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Tax Audit

Income Tax Audit – Meaning, Applicability, Objective, Due date of filing tax audit, Penalties for not filing

In this article, we will discuss in detail about Tax Audit & its applicability under Section 44AB of the Income Tax Act, 1961. Tax Audit meaning:   Section 44AB of the Income Tax Act, 1961 specifies that every person who earns income by any business or profession has to maintain his books of accounts & get a tax audit done except those who opted for presumptive taxation under section 44AD, 44ADA, 44AE of the income tax act, 1961 or if their turnover exceeds the specified threshold limit of Rs 1 Crore. Tax Audit refers to the activity in which an auditor examines or reviews the accounts of a business to check for tax compliance. Some companies are legally required to carry out regular audits under Section 44AB of the Income Tax Act, 1961 & for them performing periodic tax audits is mandatory. The main goal of a tax audit is ensuring that the details related to the income, expenditure & tax-deductible expenditure information are filed correctly by the business undergoing audit.   Who need to get tax audit done?   1.  Any self-employed individual who is engaged in a business with an annual turnover of Rs. 1 crore & above. 2.  A self-employed professional whose income receipts aggregate Rs. 50 lakhs or more in a financial year. 3.  An individual who qualifies for the presumptive taxation scheme under Section 44AD & Section 44ADA but claims that the specified profits (8%/6%, as the case may be) are lower than those calculated in accordance with the presumptive taxation scheme for the financial year. Provided, if: a) Aggregate of all amounts received including amount received for sales, turnover or gross receipts during the previous year, in cash, does not exceed 5% of the said amount and b) Aggregate of all payments made including amount incurred for expenditure, in cash, during the previous year does not exceed 5% of the said payment. Threshold limit would be 10 crores instead of 1 crore. Note – i) Payment/receipt by a cheque/draft, which is not account payee, shall be deemed to be payment/receipt in cash. ii) Professionals are not entitled to claim an enhanced turnover limit of Rs. 10 crores u/s 44ADA. In other words, more than 95% of the business transactions should be done through banking channels.   4.  An individual who qualifies for the presumptive taxation scheme under Section 44AE (Plying, hiring or leasing goods carriages having not more than ten goods carriage vehicles), Section 44B (Non-Resident Shipping Business), Section 44BBA (Non-Resident Aircraft Business), Section 44BB (Non-resident assessee engaged in exploration of mineral oil) & Section 44BBB (Foreign Company engaged in Civil Construction) but claims that the profits are lower than those calculated in accordance with the presumptive taxation scheme.   5.  If an assessee, who has qualified for taxation under the presumptive taxation scheme opts out of it after a specified period. After opting out of the presumptive taxation scheme, the assessee is not allowed to opt into the presumptive taxation scheme for a continuous period of 5 assessment years.   Exception of Tax Audit for Individual having turnover exceeding Rs 1 crore but up to Rs 2 crores:   – If an Individual whose gross receipts or turnover from business exceeds Rs 1 crore but is up to Rs 2 crores, then he can opt for Presumptive Taxation under section 44AD of Income Tax Act, 1961 then he will not be liable to maintain books of accounts u/s 44AA & also will not be liable for tax audit u/s 44AB of Income Tax Act, 1961 if he discloses the required percentage of profit as required u/s 44AD of Income Tax Act, 1961. – This Section is applicable only for Resident Individual, HUF or Resident Partnership Firm (not Limited Liability Partnership) – The required percentage of profit as required to be disclosed u/s 44AD of Income Tax Act, 1961 is as follows: a) 6% of Gross receipt or total turnover if the amount is received through any mode other than cash. b) 8% of Gross receipt or total turnover if the amount is received through cash mode. c) No further deduction of business expenditure will be allowed from section 28 to Section 43 of Income Tax Act, 1961 under the head business income & it will be deemed to have been allowed.   Goals & Objectives of a Tax Audit:   – To make sure that even medium and small business owners maintain book of accounts, ledgers as well as receipts for revenue and expenses properly. – To report observations or discrepancies after a methodical examination of the books of account of the business. – To report prescribed information including compliance of different provisions of the Income Tax laws such as tax liability, tax paid, eligible refund amount, etc. – To enable the tax authorities to verify the correctness of income tax returns filed by the business owner. – To make it easy for the tax assessing authorities engaged in carrying out routine verifications to calculate and verify information such as total income, claim for deductions, etc. furnished by the taxpayer. – To identify and restrict any fraudulent practice by businesses.   Forms for Submission of a Tax Audit:   Form 3CA: This form is required to be furnished by a person who is carrying on a business or profession that requires that accounts are audited under any rule other than Section 44 and its subsections. Form 3CB: This form is required to be furnished by a person who is carrying on business or profession which does not require that his accounts are audited under any rule except Section 44 and any of its subsections. Form 3CD: If either of the aforementioned audit reports is prepared, the tax auditor must furnish the required particulars using Form 3CD. In India, Tax audit reports under various subsections of 44 can only be prepared by qualified chartered accountants. Currently tax audit reports from chartered accountants are filed electronically with the Income Tax Department. Once the chartered accountant has filed

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Taxation in case of Shares Trading or Investment (AY 2024-25)

In this article, we will discuss about the summary of Taxation Rules in case of Shares Trading or held as Investment as per Income tax act: Intraday Trading:   1.    Tax Treatment – Intraday trading objective is to earn income or profit from fluctuation in prices of stocks, income from intraday trading is treated as either speculation gain or loss, which comes under the head of business income. It is considered speculative as trading is done without the intention of taking delivery of the contract. 2.   Turnover – Turnover of Equity Intraday Trading = Absolute Profit (Absolute profit means the sum of positive and negative differences from trades) 3.   Taxability – Income from intraday trading is added to the total income for the financial year and consequently is charged at the prescribed tax slab rates. 4.   Treatment of loss – The loss from intraday trades can be carried forward for 4 years. It can only be set-off against Speculative Business Income.   Future & Option Trading:   1..  Tax Treatment – Transactions that take place in futures & options trading are considered as non-speculative business transactions. i.e., profits obtained from F&O trading are taxed in the same way as profits obtained from any other business transaction. This also implies that taxpayers can claim expenses such as electricity, telephone, internet etc. from earnings of the business. 2.  Turnover – Turnover of Futures = Absolute Profit Turnover of Options = Absolute Profit Absolute profit means the sum of positive & negative differences from trades.   3.  Taxability – Income from futures and options is added to the total income for the financial year and consequently is charged at the prescribed tax slab rates. 4.  Treatment of loss – Loss from futures and options trading can be adjusted from income from remaining heads such as rental income or interest income (cannot be adjusted from salary income) in the same financial year. Any unadjusted loss can be carried forward for 8 years. However, in the future, they can only be adjusted from non-speculative income.   Equity Dividends:   1. Tax Treatment – If shares are held for trading purpose, then the dividend income shall be taxable under the head income from business or profession. Whereas, if shares are held as an investment, then income arising in nature of dividend shall be taxable under the head other sources. 2.  Taxability – 10% TDS is deducted on dividend income paid in excess of Rs 5,000 from a company or mutual fund. The dividend received is taxable as per the prescribed tax slabs under the head Income from Other Sources. 3.  Deductions – Where dividend is assessable to tax as business income, deductions of all those expenditures which have been incurred to earn that dividend income such as collection charges, interest on loan etc. can be claimed. Whereas if dividend is taxable under the head other sources, deduction of only interest expenditure which has been incurred to earn that dividend income to the extent of 20% of total dividend income can be claimed.   Short Term Trades:   1.  Tax treatment – If equity shares are sold within 12 months of purchase, the seller may make short term capital gain or incur short-term capital loss. Taxpayers have been offered a choice of how they want to treat such income. Tax payers can treat gains or losses from the sale of shares as ‘income from business”, or ‘Capital gains’. However, once chosen, they must continue the same method in subsequent years. 2.  Taxability – When the sale of shares is treated as business income, one is allowed to reduce expenses incurred in earning such business income. In such cases, the profits would be added to the total income for the financial year and consequently will be charged at the tax slab rates. When the sale of shares is treated as capital gains, the gains are taxable @ 15% plus Surcharge (if applicable) plus 4% Cess u/s 111A, irrespective of the applicable tax slab. Expenses incurred on transfer are deductible. 3.  Deductions – No deductions under section 80C to 80U are allowed from STCG. 4.  Treatment of loss – Any STCL can be set off against STCG or LTCG from any capital asset. If the loss is not set off entirely, it can be carried forward for a period of 8 years and adjusted only against any STCG or LTCG made during these 8 years.   Long Term Trades:   1.  Tax treatment – If equity shares listed on a stock exchange are sold after 12 months of purchase, the seller may make long-term capital gain (LTCG) or incur long-term capital loss (LTCL). 2.  Taxability – LTCG is taxed at concessional rate of 10% plus Surcharge (if applicable) plus 4% Cess for the gains exceeding Rs. 1 Lakh u/s 112A without indexation benefit. Here, the Grandfathering Value concept will apply to give higher exemption, if shares or mutual fund is purchased before February 1, 2018. 3.  Deductions – No deductions under section 80C to 80U are allowed from LTCG. 4.  Treatment of loss – Any LTCL can be set off against LTCG only. If the loss is not set off entirely, it can be carried forward for a period of 8 years and adjusted only against LTCG. Debt Mutual Funds (MF):   1. Tax treatment – Debt MF are those funds whose portfolio’s debt exposure is in excess of 65%. STCG realized on redeeming debt MF units within a holding period of 3 years. LTCG realised on selling units of a debt MF after a holding period of 3 years. 2.  Taxability – STCG are added to the overall income and taxed at the income tax slab rate. LTCG are taxed at a flat rate of 20% with indexation benefit plus Surcharge (if applicable) plus 4% Cess. 3.  Treatment of loss – STCL can be set off against both STCG or LTCG. LTCL can be set off against LTCG only. If the loss is not set off

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Special Tax Rates Applicable on Special Income

In this article, we will discuss about the Special Tax Rates Applicable on Special Income such as Short Term Capital Gain, Long Term Capital Gain, Virtual Digital Assets, Casual Income, Lottery Income etc. as follows: Short Term Capital Gain (STCG) u/s 111A:   (i). STCG u/s 111A is applicable in case of CG arising on transfer of equity shares or units of equity oriented MF or units of business trust. (ii). Period of Holding (POH) of < 12 months will be considered (iii). STCG is charged to tax at special 15% flat rate u/s 111A + surcharge (if any) + 4% cess (always). (iv). NO deduction under sections 80C to 80U is allowed against STCG u/s 111A. (v). Basic Exemption Limit (BEL) benefit is allowed ONLY to the RESIDENT Individual. NO BEL is allowed to NRI individuals against STCG income u/s 111A. (vi). Rebate u/s 87A is allowed if total income is upto Rs 5 Lakhs & it includes STCG income u/s 111A. (vii). Maximum Surcharge applicable on STCG u/s 111A is restricted to 15% only. (viii). In case of Short Term Capital Loss (STCL) u/s 111A, it can be SET-OFF ONLY against STCG or LTCG in the SAME financial year. (ix). In case, if any STCL need to be carry forward then ITR need to be filed on or before the due date (i.e. 31st July of assessment year) specified u/s 139(1). (x). STCL can be carry forward for 8 assessment year (AY) & to be set off only against STCG or LTCG & NOT against any other income. Long Term Capital Gain (LTCG) u/s 112A:   (i). LTCG u/s 112A is applicable in case of CG arising on transfer of equity shares or units of equity oriented MF or units of business trust. (ii). POH of > 12 months will be considered (iii). LTCG is charged to tax at special 10% flat rate u/s 112A + surcharge (if any) + 4% cess (always). (iv). Adhoc deduction of Rs 1 lakh on gain amount of LTCG u/s 112A is available in each financial year to the RESIDENT & NRI Individuals. (v). NO deduction under sections 80C to 80U is allowed (vi). BEL benefit is allowed ONLY to the RESIDENT Individual. NO BEL is allowed to NRI individuals against LTCG income u/s 112A. (vii). Rebate u/s 87A is NOT allowed on LTCG income u/s 112A. (viii). NO Indexation benefit is allowed on LTCG income u/s 112A. (ix). Grandfathering Concept will apply if Shares or MF is purchased before 1st February, 2018 to give higher exemption from Cost of Acquisition (COA). COA shall be deemed to be higher of the following if listed equity shares or MF purchased before 1st February, 2018: a) Actual cost of acquisition b) Lower of the following: i) Fair Market Value (FMV) of such shares as on January 31,2018, or ii) Actual sales consideration accruing on its transfer. (x). Maximum Surcharge applicable on LTCG u/s 112A is restricted to 15% only. (xi). In case of Long Term Capital Loss (LTCL) u/s 112A, it can be SET-OFF ONLY against LTCG in the SAME financial year. (xii).  In case, if any LTCL need to be carry forward then ITR need to be filed on or before the due date (i.e. 31st July of assessment year) specified u/s 139(1). (xiii). LTCL can be carry forward for 8 assessment year (AY) & to be set off ONLY against LTCG & NOT against any other income. (ivx). If any ULIP is taxable as per amendment in Finance Act, 2021 if the aggregate premium amount paid exceeds Rs 2.5 Lakhs on single or multiple ULIP plans, then any amount received (including bonus) on maturity will be taxable as LTCG u/s 112A @ 10% over & above Rs 1 lakh + 4% cess (always) + Surcharge (If any). However, NO TAXABILITY will arise in case of DEATH of an individual.   Long Term Capital Gain (LTCG) u/s 112:   (1). LTCG u/s 112 is applicable in case of CG arising on Sale of Immovable Property. (2). LTCG u/s 112 will apply on Sales Consideration – Cost of Acquisition. (3). POH of > 24 months will be considered (4). LTCG is charged to tax at special rate @ 20% u/s 112 + surcharge (if any) + 4% cess (always). (5). INDEXATION benefit is ALLOWED on LTCG income u/s 112. Cost of Improvement is also allowed if immovable property is purchased on or after 01.04.2001. (6). NO deduction under sections 80C to 80U is allowed (7). BEL benefit is allowed ONLY to the RESIDENT Individual. NO BEL is allowed to NRI individuals against LTCG income u/s 112. (8). Rebate u/s 87A is allowed if total income is upto Rs 5 Lakhs & it includes LTCG income u/s 112. (9). Maximum Surcharge applicable on LTCG u/s 112 is restricted to 15% only. (10). In case of LTCG u/s 112, Exemption u/s 54, 54F & 54EC can be claimed by the individual selling the property as per the term & condition mention in these specific sections. (11). TDS u/s 194IA is deducted @ 1% of actual sales consideration or SDV value, whichever is higher if amount exceeds Rs 50 Lakhs in case of Resident Individuals by the buyer & Form 26QB need to be filed by the buyer. (12). In case of NRI Individuals, TDS is deducted u/s 195 at applicable slab rates + surcharge (if any) + cess @ 4% (always) even if actual sales consideration or SDV value amount is less than Rs 50 Lakhs. TDS is required to be deducted by the buyer & prescribed form need to be filed by the buyer. (13). In case of Long-Term Capital Loss (LTCL) u/s 112, it can be SET-OFF ONLY against LTCG in the SAME financial year. (14). In case, if any LTCL need to be carry forward then ITR need to be filed on or before the due date (i.e. 31st July of assessment year) specified u/s 139(1). (15). LTCL can be carry forward for

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TDS applicability on Sale of Immovable Property by Non-Resident Indian (NRI)

TDS Applicability on Sale of Immovable Property by Non-Resident Indian (NRI): (i). On Sale of Immovable Property (IP) by a NRI SELLER, Capital Gain (CG) will arise to NRI Seller on which he will be liable to pay income tax depending upon the Period of Holding (POH) for which IP is being held by him. (ii). If the POH is < 24 months, then CG on sale of IP will be treated as Short Term Capital Gain (STCG) & will be taxable as per the income tax slab rates applicable to the Individual + Surcharge (If any) + Cess @ 4% (always) will be levied since the assessee is an NRI & In case of NRI Health & Education Cess @ 4% is always applicable. (iii). If the POH is > 24 months, then CG on sale of IP will be treated as Long Term Capital Gain (LTCG) & will be taxable @ 20% u/s 112 with indexation benefit + Surcharge (If any) + Cess @ 4% (always) will be levied since the assessee is an NRI & In case of NRI Health & Education Cess @ 4% is MANDATORY applicable. (iv).  TDS will be required to be deducted u/s 195 would depend on the residential status of the Seller. Since in this case the Seller is a NRI – the amount of TDS to be deducted would depend on the Sale Consideration amount received by the NRI Seller irrespective of the Transaction Value of the Immovable Property. (v). In case Seller is a Resident Indian –TDS amount to be deducted would be 1% of Sale Consideration amount received, ONLY IF the value of actual sales consideration or Stamp Duty Value of IP, whichever is HIGHER exceeds Rs 50 Lakhs. (vi). Buyer of IP is required to deduct TDS on payment made to NRI Seller. The buyer while paying the amount to the NRI seller will deduct TDS & pay the balance to the seller. TDS which has been deducted by the buyer would then be required to be deposited with the Income Tax Department by the buyer. (vii). The residential status of the buyer would NOT be considered & only the residential status of the seller would be considered for computing the amount of TDS to be deducted on sale of IP.   Effective Rate of TDS on Sale of Property by NRI in Case of Long-Term Capital Gain (LTCG) TDS on Sale of Property by NRI Seller is required to be deducted by the buyer as per the income tax rates as mentioned:                                   Property Sale Price (Rs)   Less than Rs 50 Lakhs Rs 50 Lakhs to Rs 1 Crore Rs 1 Crore to Rs 2 Crores Rs 2 Crore to Rs 5 Crores Above Rs 5 Crores LTCG Tax Rate u/s 112 20% 20% 20% 20% 20% Add: Surcharge Nil 10% of above amount 15% of above amount 15% of above amount 15% of above amount Total Tax (including Surcharge) 20% 22% 23% 23% 23% Add: Health & Education Cess 4% 4% 4% 4% 4% Applicable TDS Rate (including Surcharge & Cess) 20.80% 22.88% 23.92% 23.92% 23.92% Note – No Basic Exemption limit will be available to NRI Seller in case his Total Income consists of Only LTCG u/s 112. Also, NO deduction u/s 80C to 80U will be allowed to NRI Seller against this income. Maximum Surcharge applicable in case of LTCG u/s 112 on sale of Immovable property is restricted to 15% of tax amount only.   – As per AMENDMENT in Finance Act, 2023 (i.e. from 1st April, 2023) if NRI Seller is claiming EXEMPTION u/s 54 & 54F then the exemption limit u/s 54 & 54F has been RESTRICTED to Rs 10 Crores. – INDEXATION benefit is ALLOWED on LTCG income u/s 112. Cost of Improvement is also allowed if immovable property is purchased on or after 01.04.2001. – In case any ADVANCE MONEY is FORFEITED on failure of negotiations for transfer of capital assets then: a) If advance money was received & forfeited before 01/04/2014, then deducted from cost of acquisition while computing CG. b) If advance money was received & forfeited after 01/04/2014, then it will be taxable as “Income from Other Sources”. – In case of Long-Term Capital LOSS (LTCL) u/s 112, it can be SET-OFF ONLY against LTCG in the SAME financial year. In case, if any LTCL need to be carry forward then ITR need to be filed on or before the due date (i.e. 31st July of assessment year) specified u/s 139(1). LTCL can be carry forward for 8 assessment year (AY) & to be set off ONLY against LTCG & NOT against any other income. – In case of Short-Term Capital Gain (i.e. if the Property has been held for < 24 months by the seller), this Surcharge & Cess would be added to the applicable Income Tax Slab Rate in the same manner as explained above for LTCG u/s 112. – TDS is required to be deducted whenever any PAYMENT is made to the NRI Seller for purchase of property by the Buyer. Even if any ADVANCE is being paid for purchase of property – TDS is required to be deducted. – Moreover, this TDS on purchase of Property from NRI Seller is required to be deducted irrespective of the Transaction Value of the Property. Even if the value of property is less than Rs. 50 Lakhs, TDS is required to be deducted.   Other Points to be Considered on Sale of Immovable Property by NRI Seller:   (1). TDS on sale of immovable property by NRI Seller is required to be deducted u/s 195 on the Sale Consideration amount. (2). Since the TDS to be deducted on sale of immovable property by NRI Seller on the Total Sale Consideration amount is a hefty amount. NRI Seller can apply for LOWER or NIL deduction of TDS Certificate. (3). The Seller is required to give this LOWER or NIL deduction of TDS Certificate to the

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16 important investments for increasing your wealth and its tax treatment

In this article, we will discuss about tax treatment of various different Income & Investments made are: (1). Public Provident Fund (PPF) –   a) Fully Tax exempt (Both Principal & Interest amount are fully tax exempt at the time of maturity). b) Section – 80C deduction is available up to Rs 1.5 Lakhs. c) Minimum investment amount = Rs 500 & Maximum investment amount = Rs 1,50,000 d) Lock-in-period = 15 years, Interest rate is 7.10% p.a. e) For better interest earning, Investor can invest in PPF on or before the 5th date of the month to cover larger portion of interest earning whether investing through lumpsum or SIP mode. (2). National Pension Scheme (NPS) –   a) 60% amount are tax exempt & balance 40% are taxable. Annuities have to be purchased of balance 40% amount. b) Amount received from balance 40% annuities as pension will be taxable as per the income tax slab rates of the individual. c) Section – 80C deduction is available up to Rs 1.5 Lakhs for NPS contribution. Section – 80CCD(1B) additional deduction of Rs 50,000 is also available. d) Contribution to NPS is made in TIER-1 account only, Lock-in-period = Till the individual attain 60 years of age. e) In case the total corpus of NPS Contribution is LESS THAN Rs 2 Lakhs, then FULL amount can be withdrawn. f) In case of Medical Emergency, Marriage, Higher Education – NPS can be withdrawn up to certain limit after satisfying certain condition even before 60 years of age of Individual. (3). ELSS Tax Saver MF –   a) Due to 3 years lock-in-period in ELSS Tax Saver MF, it will always be treated as Long Term Capital Gain (LTCG) taxable @ 10% + 4% Cess (Surcharge, if applicable) over & above Rs 1 lakh gain u/s 112A. b) No Indexation benefit will be available. No Rebate u/s 87A will be allowed c) Section – 80C deduction is available up to Rs 1.5 Lakhs. d) In case of SIP Investment, on every SIP investment it will be treated as new purchase & 3 years lock-in will be counted from that date. (4). Employee Provident Fund (EPF)–   a) Minimum contribution by employer 12% of Basic Salary + D/A. b) Contribution can be made by both Employer & Employee. Interest rate is 8.15% p.a. c) Contribution amount is allowed as deduction u/s 80C up to Rs 1.5 Lakhs. d) Maturity amount is tax free only on completion of 5 years of period of employment. EPF can be withdrawn while permanently quitting the job or transferring from one job to another. e) INTEREST received on EPF will be TAXABLE if INTEREST amount received exceeds Rs 2.5 Lakhs during a financial year under the head Income from Other Sources as per slab rates of the individual. i.e., Principal amount of EPF contribution will be EXEMPT but INTEREST received on EPF contribution will be TAXABLE if INTEREST amount received exceeds Rs 2.5 Lakhs during a financial year. (5). Mutual Fund (Equity Oriented), Equity Shares & Units of Business Trust – a) If MF (Equity Oriented), Equity Shares & Units of Business Trust are held for < 12  months from date of Investment, it will be treated as Short Term Capital Gain (STCG) taxable @ 15% + 4% Cess (Surcharge, if applicable) u/s 111A. b) If MF (Equity Oriented), Equity Shares & Units of Business Trust are held for > 12  months from date of Investment, it will be treated as Long Term Capital Gain (LTCG) taxable @ 10% + 4% Cess (Surcharge, if applicable) over & above Rs 1 lakh gain u/s 112A. No Indexation benefit will be available. No Rebate u/s 87A will be allowed. c) Basic Exemption limit will be allowed to RESIDENT individuals on STCG u/s 111A & LTCG u/s 112A. Maximum SURCHARGE payable on tax amount u/s STCG u/s 111A & LTCG u/s 112A will be restricted to 15%. (6). Mutual Fund (Debt Oriented), Any other Capital Assets – a) If MF are held for < 36 months from date of Investment, it will be treated as Short Term Capital Gain (STCG) taxable as per income tax slab rate of Individual + 4% Cess (Surcharge, if applicable). b) If MF are held for > 36 months from date of Investment, it will be treated as Long Term Capital Gain (LTCG) taxable @ 20% (with INDEXATION benefit) + 4% Cess (Surcharge, if applicable). However, as per AMENDMENT in Budget 2023 (i.e., from 1st April, 2023), LTCG on sale of debt oriented MF will be taxable as per income tax slab rate of Individual + 4% Cess (Surcharge, if applicable). c) Any other capital assets INCLUDES Bullion, Jewellery, Archaeological Collection, silver, Utensils, Precious Stones, Drawings, Paintings or any other capital assets. (7). Sale of Immovable Property (Land & Building), Unlisted Shares – a). If property is held for < 24 months from date of Investment, it will be treated as Short Term Capital Gain (STCG) taxable as per income tax slab rate of Individual + 4% Cess (Surcharge, if applicable). b). If property is held for > 24 months from date of Investment, it will be treated as Long Term Capital Gain (LTCG) taxable @ 20% (with INDEXATION benefit) + 4% Cess (Surcharge, if applicable) u/s 112. Cost of Improvement will also be available. c). Basic Exemption limit will be allowed to RESIDENT individuals, Maximum SURCHARGE payable on tax amount will be restricted to 15% on LTCG u/s 112 (Sale of Immovable Property) NOT against Unlisted Shares. d). Exemption u/s 54 & 54F can be claimed by assessee selling immovable property if assessee invest the amount of sale consideration 1 year before or 2 year after date of sale in purchasing any other Residential House Property or Construct any house property within 3 year after date of sale. However, the NEW residential house property purchased CANNOT be sold within 3 years from date of purchase of property, otherwise the LTCG exempted earlier will be taxable & any gain

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Section – 194IB – TDS on Rent payment by Certain Individuals or HUF

Section 194IB of Income Tax Act, 1961 is applicable on TDS to be deducted on TDS on Rent Payment by Certain Individuals or HUF. Any Individual or HUF is required to deduct TDS @ 5% before making the payment to the resident recipient of rent if rent amount for each month exceeds Rs 50,000. Rent means payment made for letting out, tenancy, lease, sub-lease or any other agreement or arrangement of renting or letting out of Plant, Machinery, Land, Building, Factory Building, Furniture, Fixtures or Fittings.   Important Points to be remember in Section 194IB are:   (1). As per Section 194IB, it is mandatory for any person (Individuals or HUF not liable for Tax Audit u/s 44AB) who pays another other RESIDENT person any income by way of RENT for a month exceeding Rs 50,000 must deduct TDS @ 5%. (2). The TDS to be deducted @ 5%: i) time of credit of rent (for the LAST MONTH (March) in the financial year or the last month in which tenant is vacating the property if the property is vacated before or during the year); OR ii) at the time of actual payment of the rent whichever is earlier. (3). If the PAN of the recipient is NOT available then the rate of TDS will be 20%. However, the TDS amount CANNOT exceeds the last month rent. (4). For deducting TDS, there is NO requirement of obtaining TAN. (5). Challan-cum-statement in Form 26QC will have to be submitted. TDS certificate in Form 16C need to be issued by person deducting tax. (6). TDS u/s 194 IB is to be deducted only if rent payment is made to RESIDENT. If rent is paid to NRI owner of property, then NO TDS u/s 194IB. Tenant may be Resident or Non-Resident. Rent paid by tenant may be for residential or commercial purpose. Example –   Mr. Saurabh, a salaried employee, pays rent of Rs 80,000 per month to Mrs. Jyoti for the FY 2022-23. Is Mr. Saurabh is required to deduct TDS as per Income tax Act, 1961? What if Mr. Saurabh has vacated the property in December, 2022. What will be his TDS liability? What if in March 2023, Mrs. Jyoti did not furnish her PAN to Mr. Saurabh. What will be his TDS liability? Answer –   As per Section – 194IB, Since Mr. Saurabh is paying RENT in excess of Rs 50,000 per month in FY 2022-23, he will be liable to deduct TDS @ 5% on payment of such rent amount to Mrs. Jyoti. Hence, Rs 80,000 * 12 month * 5% = Rs 48,000 TDS will be deducted from LAST MONTH (MARCH) rent payment by Mr. Saurabh to Mrs. Jyoti. Net payment of Rent in March 2023 will be Rs 80,000 (Rent Amount) – Rs 48,000 (TDS) = Rs 32,000. If Mr. Saurabh has vacated the property in December, 2022, then TDS will be deducted in December, 2022 of Rs 80,000 * 9 months * 5% = Rs 36,000 TDS for the LAST MONTH (December 2022) in which tenant is vacating the property if the property is vacated before or during the year or LAST MONTH (March 2023) in the FY 2022-23, whichever is EARLIER. If Mrs. Jyoti does NOT furnishes her PAN to Mr. Saurabh, TDS @ 20% will be deducted. However, the TDS amount CANNOT exceeds the LAST MONTH rent. i.e., Rs 80,000 * 12 months * 20% = Rs 1,92,000 TDS but TDS CANNOT exceeds the last month (March 2023) rent amount (Rs 80,000). Hence, Rs 80,000 TDS will have to be deducted by Mr. Saurabh in case Mrs. Jyoti does NOT furnishes her PAN. (7). Consequences of NOT deducting or depositing TDS: If any person fails to deduct or deposit TDS, then he/she has to pay interest @ 1% per month or part thereof from the date on which TDS is actually deductible to the date when TDS is actually deducted. If the person deducted the TDS but fails to deposit the TDS on time (on or before the 7th of next month, In March month – on 30th April), then he/she has to pay interest @ 1.5% per month or part thereof from the date of TDS deduction to the actual date when TDS is deposited.   Happy Readings!   Disclaimer: The information contained in this website is provided for informational purposes only, and should not be construed as legal/official advice on any matter. All the instructions, references, content, or documents are for educational purposes only and do not constitute legal advice. We do not accept any liabilities whatsoever for any losses caused directly or indirectly by the use/reliance of any information contained in this article or for any conclusion of the information. Share It . .

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14 Benefits available to Senior Citizens in respect of Income Tax Return (ITR)

There are multiple benefits available to Senior Citizens in respect of filing ITR which is as follows: (1). Higher Basic Exemption Limit (BEL):   Senior citizens are granted a higher exemption limit as compared to normal individual tax payers. BEL is the income up to which a person is not liable to pay tax. The exemption limit granted to a resident senior citizen for the financial year 2022-23 is Rs 3,00,000. An additional benefit of Rs. 50,000 in the form of higher exemption limit is available to a resident senior citizen as compared to normal individual tax payers. (2). Age Criteria of a person to qualify as a senior citizen under the Income-tax act, 1961:   Higher basic exemption limit is available only to a Resident senior citizen. These benefits are not available to a non-resident even though he may be of higher age. He must be of the age of 60 years or above but less than 80 years at any time during the relevant financial year & must be resident. (3). Exemption from payment of advance tax to a senior citizen:   Every person whose estimated tax liability for the year is Rs. 10,000 or more, shall pay his tax in advance, in the form of “advance tax”. However, Income tax act gives relief from payment of advance tax to a resident senior citizen during the relevant financial year if he has not having any income from business or profession, then he is not liable to pay advance tax. (4). Benefits available in respect of interest on deposits to senior citizens:   Section 80TTB ​of the Income Tax act gives tax benefits on account of interest income from deposits with banks or post office or co-operative banks of an amount upto Rs. 50,000 earned by the senior citizens. Interest earned on saving deposits and fixed deposit, both shall be eligible for deduction under this section. (5). TDS deductions under Section 194A:   Section 194A of the Income Tax act provides that no TDS shall be deducted from payment of interest by bank or post-office or co-operative bank to a senior citizen up to Rs. 50,000. Limit is to be computed for every bank individually. (6). Benefits of Standard Deduction:   Senior citizens who is in receipt of pension income from his former employer can claim a deduction upto Rs 50,000 against such income. (7). Higher Deduction limit for Medical Insurance Premium under section 80D:   Maximum limit for deduction u/s 80D in respect of payment made for health insurance premium in respect of a senior citizen has been allowed at Rs. 50,000 as against that allowed to other individuals at Rs. 25,000. Deduction upto Rs. 50,000 is also allowed for medical expenses incurred on the health of a Senior Citizen provided no amount is paid for health insurance of such person. For claiming this deduction, it is mandatory that the health insurance premium/ medical expenses are paid by any mode other than cash. (8). Higher Deduction Limit in respect of expenses incurred for Medical Treatment of a specified disease or ailment:   For general taxpayers, the amount of deduction available in respect of expenses incurred for medical treatment of specified disease or ailments of self or dependent relative’s u/s 80DDB is Rs 40,000. However, in case the expenses are incurred by the taxpayer in respect of a dependent senior citizen, the entitlement is Rs. 1 lakh in a year. (9). Form No. 15H for Non-deduction of TDS:   A senior citizen may submit Form No. 15H to the deductor for non-deduction of TDS on certain incomes referred to in that section, if the tax on his/ her estimated total income of the relevant financial year comes to nil. In case of Senior Citizens, this form can be submitted if the Total Income after Deductions is less than the minimum amount exempted from the levy of tax whereas in case of non-senior citizens this form is applicable if the Total Income before deductions is less than the minimum amount exempted from levy of tax. Hence, in case of Senior Citizens the benefit is higher & therefore Form 15H is to be filed whereas Form 15G is to be filed in case of non-senior citizens. (10). Income tax provision on Transfer of Capital asset under ‘Reverse Mortgage Scheme’:   The transfer of a residential house property by way of a reverse mortgage as per the Reverse Mortgage Scheme made and notified by the Central Government for senior citizens, is not liable to be taxed as Capital Gain (nor under any other head of income). (11). Conditions under which certain specified senior citizens are not required to file ITR:   From AY 2022–23, in case of senior citizens of the age of 75 years or above having only pension income and interest income only from the account(s) maintained with a bank in which they receive such pension, such senior citizen shall not be required to file their ITRs. The specified bank shall be responsible for computing their total income and deducting tax thereon after giving effect to various deductions allowable under Chapter VI-A and rebate u/s 87A of the Act under Section 194P of Income Tax Act, 1961. (12). Income Tax Slab Rates for Senior Citizens:   (A). Slabs Rates for Senior Citizens of the age from 60 to 80 years under Old Scheme – INCOME SLAB RATE OF INCOME TAX Upto Rs. 3,00,000 NIL Rs. 3,00,001 to Rs. 5,00,000 5% Rs. 5,00,001 to Rs. 10,00,000 20% Above Rs. 10,00,000 30% (B). Income tax Rate Slabs for Senior Citizens of the age from 60 to 80 years under New Scheme: INCOME SLAB                                                        RATE OF INCOME TAX Upto Rs. 2,50,000 NIL Rs. 2,50,001 to Rs. 5,00,000 5% Rs. 5,00,001 to Rs. 7,50,000 10% Rs. 7,50,001 to Rs. 10,00,000 15% Rs. 10,00,001 to Rs. 12,50,000 20% Rs. 12,50,001 to Rs. 15,00,000 25% Above Rs. 15,00,000 30% Note – 1) Surcharge will apply If taxable income is more than Rs. 50 lakhs @ 10% & other specified

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Notice for excess tax deductions, excess payment, and clarifications u/s Section 133(6)

In the last few months, we have seen numerous cases where income tax notices have been issued by the income tax department. Out of these notices, two notices are most common: (1). 148A – Income Escapement Notice; (2) 133(6) – Power to Call for Information notice. In this article, we would be understanding in details about the 133(6) notice. Section – 133(6) – Power to call for Information by Income Tax Authorities. Notice u/s 133(6) of Income Tax Act,1961 pertains power to income tax authorities to require any person to furnish information or documents relevant to a tax inquiry or proceeding from the taxpayer himself as well as third parties such as banks, employers or other relevant sources, to gather details about a taxpayer’s financial transactions. This notice aims to ensure accurate reporting of income & prevent tax evasion. Tax authorities can use this information to cross-verify the taxpayer’s claims & identify any discrepancies between reported & actual financial activities. In the recent days, the department has mostly use this section for asking documentary evidences for claiming excess/bogus deductions, exemptions, claim fake expenses, clarification about making excess credit card payments etc. Here are the few samples of the notices: Some of the important points to be considered in Section – 133(6) notice are as follows: Information collected here by the Income Tax Authorities can be used for assessing or reassessing the income of a taxpayer, determining tax liability or for any other purpose related to taxation. Notice u/s 133(6) can be issued only after obtaining the PRIOR APPROVAL of Principal CIT/ CIT/ Principal DIT/ DIT. Notice u/s 133(6) is generated by ITD system. Hence, AO do not require to issue the handwritten notice. Also, reply to the notice by the assessee under verification can be done only through Online mode only. Officer may during the course of an inquiry or proceeding issue a written notice to any person requiring assessee to provide specific information or documents. This notice should clearly state the purpose for which the information is required. It is MANDATORY to submit REPLY for all or any information asked u/s 133(6). Generally, the TIME LIMIT to submit reply to information asked in the notice is up to 15 days from the date of serving of notice u/s 133(6). If an assessee who receives a notice under this section, fails to furnish the required information then penalty u/s 272A(2)(c) may be imposed which may be up to Rs 10,000. The assessee on whom the penalty is proposed to be imposed must be given an opportunity of being heard in the matter by IT authority, only after that order shall be passed of imposing penalty by IT authority. The information can be called for checking irrelevant of the fact that whether or not any proceeding is pending before the IT authorities or not. Notice u/s 133(6) can be given to assesses asking for information relating to:a) any EXEMPTION (u/s 10(14)(i), u/s 10(14)(ii), 10(13A), 10(10AA)) or DEDUCTION (u/s 80C, 80D, 80CCD (1B), 80DDB, 80GG, 80U etc.) claimed by assessee. b) any rental income, FD, RD, any interest income, Share market transaction such as Sale of Shares & MF, Sale of Land or Building or Both which has been reflecting in AIS Statement of the assessee but he/she has NOT filed the ITR return or has filed the return showing less income than appearing in AIS Statement. c) SOURCE of INCOME in respect of any purchase of land or immovable property, heavy amount spend on CREDIT CARD TRANSACTION, any large amount of CASH DEPOSIT has been made in Saving or Current account by the assessee. Here are the detailed examples of this:   (I). Example – 1 –   Mr. A has filed his ITR for the FY 2022-23. In his ITR, his Salary Income is Rs 28,50,000 from which he has claimed exemption u/s 10(14)(i) of Rs 2,51,250 & u/s 10(14)(ii) of Rs 2,04,650 & u/s 10(13A) of HRA of Rs 1,42,000. Mr. A has also claimed deduction u/s 80C of Rs 1,50,000, u/s 80D of Rs 75,000, u/s 80DDB of Rs 1,00,000, u/s 80GG of Rs 60,000 & u/s 80U of Rs 70,000. Now, here income tax authorities can issue notice u/s 133(6) asking for information of exemption claimed u/s 10(14)(i), 10(14)(ii) & 10(13A) of amount as mentioned above. Also, income tax authorities can ask of deduction proof such as payment made, document evidence of deduction claimed u/s 80C, u/s 80D, u/s 80DDB, u/s 80GG & u/s 80U. Mr. A need to give the proper explanation of exemption claimed & payment & document proof of deduction claimed. If he failed to give proper explanation & evidence proof of exemption & deduction claimed then it will be deemed that he has falsely claim the exemption & deduction & it will be disallowed. Penalty for misreporting of exemption & deduction can be imposed by income tax authority.   (II) Example – 2 –   Mr. Basu has filed his ITR return for FY 2022-23 for Rs 10 Lakhs as his total income by showing it as Business Income (Gross Receipt or Turnover = Rs 40 lakhs) under the head PGBP. However, in his AIS statement as updated on Income Tax Portal, it is reflecting that he has DEPOSITED CASH of Rs 80 Lakhs in his saving account. Also, he had sold some shares & MF amounting to Rs 7.5 Lakhs. Now, here income tax authorities can issue notice u/s 133(6) asking for information about the SOURCE of INCOME  of differential amount of EXCESS CASH DEPOSIT of Rs 40 lakhs & also about the Sale of shares & MF of Rs 7.5 lakhs & why this SALES from shares & MF has not been shown in the ITR filed by Mr. Basu.   Mr. Basu need to give the proper explanation of about the SOURCE of INCOME of EXCESS CASH DEPOSIT of Rs 40 lakhs had been made which is coming in his AIS Statement & also about NOT showing SALES from

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Bonds Investments

Taxation on Gains from Bond Investment in India

  In India, bonds are financial instruments that are used to raise capital by companies, financial institutions, and government entities. They are essentially debt instruments that provide a fixed rate of return to the investor. Under the Indian Income Tax Act, the interest income earned on bonds is treated as taxable income and is subject to tax at the applicable rate. The interest income earned on bonds is added to the total income of the individual or entity and taxed accordingly. However, there are certain types of bonds that are exempt from tax under the Income Tax Act. For example, interest earned on government securities, such as the National Savings Certificate (NSC), Kisan Vikas Patra (KVP), and Public Provident Fund (PPF), are exempt from tax. In this article, we will discuss about Taxation on Gains from Bond Investment in India.   Taxation on Gains from Bond Investment in India   Bond investors check many parameters while investing in bonds, such as a coupon, frequency of coupon payments, maturity & yield. Important factor to be considered in bond investment is “taxation on gains from bond investment. Few important points that need to be considered before taxation on gain from bond are:   Bonds provide coupon payments and return principal amount on maturity. Firstly, the coupon payments are the gains from bond investment; hence they are taxable. Secondly, you may sell bonds in the secondary market before maturity, or you may hold bonds till maturity. In either of the cases, if there is capital gain, then the gains are taxable.   The bonds listed on the National Stock Exchange are Listed Bonds, and bonds that are not listed on the National Stock Exchange are called Unlisted Bonds.   Short Term Capital Gain Tax is applicable if you sell listed bonds before 12 months (it is 36 months in the case of unlisted bonds).   Long Term Capital Gain Tax is applicable if you hold listed bonds for more than 12 months or hold unlisted bonds for more than 36 months.   TDS will not be deducted on interest received from Listed Bonds & Debentures.   Slab system defines the tax rate applicable to individuals considering age and income. Individuals can be Resident or Non-Resident or HUF or Association of Person (AOP) or Body of Individual (BOI) or any other Artificial Juridical Person (AJP). The applicable tax rate is called the slab rate.   Taxation of bonds in India as follows   1.  Regular Taxation of Bonds in India – Interest earned from Bonds is taxed as per marginal slab rate, and the maximum slab rate is 30 %. Appreciation of the bond price is considered as capital gain and taxed accordingly. If these bonds are held for the long term (more than 12 months for listed bonds and more than 36 months for unlisted bonds), the capital gain tax will be 10 %. Short-term capital gain tax can be 5% to 30%. Example – Mr. Suresh is a senior citizen aged 65. He has invested Rs. 10 lakhs in listed bonds. The coupon rate, i.e., interest rate, is 10% paid annually. His annual income is 9 lakhs. So, he comes under the 20% slab rate Investment amount – 10,00,000 Coupon rate -10% Annual Interest income – 1,00,000  Tax on interest income:- 1,00,000 * 20% = Rs 20,000 Suresh has to pay Rs. 20,000 taxes on interest income every year till maturity or till he resells bonds STCG Tax – Suppose after 10 months, if he sells bonds for Rs.10,50,000, then the capital appreciation is Rs.50,000 Tax on STCG – 20% X 50,000 = Rs 10,000 LTCG Tax – Suppose after three years, if he sells bonds for Rs. 13,00,000, then the capital appreciation is Rs. 3, 00, 000 Tax on LTCG – 10% X 3,00,000 = Rs 30,000 Note – i) Indexation benefits can be availed only in the case of inflation-indexed bonds or capital indexed bonds. ii) The income should be listed under the ‘income from other sources’ section in your income tax forms   Tax Free Bonds   In the case of Tax- free bonds, the interest earned from bonds is not taxed, but price appreciation of the bonds during maturity (or sale) is considered as capital appreciation. Hence capital gain taxes are applicable. Considering the holding period, either LTCG or STCG, will be applicable.   Tax Saving Bonds   Section 54EC Bonds are Capital Gain Tax Exemption Bonds that provide 100% tax exemption on the long-term capital gain earned by selling any property. These bonds are the best options to save tax after the property sale. But conditions apply, such as the time gap between property sale and bond investment cannot exceed six months. Also, the investment limit in Section 54EC Bonds is 50 lakhs. Section 54EC Bonds do not provide any exemption on short term capital gains. Note – i) Interest earned on tax exemption bond will be taxable as per the slab rate of the individuals. Income should be listed under the ‘income from other sources’ section in your income tax forms. ii) There is a lock-in-period of 5 years on these exempted 54EC bonds from the date of purchase of bonds, if these bonds are sold before 5 years from date of purchase then the LTCG exempted earlier will be taxable in the hands of assessee. Even if any loan or security is taken against these bonds will be treated as redemption & LTCG exempted earlier will be taxable.   Example – An immovable property is sold at Rs. 85 lakhs after a period of 42 months from the date of acquisition. The indexed cost of acquisition is 52 lakhs and indexed cost of improvement is Rs. 13 lakhs. Calculate the capital gain that is taxable after claiming exemption under Section 54EC if investment amount is Rs. 22 lakhs invested in NHAI bonds within 6 months from date of sale of immovable property Particulars Amount (Rs) Sale Consideration 85,00,000 Less: indexed cost of acquisition 52,00,000 Less: indexed cost of improvement 13,00,000 Long Term Capital Gain 30,00,000 Less: Investment in NHAI

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leave travel Allowance

Leave Travel Allowance (LTA) Tax Exemption, Eligibility, Rules & Claims

  LTA or leave travel concession is the allowance paid by your employer to cover your travel expenses, while you go on leave with or without your family. LTA forms a part of your cost to company (CTC) and is given as a yearly benefit but can be availed of monthly. In this article, we will discuss about Leave Travel Allowance (LTA) Tax Exemption, Eligibility, Rules & Claims.   The Income Tax Act, 1961 provides various exemptions to salaried class. Exemption means exclusion from total taxable income. Such exemptions enable the employers to structure Cost to Company (CTC) of employees in a tax efficient manner. One of such exemptions available to salaried class under the law and also widely used by employers is Leave Travel Allowance (LTA) /Leave Travel Concession (LTC). LTA exemption is also available for LTA received from former employer w.r.t travel after the retirement of service or termination of service. LTA is a type of allowance which is provided by the employer to his employee who is travelling on leave from work to cover his travel expenses LTA is an important component of the salary of the employee as it is eligible for income tax exemption as per section 10(5) of the IT Act, 1961 LTA received by the employer will not be a part of his net income of the year Value of LTA provided to High Court (HC) or Supreme Court (SC) Judge & members of his family are completely exempt from tax without any conditions.   The eligible criteria/condition for claiming LTA   1.  LTA can only be claimed on actual travel cost. Actual journey is a must to claim the exemption. All the mediums of the travel i.e. road, rail or air are claimable under LTA. However, employee must submit a valid proof of cost to claim the LTA.   2.  LTA can be claimed only on travel expense. Food or stay or any such expenses excluding travel cannot be part of it. LTA is exempt from tax   3.  LTA can only be claimed on domestic travel expenses. You cannot claim LTA on the expenses incurred during the international trip (if any) of the employee   4.  Employee cannot claim LTA in every financial year. LTA can be claimed only for two journeys in a block of 4 calendar years. The block years for LTA purposes are decided by government. The current running block for claiming LTA is calendar years 2018-2021. The last running block for LTA was 2014-2017   5.  LTA can only be claimed when the employee has been on leave from work for travelling purpose, the employee should mark the period as “leave”. For example – Sanju went on a holiday to Manali with his family and friends. He received Rs 50,000 as LTA from his employer. However, he spent Rs 30,000 for the air tickets of his family. The total LTA exemption he can claim is Rs 30,000, an amount he spent. The balance amount of Rs 20,000 received as LTA will be added in his taxable income.   Expenses that can be included in LTA   Tax benefits are available only on actual travel expenses incurred on rail, road or air fares only subject to the following condition:- Travel by Air – The air fare of the economy class of the national carrier (Air India) by the shortest route or the actual expenditure incurred, whichever is less, can be claimed as tax exemption.   Travel by Train – If the place of origin & destination is connected by rail & journey is performed by any mode of transport other than air, then the first class AC rail fare by the shortest route or the actual expenditure incurred, whichever is less, can be claimed as tax exemption.   Travel by Other Modes a)If the place of origin & destination of the journey are not connected by rail but a recognized mode of transport exists for the route then the first class or deluxe class fare for the shortest route for the recognized mode of transport or the actual expenditure incurred, whichever is less, can be claimed as tax exemption. b) However, if there is no recognized mode of transport for the route, then the amount equivalent to the first class A.C. rail fare of the distance covered assuming that the journey has been performed by rail can be claimed as tax exemption.   Procedure of claiming LTA   It is generally employer specific. Every employer announces the due date within which LTA can be claimed by the employees & may require employees to submit proof of travel such as tickets, boarding pass, invoice provided by travel agent etc along with the mandatory declaration. It is not mandatory for employers to collect proof of travel, it is always advisable for employees to keep copies for his/her records & also to submit to employer based on LTA policy of the company/to tax authorities on demand.   Carry Forward of the unclaimed LTA of a block year to the next block year   If the employee has not claimed LTA in the last running block or just claimed it once, he can still claim one additional LTA in the next block of calendar years under the carry over concession rules under which an employee can claim LTA tax break on 3 journeys made in current block of years. However, in order to utilize the carry over concession facility, one LTA exemption with respect to journey must be claimed in first calendar year of next block. For example – If an employee had just claimed one tax exemption under LTA in last block of year i.e. between 2014-2017. Now, he is  eligible to make LTA claims up to 3 journeys in current block i.e. between 2018-2021. However, his first claim must be made in first calendar year of current block i.e. 2018.   Who are included in the travel cost claimed for tax benefit under LTA?   LTA tax exemption claim can

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