Seven ways your family can help you save taxes

Your family is always there to give you support – not just emotional, but sometimes financial as well. For instance, your family members can be of great help for saving on taxes. However, all your investments and spending for your family are not eligible for tax rebates. There are rules and some of them are pretty complex. To make things simpler, here we list 7 perfectly legal ways your family can assist you cut your tax bill.
1. Buy health insurance for the family: A medical insurance is a necessity that helps you save taxes. If you buy it only for yourself, you can save up to Rs 15,000, but if you buy it for the whole family (including your parents), you can save up to Rs 40,000.

Under Section 80D, a deduction of Rs 15,000 can be claimed for the health insurance premium and preventive healthcare check-up costs for yourself, spouse and your children. If you decide to protect your parents as well, you get an additional deduction of up to Rs 20,000, if they are senior citizens. Otherwise the regular Rs 15,000 limit is also applicable for your parents. Also, this deduction is available irrespective of whether the parents are financially dependent on the taxpayer or not. So, if your wife is an earning member as well, she can use the same strategy and reduce the taxable income of the family by buying her parents a plan as well.

2. Invest through your spouse: Exhausted your 80C limit? Gift some money to a non-earning spouse and invest that in a tax-free instrument. There is no upper limit to the amount you can give as your spouse is in the list of specified relatives whom you can gift any sum without attracting a gift tax. However, the taxman is not foolish. If you invest the gifted money, the Section 64 of the Income Tax Act, a provision for clubbing income, comes into play. Therefore, the escape route is by investing in a tax-free option such as a PPF or ELSS scheme.

Also, there is no tax on long-term gains from shares and equity mutual funds. So, if you invest in them in your spouse name and then hold for more than a year, there will be no additional tax liability. What’s more? When you re-invested these earnings from the investment, it will be considered the spouse income and you’ll have no further tax liability on that money. You can use this strategy even if your spouse is earning, but falls in a lower tax bracket.

Similarly, you can also invest in your parent’s name and the best part is the clubbing rule won’t be applicable here. Also, there is no gift tax on the money you give to your parents. So make use of their a basic tax exemption limit—Rs 2 lakh for up to 60 years, Rs 2.5 lakh for people above 60 and Rs 5 lakh if they are above 80 years of age. In case, they are exceeding the exemption limit, help them save taxes by investing in a tax-free option.

3. Loan money to spouse: Another way to avoid tax is by showing the monetary transaction as loan. So, for instance, if you buy a house in your wife’s name or transfer the second property to her, the rental income from it will not be treated as your income if she pays you a nominal interest on the loan. She can also transfer her jewellery worth the value of the property in your favour. Then also the rental income from that house would not be taxable to you.

Even your fiancee (or, fiance) can help you save taxes. “If a couple is engaged, and the one of them does not have any taxable income or pays tax at a lower rate, her fiance can transfer money to her. The income from those assets won’t be included in his income because the transaction took place before they got married,” says Sudhir Kaushik, co-founder and CFO of One can give up to Rs 2 lakh (the tax exempt limit) without putting any tax liability on the partner.

 4. Children can help as well: You must be already claiming a deduction for the education fee of your children. You can also gift your minor child some cash. But if you plan to invest that amount, the income will be clubbed with that of the parent who earns more.

To avoid clubbing of your child’s income, you may invest in tax free instruments such as PPF, mutual fund (MF) or ULIP. Open a minor PPF account in the name of your child and it won’t be taxable. However, there is a limitation to this option—the contribution to your own PPF account and that of the child cannot exceed the overall limit of Rs 1 lakh a year.

You can buy a child plan from an insurance company or invest in an MF. The premium paid (or investment made, in case of MFs) by you for your child’s future qualifies for a deduction under Section 80C of the Income Tax Act, 1961. A private trust for your child can also be created to save tax.


Section 80C investments should be guided by your needs

The last few months of the financial year are addressed towards ensuring that the tax benefits that are available are utilised effectively. One of the most widely used benefits covers the deduction under Section 80C of the Income Tax Act and while making use of this there is a need to take a careful look at the overall strategy that one is following. This will ensure that there is no wastage of funds and that the best use of the money is possible. There are a few parameters that can be followed for this purpose and here is a detailed look at what an individual investor needs to do in this regard.

Reach the limit.

One of the first things that people with a high income needs to do is to ensure that they are making the full use of the Section 80C limit available under the Income Tax Act. This is Rs 1.5 lakh per annum and if there is no full use of the limit then it would mean that some amounts that could have been taken have been allowed to lapse. This can result in a rise in the tax liability as the reduction of the amount from the taxable income is less. The overall limit that is being utilised by the existing investments should be checked and there should be a plan to ensure that the figure that is required is achieved during the year. Some of the options that are suitable for last minute investing include those like PPF, NSC and for senior citizens the Senior Citizens Savings Scheme.

Do not make excess investments.

There are times when the individual will realise that they have already crossed the limit of Rs 1.5 lakh that has been allowed and their eligible investments are already above this figure. This is a tricky situation because it could mean that there are some additional investments that are not required but are still being made and hence an effort needs to be undertaken to try and cut down the investments. This is difficult because in some cases it might not be possible to do so with an example being the payment of an insurance premium where if this is curtailed then the benefits on the policy can be terminated. This is the reason why any investment should be checked for its future impact before it is actually made rather than during this exercise after the process has been completed. An overall review of the excess investments will show whether there can be some investments that can be cut down and the money directed elsewhere.

Actual need.

For some people there might not be the need to make the full use of the Section 80 C deduction because they might not have the necessary income that can be reduced by the investments. Take for example someone who has a total income of just Rs 3.5 lakh. In this case since there is no higher inflow that is present the individual need not invest more than Rs 1 lakh in order to bring down their tax liability to zero. The basic exemption limit is Rs 2.5 lakh for those below 60 years and hence this plus the Rs 1 lakh deduction will reduce the taxable income to Nil. This means that there would be a reduced pressure on the finances of the individual in trying to make the highest use of the available limits because there might not be the need for such an effort. This can help in the overall financial planning process because it will free up the amounts that can be used effectively for some other investment that can actually yield better benefits in terms of the achievement of other goals. Or it could be that the investment can yield higher returns than what would have come had the amount just been directed towards tax saving debt investments.

All about TDS – Tax Deducted at Source

TDS or Tax Deducted at Source, is a means of indirect tax collection by Indian authorities according to the Income Tax Act, 1961. TDS is managed by the Central Board of Direct taxes (CBDT), which comes under the Indian Revenue Services (IRS).

TDS is collected as a means to keep a stable revenue source for the government throughout the year, while desisting people from avoiding taxes.

How is TDS Deducted?

Income and expenditure such as salary, lotteries, interests from banks, payment of commissions, rent payment, payments to freelancers, etc. fall under the ambit of TDS. When making payments under these segments, a percentage of the overall payment is withheld by the source that is making the payments. This source, which can be a person or an organization, is known as the Deductor. The person whose payment is getting deducted is called the Deductee. For instance, a deductor is the employer paying salary to an employee (the deductee).

Advantages of TDS:

TDS is based on the principle of ‘pay as and when you earn’. TDS is a win-win scenario for both the taxpayers and the government. Tax is deducted when making payments through cash, credit or cheque, which is then deposited with the central agencies.

  • Responsibility sharing for deductor and tax collection agencies.
  • Prevents tax evasion.
  • Widens the tax collection base.
  • Steady source of revenue for the government.
  • Easier for a deductee as tax gets automatically collected and deposited to the credit of the central government.

Types and Rates of TDS:

TDS is calculated on the basis of a threshold limit, which is the maximum level of income after which TDS will be deducted from future income/payments. TDS is deducted as a percentage of overall payment, and may range from 1% to 30% of actual payable amount.

Major sections of the Income Tax Act that outline TDS deductions are:

IT Section TDS Rate Threshold limit*
Section 192 According to income slab According to income slab
Section 193 10% of income from interests on securities. NIL
Section 194 10% of income from deemed dividends NIL
Section 194A 10% of income from interests other than those on securities Rs.5,000
Section 194B 30% of lottery or game-related winnings Rs.10,000
Section 194BB 30% of income from horse racing Rs.5,000
Section 194C 1% of earning from contracts or sub contracts for individuals and HUF (Hindu Unified Families) 2% for corporates Rs.30,000
Section 194D 10% of income from insurance commissions Rs.20,000
Section 194EE 20% of payment in NSS deposits Rs.2,500
Section 194F 20% of payment made for repurchase of UTI or MF units NIL
Section 194G 10% of commission earned from selling lottery tickets Rs.1,000
Section 194H 10% of commission or brokerage earnings Rs.5,000
Section 194I 2% of rent of plant and machinery 10% of rent of land, building, fitting, or furniture Rs.1.8 lakhs
Section 194J 10% of fees for technical or professional services NIL
Section 194L 10% of compensation payment made to a resident when acquisitioning some immovable property Rs.1 lakh

*Threshold limit denotes the amount of income/profit up to which TDS will not be deducted. TDS will be calculated on value of income up and over threshold limit only.

TDS on income from salaries are deducted on an estimation made at the start of the financial year. The employer is responsible for deducting taxes every month in equal instalments. In case the deductee has switched jobs during the fiscal year, the employer will deduct taxes on the basis of all accrued income in the fiscal year. Deductees should be very careful when mentioning their overall income as tax avoidance will be penalised by relevant authorities.

When TDS is not Deducted?

TDs is not collected on payments made to the Reserve Bank of India, the Government of India etc. TDS will not be collected when interest is credited or paid to:

  • Central or State Financial Corporations.
  • Banking companies.
  • Interest paid under Direct Taxes or refund from the IT department.
  • UTI, LIC and other insurance or co-operative societies.
  • Interests earned from recurring deposit or savings account in cooperative societies or banks.
  • Interest in Indira Vikas Party, KVP, or NSC.
  • Interest earned in NRE account.
  • All institutions notified under no-TDS.

Apart from these, there are other avenues also where TDS may not be applicable, such as interest on compensation from MVCT (Motor Vehicles Claims Tribunal). Therefore, taxpayers are advised to check if their interest income is liable for TDS with a particular institution or not.

TDS Certificate:

As TDS is collected on an ongoing basis, it can be difficult to keep track of deductions by an individual. As per Section 203 of the ITA, the deductor has to furnish a certificate of TDS payment to the deductee/payee. This certificate is also offered by banks making deductions on pension payments etc. The certificate is typically issued at the deductor’s own letterhead. Individuals are advised to request for TDS certificate wherever applicable, and if not already provided.

Refund of Excess TDS Deductions

If a person has been subjected to excess TDS deductions, the deductor can make claims for refund of the excess amount. The difference between the tax deducted and the actual payments made by the deductor, whichever is higher, is accepted as the excess payment, and this amount will be refunded after adjusting against any tax liabilities under Direct Tax Acts.

Quick Takeaways

  • TDS denotes the tax deductions at source of an individual’s income/payments. The deductor (employer/contractor etc) is the person who is making payments to the deductee (employee, stock broker etc.).
  • TDS helps in reducing tax filing burdens for a deductee and ensures stable revenue for the government.
  • In most cases, TDS is collected after a certain threshold limit of earnings has been crossed. The highest TDS of 30% is applicable on winnings from horse races, and lotteries and other games.
  • TDS certificate is issued wherever TDS has been collected, typically by the deductor or a bank.
  • TDS is exempted on some payments made to government, RBI, cooperative societies etc.
  • Refunds can be requested if there are discrepancies in the collected amount and the actual payable amount.

Investing: Save tax, maximise returns


For salaried employees, investments for tax planning must have prudent asset allocation of debt and equity. This will ensure that such investments made every year not only save on tax outgo but also build a corpus in the long-run, which is inflation protected.

At present, one of the most important components of tax savings is Section 80 C of the Income Tax Act, 1961. An individual can invest up to R1.5 lakh in a fiscal year in financial instruments like Public Provident Fund (PPF), life insurance premiums, five-year bank or post office fixed deposits, five or 10-year National Savings Certificates of India Post, employee’s contribution to provident fund, Equity-Linked Savings Scheme (ELSS) of mutual funds and unit-linked insurance plans (Ulips) of life insurance companies. Moreover, a tax-payer can avail an additional exemption under Section 80CCD of R50,000 by investing in government’s National Pension Scheme which is a mix of equity and debt instruments.

Employees’ Provident Fund (EPF): Those working in the organised sector is covered by the Employees’ Provident Fund Organisation (EPFO), which invests mostly in debt instruments. From August this year, EPFO has been investing 5% of its incremental corpus in Nifty and Sensex-based exchange traded fund. An ETF is a basket of securities that tracks the stock prices of the companies on an underlying index, and is traded on the exchanges. It comes with a much lower expense ratio. The EPF is country’s largest defined contribution and publicly managed plan and the employee’s contribution gets tax exemption. Employees in the organised sector are required to participate in provident funds and pension plans administered by EPFO and it covers 14% of the workforce.

National Pension Scheme (NPS): The biggest benefit for tax payers in this year’s Budget came in the form of investment in NPS. One can avail tax benefit on investment of up to R50,000 in a year under Section 80CCD, which is over and above the benefit available on R1.5 lakh under Section 80C. For non-government employees, up to 50% of the contribution can be invested in equities and the rest between corporate and government debt paper. It has given a return of around 11% and is an ideal tax-saving investment with equity and debt exposure. After retirement, a subscriber can withdraw 60% of the corpus and buy annuity from the rest 40% of the accumulated corpus. Subscribers of NPS Tier 1 account can now make partial withdrawal of up to 25% of contributions for certain specified circumstances after 10 years of being in the scheme.

Equity Linked Savings Scheme (ELSS): It offers the twin-advantage of capital appreciation through investment in stock markets and tax benefit. The lock-in period of the investment is three years and there is minimum turnover in portfolio. One can invest a minimum of R500 a month in ELSS through a systematic investment plan of mutual fund and can stagger the investments, which would, in turn, bring down the risk sizeably. Money is debited automatically from the investor’s bank account through the ECS mandate and units are allocated based on net asset value applicable for the day. ELSS schemes are open-ended, that is, investors can subscribe to the fund any day.

Unit Linked Insurance Plans (Ulips): They are essentially market-linked insurance scheme that offer tax saving options under section 80C of the Income Tax Act. Ulips offer the advantage of life cover with an investment in equity and debt markets. The lock-in period is for five years. One can also opt for a debt market-linked Ulips and move to equity when the market is moving up to attain higher returns.

National Savings Certificates: These certificates are available at post offices and one can opt for a 5-year or 10-year tenor. The amount is invested in debt and deposits made by individuals qualify for tax rebate under Section 80C of I-T Act. The interest accrue annually and is deemed to be reinvested under Section 80C of I-T Act. The 5-year certificates give 8.5% interest compounded six monthly but payable at maturity. So, R100 invested grows to R151.62 after 5 years. Similarly, the 10-year certificates give return of 8.80% compounded six monthly but payable at maturity. Here R100 invested become 236.60 after 10 years. The certificates are available in denominations of R100, R500, R1,000, R5,000 and R10,000. The minimum investment is R100 and there is no maximum limit. However, one can get tax exemption by investing up to R1.5 lakh a year.

Five-year term deposits: For risk-free investors, five-year bank or post office deposits can also get them tax benefits under section 80C of I-T Act. The tax benefit can be availed in invested for the fixed tenure without premature withdrawal and one can invest up to R1.5 lakh. Bank will issue a fixed deposit receipt for claiming tax benefit and the deposit under this scheme cannot be pledged to secure a loan. An investor will have to pay tax on the interest earned on these term deposits on the basis of annual accrual or receipt, depending upon the method of accounting followed by the assessee.

Various avenues

From August this year, EPFO has been investing 5% of its incremental corpus in Nifty and Sensex-based exchange traded fund. Employees in the organised sector are required to participate in provident funds and pension plans administered by EPFO and it covers 14% of the workforce.

The biggest benefit for tax payers in this year’s Budget came in the form of investment in NPS. One can avail tax benefit on investment of up to R50,000 in a year under Section 80CCD, which is over and above the benefit available on R1.5 lakh under Section 80C.

ELSS offers the twin-advantage of capital appreciation through investment in stock markets and tax benefit. The lock-in period of the investment is three years and there is minimum turnover in portfolio.

Ulips are essentially market-linked insurance scheme that offer tax saving options under section 80C of the I-T Act.

Tax rules NRIs need to know for realty deals

Non-resident Indians (NRIs) may sell their property in India, either to seek capital appreciation on their investments, or they may want to dispose of their properties in India in order to acquire some assets in their country of residence. It is imperative that they understand the applicable tax rules and regulations with respect to such a transaction.

Any profit earned through sale of property is taxable as capital gains. In case the property is held for more than 36 months, the gains are classified as long-term capital gains (LTCG); else, they will be classified as short-term capital gains (STCG). STCG is taxable at the applicable slab rates; however, LTCG on the sale of property is taxed at a beneficial rate of 20%.

The law also allows an indexation benefit in case of LTCG. Indexation basically factors for the effect of inflation by applying the cost inflation index (CII) resulting in a higher Cost of Acquisition (CoA).

NRIs are entitled to claim certain exemptions while calculating the taxable LTCG under the Act, as below:

Investment in property: The individual taxpayer may claim exemption of LTCG arising on sale of a residential house property/ land, through purchase of another residential house in India. LTCG on sale of a residential house property can be claimed to the extent of capital gains utilised LTCG on sale of a land can be claimed to the extent of sale consideration utilised. To avail this benefit, one must ensure that the new house property should be purchased within one year before or two years after the sale; or this can be claimed if a new property is constructed in India within three years from the date of sale of property.

Investment in specified bonds: LTCG can be claimed as exempt from tax if the capital gain is invested in specified bonds (NHAI and RECL bonds), within six months from the date of sale of property, up to R50 lakh.

NRIs may further evaluate the benefits as may be available under the relevant Double Taxation Avoidance Agreement which India has with their country of residence while computing their capital gains tax liability in India. For the sale of property by NRI, the buyer is under an obligation to deduct tax at source while making the payment of sales consideration.

Tax is required to be deducted @ 20% in case of LTCG and at applicable slab rates in case of STCG. The mechanism of such tax deduction at source was introduced by the government in order to ensure the appropriate collection of tax from NRIs who are mostly based out of India.

As the above mentioned benefits and exemptions can only be claimed by the NRIs at the time of filing their India tax return, they need to apply for Tax Exemption Certificate from the I-T department if they would like Nil/ lower tax deduction on such transaction.

Under Section 197 of the Act, NRIs can obtain Tax Exemption Certificate on the basis of estimated capital gains tax computation and submission of relevant documents. After going through the information furnished by the NRI, the jurisdictional Assessing Officer/ Tax Officer may issue a certificate authorising the buyer of property to deduct tax at a lower rate or nil rate as the case may be.

What to expect from Budget 2016?

As is human nature, we place high expectations on our governments. Especially those running on a massive mandate, have too many promises to keep.

Our government though has a lot going on. Given the connected world we live in, our economy is not immune to global challenges. There are a bunch of domestic challenges too. Businesses want GST to take shape, while the common man wants more money in their pockets. Keeping 1.2 billion people happy is not an easy job. What then is a reasonable expectation from the finance minister this budget, let’s find out.

About 14% of what our government earns comes from tax collections. The gap between our collections and expenses, is referred to as the deficit. Our government’s efforts are targeted at keeping this deficit in check. This helps keep our borrowings under manageable levels. Our tax collections have been under pressure lately. Also there is a large payout in this budget towards OROP. At the same time China looks threatening to global markets. All eyes are now set on the moves Modi government is planning, to reign in growth and reform.

It seems to be the perfect time for the government to take steps to simplify our tax laws. Tax payers will benefit from revision and simplification of numerous archaic exemptions and deductions in our tax laws. TDS or tax deducted at source has been the bane of deductees and deductors alike. Thresholds beyond which TDS must be deducted have not been revised since a long time. For example, TDS has to be deducted when payment exceeds Rs 30,000 for professional technical services. TDS on interest (other than securities) has to be deducted when it exceeds Rs 5,000. This increases compliance burden on deductors. Additionally, deductees whose total income is below taxable limit or is taxable at lower rates, have to either submit forms for no or lesser TDS deductions or claim refunds. Refund processing adds another layer to this issue. Therefore, it would be worthwhile to consider Eashwar committee’s recommendations of reducing TDS rate to 5%.

Some of the tax deductions, such as 80GG, which is allowed to those pay rent and do not receiveHRA has been set at Rs 2,000. This is the maximum amount that can be claimed. While HRA is directly linked to one’s salary, those who do not get HRA cannot claim deduction beyond Rs 2,000. Similarly, exemption on a children education allowance is fixed at Rs 100 per month for max 2 children. These deductions are lost in time. They should both be shelved and merged by increasing the exemption limit or should be enhanced to match with current times.

Section 80C limit is Rs 1,50,000 since financial year 2014-15. Also, this section is crowded with a host of deductions. Allowing a higher limit for investments would do the taxpayer good and this money may be used by the government to fuel growth. First time home owners have suffered at the hands of builders when projects are delayed. Innocent buyers have to forgo tax benefits as well as pay rent and EMIs. The government must consider relief for first time home owners, extending the period of construction, where the delay is from the builder’s end.

While GST may be on our finance minister’s mind, DTC (Direct Tax Code) must also be put up for discussion. Several valuable recommendations were put through in DTC and bringing it will put tax reforms in high gear.

A lot of progress has been made, returns can be verified online, refunds are processed much faster, the tax department is embracing technology like never before. There is still a long way to go to make our tax laws world class.

Here’s hoping our finance minister has good things lined up on 29th February this year.

Want your income tax refund quickly? Here are 8 things you must do

Many times taxpayers don’t get Income Tax refund on time and they curse the Income Tax Department for the delays. On the contrary, it has been observed that in majority of cases, the mistakes are on the part of taxpayers themselves that causes delay in processing of Income Tax Return (ITR) and issuance of refund.

So, let’s learn what measures one can take in order to receive Income Tax refund quickly.

1. File your Income Tax Return on time: People who file their Income Tax Return on time get their Income Tax Refund (if any) quickly as their Income Tax Return (ITR) gets processed on time. Thus, it enables the Income Tax Department to release their refund (if any) directly to their bank account. Although the last date of filing of Income Tax Return for the financial year 2014-15 has been extended till  31st Aug 2015, it is advisable to file Income Tax Return as early as possible as this will lead to quicker processing of your Income Tax Return.

2. File your Income Tax Return Online: From June, 2015, Income Tax Department (ITD) has made it mandatory for people seeking Income Tax Refund to file their Income Tax Return online. So, please make a note to e-file your Income Tax Return for this financial year if you were not doing it in previous years. Failing to do so, will debar you from getting any Income Tax Refund.

3. Crosscheck the TDS/Self assessment tax paid mentioned in Form 16 with Form 26AS: It is very important that you crosscheck the details of TDS (as mentioned in Form 16 or Form 16A) or Self Assessment tax or Advance Tax with Form 26AS. Actually the income tax authorities take the figures of Form 26AS as final for giving tax credits to tax payers during the processing of income tax return. Crosschecking of Form 26AS is done to assure  thatassure that the figures of Form 16 corresponds with the figures mentioned in form 26AS which26AS that finally results in claiming tax credits smoothly.

4. Choose the right ITR form to file Income Tax Return: Make sure that you choose correct Income Tax Return form to file Income Tax Return. People often file their tax return using incorrect ITR form which makes Income Tax Department unable to process Income Tax Return and thus it causes delays in Income Tax Refund. Choosing the right ITR form to file Income Tax Return ensures faster processing of Income Tax Return and thus quicker  refundquicker refund.

5. Provide correct TAN no. of TDS deductor: Mentioning of Correct TAN No. of Deductor in Income Tax Return assumes prime importance. You can locate the TAN no. from Form 16 or Form 16A (as the case may be) received from the TDS deductor. If the TAN no. of deductor mentioned in ITR does not match with Form 16 then you may end up losing your tax credits and will deprive you of any income tax refund. You may even get a notice from Income Tax Department for shortfall in taxes.  So be very cautious while filling TAN No. of Deductor in Income Tax Return.

6. Provide correct Bank Account details:  From June, 2015, Income Tax Department will release the refund directly into the bank account of the tax payer (also called ECS). The earlier option of refund via cheque at the taxpayer’s address has been abolished. So, it becomes very important that one provides correct bank details such as bank account no. , IFSC code of the bank branch, MICR code, etc. in his tax return. This enables smooth issuance of refund by Income Tax Department.

7. Send the ITR-V to CPC Bangalore within 120 days of e-filing: If you have e-filed your tax return without digital signature or without Aadhar card EVC (Electronic verification) mechanism then you are required to send the completely filled ITR-V form duly signed to CPC (Central Processing Center), Bangalore within 120 days of e-filing your Income Tax Return. If you fail to do so then your Income Tax return will become void and thus you will be deprived of tax refund.

8. Keep Tracking the Status of Intimation U/s 143(1):  Once Income Tax Department gets done with the processing of your Income Tax Return you will receive an email called Intimation u/s 143(1) telling you that your Income Tax Return has been processed. In that intimation mail, you will get information about any tax or interest, you are required to pay to Income Tax Department or any Income Tax Refund is due to you. So, it is very important that you keep an eye on intimation u/s 143(1) as if you don’t receive the Income Tax Refund expected by you, corrective measures can be taken.

So just observe the above points carefully during the tax filing and you will receive Income Tax refund without any hassles.

Declarations and payments made under the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015- regarding

The Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015 came into force with effect from 1st July, 2015. The Act provided for a one time compliance window to declare assets held abroad and pay due taxes and penalty on the value of assets declared.

A total of 644 declarations were made under the compliance window provided in the Act which closed on 30th September, 2015. The amount involved in these 644 declarations was 4,164 crores.

The declarants were liable to pay tax at the rate of 30 percent and a like amount of 30 percent by way of penalty on the value of assets declared, by 31st December, 2015. The amount received by way tax and penalty upto 31st December, 2015 is Rs 2,428.4 crores. The shortfall is primarily on account of certain declarations, in respect of which there was prior information under the provisions of Double Taxation Avoidance Agreements/Tax Information Exchange Agreements or receipt of payment after 31st December, 2015.

Issue of refunds of smaller amounts – regarding


In an initiative to reduce taxpayer grievances and enhance the taxpayer satisfaction, the Central Board of Direct Taxes had issued instructions to Central Processing Center (CPC), Bengaluru and the field officers in December, 2015 to issue refunds of amounts less than Rs.50,000/- expeditiously.

As a result of the special drive to issue smaller refunds, 18,28,627 refunds below Rs.50,000/- involving a sum of Rs.1,793 crore have been issued between 1 st December, 2015 and 10th January, 2016. These refunds relate to Assessment years 2013-14 to 2015-16.

In order to further expedite the process of issue of small refunds, CBDT has also directed CPC-Bengaluru and the field units that refunds up to Rs.5,000/-, and refunds in cases where outstanding arrears are up to Rs.5,000/- may be issued without any adjustment of outstanding arrears. Office Memorandum F. No. 312/109/2015-OT dated 14th January 2016, conveying these directions of CBDT is available on the website of the Department

PAN must for cash payment of hotel bill over Rs 50,000 from January 1, 2016

Furnishing PAN will be mandatory from Friday for cash transactions such as hotel or foreign travel bills exceeding Rs 50,000 – a move aimed at curbing the black money menace.

Besides, PAN will be a must for all transactions, including purchase of jewellery, above Rs 2 lakhs in cash or through card with effect from January 1, 2016, the Finance Ministry said in a notification.

PAN will also be mandatory on purchase of immovable property of over Rs 10 lakh. This will be a relief to small home buyers as previously the government had proposed to make PAN mandatory for property worth Rs 5 lakh.

Quoting of Permanent Account Number (PAN) will also be mandatory for term deposits exceeding Rs 50,000 at one go or Rs 5 lakh in a year with banks, Post Offices and NBFCs.

The notification said PAN would be mandatory for payments of more than Rs 50,000 for cash cards or prepaid instruments as well as for acquiring shares of unlisted companies for Rs 1 lakh and above.

It has also been made mandatory for opening all bank accounts except Pradhan Mantri Jan Dhan Yojana accounts.

Finance Minister Arun Jaitley had earlier this month announced in Parliament that PAN would be made mandatory for all cash and card transactions beyond Rs 2 lakh.

The limit is double of Rs 1 lakh that he had proposed in 2015-16 Budget, but is lower than the existing threshold of Rs 5 lakh.

Making cash deposit of more than Rs 50,000 or purchase of bank draft/pay orders/bankers cheque of equal denomination on a single day, payment of life insurance premium of Rs 50,000 in a year would also require quoting of PAN.

In keeping with the government’s thrust on financial inclusion, opening of a no-frills bank account such as a Jan Dhan account will not require PAN.

Other than that, the requirement of PAN applies to opening of all bank accounts including in co-operative banks.