Standard Deduction U/s 16(ia) | With Automated Income Tax Form 16 Preparation Excel Based Software for the F.Y.2021-22

 Standard Deduction U/s 16(ia) | Section 16 of the Income Tax Act 1961 provides for a

 deduction from income charged to tax under the heading “salaries”. Provides deductions for

 the standard deduction, leisure allowance, and occupational tax. Through this deduction, a

 salaried taxpayer can reduce his or her taxable salary income.

 

Moreover, with recent modifications to the standard deduction, the interest of this section has been extended to a higher amount. Moreover, there is no hassle in submitting bills for travel and medical treatment which makes it easy to claim them.

Download and Preparation One by One Form 16 Part A&B and Part B for the Financial Year 2021-22

In this article, we'll cover each of the deductions in Section 16 along with account-specific illustrations.

 

U/s  16 (IA) Salary Deduction of Rs. 50,000/-

The standard deduction is allowed under Section 16(ia) of the Income Tax Act. Replace the standard deduction for transportation allowance of Rs 19,200 and medical reimbursement for Rs 15,000. In Budget - Presented by Finance Minister Jaitley for 2018.

 

Budget - 2018 provided for a standard deduction of Rs 40,000 in lieu of transport allowance and medical reimbursement. This deduction of Rs 40,000 does not require the taxpayer to provide any invoice or proof of expenses. It provides for a fixed discount of Rs 40,000.

Download and Preparation One by One Form 16 Part B for the Financial Year 2021-22

 

Later in the 2019 Provisional Budget, the discount amount of Rs 40,000 was increased to Rs 50,000. Hence, the discount for F.Y 2018-2019 was Rs 40,000 and from FY 2019-20 the discount would be Rs 50,000.

 

The standard discount is also available for retirees. A clarification has been issued by the Central Bank of Tunisiaexplaining the applicability of the standard deduction to retirees. The pension received by the taxpayer from his previous employer is subject to tax underthe heading “salaries”. Since the pension received is taxable under "salaries," the deduction will also be available to pensioners under Section 16.

 

The deduction amount available under Section 16 for the standard deduction is:

Salary received

Or

50,000 rupees

Whichever is less?

Download and Preparation at a time 50 Employees Form 16 Part B for the Financial Year 2021-22

 

Details F.Y2018-19 F.Y2019-20

(Rs.) From F.Y2019-20 From F.Y2020-21 (Rs.)

Base salary + design allowance 800,000 800,000

Other taxable benefits 100,000 100,000

Gross wages 900,000

Standard deduction 40000

Total income 860,000

Other deductions 200000

Taxable income 660000

Income tax 44500

Income Tax Savings - 2000

Remember that the standard deduction is not related to the u/s 80C deduction or any other part of the VIA chapter.

 

Interpretation of the Standard Deduction Calculation

Section 16(ii) Entertainment allowance

Entertainment allowance is first included in wage income and then deducted based on several criteria. The allowance must be an allowance specifically provided by the employer to the taxpayer as an entertainment allowance.

Entertainment allowance for government employees

The minimum deduction for central government and state employees is:

20% of the basic salary

5000 rupees

Amount Provided as Entertainment Allowance in Fiscal Year

Download and Preparation at a time 50 Employees Form 16 Part A&B for the Financial Year 2021-22

 

To qualify for relief, the taxpayer must ensure that the following details are met:

Salary must not include any allowances, employer benefits, or other benefits received. Essentially, wages should be the gross amount received, excluding any other benefits.

 

Ignore the actual amount spent on entertainment benefits received from the employer.

 

Entertainment allowance for a non-government employee

The hospitality deduction is not available to non-government employees. Only employees of the central or state government are eligible for the deduction. In addition, employees of local governments and public corporations are not entitled to the deduction.

 

Demonstration of calculating the entertainment allowance deduction

 

Size Details

Salary (excluding other allowances, benefits and privileges) 120000

Entertainment allowance received per month 1000

Entertainment allowance for the full fiscal year 12,000

Available withdrawal amount:

20% of salary (а) 24000

5000 rupees (b) 5000

The actual amount received (c) 12000

The amount allowed as a deduction (minimum a, b and c) is 5000

Download and Preparation at a time 100 Employees Form 16 Part B for the Financial Year 2021-22

 

Occupational or employment tax under Section 16(iii)

A deduction is allowed for payroll tax under section 16iii of the Income Tax Act. The amount paid by the taxpayer in respect of work tax or occupational tax is allowed as a deduction in accordance with section 16. Here, work tax is provided for in (2) of section 276 of the Constitution.

 

When calculating professional tax deductions, the following points should be considered:

 

The taxpayer must claim the deduction only in the fiscal year in which the professional tax is paid to the government.

 

Tax paid by an employer on behalf of an employee is also eligible for a deduction. Here, the amount paid by the employer as an occupational tax will be included in the first place as a mandatory condition in the total salary. Later, an equal amount will be allowed as a deduction under section 16.

 

 Under section 16 of the Income Tax Law, there is no upper or lower deduction limit.  However, no state government may charge more than 2500 rupees per year as professional tax. Only tax paid is deductible, not interest on late payment or fees for late or non-payment of professional tax.

 

Download and Preparation at a time 100 Employees Form 16 Part A&B for the Financial Year 2021-22

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Income Tax exemption to the disable persons Section 80U | With Auto Fill Income Tax Master of Form 16 for the F.Y.2021-22 as per Section 115 BAC

 Income Tax exemption to the disabled person Section 80U is given tax deductions for

 those who have at least 40% disability under the law. There are several criteria for this and a specific

 set of procedures for claiming this deduction under section 80U.

 

Section 80U deals with tax deductions for residents of Indiawho are classified as disabled under government regulations. Under the IncomeTax Act, 1961, any individual who was resident in India during the year of taxation and has at least 40% disability under the law is eligible for deductions.

Definition of disability

 

Disability is defined as a disability of at least 40% in a person, confirmed by the competent medicalauthorities. Persons with disabilities are defined under the Persons with Disabilities (Equal Opportunity, Protection of Rights and Full Participation) Act, 1995, enacted by the government. Disability is mainly divided into 7 categories:

Download and prepare One by One Form 16 Part A&B for the F.Y.2021-22

Poor vision: Poor vision refers to people with visual impairments that cannot be corrected with surgery but can still use their vision with other devices.

 

Blindness: Blindness is defined as total loss of vision or limited field of vision to an angle of 20 degrees or worse, or visual acuity of less than 6160 after corrective lenses.

Hearing impairment: hearing loss of at least 60 decibels.

 

Cured of leprosy: People who have been cured of leprosy but have lost sensation in their legs or arms and paresis of the eyelids and eyes. Even the elderly or people with extreme deformities prevent them from engaging in any useful activity.

 

Mental retardation: people with incomplete or delayed development of mental abilities, resulting in a subnormal level of intelligence.

 

Musculoskeletal Disability: People with severely limited movement of the limbs due to a disability in the articular muscles or bones.

 

Mental illness: other mental disorders not associated with mental retardation.

The law also defines severe disability in addition to disability. Severe disability refers to a condition in which a person suffers from 80% or more of the disability in the categories mentioned above. Severe disability also began to include multiple disabilities, cerebral palsy and autism.

Download and prepare One by One Form 16 Part B for the F.Y.2021-22

 

Section 80U deductions

These Section 80U Exemptions are allowed at Rs 1.25 lakh for severely disabled persons and Rs 75,000 for persons with disabilities.

 

How can I claim Section 80U benefits?

There are no documentationrequirements other than a certificate from a recognized medical institution confirming the disability. There is no need to submit bills or other itemsincurred as the cost of treatment or any other expenses.

 

Section 80U

Section 80U gives tax Exemptions for those who have at least 40% disability under the law. There are various criteria for this and a specific set of procedures for obtaining this deduction under Section 80U.

 

Section 80U deals with tax deductions for residents of Indiawho are recognized as disabled under government regulations. as per the  Income Tax Act, 1961, any person who has been resident in Indiaduring the accounting year and has at least 40% disability as specified in the law is entitled to the deductions.

Definition of disability

Download and prepare at a time 50 employees Form 16 Part A&B for the F.Y.2021-22

 

Disability is defined as a disability of at least 40% in a person, confirmed by the competent medical authorities. Persons with disabilities are defined under the Disability (Equal Opportunity, Protection and Full Participation) Act of 1995, issued by the government. Disability is mainly divided into 7 categories:

 

Poor vision: Poor vision refers to people with visual impairments that cannot be corrected with surgery, but who can still use their vision with other devices.

 

Blindness: Blindness is defined as total vision loss or visual field restriction of 20 degrees or worse, or visual acuity below 6160 after corrective lenses.

Hearing impairment: hearing loss of at least 60 decibels.

 

Healed leprosy: People who have recovered from leprosy but have lost sensation in the legs or arms and paresis of the eyelids and eyes. Even elderly people or people with extreme deformities prevent them from carrying out any user activity.

Download and prepare at a time 50 employees Form 16 Part B for theF.Y.2021-22

 

Mental retardation: People with incomplete or delayed development of mental abilities, resulting in a subnormal level of intelligence.

 

Musculoskeletal motor insufficiency: People with severely limited limb movement due to impaired functioning of the joint muscles or bones.

 

Mental Illness: Other mental disorders not associated with mental retardation.

The law also defines severe disability separately from disability. Severe disability refers to a condition where a person suffers 80% or more of the disability in the above categories. Severe disability also began to include multiple disabilities, cerebral palsy, and autism.

 

Deductions Section 80U

Section 80U deductions are available at Rs 1.25 lakh for severe disability and Rs 75,000 for people with disabilities.

 

These limits have been increased from the previous limits of Rs 1 lakh for severe disability and Rs 50,000 for disability. The changes take effect from the 2020-21 evaluation year.

Download and prepare at a time100 employees Form 16 Part A&B for the F.Y.2021-22

 

How do I get Section 80U benefits?

No documents other than a certificate from a recognized medical institution certifying disability are required. It is not necessary to present invoices or other items incurred as a cost of treatment or any other expense.

 

However, you need to complete various modules for mental illness and other disabilities. Likewise, Form 10-IA for children with cerebral palsy and autism must be completed.

To make an application, you must provide a medical certificate of disability and a Section 139 tax return for the relevant assessment year.

If your disability assessment certificate has expired, you can still request deductions in the year that the certificate expires.

 

However, starting next year, a new certificate will be required to benefit from Section 80U benefits.

 

Certifications can be obtained from government-licensed medical bodies, which may include a physician in neurology, paediatrician, urologist, chief medical officer (CMO), or civil surgeon at a government hospital.

 

It should be mentioned here that Section 80DD also applies if a person has paid a premium to care for a disabled dependent. Dependent means any member of a united Hindu family (HUF) or siblings, parents, spouse or children. As regards the limits to the deduction, they are the same as those referred to in Section 80U.

Download and prepare at a time 100 employees Form 16 Part B for the F.Y.2021-22

 

Section 80U Frequently Asked Questions

1. Can a person with a proven disability of 44% receive tax deductions under section 80U?

Yes, you can take advantage of the tax deductions provided in section 80U. It should be noted that the percentage of disability established for the deductions referred to in the section is between 40% and 80%.

 

2. What is the Section 80U deduction?

Deductions of up to Rs 1.25,000 can be claimed. The indicated amount can be requested if the person has an 80% disability. For people whose disability is greater than 40% and less than 80%, the deduction is Rs 75,000.

 

3. Have the deduction limits for the disabled changed?

Yes, the deduction limits for the disabled have been changed. The new limits take effect from the 2020-21 assessment.

 

4. How many categories is the disability divided into?

Disability is divided into seven categories. These are vision problems, blindness, hearing problems, leprosy treatments, mental retardation, impaired musculoskeletal system, and mental illness.

 

5. Are autism, cerebral palsy and multiple disabilities considered severe disabilities?

Yes, autism, cerebral palsy and multiple disabilities are considered severe disabilities

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