Finance Buddy

Section 10(5) of the Income Tax Act exempts Leave Travel Allowance (LTA), which is classified as an allowance in salary components. Accommodation, food, and sightseeing costs are not included in the exemption, which only applies to actual travel expenditures paid for domestic travel. When submitting an ITR, the employee can manually declare the allowance and claim the exemption if the employer has not included this in Form 16. You must accurately disclose it in your Income Tax Return (ITR) in order to claim the LTA exemption without Form 16. The LTA exemption may only be claimed twice in a four-year period, according to tax regulations. This is an important factor to keep in mind. Taxpayers must make sure their HRA claims are genuine and supported by actual transactions in order to avoid inspection and penalties. Complete documentation is essential since, while a late return does not preclude HRA claims, it does raise the possibility of inspection by the Income Tax Department. Based o...

The recent overhaul of tax policies has sparked a significant conversation about the need for individuals to rethink their wealth-creation strategies. With the government’s emphasis on simplifying tax arrangements and increasing take-home pay, taxpayers are now faced with both opportunities and challenges in managing their finances under the new regime.    Income tax slabs under the new tax regime    Rs 0-4 lakh: Nil   Rs 4-8 lakh: 5 per cent     Rs 8-12 lakh: 10 per cent   Rs 12-16 lakh: 15 per cent     Rs 16-20 lakh: 20 per cent     Rs 20- 24 lakh - 25 per cent    Above Rs 24 lakh: 30 per cent   The new tax regime provides lower tax rates, but eliminates many deductions and exemptions that previously helped individuals reduce their taxable income. This change directly impacts how people approach tax-efficient investments and financial planning.   “With the new tax regime rebate making income up to Rs 12 ...