Tax Planning

Tax Planning (21)

The changes brought about in the Income Tax Act for the Financial Year 2012-13 pertaining to individuals are sections(a) 80D(Preventive health check of Rs 5,000/-),(b)Section 80CCD(Employer's contribution to NPS upto 10% of salary as allowable business expenses) and (c) section 80CCG(50% deduction for fresh Investment in equity upto Rs 50,000/- for first time investors). Further section 80CCF for investment of Rs 20,000/- in infrastructure schemes has been withdrawn.

If you fail to file the IT annual return by the stipulated date i.e. 31st July 12, then it may affect you in the following ways:

1. Individuals who have losses (expect loss from house property) and wish to carry forward for subsequent years, cannot do so.

2. Certain exemptions under Section 80 are not available who file tax returns after the due date.

3. The individuals cannot file revised return for that assessment year.

4. The refund claim will be processed late, so the actual receipt of the refund amount may take considerable time.

In fact filing online return is very convenient and filing in time is the best way to pre-empt complications afterwards.

Capital gain from any asset other than shares and mutual funds, if it is held at least for three years or more is called Long Term Capital Gain( LTCG) otherwise it is called Short Term Capital Gain(STCG). LTCG will be taxed at a rate 10% without indexation and 20% with indexation. The option lies with assessee. But STCG will be taxed as per tax slab applicable to that person.

The end of financial year 2011-12 is only two months away. All individual and HUF tax payers can save up to Rs 1, 00,000/- under section 80 C of the Income Tax Act.

It is essential to know a NRI’s residential status for calculating his/ her tax liabilities because certain income of a NRI or a Resident but not ordinary resident (RNOR) is not taxable in India. Under section 6 (1) of income tax Act 1961, an individual is said to be resident if he/she satisfies at least one of the basic conditions.

Many salaried individuals are in the process of finalizing their investments for tax saving so that they can submit the proof by January’2014. If you fail to submit the details along with the proof, be prepared for huge cuts from the monthly salary. The company will deduct applicable tax (TDS) from your salary in the remaining three months of the financial year, although you have the option of claiming a refund later from the Income Tax department. We provide you the investment options and the additional new tax rules introduced this year. 

Closing of Financial Year is two days away and you may like to view your Tax Credit (TDS) statement (Form 26 AS) on TRACES portal of Income Tax department to check your TDS and compare it with your tax liability.

The Union Budget, in July 2014, increased the Income Tax section 80C limit from Rs1 lakh to Rs1.5 lakhs and home loan interest limit under section 24 from Rs1.5 lakhs to Rs 2 lakhs for the year 2014-15.In the meantime distributors have been aggressively approaching to sell their products for availing the increased limits under 80C.

Firstly, before you start rushing to buy any products for the increased limit, we suggest you to do some numbers crunching on the following;

  1. Estimate your annual contribution to EPF/PPF/Voluntary PF if any
  2. If you have a home loan, estimate the breakup of repayment towards principal and interest separately. You can approach your Bank for this breakup.

We have been submitting declarations in form 15G(Indian residents below 60 years of age) or 15H (Indian residents above 60 years) to the Banks for not deducting Income Tax TDS on the interest income on deposits kept with the bank. Now TDS has to be deducted if the total interest income from savings bank(s),Recurring deposit(s) and Fixed deposit(s) exceed Rs10,000/- during the year. If your interest income exceeds Rs 10,000 a year, the bank will deduct 10% tax at source.If you do not furnish PAN details, the TDS rate will be higher at 20%. However, you can submit a Form 15G and 15H to avoid TDS on interest income. But the repercussions of wrong filing are stiff from this financial year. A false or wrong declaration in Form 15G/15H attracts penalty under Section 277 of the Income Tax Act. Prosecution includes imprisonment ranging from three months to two years, and a fine. The term can be extended to seven years and fine, where tax sought to be evaded exceeds Rs25 lakhs.

When can you submit 15G?

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