Category: Income Tax return

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To deepen the penetration of insurance in the country, Finance Minister Arun Jaitley should give additional tax deduction for buying life insurance and remove service tax on term insurance, say industry experts.

A term insurance provides highest cover at minimal cost because it offers death-only benefit, with no survival benefits.

“To make insurance more popular in a country where there is no social security, there should be a separate window for deduction on life insurance premium,” says Girish Kulkarni, MD & CEO of Star Union Dai-Ichi Life Insurance. Currently, one can claim a deduction of up to

It is that time of the year, when the salaried class starts praying for incremental tax concessions in the annual budget. Analysts, however, say that the government should focus on increasing the tax net instead of announcing new income tax concessions.

That’s because only 3 per cent of over 1 billion people in the country are estimated to pay income tax. Those who earn

Only 3 per cent of over 1 billion people in India pay income tax, so it’s not surprising that the salaried class often complains about high taxes. Accountancy firm PricewaterhouseCoopers (PwC) found in 2014 that the take-home salary of a high earner in India is less than that of salary earners in many developed countries like UK, Canada and US. (Read)

Individuals earning as little as

To ease communication with the Income-Tax department, the government has allowed

Real estate stakeholders in every Indian city are looking forward to the upcoming financial budget 2016 to see whether it will provide any relief to the sector. Developers have their own expectations, because positive announcements for real estate buyers made during the budget will help increase the market sentiment, and therefore sales. The general hope is that the budget will provide cheer to intending home buyers who have been deterred for various reasons.

Make home loans more affordable-

The Union Budget 2016 should make the rate of interest specific to home loans more reasonable. Currently, the banks are offering interest rates which are still too high. Paying so much interest has serious implications on the family budgets of most middle-class wage earners. It is not surprising that many of them currently shy away from home loans.

The budget should bring the interest rate on home loans down to between 7.5%-8.0%. The new government has clearly stated that it wants to make

Want to avail additional tax benefits and long term returns? Enjoy tax saving benefits through investing in NPS, ELSS and Medical Health Insurance on Religareonline.com

1. How to plan your taxes through NPS (National Pension Scheme)? What is the NPS all about?

National Pension System (NPS) is a voluntary retirement savings scheme which is specially designed to facilitate the subscribers to make decisions regarding their future through savings during their working life.

In the last budget, the government has introduced a special Income Tax exemption under Section 80CCD (1B), which has an upper limit of Rs.50,000/- per financial year per person. This is in addition to the normal benefits under Section 80CCD (1) that is available on other similar schemes.

Under NPS scheme, two types of accounts i.e. Tier I and Tier-II are available for the investors. In case of Tier-I NPS, government employees will have to contribute 10% of (basic+DA) and the government will match that contribution. In case of non-government employees, the minimum contribution has to be Rs. 500/- per month.

There are no such restrictions on the Tier-II NPS investments. Click here to Open NPS Account with Religare Online and Avail additional tax benefits.

Benefits:

– The National Pension System (NPS) gives the tax saving benefits as well as a long term retirement planning mechanism and an opportunity for investors to invest either in corporate debt or government debt or equity or a mix of both.

– The investor can also opt for an “Auto-Choice” in which case the fund will automatically allocate money based on a life cycle matrix.

– This additional choice is a major advantage of this scheme as it enables the person according to his age to select the investment plan that is most suitable.

2. How to plan your taxes through Equity Linked Savings Schemes (ELSS)? What is ELSS all about?

Equity Linked Savings Scheme (ELSS) is an efficient tax saving scheme which has a locking period of 3 years which means the specified units cannot be redeemed till the end of 3 years from the date of purchase.

No additional KYC formalities are required for ELSS. Normal mutual fund KYC is sufficient to invest in ELSS scheme.

Click here to invest in ELSS Mutual Fund with Religare Online and avail additional tax benefits.

Benefits of investing in an ELSS:

– The investor gets a tax benefit under Section 80CCD (1) up to a limit of Rs.150,000/- on ELSS investment. Of course, this will be clubbed with other investments like LIC premium, PF contribution, principal repayment of a home loan, long term FDs and the overall investments will be subject to a limit of Rs. 150,000/.

– Investing in ELSS is also a good source of stable long term returns and substantially ehances effective yield due to the tax advantages

3. How to plan your taxes through Medical Health Insurance? What is Medical insurance all about?

Medical insurance is a non-life cover which not only covers you against the cost of hospitalization and other related expenses but also appoints a nurse at home for home care, convalescence can be covered under medical insurance subject to prescribed limits.

Now-a-days most of the insurance companies directly pay the hospital for the entire medical bill amount.

Click here to Open Health Insurance Account with Religare Online and Avail additional tax benefits.

How and for whom can you buy medical insurance?

Under the Income Tax Act, you are eligible for tax benefit for medical insurance bought for yourself, on behalf of your spouse and dependent children as well as your dependent parents.

There are two types of policies i.e. stand-alone and floater policy. Floater one is more economical out of these two. Now, we can buy medical insurance online on a declaration of a good health. But in case of persons above 45 years of age, medical test is a must.

Tax benefits of medical insurance:

– Contributions towards recognized medical insurance policies are eligible for additional tax benefits under Section 80D of the Income Tax Act. This benefit is over and above your other sections like Section 80CCD. Under the Income Tax Act amendments made in Budget 2015-16, medical insurance premium up to Rs. 25,000/- per year paid for the life of the insured and his spouse and children is eligible for full tax deduction.

– In addition, there is a supplementary tax break of Rs.30,000/- per year for medical Insurance premium paid on behalf of your parents who are senior citizens. Thus you are eligible to claim up to a maximum of Rs.55,000 as premium towards medical insurance.www.taxxcel.com

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“Currently an Income-Tax Return or ITR can be e-verified by using internet banking, email or an Aadhaar number- generated One Time Password (OTP).”

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In a bid make e-verification of tax returns simpler, the Income-Tax Department has included bank account and demat account details among the modes that can be used to generate code to e-verify ITRs.

Currently an Income-Tax Return or ITR can be e-verified by using internet banking, email or an Aadhaar number- generated One Time Password (OTP).

To these, two more modes of bank account and share demat account have been added for generating an electronic verification code (EVC) that is used to submit annual ITRs.

The measures are intended towards ending the practice of sending paper acknowledgement of ITRs to CPC, Bengaluru.

The Central Board of Direct Taxes (CBDT) has added two additional modes for generation of electronic verification code (EVC) for e-verification of ITRs.

The efiling website of the I-T department would now provide a facility to pre-validate bank account details. The assessee will have to provide bank account number, IFSC code, email id, and mobile number and these details will be validated against the details of the tax payer registered with the bank.

“Generated EVC will be sent by e-filing portal to taxpayers’s email id and or mobile number verified from bank,” a CBDT notification said.

The list of banks which will participate in this facility would be provided on the efiling website.

As regards generation of EVC using Demat account details, the CBDT said the assess would have to provide demat account number, email id and mobile number. This details, along with Permanent Account Number (PAN), would be validated against the information with depository (CDSL/NSDL).

“Generated EVC will be sent by e-filing portal to email id and or mobile number verified from CDSL or NSDL,” CBDT said.

After the EVC is generated, it can be put in the ITR form for final submission.

“Despite of all the efforts of the government to go green and paperless, the mandate of providing Aadhaar Number at the time of filing the return of income prevented e-filing from becoming a completely paperless process for those who did not have an Aadhar Card,” Nangia & Co Executive Director Neha Malhotra said.

Last year the tax department launched its ambitious One Time Password (OTP) based e-filing verification system for taxpayers using the Aadhaar number.

According to experts, bank account detail based EVC generation is a more reasonable mode for e-verification. It would be now easier for small tax payers as mostly all of them have bank accounts, even if they do not have Aadhaar numbers.

“With Jan Dhan Yojna, even the small taxpayers have a bank account and thus can complete easily complete the return filing process,” www.taxxcel.com

To ease communication with the Income-Tax department, the government has allowed tax payers to reply to notices using their registered email address.

The Income-Tax Department has issued detailed guidelines for using electronic communication, or emails, for paperless assessment proceedings.

As per the guidelines, the department will primarily issue notices or other communication through the email address provided by the assessee or the one available in the last income-tax return furnished.

In case of a company, its email address as available on the website of Ministry of Corporate Affairs or the one made available by the firm will be the primary address.

The assessee may furnish a letter to the Assessing Officer (AO) providing any other email address for the purpose of issuing email.

“Any email, in response to the notice issued by the AO, received from the primary email address of the assessee shall be considered as a valid response to the notice,” the guidelines said.

The guidelines will apply in respect of select non-corporate assessees as part of the pilot project on paperless assessment proceedings and can be extended to other assessees or proceedings as may be notified by the Board subsequently.

Commenting on the move, Vikas Vasal, Partner – Tax, KPMG said the government has clarified the procedural aspects of usage of electronic communication regarding paperless assessment proceedings.

“Gradually, the aim is to move most of the communication to the electronic format. Once done, it would save time and effort both of the tax payers and the tax department,” he said.

Also, such a move would bring in more transparency and consistency in tax positions. “A number of tax simplification measures have been announced by the government recently and few more are expected to form part of the forthcoming Union Budget,” he added.

The email address to be used by the AO for communication shall be his official designation-based email address under the domain @incometax.gov.in. “The AO shall issue all statutory notices/questionnaires including notice u/s 143(2) and notice u/s 142 (1) of the Income Tax Act 1961 from his designation email address to the assessee’s email address,” it said. www.taxxcel.com

There are certain incomes that are exempt from income tax. If you get your income from these sources, your tax liability will be zero.

1) Dividend from shares and equity mutual fund: If you have invested in the shares of an Indian company, any dividend that you receive is not liable to tax under Section 10 (34) of Income Tax Act. The reason being the company has already paid tax from its own profit. Similarly, dividend income from an equity mutual fund is also exempt from tax. However, if you being an Indian resident have received dividend from a foreign company, it will be taxable. In case the dividend is taxed both in the foreign country and in India, you can claim taxation relief either as per the provisions of Double Taxation Avoidance Agreement (if India has such agreement with that country) or can claim relief as per Section 91, if no such agreement exists.

2) Proceeds received on maturity of life insurance policies: Any sum received under a life insurance policy (including bonus if any) is exempt from tax provided the premium paid to actual capital sum assured does not exceed the prescribed thresholds provided by Income Tax Act.

“For policies issued till March 2012, the premium shouldn’t be more than 20 per cent of the actual sum assured. For policies issued from April 1, 2012, the percentage was reduced to 10 per cent of actual sum assured,” says Ms Neha of Nangia & Co. The tax exemption is applicable for endowment policies only, she adds.

However, if the above conditions are not met, the individual will be liable to pay a tax deducted at source (TDS) at the rate of 2 per cent, if the amount received during the financial year is more than Rs. 1 lakh.

3) Scholarship or grant received: If you have received any scholarship or grant as a student to meet your education cost, it is totally exempted from tax.

4) Interest received from government notified bonds: Interest income that you earn from certain bonds notified by government is exempt from tax. Recently, the government allowed certain public sector companies to issue such tax-free bonds to raise money for infrastructure projects. The interest that you will receive on these bonds will be tax-exempt but if you make any gains by selling these bonds on exchange before maturity, you will have to pay tax on the capital gains.

5) Agriculture income: As per Section 10 (1) of Income Tax Act, agriculture income in terms of rent or from any agriculture produce is exempt from tax. However, the agriculture income will have to be added to one’s total income for the determination of the income-tax slab of the individual, says Neha Malhotra, executive director of taxation at Nangia & Co, a tax advisory firm.

6) Share of profit from partnership firm: If you are a partner in a partnership firm, you will not have to pay any tax on your share of profits. “The share of profit is exempt for the individual partner, if received from a partnership firm which has been subjected to tax on the profits at the partnership firm level,” says Parizad Sirwalla National Head-Global Mobility Services-Tax, KPMG.

7) Interest on Non Resident External (NRE) account: “Any interest received by an individual is exempt from tax until such time the individual is a person resident outside India (PROI) as per Foreign Exchange Management Act, 1999 (FEMA),” says (USE Mr or Ms) Parizad of KPMG.

8) Leave Travel concession (LTA): If you receive LTA as part of your salary is exempted from income tax unlike house rent allowance (HRA) against which you can claim deduction. You can claim exemption on the cost of domestic travel incurred under Section 10 (5) of Income Tax Act provided you give the proofs. You can claim LTA twice in a block of four years. www.taxxcel.com