New strict rules for claiming deduction for LTA and HRA

The income tax department (I-T) on Tuesday announced changes in reporting format for individuals claiming tax deduction on leave travel allowance (LTA), leave travel concessions (LTC), house rent allowance and interest paid on home loans.

Presently, industry practice is that employees claiming tax deduction file self-declarations to employers with regard to tax savings/deductions along with the evidences for each financial year. Employer deducted tax at sources on the estimated income of employees, after considering such self-declarations of tax savings.However, until now, there was no prescribed format for filing the declarations.

Accordingly, to bring clarity vis-a-vis the declaration to be filed for deductions claimed by employees, a prescribed form (Form 12 BB) has been introduced (under rule 26C).

Following are the key particulars under Form 12BB

S.No.	Nature of claims	Evidence/particulars
1	House Rent Allowance	Name, address and permanent account number of the landlord/landlords where the aggregate rent paid during the previous year exceeds rupees one lakh
2	Laeve travel concession or assistance	Evidence of expenditure
3	Deductionof interest under the head “income from house property”	Name, address and permanent account number of the lender.
4	Deduction under Chapter VI-A	Evidence of investment or expenditure.

We understand that the key reason for the same should be standardisation of the format in which declarations are furnished. In this regard, reference can be drawn from the Supreme Court Judgment in the case of CIT vs L&T (181 Taxmann 71 (SC) (2009)), wherein it was held that employers are under no statutory obligation to collect bills and details to prove that the employees have utilised the amounts obtained against these claims on travel and related expenses.

Accordingly, the current amendment now obligates the employers to collect the relevant details in prescribed format, along with relevant evidence, before allowing the benefit to the employees. Thus, the new format would now ensure collection and maintenance of information in a defined format, which could further assist in streamlining the assessment process, due to standardization of information so collected and produced to the tax authorities.

Thus, the above is a welcome move, as the same in long run can put in abeyance undesired litigation on such matters.

Additionally, the said circular has also announced the change in dates for filing TDS Returns.

Details for the same are as under:

Presently, the due date for filing TDS return for government and non-government are different, in order to bring uniformity and to give deductors sufficient time in filing of TDS statement, CBDT has revised the due date for filing TDS return for government and non- government deductors w.e.f 01.06.2016 as follows: 

S.No.	Date of ending of quarter of financial year	Due date for Government and Non-Government Deductors
1	30 th June	31st July of financial year
2	30 th September	31st October of financial year
3	31 st December	31st January of financial year
4	31 st March	31st May of financial year immediately following the financial year in which the deduction is made.