[aravind.anand]

Originally Posted by govigov

Can experts help me with 2 questions?

I have an HRA section in payslip, but did not do proof submission. So, form 16 does not have HRA section. Do I have to deduct the rent I paid under section 80GG or exempt income under section 10(13A)?

AFAIK, Section 80GG can be used to declare HRA when the employer does not provide the option of declaring HRA at all. But in your case, since there was an option which you have not utilized, declaring HRA under 80GG will result in a notice being generated once you submit the return.

[Ry_der]

Originally Posted by govigov

Can experts help me with 2 questions?

I have an HRA section in payslip, but did not do proof submission. So, form 16 does not have HRA section. Do I have to deduct the rent I paid under section 80GG or exempt income under section 10(13A)?

You should claim u/s 10(13A). AFAIK 80GG is for non salaried individuals. In case you receive a notice, submit relevent documents supporting your claim.

The company pays a conveyance allowance of 19,200 (1,600 * 12) for commuting. Now, in the ITR-1 form, there are 2 of them, 10(14)(i) AND 10(14)(ii), which one of these should I be using? I think it is section 10(14)(ii) based on the reading/research that I have done online, but not sure.

The first question is a total googly. :/

You can claim u/s 10(14)(ii).

[aravind.anand]

Originally Posted by govigov

Can experts help me with 2 questions?

I have an HRA section in payslip, but did not do proof submission. So, form 16 does not have HRA section. Do I have to deduct the rent I paid under section 80GG or exempt income under section 10(13A)?

AFAIK, Section 80GG can be used to declare HRA when the employer does not provide the option of declaring HRA at all. But in your case, since there was an option which you have not utilized, declaring HRA under 80GG will result in a notice being generated once you submit the return.

[null]

Originally Posted by null

Has the EPFO interest (managed by EPFO & not a private trust) for FY2017-18 been updated for you?

The FY17-18 EPF interest is not declared till now. How did you file your tax returns this time without this information(presuming most of you are employed & have an EPF account)?

Curious - Do you submit your ITR without declaring this notional PF interest income (EPF & PPF) in your returns? OR is there any workaround here?

[sgiitk]

They are changing the software even till a week back. The problem is that the data format has changed, to the software developers were left in the lurch. They will take at least two days to com up to speed. Also, following a court case the disable the Aadhar link for some time. So i took and mailed the ITR-V. It never was uploaded. Then yesterday my CA called and then was able to upload from the Aadhar.

What a shambles.

[dailydriver]

Specific to the state of Kerala, CBDT has extended the last date for filing IT returns to 15-09-2018, reports Times of India.

"In view of the disruption caused due to severe floods in Kerala, the Central Board of Direct Taxes (CBDT) hereby further extends the due date for furnishing Income Tax returns from August 31, 2018 to September 15, 2018 for all Income Tax assesses in the state of Kerala, who were liable to file their Income Tax returns by August 31, 2018," a notification from ministry of finance stated.

[carboy]

Let's say I work in a company from April to August. In my final settlement how to they estimate taxes. Do they assume that my April to August salary is my salary for the whole year - i.e. if I earn 1 Lakh a month, do they assume that 5 Lakhs is my annual salary. Or do they extrapolate & assume 12 lakhs is my annual salary while doing TDS for my full and final settlement? Or is there any other way?

By Govt rules - is there something they are obligated to do?

[reignofchaos]

Originally Posted by carboy

Let's say I work in a company from April to August. In my final settlement how to they estimate taxes. Do they assume that my April to August salary is my salary for the whole year - i.e. if I earn 1 Lakh a month, do they assume that 5 Lakhs is my annual salary. Or do they extrapolate & assume 12 lakhs is my annual salary while doing TDS for my full and final settlement? Or is there any other way?

By Govt rules - is there something they are obligated to do?

They will only tax based on what they paid you till your last date. There is no extrapolation involved here.

[ruzbehxyz]

Originally Posted by carboy

Let's say I work in a company from April to August. In my final settlement how to they estimate taxes. Do they assume that my April to August salary is my salary for the whole year - i.e. if I earn 1 Lakh a month, do they assume that 5 Lakhs is my annual salary. Or do they extrapolate & assume 12 lakhs is my annual salary while doing TDS for my full and final settlement? Or is there any other way?

By Govt rules - is there something they are obligated to do?

They are authorized to deduct TDS only for the amount you earned / paid by them.

[binand]

Originally Posted by carboy

Let's say I work in a company from April to August. In my final settlement how to they estimate taxes. Do they assume that my April to August salary is my salary for the whole year - i.e. if I earn 1 Lakh a month, do they assume that 5 Lakhs is my annual salary. Or do they extrapolate & assume 12 lakhs is my annual salary while doing TDS for my full and final settlement? Or is there any other way?

By Govt rules - is there something they are obligated to do?

Don't know what they are obligated to do. But I have some experience here (having been involved in this matter for a while, including discussing it with payroll outsourcing companies). Here is what is done. Let us call the two companies A & B.

• At the beginning of the financial year, A makes a good faith assumption that you will stick with them for the entire year. The procedure for people who are serving notice period, or superannuating during the FY is different.
• Based on this assumption A will compute your projected gross pay, ask you for your other income, exemptions, deductions and arrive at your taxable income. They calculate tax on this based on your marginal rate etc. and strive to deduct this tax in equal monthly installments.
• At the end of every month this exercise is repeated. Project your numbers, calculate tax, remove tax already deducted, and deduct the remaining in equal monthly installments. Sometimes mid-year bonuses, pay raises, windfall income etc. all will result in changes in the calculation, hence this re-calculation is necessary.

Now suppose you leave A in the middle of the year (at the end of August, as you say). They will issue you a document called salary certificate or something similar. It will list all the relevant numbers - gross pay, other income reported by you, exemptions and deductions claimed, taxable income, total tax deducted.

• B will compute the taxable income for the period you are working with them (say October to March). They will adjust the exemptions and deductions available to you from their side, based on the numbers in the A document. Eventually they will arrive at a taxable income from B.
  
• B will then add the taxable income from A (from the document) to arrive at total taxable income. They will compute tax payable at your marginal rate, using this number.
  
• From this tax payable, they will reduce the tax already deducted by A. The remaining amount they will deduct in equal monthly installments.

To take a concrete example:

Suppose you work at A with monthly gross pay 1L from April to August, and at B from October to March with monthly gross pay 1.5L. We will assume you mentioned standard deduction of 10K pm to both A & B and no more.

A's calculation (ignoring cess):

Gross pay = 1L x 12 = 12L
Deductions = 1.2L
Taxable income = 10.8L
Tax at marginal rate = 1.365L
Monthly TDS = 11375.

The salary certificate will say:
Gross pay = 5L
Deductions = 1.2L
Taxable income = 3.8L
Tax at marginal rate = 6500
Tax deducted = 56875

B's calculation:

Gross pay = 1.5L x 6 = 9L
Deductions = 0 (since all of what you are claiming has been claimed at A)
Taxable income = 9L
Total taxable income incl. A income = 12.8L
Tax at marginal rate = 196500
(less) tax already deducted = 139625
Monthly TDS = 23271

Your in-hand pay at A is 88625 and at B is 126729.

Combining the two, your full year's details are:

Gross pay = 1L x 5 + 1.5L x 6 = 14L
Deductions = 1.2L
Taxable income = 12.8L
Tax at marginal rate = 196500
Tax paid = 11375 x 5 + 23271 x 6 = 196501

Edit: If you didn't join B or any other company, in your IT return you will show tax due as 6500, tax paid as 56875 and get a tax refund of 50375.

[carboy]

Originally Posted by reignofchaos

They will only tax based on what they paid you till your last date. There is no extrapolation involved here.

Originally Posted by ruzbehxyz

They are authorized to deduct TDS only for the amount you earned / paid by them.

I think you have both misunderstood my question. My bad, I wasn't clear probably.

Originally Posted by binand

Edit: If you didn't join B or any other company, in your IT return you will show tax due as 6500, tax paid as 56875 and get a tax refund of 50375.

Yes - this is what I was asking about. In the month after I have given my resignation - why should A assume that I will work for the remaining 8 months & what salary? Shouldn't they assume that 5 lakhs is what I will earn for the whole year & calculate/adjust my tax deducted in the last month based on this calculation? I am not saying they should refund me tax already deposited, but shouldn't they at least not deduct anything from my final month's salary considering that they have already deducted more than necessary assuming I don't join any company at all after A. Can they not do this?

[binand]

Originally Posted by carboy

In the month after I have given my resignation - why should A assume that I will work for the remaining 8 months & what salary? Shouldn't they assume that 5 lakhs is what I will earn for the whole year & calculate/adjust my tax deducted in the last month based on this calculation?

Yes, and that is what I said here:

At the end of every month this exercise is repeated. Project your numbers, calculate tax, remove tax already deducted, and deduct the remaining in equal monthly installments.

If A has a proper payroll software/outsourcing partner this will happen exactly the way you feel it should; if A is the type where an entry-level Accounts team member does payroll with Excel spreadsheets it might not.

[carboy]

Originally Posted by binand

Yes, and that is what I said here:

Sorry - I am confused. If that the end of the final month, if they repeat what they did the previous months, won't a tax similar to the previous months be deducted?

[blorebuddy]

Originally Posted by carboy

I am not saying they should refund me tax already deposited, but shouldn't they at least not deduct anything from my final month's salary considering that they have already deducted more than necessary

I agree. The usual practice is not to deduct the tax assuming you will continue to work rest of the year and at the same salary. I think you can challenge this and ask them to pay the taxes deducted. They would have not paid this to income tax authorities (TDS) as companies make their TDS paid closer to quarter end. It’s your responsibility to be compliant to all the tax laws by paying necessary taxes on time and file the returnsat the end of the year so they should oblige.

[binand]

Originally Posted by carboy

Sorry - I am confused. If that the end of the final month, if they repeat what they did the previous months, won't a tax similar to the previous months be deducted?

The repetition is after incorporation of new information. As I said, it all depends on the level of sophistication that the company's payroll system uses.

At a previous job, the payroll system was integrated to the HRMS (later ERP); so the moment someone's relieving date is updated in HRMS payroll will automatically know about it and the next re-run would do the right thing. Similarly employees could update things themselves through a self-service system.

At another location payroll was a big spreadsheet with one sheet per employee; there HR information wouldn't percolate down to Accounts therefore the scenario you are scared about plays out month after month.