translate to reduce tax debt. However, over time, investments have financial benefits and taxpayers will want to work for the old government because that will be of great benefit.

The current budget announcement has done more than provide adequate freedom of choice for each incumbent. It’s best to understand all the variables as you proceed with this list before switching. Freedom is yours, use it wisely.

Present Tax System – high rates but a lot of choices to reduce taxes 

The current tax system is a little complex, to say the least. While tax rates are high, there are many ways to reduce your tax debt.

Over the years the government, by inserting clauses in the Income Tax Act, has given Indian taxpayers more than 70 exemption and deduction options with which they can defer their income and pay less.

While exemptions are part of your income, such as House Rent Allowance (HRA) and Leave Travel Allowance (LTA), deductions allow you to lower your tax rate by investing, saving or using certain items. The largest deduction is 80c where you can deposit your tax-free income at Rs.1.5 lakh. Apart from this, there are a few other categories that allow you to deduct tax deductions on items ranging from your loan interest (home and education) to the premiums you pay for health insurance.

The most common exemptions and reductions obtained by Indian taxpayers.

Your taxable income can be reduced by lakhs through a combination of exemptions and deductions. However, it also means that you must find ways every year to optimize your wages and savings/investments so that you keep taxable income as low as possible.

New taxation – lower tax rates but no way to reduce taxes and More taxation

The new tax system is in two respects different from the current one.

One is that the tax burdens in the new regime have increased, together with rates of the 15 lakh sub-Rs have been reduced. Two, the new scheme will not be able to provide all the exemptions and deductions used by taxpayers under the current scheme.

This is a comparison of old and new taxation sheets

Income from Rs 5 lakh to 7,5 lakh, as can be seen from the new system, is 10 percent, whilst income from Rs 7,5 lakh to Rs 10 lakh is at 15 percent. The entire range of the current regime was 20 percent flat. The earlier Rs 10 lakh+ sheet where you paid 30% was split into three parts at 20 percent Rs 10-12.5 lakh, Rs 12.5 lakh-15 lach 25 percent and Rs 15 lakh, and then Rs 15 lakh and higher at 30 percent.

What If You Don’t Inform Your Employer About The Choice Of Your Tax Regime?

The CBDT circular has made it clear that if it’s not communicated by an employee, the employer should deduct taxes from salary income according to the old tax regime.

What this means is that if you have not communicated your decision for a particular tax regime in the month of April, then your employer will keep deducting TDS according to the old tax regime.

Moreover, if you do not show the proof of investments or announce how many investments you will be made in FY 2020-21, then this could lead to TDS from salary without the tax benefits.

If you inform your employer about your choice of the new tax regime in the month of June, then TDS from June to March (the end of the financial year) will be deducted according to the new tax rates subject to any amendments for extra TDS deducted for April and May which can be made by the employer.

Advance Tax

It doesn’t matter if you choose the old tax regime or the new tax regime, if your total tax liability on all income streams excluding the TDS is more than Rs 10,000 in the financial year, then you will have to pay advance tax.

Advance tax installments must be paid on time, if not, then an individual is liable to pay a penalty at the rate of 1 percent per month as interest on the tax amount due under the Income-tax Act.

As the Income-tax department may impose this interest if the total advance tax amount payable is not fully paid due to short-deduction of TDS by the employer, it is suggested that you should carefully make a plan of your annual salary taxation in advance and then make the right declaration to the employer on the selection of regime.

According to the IT laws, switching of tax regime at the time of filing the tax return is allowed. Taking into consideration the other incomes (like interest, etc.), an advance tax may be payable, if there is a short deduction of tax from salary if an employee selects the new tax regime for TDS from salary but changes to the old tax regime at the time of filing return.

If You Choose New Tax Regime For TDS From Salary

If you choose the new tax regime for TDS on salary, then keep in mind that your Form 16 will not have details of all the tax benefits and deductions that you may be eligible to avail if you choose the old tax regime at the time of filing ITR.

You must collect all the documents needed and compute the total amount of deductions that you are able to claim on your own. Although, you need not submit any documents to the tax department while filing ITR.

Old Tax Regime As Compared To The New Tax Regime

Ever since the circular was made public, taxpayers have been puzzled about if they should stick to the old regime which provides the benefit of exemptions and deductions, or change and choose the new regime which has low tax rates.

Taxpayers are still thinking about if the new personal tax regime will really provide significant tax relief.

The tax benefits that won’t be available as per the new regime include Section 80C deductions (Investments in PF, NPS, Life insurance premium), Section 80D (medical insurance premium), HRA, and interest that is paid on housing loan. Tax benefits for the disabled and for charities will also be removed.

While trying to help taxpayers make the right decision by computing and comparing their tax outgo under both the old and new tax regime, the income tax department has provided the system of an e-calculator on its e-filing website which can assist people. Just like the new tax regime has lower income tax rates, the old tax regime has income tax exemptions and deductions.

This calculator is only made to give a basic idea of the approximate impact of the new regulations. For the real provisions and eligibility, one has to go to the Income Tax provisions. All tax computations (includes cess) are excluding Surcharge and total claimable exemptions/deductions are considered to be zero in the new regime.

The approximate Annual Income is not applied for any Income with special rates. Deductions and exemptions are applicable according to the old regime. Before comparing and taking a decision regarding to your savings, ensure that you have a proper financial plan in place.

So, which tax regime should you choose?

Unfortunately, there is no single answer to this. And what creates the case is also the complexity of Indian tax laws.

While looking at tax cuts, the first response could be that the new system looks better. However, for these cuts, a person with Rs 7.5 lakh will have to pay Rs 25,000 and for those earning 10 lakh, tax savings will be Rs 37,500. But, as they say, Satan is asleep in the details. With this saving, you will have to release all the exemptions and deductions that can reduce this benefit.

While finding out which option you would like to find may seem complicated, if you talk about it in a systematic way, it is not difficult to find.

Here’s what you need to do –

1. Count all the exemptions you get: If you stay employed, you will be looking for the HRA which is the greatest freedom a person can enjoy. Apart from that, other tax-free items include LTA, Food Bill, Phone Bills, etc. All of this will be taxable if you choose to switch to a new tax regime.
2. Look for cuts you want: As a paid job, two cuts automatically get a standard deduction of Rs 50,000 and your contribution to your Employee Provident Fund (EPF). In the new state, you will not be able to claim this release even if you continue to contribute to the EPF. In addition, you cannot apply for your home loan deduction (if you have one) or insurance policies, which have so far helped you reduce your taxable income.
3. Now combine these exemptions with deductions and deduct them from your salary to see what your taxable income is and what it would be like if you stopped this deduction. This should be a factor in deciding which government to seek.

Exemptions and rebates are available to the new tax government-

1. A general deduction from rent under section 24 – 30% of the tax received
2. Agricultural income: There is no limit
3. Income from life insurance: If the insurance cover is ten times the annual premium
4. Compensation for retrenchment: Rs 5 lakh
5. VRS continued: Rs 5 lakh
6. Leave at retirement: Rs 3 lakh (No limit for government employees)
7. Proceeds from the maturity of the PPF (Public Provident Fund), Sukanya Samriddhi Yojana
8. Interest earned on post savings account balance of Rs 3,500 per person per year
9. Employee grant of up to Rs 20 lakh after providing five years of continuous service.
10. Withdrawal from the National Pension Scheme (NPS) up to 40% of the proceeds from such withdrawals. Up to 25% in case of withdrawal of part of NPS.

Conclusion

As we said earlier, the changes introduced to make things for Indian taxpayers no easier. However, you have to be careful about one thing. The plan you choose should not decide whether to invest and obtain insurance. The reasons why you do not receive tax benefits from them are to attain your life goals and to secure the future of your family.LegalRaasta is an online gateway for analyzing legal compliances for Individuals as well as businesses. We further give the quickest and most effective legal registration for businesses like GST consultation, Food License, as well as, Company Formation with Trademark Filing. Moreover, our services extend to effective tax management such as GST returns, and Income Tax Returns ITR. Give us a call at +91-875-000-8585 with your demands.

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