If not for any other normal financial years, 2020 has been the most unexpected and rigid time in the history of mankind. There has been a drastic fall seen in the economic backdrop and surplus amount of job losses. At this juncture, many of the stable establishments and small-scale industries collapsed leading to the rise in house job stations which is rather called Work from home. For some of you this might be a new agenda to foresee, but being the new normal, tax compilations might be another issue. To clear through this juncture, here are some things you have to keep in mind before filing your taxes.
But consider you have saved up your money on daily essentials and travel components since you moved into your hometown. Your salary still remains the same. But now the taxable amount is completely different.
Let’s take statistics into count.
Consider you early 50,000 per month of which you spent 20,000 on miscellaneous.
The tax you paid per month in the past year would be 30,000 minus the payable tax.
But this year, since you saved up 50,000 of which you haven’t spent, you would have to pay 50,000 minus the tax which is a higher amount compared to taxes you paid last year. But what we have noticed is that the government has taken a step to restore allowances with a basic deduction for the employed sector which is a classic to further fit into space.
You will also not be able to claim exemptions such as leave exemptions; house rent allowance, travel exemptions because now these things don’t count primarily at least for now.
But how does this work?
Let’s assume that you pay a part of your income to your landlord. You can further claim the rent paid as an exemption. This again depends on several factors.
Let me also tell you how this affects.
Imagine you stayed within your hometown for a matter of a year. You did not have to pay the rent. Now, the tax payable amount has increased. You will not be able to claim the tax deduction for an obvious reason and here’s the loss. Your tax liability has increased.
But if you were still charged for the house resources you left behind and paid a part of the sun to your landlord, do not forget to submit the proof for the same as you can claim the outward later. Submit these documents to your HR. If not you will be entitled to pay huge taxes from your salary.
There are some essentials that are also free from the taxable. Mobile charges, the internet, self-learning, up skills, the internet are exempted to the extent of the actual expenses.
Where the leave allowances are considered tax free if you have spent three times the allowance.
Since there were travel bans and rules imposed, you cannot claim the exemption on travel and travel-related allowances.
This is also widely quoted as “work from home is a privilege and this privilege must be taxed.
Work from home is the new normal and this has to be followed. The tax policies might remain the same for a furthermore period of time.
Amidst this, do not forget to file your taxes on time, and claim allowances for the nontaxable commodities.
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