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For Employees
For Employers
If you have any question or doubts or want to consult our panel of experts, then please send in your mail at info@ecandor.com
FAQ for Employees
1. What is the Tax Slab for the year - 2006-07, Assessment year - 2007?
2. How is my exemption on House Rent Allowance calculated?
3. How is my exemption on House Rent Allowance calculated?
4. What all are the Tax Saving Instruments ?
5. LTA |
5a. What is the criteria for me to claim LTA?
5b. How frequently can I claim LTA?
5c. What proof do we have to submit to avail LTA?
5d. Can both spouses claim LTA?
5e. What kind of expenses get covered in LTA?
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6. From when can I start availing the Tax benefit on Housing Loan Interest?
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1. What is the Tax Slab for the year - 2006-07, Assessment year - 2007
After the Budget 2005, the new income-tax slabs are as under:
| Level of Income |
Tax rate |
Tax payable |
| From 0 to 100,000 |
Nil |
Nil |
| 100,001 to 150,000 |
10% |
5,000 |
| 150,001 to 2,50,000 |
20% |
5,000 + 20,000 |
| 2,50,001 and above |
30% |
25,000 + 30% of income exceeding 2,50,000 |
For lady taxpayers, the income slabs are as under:
| Level of Income |
Tax rate |
Tax payable |
| From 0 to 135,000 |
Nil |
Nil |
| 135,001 to 150,000 |
10% |
1,500 |
| 150,001 to 2,50,000 |
20% |
1,500 + 20,000 |
| 2,50,001 and above |
30% |
21,500 + 30% of income exceeding 2,50,000 |
For senior citizens, the income slabs are as under:
| Level of Income |
Tax rate |
Tax payable |
| From 0 to 185,000 |
Nil |
Nil |
| 185,001 to 250,000 |
20% |
13,000 |
| 2,50,001 and above |
30% |
13,000 + 30% of income exceeding 2,50,000 |
In all the above cases, income-tax has to be increased by a sur-charge of 10% of the tax if the income exceeds Rs. 10,00,000.
In addition to the tax (and sur-charge wherever applicable), an education cess of 2% is also payable by all assessees.
2. How is my House Rent Allowance calculated
House Rent Allowance: Sec 10(13A):- This exemption is not allowed where an employee lives in his/her own house, or in a house for which he/she does not pay any rent.
So, if he/she is paying a rent, Least of the following is exempt from Income Tax
a) 40 % of Basic Salary for Non Metro Cities 50% of Basic Salary for Metro Cities
b) Actual HRA
c) Excess of rent paid over 10 % of Basic Salary
3. What is Section 80C?
Finance Minister has introduced one new section into the Act in the year 2005-06. Section 80C seeks to compensate the taxpayers for the deletion of the various rebates from tax.
Under the new section 80C, a taxpayer gets a deduction from income . The deduction is in respect of various items of investments/payments made by the taxpayer during the year. The upper limit for this deduction is Rs. 1 lakh per year. There are few positive points about this deduction as compared to the rebates available earlier:
a) This deduction is available to any resident individual tax payer irrespective of his/her level of income. Earlier, the rebate under section 88 was not available to tax payers whose income exceeded Rs. 5 lakhs
b) There are no sub-limits in this section for the different investment options. Earlier, in section 88, there were sub-limits for different items (for example Rs. 10,000 for housing loan repayment, Rs. 12,000 per child for educational expenses etc.). Now, theoretically, a taxpayer can put in the entire Rs. 1 lakh in any one of the various options available. There is no bar under the Income-tax Act. It may be noted however, that the upper limit for investment in PPF account continues to be Rs. 70,000 since that limit has been prescribed under the PPF Act and that Act has not undergone any change
4. What all are the Tax Saving Instruments?
- Life insurance premium paid by an individual to effect or to keep in force an insurance on his own life, life of the spouse or any child
- Employee Contribution (not being repayment of loan) made by an individual towards Statutory Provident Fund & Recognised Provident Fund - This is a recovery from Salary.
- Contribution (not being repayment of loan) made by a person towards the 15-year Public Provident Fund set up by the Government under the Public Provident Fund Scheme, 1968.
- Employee Contribution by an individual towards an approved Superannuation fund
- Any sum deposited in a 10 year or 15 year account under the Post Office Savings
- Subscription to any notified Government security or any notified deposit scheme (ie National Savings Scheme)
- Any sum paid as subscription to National Savings Certificates, VI & VII Issues & also National Savings Certificates VIII Issue.
- Contribution made by an individual for participating in the unit-linked insurance plan of Unit Trust of India.
- Any sum paid (incl. accrued interest) as subscription to Home Loan Account Scheme of the National Housing Bank or contribution to any notified Pension Fund set up by the National Housing Bank.
- Amount invested in debentures , Tax saving Mutual Fund & equity shares in, a public company engaged in infrastructure including power sector or units of a mutual fund proceeds of which are utilised for the developing, maintaining, etc., of a new infrastructure facility.
- Housing Loan Principal Amount upto Rs. 100,000/- limit of 80C
- Investment in Pension Scheme
5a. What is the criteria for me to claim LTA?
If you fulfill two criteria, you can claim LTA:
i. You should have taken leave from your company
ii. You should actually travel
You can either travel alone or with your family. However, if your family travels without you, no LTA can be claimed.
5b. How frequently can I claim LTA?
Twice in the block of four calendar years defined by the government.
Presently the block is 2006-2009 Since it is the calendar year and not the financial year, it will be from January 1, 2006 to December 31, 2009.
5c. What proof do we have to submit to avail LTA?
You can produce an air, rail or any public transport ticket. You can even submit the bills issued by the car rental company if you rent a vehicle.
However, the travel is applicable anywhere in India and not abroad. So an international air ticket will not hold.
5d. Can both spouses claim LTA?
Yes, if both spouses are getting the LTA benefit in their work place, they can both claim LTA from their employers and the benefit for four journeys in one block. But they should not have traveled twice during the same year.
5e. What kind of expenses get covered in LTA?
The reimbursement would be restricted to actual travel expenses in any of the following mode of transportation-
| Air travel |
Economy fare of national carrier |
| Rail travel |
First class AC fare |
| Road |
Public transport - First class or deluxe class. If there is no recognized transport - Equivalent of first class AC fareCar Rental Company Bill |
LTA does not cover the Boarding & Lodging Expense.
6. From when can I start availing the Tax benefit on Housing Loan Interest?
From the time you get the possession of the house / flat you can avail the tax benefit . Under Section 24, the maximum amount of interest that can be deducted from your income is Rs 1,50,000. As a result, your taxable income decreases by that amount.
For the amount paid towards Interest (e.g. Rs.200,000) prior to getting the Possession of the house / flat can be claimed in 5 equal installment of 20% each for the consecutive 5 years (Rs 40,000 for 5 years).
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