LESSOR KNOWN DEDUCTIONS AND REBATES IN INCOME TAX

Here are the few deductions which are lessor known to common persons:

1) SECTION 80GG
This is the deduction related to Rent paid. If your employer is not giving your HRA (House Rent Allowance) then also you can claim deduction for rent paid. You can claim deduction maximum of Rs. 2,000 per month.

2) SECTION 80E
This section belongs to interest on loan taken for higher education and vocational courses. You can also claim any interest paid on loan taken for higher education of spouse, children or student for whom you are guardian.

3) SECTION 24B
Interest paid on second home loan is also fully deductible. If you buy second house through another home loan & gives it on rent, entire interest is deductible but rent income will be taxable.

4) SECTION 80D (Medical insurance of parents)
Normally everyone knows that Section 80D deals with medical insurance and its limit is Rs 15,000 but you can also claim deduction of additional Rs 15,000 for medical insurance of your parents. And if any one of them is Senior Citizen then this additional limit will go up to Rs 20,000.

5) SECTION 80G
This section deals with donations. If you are donating to specified funds then you can claim its deduction also. Some funds give you deduction of 100% of amount donated and some 50% of amount donated. So clarify it for claiming deduction.

6) SECTION 80EE
You can avail benefit of this section for two assessment years,i.e., 2014-16 only. This section provides deduction to first time home buyers. It provides deduction of interest on home loan upto Rs 100000. But you should be first time buyer of house property, value of house should not be more than Rs 40 lakhs, amount of loan should not be more than Rs 25 lakhs and for this purpose loan should have been taken between 01.04.13 to 31.03.14. You can avail this benefit in two years, i.e., if you are unable to avail the benefit in one assessment year then you can carry forward the balance to next year.

7) SECTION 80TTA
This account deals with interest on savings account. Earlier the interest earned from savings account were taxable under normal slab but now interest upto Rs 10000 is allowed as deduction. For claiming this deduction you have to first include it in your income then you can claim its deduction under Chapter VI-A.

8) REPAIRS AND MAINTENANCE OF HOUSE
Very few people know that they can claim deduction of interest paid on loan taken for repairs and maintenance of house property also.

9) HRA as well as HOME LOAN BENEFITS
If you have taken home loan and are living in rented house then you can claim following deductions:

-> Principal repayment of Home loan under Section 80C
-> Interest payment of Home loan under Section 24
-> HRA benefit

FINANCIAL TROUBLE INDICATORS

Many of us just go on saving and don’t even consider whether it is creating trouble for us or savings for us in real.

Here are the few financial trouble indicators, which, if, are there in your life then it is high alert for you:

1) High EMI on depreciating assets

2) Less savings despite high income

3) working for 3-5 years, but still have no asset

BEWARE of these few indicators and correct your financial life before it become trouble for you.

FINANCIAL PLANNING FOR WOMEN

Here is the financial planning suggesstions especially for women:

1) TEENAGERS
For teenagers, Sachayika Scheme for women is best as you can invest in it from your pocket money also.

2) TWENTY (20’s)
For women in twenty’s health insurance and equity mutual funds are best as at this age they can take risk in investments.

3) THIRTIES (30’s)
When you reach your thirties term insurance plans, mutual funds, tax plans, real estate and investment in gold are best options.

4) FORTIES (40’s)
Retirement plan is best for the women in forties.

5) FIFTIES (50’s)
As age grows dependencies also increases, so now one should invest in less risky funds.

6) SIXTIES (60’s)
Senior citizen Savings Scheme is the best option for investment at this age.

Hopefully, now women would also consider them as important part in making investments. Invest by planning as it can help you in adverse situations and in good ones also.

HAPPY INVESTING

Consequences of Delay in Filing Income Tax Return

1) Loss, other than from house property, cannot be carried forward.

2) Levy of Interest under Section 234A.

3) Penalty of Rs 5,000 under section 271F can be levied.

4) Exemptions/deductions under sections 10A, 10B, 80-IA, 80-IAB, 80-IB, 80-IC, 80-ID and 80-IE are not availabe.

5) Belated return cannot be revised under section 139(5).

Why to file income tax returns?

Here are the reasons why should you file your income tax returns?

-> If you fail to file income tax return then there may be a penalty imposed by income tax department.

-> You don’t get the benefit of carry forward of lossed

-> If a refund is due after adjustment of prepaid taxes or TDS, then you have to file income tax return.

-> It is very much required, if need any loan from bank.

-> Creates your financial history with Income Tax Department.

-> It is required if visa for foreign country is required.

-> Income tax return is a proof of your financial life while making any investments.

 

For any further details regarding filing income tax returns, you can contact at financetalkies@gmail.com

Reasons to Invest in Mutual Funds

Mutual fund is a pool of money. It is managed by a professional investor. People purchase mutual funds because of diversification, professional management and convenience. Here are few reasons why people invest in mutual funds:

1. New/more types of funds

2. Few or no sales charges

3. Some performed better than common stock

4. Widespread marketing

5. Selection is easier

6. Dispense profits to investors

7. Investors expect dividend income

8. Investors expect price appreciation

9. Affordability

10. Professional Management

11. Transparency

12. Liquidity

 

Investment Alternatives Available in India

Here are some most important investment alternatives available in India:

1. Gold: India is highest consumer of gold in world as it is best investment in India. Investment in gold can be in the form of jewellery, gold coins and bars, gold ETF, gold mutual funds.

2. Mutual Fund: Mutual fund is a fund created with poor of investments from many investors. It is the best way to diversify portfolio. There are plenty of mutual fund schemes available like debt funds, foreign equity, gold funds, equity funds and mixed funds.

3. Government Securities (Bonds): These are issued by central or state government. It is the safest investment instrument. No tax is deducted at source and can be held in demat form. These are issued and redeemed at face value.

4. Fixed Deposits: Fixed deposits can be bank fixed deposits or corporate fixed deposits. Corporate fixed deposits are issued by corporations. These are more riskier than bank fixed deposits as most corporate deposits are unsecured and so offer higher rate of interest.

5.Real Estate: Considered as the best form of investment but only after gold. Investing in metros is very expensive, so it is advisable to invest in outskirts.

6. Debentures/Bonds: These are bit riskier than government bonds. Due to high risk return offered is also higher than government bonds.

7. Public Provident Fund: This investment enjoys the benefit under section 80C of Income Tax Act. Minimum investment can be of Rs 500 and maximum can be Rs 1,00,000 per fiscal year.Lock in tenure of public provident fund is 15 years.

8. National Pension Scheme: This instrument is used for retirement planning.

9. Venture Capital/Angle Investing: Investing in someones business idea at an early stage of venture. One can exit the investment when business is acquired by some other company or when company gets listed. These carry huge risk and are highly illiquid. This type of investment is not advisable for small investors.

 

Some other investment alternatives are SIP (Systematic Investment Plan), equity and Term Plans.

GOLD MUST BE A PART OF YOUR PORTFOLIO

In India attachment to gold is sentimental and emotional. For many of us, this yellow metal is top on the shopping list in festivals. The physical gold bought by us is rarely sold in the market due to emotional attachment with it. But if you buy units in gold exchange traded fund listed on stock exchanges, it will be easier to sell them when prices rise.
It is important to allocate a meaningful Component of your investment portfolio to gold. This allocation helps in bringing down the portfolio risk by reducing their standard deviation of the portfolio.
Gold acts as insurance in difficult times when other components of portfolio are not doing well. So, it is a smart idea to buy some gold in your portfolio.
According to experts, 5% to 15% of your portfolio should be in gold. For this, one simple option available is gold ETFs (exchange traded funds). These funds provide ease of transaction, tax efficient nature, safety and small unit such as one or half gram gold.
Very few people know that units of gold can be bought in a systematic manner – say one unit a month, by instructing your equity broker for that. There are automated gold ETF – systematic investment plan (SIP) available with most equity brokers.
So, keep adding gold to your portfolio at regular interval. This would provide a strong protection to your portfolio in times of economic slowdown.

Tackling Delayed Income Tax Refunds

The taxpayers who have filed their returns and sent their verification form in June or July, usually get the acknowledgment and refunds around this time of the year. But many taxpayers complain that they did not get the intimation of the receipt of their ITR-V on time. And some complain about delayed refunds. After filing the online income tax return, and ITR-V sent to income tax department, I-T department acknowledges the receipt of the ITR-V through SMS or email. Then the taxpayer is notified once the return is processed and after that refund process is initiated.

In many cases, taxpayers forgot to send ITR-V within 120 day deadline, which results in not receiving the acknowledgment from the IT department. But sometimes you don’t get refunds even after completing the return filing procedure in time, in this case you should ascertain the possible causes to resolve the matter. Here are some possible causes:

1. Non-submission of ITR-V: The last date of filing income tax return is 31 July but the process is not complete only by filing return online. You need to submit ITR-V with income tax department within 120 days of filing return. It should be sent either by normal post or speed post to I-T department’s Centralized Processing Centre in Bangalore. If you have forgotten to send this form, you will not receive the acknowledgment or refunds in time. Those who have filed their returns in late June or July still have time to complete the process.

2. Change in Bank Account or Address: If you have closed your bank account after entering the account number in your tax return, it can be one of the reasons for not receiving the tax refund. An incorrect bank account number in your tax return could be another reason. Generally taxpayers are advised to opt for direct credit of the refund amount to ensure quicker processing. The tax refunds of amount above Rs 25000 are issued by cheque even if the taxpayer has opted to receive by direct credit. The taxpayers are advised to mention their permanent address in their tax returns as cheques are dispatched to the address mentioned in tax return.

3. Incomplete Details: You have to be extremely careful about entering all the relevant details at the time of filing returns, if you are claiming a tax refund.

You should ascertain the reason why you haven’t received the tax refund. If you have filed return online, you can check your refund status on the I-T portal, incometaxindiaefiling.gov.in. If it has been rejected, you will also be able to view the reasons for the same. If the tax refund is stuck either because of an incorrect account number or incorrect address mentioned in tax return, you have to follow the procedure laid out for requesting for re-issue of refunds. If the return is e-filed, one can log in to his account with the I-T department’s efiling portal and follow the simple steps for re-issue of refund.

Online Provident Fund Account Transfers- Now Possible

The filing of online provident fund account transfer claims on changing jobs for subscribers of the retirement fund body EPFO has now become possible. The facility has been made available as the Employees Provident Fund Organization (EPFO) has launched its online transfer claim portal (OTCP) as per circular issued.

According to the circular, handling of transfer cases generates maximum bad publicity and it is expected that this issue shall be resolved after OTCP is made fully functional. After 31October, 2013, there shall be no physical movement of paper in transferring member accounts from one office to another.

The facility of online transfer of provident fund accounts will reduce the work load of the body. EPFO has set up a central clearance house for this purpose and the body envisages reducing the time for transfer of PF accounts to three days through the online service.

Digital signature is a pre requisite for availing this benefit and EPFO started registering digital signatures of companies from 25 July, 2013. As per the data available, 80% of the firms employing more than 500 workers have already registered their digital signatures.

The EPFO managed PF accounts of about 6.9 lakh establishments in 2011-12 and during 2012-13 the EPFO settled 107.62 lakh claims. The organization expects 1.2 crore claims in 2013-14, including 13lakh PF transfer claims, largely from tech-savvy companies from sectors like IT.