New Form 12BB (PDF) :- LTA, HRA and Home Loan Interest Proofs to be furnished to Claim Tax Rebate
Form 12BB has been introduced by The Tax dept. of India has made some reformations about the tax benefits and exemptions on various allowances that are given to the employees. There are several categories of allowance for which special amendments for tax deductions are designed and to be implemented very soon. A separate tax or for tax deductions has been started for this purpose. The types of allowances for which the tax deductions will happen are LTA, HRA and interest paid after taking a home loan. Several guidelines on how to get tax deductions on these allowances and home loan interest are mentioned in the recent announcement. The date of implementation of the below guidelines is 1st June, 2016.
Use this link to Download New Form 12BB
What is House rent Allowance (HRA) and how to claim it?
It is a special type of allowance which is given to the employees of both public and private sectors. The main motto to provide HRA to the employees is to supporting and helping them on paying the monthly or annual rents of their shelters. Many employers provide housing or quarters to the employees. To them, the HRA is not applicable. The HRA is received by those employees who do not get housing facilities from the organization they work for and they have to arrange their own housing solutions. There is a particular form for HRA which needs to be filled up. This form requires the details of the land lord of the house, address of the house and total annual rent paid with money receipts.
Tax exemption on House rent Allowance (HRA)
There are some guidelines of the tax benefits on the HRA. Under the 10 (13A) section, these guidelines are described. The total HRA is not exempted from tax deductions by the govt. There are three scenarios for tax deductions on HRA and the scenario where the amount is least will be picked up for tax deduction calculation. The first scenario is if the employee lives in a metro city like Delhi or Mumbai, then 50 per cent of the basic salary is calculated. In the basic salary amount, the DA is also included. In the second case, those employees who live in other cities which are not metro cities, their 40 per cent of the basic salary will be calculated. The last case is the difference between the total rent paid in a year and 10 per cent of the basic salary. The amount which is least will be picked for tax deduction.
What is Leave Travel Allowance (LTA)?
The LTA is a special allowance which is given by the employers of every sector to its employees so that the employees can claim the amounts spent on ticket fares for travelling and touring purposes along with the employee’s family members. The employees of each sector get yearly or semi-annual vacations. The employees can claim the ticket fare or traveling costs for a maximum of two journeys. These two journeys must occur within the slab of four years. The current slab for LTA is 2014 – 17. The employees also get some tax exemptions on the LTA earned.
Rules of tax exemptions on the Leave Travel Allowance (LTA)
Sec. 10 (5) elaborates the tax rebate rules on the LTA of the employees. For a maximum of two journeys in a time span of 4 years, the rule of tax exemption is applied. Further this limit, tax will be deducted. As per notifications of the CBDT, the tax exemptions are applied only on the travel fire or the travelling costs. This exemption is not applicable for sightseeing, fooding, recreation activities and cost of hotels. The current slab to apply for tax exemptions on LTA is 2014 – 17. Another important instruction for LTA tax deductions is that the tours must be limited within India. So the tax deductions will not be applicable for international journeys.
Tax deductions on Home Loan Interest
If an employee has taken a home loan and is paying the monthly installments for it from the salary he / she receives. Then the employee will get tax deductions on the interest paid for the home loan each year. There are some rules of tax exemption on the home loans. First of all, the home loan must be taken in the name of the employee and the employee must be one of the owners of the property. There may be another co-borrower of the loan. The total interest paid for home loan is exempted from tax. In case of the home / property is registered under the employee’s name, the maximum tax deduction limit is Rs. 2 lakh. If there are two tax payers who are also joint property owners, then the maximum limit of tax deductions double i.e. it becomes 4 lakh.
Tax deduction in case of home renovation loans
There are also loans which are tailor made for purpose of house renovations. If a house is already registered under the name of the employee and he / she wants to renovate it. Then he may apply for loans in banks or other financial institutions. There is a guideline for tax exemption on the loan taken for the purpose of house renovation of self owned property. A maximum of Rs. 30,000 is applicable for tax deductions. Beyond this limit, the taxpayer must pay the taxes on the loan.
Regulations on the Tax Deducted at Source (TDS) for immovable property
Earlier the time limit to apply for TDS on immovable property was 7 days. It has been extended to 30 days as per new guidelines. For property purchases of amount more than Rs. 50 lakh, 1 per cent of TDS is applicable on that immovable property. Previously, the time limit to deposit this tax was 7 days which is now converted to 30 days.
Some important data on the tax deduction rules on HRA, LTA and interest on home loan:
|Sl. No.||Tax deduction fields||Related data|
|1||Date of implementation of new guidelines||1st June, 2016|
|2||Administrating authority||Central Board of Direct Taxes|
|3||New tax form for tax exemption in HRA, LTA and home loan interest||Form 12 BB|
|4||IT Section for tax exemption on HRA||Sec 10 (13A) of Income Tax Act|
|5||IT Section for tax exemption on LTA||Sec 10 (5) of Income Tax Act|
|6||IT Section for tax exemption interest paid for home loans||Sec 24 and Sec 80 C of Income Tax Act|
|7||Maximum limit of tax deduction for home loan||Rs. 2 lakh|
|8||Maximum limit of tax deduction for loan for house renovation||Rs. 30,000|
|9||Current block for LTA||2014 – 2017|
|10||Total no. of journeys for which tax exemption on LTA is applicable within a block||2 journeys|