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Old 23rd February 2020, 19:07   #1606
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Hi All,

I have query regarding my HRA (I did search for any previous responses that could help out but didn't see anything specific to my case..i guess that is probably a bad sign).

I live in a rented accommodation with my family. The rental agreement has both my sister and I as the tenants.

I pay about 3/4 or the rent amount and have been claiming HRA for it from my employer. This year my employers Audit team has rejected my rent filings from April 2019 to Jan 2020 since my rental agreement was done by my little sister on a A4 sheet that I had later got notarized.

NOTE: My rent tenure is from Feb to Jan. So for this year (i.e. 2020 to 2021) I had already got it done on Rs20 Non Judicial Stamp Paper.

Since my rent per annum goes above Rs. 1L I had provided both the rental agreement and Owner's PAN number. The rental agreement got rejected so my monthly claim for April2019 to Jan 2020 was reduced to Rs. 3,000 (from Rs. 15,292).

Now my question is can I get my rental agreement drafted for Feb 2019 to Jan 2020 (using the e stamp Non Judicial Stamp Paper) rental period and submit that while filing the Income tax returns under Sec 10 (13A)? Can the agreement mention that the tenure in past as long as I have it signed by my Owners.

Also, is my understanding that I have to file under ITR-1 correct?

I have bank transfer statement that can prove I payed up and with the Owners PAN in hand I am worried only about this aspect.

Edit: Additional query, Sorry forgot to put in one additional detail. Since my employer Auditor team did accept a part of the HRA payment the Form 26AS (not sure if this is right one) will show about Rs. 57,000 while I had claimed Rs. 1,60,000+ in my HRA (which I would have to do again in ITR-1). Will this lead to any additional issues? I am asking this since this has never happened to me.

Last edited by JithinR : 23rd February 2020 at 19:33.
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Old 23rd February 2020, 19:24   #1607
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Originally Posted by JithinR View Post
I pay about 3/4 or the rent amount and have been claiming HRA for it from my employer. This year my employers Audit team has rejected my rent filings from April 2019 to Jan 2020 since my rental agreement was done by my little sister on a A4 sheet that I had later got notarized.
As far as I know rental agreement is not required to claim HRA; only proof of payment is (and landlord's PAN if rent is beyond a threshold). If you are up to it you can ask the auditor for their interpretation of the relevant sections of IT act and confront them with it if their logic is not tenable.

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Originally Posted by JithinR View Post
Now my question is can I get my rental agreement drafted for Feb 2019 to Jan 2020 (using the e stamp Non Judicial Stamp Paper) rental period and submit that while filing the Income tax returns under Sec 10 (13A)?
Should be alright.

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Originally Posted by JithinR View Post
Also, is my understanding that I have to file under ITR-1 correct?
ITR-1 is for people with < 50L income and not more than one house property. If you qualify then you can file under it.
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Old 23rd February 2020, 19:35   #1608
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Originally Posted by binand View Post
As far as I know rental agreement is not required to claim HRA; only proof of payment is (and landlord's PAN if rent is beyond a threshold). If you are up to it you can ask the auditor for their interpretation of the relevant sections of IT act and confront them with it if their logic is not tenable.
Thank you for your response sir. Unfortunately, the Auditor team does require the rental agreement if the claimed monthly amount is above Rs. 3,000. I did try to get them to take a look at my Bank statements but they just said that the returns are frozen and nothing further can be done from their end.

I have added an addition to my query. Could you please advise on that too?
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Old 23rd February 2020, 21:20   #1609
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Originally Posted by JithinR View Post
Unfortunately, the Auditor team does require the rental agreement if the claimed monthly amount is above Rs. 3,000
This seem to be an unnecessary task from your audit team. The only requirement for claiming HRA for amounts more than a lakh is to produce the PAN card of the House Owner and a receipt with a revenue stamp duly signed.

If there is no choice from your auditor, you can work with a auditor and get it rectified while filing the ITR. But, be ready to forego a big chunk of amount from your salary for the next two months.
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Old 24th February 2020, 10:42   #1610
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Unfortunately, the Auditor team does require the rental agreement if the claimed monthly amount is above Rs. 3,000.
If you want to really solve this, ask the audit firm for the specific rule they are following here (IT Act section + rules + circulars + notifications etc.).
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Old 10th June 2020, 17:38   #1611
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Hi everyone. Let me give my background first -
I have a work experience of more than 7 years and till date it was always 'tax deduction at source'. My brother used to file my taxes before, but now i use Cleartax to upload my employer given Form 16 and there ends the story. I do not have any investments and no deductions, hence it was straight forward.

But now my work format has changed. I will get paid every month directly from UK and my employment has been changed to a consultant basis. i.e i get paid a fixed sum for my services and everything else has to be taken care by me. Basically i am now a self employed person, working in India, providing services to a company in UK as a consultant. So here goes my queries -
1. How do i go about paying my tax now? What is the frequency? Is it monthly or quarterly or annually?
2. Will investing in health and life insurances give any deductions?
3. What all things can be shown as deductibles in my case? i.e rental and business expenses, depreciation on assets such as laptops, etc

I am a complete noob when it comes to this, hence any help is appreciated.
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Old 11th June 2020, 20:42   #1612
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You have to pay advance tax on or before the actual deadlines, and ALL your income becomes income from other sources.

If you set yourself up as a sole trader and maintain books to the effect you can expense some amount that you spend on your car, internet access, phone bills etc - with suitable logging to show that you have used it for official purposes vs personal purposes.

Your 80G, 80D etc expenses on insurance policies, kids schooling, medical insurance will still remain valid. Also, go for a 15 year PPF now that you won't be assessible to PF as you're not a regular salaried employee in India.

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Originally Posted by Rohit_Quad View Post
But now my work format has changed. I will get paid every month directly from UK and my employment has been changed to a consultant basis. i.e i get paid a fixed sum for my services and everything else has to be taken care by me. Basically i am now a self employed person, working in India, providing services to a company in UK as a consultant. So here goes my queries -
1. How do i go about paying my tax now? What is the frequency? Is it monthly or quarterly or annually?
2. Will investing in health and life insurances give any deductions?
3. What all things can be shown as deductibles in my case? i.e rental and business expenses, depreciation on assets such as laptops, etc
I am a complete noob when it comes to this, hence any help is appreciated.
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Old 11th June 2020, 21:07   #1613
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Quote:
Originally Posted by Rohit_Quad View Post
Hi everyone. Let me give my background first -
I have a work experience of more than 7 years and till date it was always 'tax deduction at source'. My brother used to file my taxes before, but now i use Cleartax to upload my employer given Form 16 and there ends the story. I do not have any investments and no deductions, hence it was straight forward.

But now my work format has changed. I will get paid every month directly from UK and my employment has been changed to a consultant basis. i.e i get paid a fixed sum for my services and everything else has to be taken care by me. Basically i am now a self employed person, working in India, providing services to a company in UK as a consultant. So here goes my queries -
1. How do i go about paying my tax now? What is the frequency? Is it monthly or quarterly or annually?
2. Will investing in health and life insurances give any deductions?
3. What all things can be shown as deductibles in my case? i.e rental and business expenses, depreciation on assets such as laptops, etc

I am a complete noob when it comes to this, hence any help is appreciated.
Also, do check out 'Presumptive Taxation' if your total income is gonna be less than 50L and your work profile is eligible for it. It basically allows you to show 50% of your income as expenses and just pay taxes on the other 50% without the need to maintain any books.
Do also check if you will be liable to pay any GST?
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Old 20th June 2020, 11:54   #1614
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Hello CA's ACA's and FCA's

Need inputs on Taxation angle, as we trade daily in the stock market (in Wife's name, who is not a salaried person), we now need a treatment and or solution for the Speculation income part.

While I did read on the Income Tax site that ITR3 is the right form, I am still trying to understand the various sections by devoting 30 minutes to it daily, so that I will be able to get a hang of it. Prima facie it is worse than trying to understand and teach my 15 year old 10th std. mathematics.

Coming to my query, what expenses can be set off against the speculative trading income?,

We do not have any registered company in our names and both of us are filing our individual IT returns for the past 20 years. I am salaried and my wife has Investment income, purely Interest income, ST and LT Capital Gains.

Now coming to the day trading part, this is where I need help, as since the Speculative income is of considerable amount and I need to pay taxes on it. I also understand that Speculative Income will be charged at the overall tax slab rate for my wife.

First Question: can we claim expenses towards Broadband and Telecom bills, laptop, Electricity, Maids etc. as deductions or exepmtions.

Second Question : what about vehicle depreciation, can that also be accommodated under Capital expenditure?

Clarification Please : Lastly, the trades are mostly Margin calls taken daily directly not he market and we do not use any of the Futures and or Options products. I do not take delivery and square off the Gains the same day. Would this also be considered as Speculative Income, as the Income Tax directive refers to Futures and Options and Speculative income in the same breath.

Looking forward to positive replies please

Last edited by shivshanker : 20th June 2020 at 11:58.
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Old 21st June 2020, 05:57   #1615
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Speculative transaction is a transaction of purchase or sale of a commodity including stocks and shares settled otherwise than by actual delivery or transfer of the commodity or scrip (Section 43(5) of the Income-tax Act)
Speculative income is income derived from such transactions. Intra day does not take delivery so it squarely falls under speculative income.

The only thing you can set off against it seems to be loss from speculative business, and if you do various other things to earn income like a salaried job, rent income etc your speculation is a distinct business so you canít offset losses from elsewhere against your speculation profit.

You can deduct eligible expenses connected to day trading, including STT paid, brokerage and broker commission etc but need to keep account books and be subject to audit in case there are large expense claims or taxes due.

What sort of expense is eligible as in related to your day trading will be narrowly interpreted. For example if you have a dedicated phone or net connection for your trading terminal rather than watching Netflix and browsing, subscriptions to business papers like Economic Times, research costs such as attending a seminar on the topic you can deduct those. Maid or car will only be claimed if there is a separate office you hire her to clean and have to travel to.

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Coming to my query, what expenses can be set off against the speculative trading income?,

We do not have any registered company in our names and both of us are filing our individual IT returns for the past 20 years. I am salaried and my wife has Investment income, purely Interest income, ST and LT Capital Gains.

Clarification Please : Lastly, the trades are mostly Margin calls taken daily directly not he market and we do not use any of the Futures and or Options products. I do not take delivery and square off the Gains the same day. Would this also be considered as Speculative Income, as the Income Tax directive refers to Futures and Options and Speculative income in the same breath.

Looking forward to positive replies please
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