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After checks on LTA, HRA claims for salaried class, I-T dept may tighten noose on non-salaried

Source | The Financial Express : By Sarbajeet K Sen

While the income tax department has made attempts to eliminate fudging of leave travel and rent receipts claims for availing deductions, the taxman’s next target could be to plug similar leakages from non-salaried taxpayers. Non-salaried taxpayers are those showing business income instead income from salaries.

The recently issued new standardised Form 12BB by the I-T department for the salaried class attempts to put a lid on fake claims by employees on LTA, Leave Travel Concession (LTC), House Rent Allowance (HRA) and interest paid on home loans. From June 1 onwards, taxpayers will have to furnish to their employers proof of travel for claiming LTA, LTC benefits. In case of HRA, the Central Board of Direct Taxes has asked employees to furnish details including name, address and PAN number of the landlord if the aggregate rent paid exceeds Rs 1 lakh a year.

“Form 12BB is applicable to all salaried employees. Salaried employee is claiming one or the other exemption or deduction mentioned in form 12BB for saving taxes. Similar provision may come for individual – non salary claiming deductions,” says tax expert Sudhir Kaushik, Co-Founder & CFO,

To put it in context, Kaushik pointed out that the salaried class consists of nearly 50 per cent of total 4.33 crores e-filers in India, leaving the remaining half of e-filing taxpayers out of similar tax evasion checks.

Earlier, salaried employees who wanted to claim tax deductions were required to file self-declarations of tax savings/deductions to employer along with the evidences of such tax savings for every financial year.

Employer was liable to deduct tax at sources on the estimated income of employees after considering such self-declarations of tax savings.

Kaushik feels the new Form 12BB will help in plugging tax leakages. “It will help processing the returns data after matching the deduction and exemption from electronic data available. I-T deparment has got leakages fixed through Form 26AS matching income and tax payment but exemption deductions are not yet covered,” he said.

Through the new form the I-T department has tried to streamline procedures to be followed by employers in collecting the deduction/investment proofs from the employees. “Now the employer has to produce Form 12BB along with the deduction/investment proofs declared by the employees if any information is sought by the I-T officer,” Kaushik said.

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