DEARNESS ALLOWANCE 30 SLAB MORE FROM AUGUST 2021

Don't have Idea about your Savings Plan Its Simple Now Just Follow these Personal Financial Rules

Personal Finance Rules 

Rule of 72 (Double Your Money)

Rule of 114 (Triple)

Rule of 144 (Quadruple) 

Rule of 70 (Inflation)

4% Withdrawal Rule

100 - Minus Age Rule

10, 5, 3 Rule

50-30-20 Rule

3X Emergency Rule

40% EMI Rule

Life Insurance Rule

Rule of 72

No. of yrs required to double your money at a given rate, U just divide 72 by interest rate

Eg, if you want to know how long it will take to double your money at 8% interest, divide 72 by 8 and get 9 yrs

At 6% rate, it will take 12 yrs

At 9% rate, it will take 8 yrs

Rule of 114

No. of years required to triple your money at a given rate, U just divide 114 by interest rate.

For example, if you want to know how long it will take to triple your money at 12% interest, divide 114 by 12 and get 9.5 years

At 6% interest rate, it will take 19yrs

Rule of 144

No. of years required to quadruple your money at a given rate, U just divide 144 by interest rate.

For eg, if you want to know how long it will take to quadruple your money at 12% interest, divide 144 by 12 and get 12 yrs.

At 6% interest rate, it will take 24yrs

Rule of 70

Divide 70 by current inflation rate to know how fast the value of your investment will get reduced to half its present value. 

Inflation rate of 7% will reduce the value of your money to half in 10 years.

4% Rule for Financial Freedom

Corpus Reqd- 25*Annual Expenses

Eg- annual expense is 500,000 then corpus required to retire is 1.25 cr.

Put 50% into fixed income & 50% into equity.

Withdraw 4% every yr, i.e.5 lac.

This rule works for 96% of time in 30 yr period

100 minus your age rule

This rule is used for asset allocation. Subtract your age from 100 to find out, how much of your portfolio should be allocated to equities

Age 30

Equity : 70%

Debt : 30%

Age 60

Equity : 40%

Debt : 60%

10-5-3 Rule

One should have reasonable returns expectations

10℅ Rate of return - Equity / Mutual Funds

5℅ - Debts ( Fixed Deposits or Other Debt instruments) 

3℅ - Savings Account

50-30-20 Rule - Allocation

Divide your income into

50℅ - Needs - Groceries, rent, emi

30℅ - Wants - Entertainment, vacations, etc

20℅ - Savings - Equity, MFs, Debt, FD, etc

Atleast try to save 20℅ of your income.

You can definitely save more

3X Emergency Rule

Always put atleast 3 times your monthly income in Emergency funds for emergencies such as Loss of employment, medical emergency, etc. 

3 X Monthly Income

You can have around 6 X Monthly Income to be on a safer side

40% EMI Rule

Never go beyond 40% of your income into EMIs. 

Say you earn, 50,000 per month. So you should not have EMIs more than 20,000 .

This Rule is generally used by Finance companies to provide loans. You can use it to manage your finances. 

Life Insurance Rule 

Always have Sum Assured as 20 times of your Annual Income 

20 X Annual Income

Say you earn 5 Lacs annually, you should atleast have 1 crore insurance by following this Rule

CIR LTR 194.9 DA FROM MAY 7 SLABS LESS

11 BPS - DA from February 2021

How to File Form 10E for Tax Relief on Salary Arrears? Filing Form 10E

How to File Form 10E for Tax Relief on Salary Arrears?

 Filing Form 10E

As a salaried individual, if you receive any advance salary or arrears, you may have to pay taxes on the total amount received. The Income Tax Department, however, protects you from any additional tax liability due to any delay in receiving income under Section 89(1). In other words, if you receive any portion of your salary in the form of arrears, you can claim tax saving under Section 89(1) on the same via Form 10E filing.

Under Section 89(1), you can avail of tax relief through recalculation of tax for both years (in which the arrears are received and the arrears pertain). The tax liability is adjusted after assuming that the arrears were received in the same year they were due.

What is Tax Relief under Section 89(1)?

As a taxpayer, the following types of arrears received are taxable in the same year they are received –

Salary Arrears

Advance salary

Family pension arrears

Commuted pension

Any Compensation received from your employer for termination of employment

Gratuity

You can, however, reduce the additional tax liability due to any delays in receiving such income under Section 89(1).

What is Form 10E?

It is mandatory to fill out Form 10E if you want to claim tax relief under Section 89(1) of the Income Tax Act 1961. Under Section 89(1) of the Act, you are eligible to claim tax relief for delayed salary received in the form of arrears. Any arrears received are reflected in Part B of your Form 16.

Form 10E is required for furnishing particulars of received income under Section 192(2A) and can be filed by a Government servant or any employee working in a company, co-operative society, university, local authority, institution, association, or body.

How to File Form 10E?

The following steps explain the process of filing the Form 10E –

Log into your Income Tax e-filing account

Go to e-File and then Income Tax Forms

Select ‘FORM NO. 10E - Form for relief u/s 89’ under ‘Form Name.’

Select the Assessment Year (or AY) for which you need to file Form 10E (for example, select Assessment Year as 2019-20, if the arrears of salary you have received are for the Financial Year 2018-19 (or Assessment Year 2019-20)

Select the Submission mode and click on ‘Continue.’

Fill out the applicable details and click on the ‘Save Draft’ button

For the Arrears of Salary, please select Annexure-I* and fill out the details as applicable

Click on ‘Preview & Submit’ to review the details and then submit the Form

* Please note that the following Anexxtures are available under the page menu –

Annexure-I: For Arrears or Advance Salary

Annexure-II: For Gratuity (Past services over five years but less than 15 years)

Annexure-IIA: For Gratuity (Past services for 15 years or more)

Annexure-III: For Compensation on Termination of employment

Annexure-IV: For Commutation of Pension

Important Things to Consider While Filing Form 10E

Consider the following aspects while filling out form 10E for claiming tax relief on salary arrears –

You must file Form 10E online on the Income Tax Department website

If you had claimed tax relief in the previous financial year but did not file Form 10E, you would receive a notice from the Income Tax Department for non-compliance

You must file Form 10E online before filing your income tax return

While arrears on salary may pertain to earlier financial years, you must choose the Assessment Year in which you have received the arrears while filling out Form 10E.

You do not need to attach any copy of the Form 10E submitted with your income tax return (keep a copy, however, for your record)

While your employer may ask for the confirmation, once you have submitted Form 10E, however, it is not mandatory to provide this Form to your employer

Tax relief under Section 89(1) is also applicable for family pension received in arrears

There is no tax relief under Section 89(1) for VRS (Voluntary Retirement Scheme) compensation if you have previously claimed tax exemption on the same under Section 10(10C)

The steps mentioned above will help you file and submit Form 10E online to claim tax relief under Section 89(1) of the Income Tax Act 1961. Form 10E must be filed if you wish to reduce your tax liability on the salary payments received as arrears. In case you have any issues, concerns, or doubts related to Section 89(1), Form 10E, or tax filing, you must consult an expert to ensure that you file the income tax return correctly without any hassles.