save your tax

Sponsored Links

Its financial year ending time!!! Hurry up save your tax 

  • Its March, the end of financial year and from April a new financial year will be started. And now you have to pay your tax on your earning.
  • From an employee’s prospective here I would like to highlight that each employee of an organization (With a taxable salary) will make an all out effort to save some tax on his/her earning.
  • However most of us unaware about the various ways to save the tax under the several section of IT Act (Income Tax Act). Yes, The government of India in the IT act has made some provision to get rebate and exemption on your income taxc.
  • Here we will discuss in detail about the various exemption and rebates of the IT Act.
SPONSORED LINKS

Income Tax Slab:

  • Before proceeding for the tax saving options, let me tell you about the different slab of Income tax and the slab is applicable according to your monthly gross salary.
  • Here is the table for tax slab, have a look:

 

 

Upto Rs. 2,50,000 Nil Nil
Rs. 2,50,001 to Rs. 3,00,000 10% 10%
Rs. 3,00,001 to Rs. 5,00,000 10% 10%
Rs. 5,00,001 to Rs. 10,00,000 20% 20%
Above Rs. 10,00,000 30% 30%
  • Yes for women, senior citizens and PH the tax slab vary and they will get some additional discount.

Tax saving options:

  • Under the section 80C of income Tax an individual can get an exemption and rebate upto 1.5 lacs per annum on the total income tax for a financial year.
  • Now let me highlight you what is Section 80 C and how a person can get rebate under section 80C.
Sponsored Links
  1. Insurance or LIC premium: Any LIC or insurance policy on your or our spouse name you will get the rebate. Whatever premium you are paying for the policy for a financial year, the same amount of rebate you will get in your income tax.
  2. PPF: It is the most attractive, safe, high rate of return and highly liquidity option to save your hard earned money. In the current financial year whatever money you have saved or deposited in the PPF account, you will get the same amount of exemption in the income tax.
  3. NSC Deposit: This is the scheme run by the postal dept of India. You can purchase a NSC Certificate according to your caliber and in the return you will also get the tax rebate while paying the income tax. Of course it is a safest and attractive investment.
  4. Mutual fund, ELIS and 80 CG equity plan: You can also invest in Mutual fund, ELIS and 80 CG equity plan. According to your invested amount you will get the tax emption.
  5. Child education and hostel exemption: If any of your child is studying and for that you have taken any bank loan than also you will get some exemption. The interest whatever you are paying in a financial year, the same percentage of exemption you will get in the income tax. And so in case of the hostel fees for your child.
  6. Loss of house property and capital gain: This is also another option by virtue of which you can save your tax.
  7. Housing loan interest: Whenever you take a housing loan from bank, monthly you need to pay the interest. You will get tax exemption according to your paid interest on your housing loan.
SPONSORED LINKS

So all total you can show a saving of 15. Lacs for a financial year and you will get the tax exemption of 1.5 lacs for a financial year.

Good news!!!

Employees those who are under the NPS(New pension scheme) can get a tax benefit of another 50000 for a financial year. Just by saving (Max 50000) in the NPS, you can claim the tax exemption of 50000 for a financial year.

Posted in Tax

Chapter 6A

Sponsored Links

Under this chapter there are numerous sections of tax income Act. This article will explain and elaborate more on the various segments of the chapter. Under every segment there are different situations that differ from one section to the other.

SPONSORED LINKS
  • Under segment 80C -this consists of various expenses and investments made.
  • Under segment 80CCC –it’s made up of numerous Annuity premium plans
  • Under segment 80CCD –consists of the contributions made to the pension plan
  • Under segment 80CCG – consists of Equity RGESS 201 fund investment
  • Under segment 80D – consists of the medical or even health insurance
  • Under segment 80 DD – consists of the rehabilitation of the relative dependent handicapped.
  • Under segment 80 DDB – consists on any medical expenditure on a dependent relative or on you.
  • Under segment 80 E – Involve the loan earned interest during the achievement of higher studies
  • Under segment 80 EE – any surplus interest an exemption is made on the home loans. This is applicable for 2014 to 2015
  • Under segment 80 G –consist of a list of various donations
  • Under segment 80GG –consist on the amount to be paid as house rent
  • Under segment 80TTA –consist of the interest earned on the deposits in the saving accounts
  • Under segment 80U – consists of all the employees who experience physical disabilities
Sponsored Links

Under this chapter there are various documents a person can submit to claim for deductions. Below is a list of all the needed documents.

  • Under segment 80C – the required papers are a  copy of insurance proceeds, deposit certificate, loan statement for a house and receipts for school fees, Provident Fund
  • Under segment 80 CCC –either a bank acquired statement or payment pension proceed receipts
  • Under segment 80 CCD –either bank account statement or pension payment proceeds receipts
  • Under segment 80 CCG – trading paper documents required
  • Under segment 80 D – either a receipt on the medical insurance or the bill for health check ups
  • Under segment 80 DD –form 101[A] is required from any government doctor
  • Under segment 80DDB – from 101 is required from any government doctor
  • Under segment 80 E – a bank statement on the educational loan
  • Under segment 80 EE – a issued bank statement of the house loan which is in compliance of the set conditions
  • Under segment 80G – the receipts for the donation
  • Under segment 80 GG – receipts for the rent paid
  • Under segment 80 TTA – bank savings account statement
  • Under segment 80 UU – form 101[A] is required from any government doctor
SPONSORED LINKS

A person can still easily claim for his or her deductions through the submission of proof when filling his or her income returns on Tax. It is important to take note that not all the documents of proof can be placed under consideration during filling time. There are other claims that are only to be deliberated on by an employer.

These are all important sections under the income return tax chapter. They are taken into consideration under specified conditions or circumstances. In this process of claim for deduction a person should follow the right procedure so that he or she can be eligible for the deductions.

Posted in Tax

Advance Tax

What is Advance Tax

Sponsored Links

This is the payment of a person’s liability tax before an economical year comes to an end. This happens on 31st of March each year. All income generation sources are susceptible to the payment of advance tax. Individuals, associations, partnership firms, trusts, corporate and HFUs are all accountable in the payment of the tax, only when their earned income surpasses the non taxable parameters. When the earned tax is below Rs.10, 000, the individual or the organization is not liable to pay tax. Senior citizens are not required to make advance tax payment when they have no income that is chargeable. The tax has to be paid after every three months throughout the entire year. That is on June, September, December and March. Either before or on the 15th of those listed months.

SPONSORED LINKS

According to the tax income act, an individual or an organization has to pay the advance tax by including theupcoming future earned income into consideration within the particular financial year. This enables people to make payments on the taxes in instalments well spread throughout the year and therefore the payment of huge tax amounts at once during the end of the financial year can easily be avoided

There are two methods with certain procedures to be followed during the tax payment. Below they are listed and explained.

Sponsored Links

Direct payment mode

One can decide to pay tax through the filling of tax imbursement challan, ITNS 280. It can be done from designated bank branches that have the tax income department.

 

Online payment mode

The tax can be paid using online means. This is through TIN NSDL website. You are required to click onto: https://onlineservices.tin.egov-nsdl.com/etaxnew/tdsnontds.jsp

SPONSORED LINKS

Then carefully follow the steps outlined below;

  1. Choose challan number ITNS 280. This is payment of the income tax and also corporation tax.
  2. Afterwards select applicable tax as 0021 that is income tax other than for establishments
  3. Choose year of assessment for example FY 2015-16, AY 2016-17
  4. Afterwards you are required to select the mode of paying as advance tax and give out the required details.
  5. Online mode of payment is strictly allowed through net banking and not by debit card.

 

In case a person defaults on the payment of tax, which is considered to being a criminal offense. They are required to wage interest and also penalties. This is according to the established Act of income tax, 1961. Once you have waged the tax, this will later reflect on your form within 2 to 3 days after making the necessary payment.

The calculation of the advance tax is quite comparable to your tax income returns calculations. All you are required to do is to accumulate all of the sources of income, exemptions and deductions then compute your liability tax. It is important to note that it’s advisable for one to make use of a qualified tax practitioner in computing the advance tax.

After you have completed the right procedure you are to keep safe the copy of challan. They are required when you are filling your tax income returns.

Posted in Tax

Interest From Fixed Deposit, Saving Account

Sponsored Links

Some might wonder if the interest obtained from a fixed deposit account in India is liable to being taxed; the answer to this question is yes. The interest is to be taxed according to the rates of tax income of an individual. One of the other questions asked is whether or not the interest from the saving account is taxable and the answer to this question is simply yes. The interest a saving account receives according to the rates of tax income is applicable to a particular individual.

SPONSORED LINKS

As from 1stApril 2012. The interested on money up to Rs.10000 is not liable to taxation. However, any interest beyond this amount is liable to taxation according to the rates of income tax of a particular individual. All accounts put together, the total amount of interest to be expected is Rs. 20000. The amount that isexempted from being taxed is Rs.10000. The taxable interest is Rs.10000.

Sponsored Links

The financial institution or bank is responsible in providing a form that mentions all the details on the payment of interest made and the also the information on the taxes deducted. The form is to be provided every quarter according to the stipulated dates by the tax income. That is in April to June, July to September, and October to November and then the last quarter is January to march. The form that is related to this is 16A however the deducted TDS may as well appear on the individual form which is 26AS. It is advisable for one to receive the related form 16A. An individual is required to avail their PAN numeral to the concerned bank.

SPONSORED LINKS

The total of TDS deducted depends on several conditions. This conditions are such as all the person who have well-provided their PAN information only 10 % of their earned interest is deducted, all persons who have not adequately given out their PAN information, they are deducted 20% of the earned interest and lastly all persons who have gave out form 15H or 15G are not deducted any amount.

The amount of tax a person should pay on a saving or fixed account it all depends with their tax slab. For example a person earns Rs.200000 and the income interest is 20000 therefore ones total income will be Rs.220000. When you subtract section 80C[B], which is Rs.40000 from section 80D[C] which is Rs.5000. The remaining balance will be Rs.175000. Therefore, this amount is not applicable to taxation.

 

All the interest on the money an individual receives is prone to taxation according to the tax slab the amount falls in. As from 1 st June 2015, the TDS are being deducted on the RD earning interests which are exceeding Rs.10, 000. During tax deductions the total savings of an individual in terms of the earned interest will be summed up and all of it will be included in the deductions. These tax calculations should be done by a professional tax auditor. This promotes accuracy of the tax results. An individual should carefully keep up with tax deductions carried out to ensure they are done properly.

Posted in Tax

Capital Gain

Capital Gain

Sponsored Links

This is the earning generated from capital resources investments that surpass the acquisition price in India. In simple language this is the money a business enterprise stands to gain by selling an asset at a certain price. The difference occurring from buying an asset at a certain price than after ward selling the asset at a higher price. The capital gain can easily be calculated by:

Capital gain= {Sale Amount [-sale expense]}

– {purchase Amount [+purchase expense]}

Sale amount =100000

Sale expense=5000

Purchase amount =40000

Purchase expense=5000

Therefore the capital gain will be :{ 100000[-5000]}-{40000[+5000]} = 50000

SPONSORED LINKS

On the capital gained in any business the tax is to be calculated. Below is a demonstration of how the tax is to be calculated. There are various types of capital assets such as shares, mutual funds with equity, non- equity mutual funds, house property, land and building gains, machinery and plants and finally precious jewellery.

The capital gains can either be short term of long term. It is however advisable that your tax computation is done by a professional auditor. This ensures accuracy

Sponsored Links

Shares capital assets short term is within a period of one year. The tax required is 15% of the total capital gain. Long term however which is a period of more than a year is fully exempted. During the calculation on the tax to be paid on capital gains, some documents must be submitted. These documents include:

  • For share calculation you must present a statement on capital gain or even transaction statement
  • For calculations of the mutual funds one requires to present, an account statement from the particular mutual fund firms or either the statement on capital gain
  • For calculations of land and buildings, plant, house property and even machinery, you are required to present supporting papers such as deeds of sales or even purchase deed.
SPONSORED LINKS

If a person happens to default on the payment of the tax or if they happen to pay a smaller amount than the required stipulated amount. They are to be penalized therefore, you required in making necessary payments on added interest. This is in accordance to the tax act.

An individual can easily reduce tax required on the capital gain. The computed tax can be lessened when the capital gain is actually invested in accordance to the provisions availed in segment 54 of income tax act of 1961 in India. It has numerous parts that are applicable in various capital assets and the relevant reinvestments. When utilized wisely the tax on the gained capital is relatively reduced.

They are implication that comes with an individual having both capital loss and capital gain during the same fiscal year. The short time loss of capital can either be adjusted to long time gain in capital or short time gain in capital. However, long term loss in capital can only be adjusted to long time gain in capital. The balance in capital loss after the required adjustments are made are to be carried over to 8 successive years and then can be accustomed on the capital gain below same head.

Posted in Tax