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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
Nature of claims
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
Laeve travel concession or assistance
Evidence of expenditure
Deductionof interest under the head “income from house property”
Name, address and permanent account number of the lender.
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: 
Date of ending of quarter of financial year
Due date for Government and Non-Government Deductors
30 th June
31st July of financial year
30 th September
31st October of financial year
31 st December
31st January of financial year
31 st March
31st May of financial year immediately following the financial year in which the deduction is made.

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  1. Due to the change in TDS return filing dates, TDS certificates will be issued by the deductor late and there by filing of ITRs by return filers will be delayed, Last date for filing ITRs should also be extended.