SOME LAST MINUTE WAYS TO SAVE TAX

Now taxpayers are in a hurry to make tax saving investments before 31March,2015, here are few ways through which you can save tax even at last minute:

1. INVEST IN TAX SAVER DEPOSITS: You can invest in tax saver FD (Fixed Deposits). It is the simplest and most popular way of saving tax. Most of the banks now allow customers to open a tax-saver FD online, but don’t allow online facility for other FDs. You can get its exemption upto Rs1.5lakhs under Section 80C. Interest earned under tax-saver FD is taxable.

2. BUY HEALTH INSURANCE ONLINE: Many companies facilitate purchase of health insurance policies online. The insurance-seekers below the age of 45 without any adverse health history do not need to go through medical tests and hence they can take health policies online. But those over the age of 45 will have to wait till policy is issued post medical tests. You can get its deduction upto Rs15,000 under Section80D and for senior citizens its deduction upto Rs 20,000.

3. BUY ONLINE TERM POLICIES: Online term plans are cheaper than physical term products. Within an hour one can purchase the online term plan. As you are taking term plan online so there is no need to pay commission to the agent. The process is completed with payment of premium, unless you have to undergo medical tests. The premium receipt can be used to claim tax deductions. You can claim its exemption up to Rs 1.5lakhs under Section 80C. The amount received on maturity is also exempt from tax.

4. INVEST IN ELSS: ELSS stands for Equity Linked Savings Scheme. This scheme does not require recurring payments. You can discontinue the payment in subsequent years if you realize the fund does not suit your needs. If you are KYC compliant then you can easily invest online. You have to got to the website that track mutual funds and identify the fund with the help of ratings. Then register on the site and click on the invest online link. Choose the scheme you have identified and choose its direct version and pay. The acknowledgement you receive will serve as proof for claiming Income tax exemption. The exemption is available up to Rs 1.5lakhs under Section 80C. The amount received on maturity of ELSS is also exempt from tax.

5. GO FOR PPF : PPF is Public Provident Fund in which anyone can invest. It has low risk. Some banks provide facilities of opening online PPF account but the application and KYC proof is to be submitted in the branch. You can also transfer funds online through your linked savings bank account.

EFILING YOUR INCOME TAX RETURN- BE CAREFUL

One must file his income tax return and that too on or before last date. I have mentioned some consequences of not filing income tax return before last date. You must file tax returns as they may help you in getting loan from bank or financial institution.

If you are efiling your Income Tax Return then you must take care of the following things:

-> Fill your bank details very carefully as from this year onwards Income Tax Department has discontinued to pay refund through cheques. So to get your refund on time, fill your details with caution.

-> You must be clear about the concept of Financial Year and Assessment Year. Financial year is one for whose income you are filing the return and Assessment year is one in which you are filing return. For example; for this year’s return Financial year will be 2013-14 and Assessment year will be 2014-15.

-> Tax is payable on Total income. Total income includes aggregate of all the income under various Heads of Income,i.e., Salary or pension, House Property, Business or Profession, Capital gains and Other Sources. This income must be reduced by deductions available to get Total Income.

-> Some people fail to send ITR-V,i.e., Acknowledegement within 120 days of filing. If you fail to do so then your return may be rejected.

-> Be careful while filling your personal details like PAN , Address, Mobile number, email id, etc. The number and mail id you will provide will be used for further communication by the Income Tax Department.

-> From this year onward, it is mandatory to update your contact details before filing the income tax return.

These are the few things that must be taken into consideration while efiling the income tax return.

WHAT TO DO WHEN YOU DON’T HAVE FORM 16?

First of all we must know what is FORM 16. It is the certificate of TDS issued by the employer. It is mandatory for the employer to issue Form 16 if TDS is deducted otherwise it is not mandatory on the part of employer.

Form 16 contains two parts, i.e., Part A and Part B. Part A contains the details of TAN, PAN and TDS deducted. Part B contains your salary details like Income from salary, deductions, etc.

Form 16 is required for filing income tax return but it is not mandatory as TDS details can also be obtained through Credit Statement Form 26AS. You can file your income tax return with the help of Form 26AS also. File your income tax as it is your responsibility.

If your employer has deducted Tax and still not issuing the Form 16 then you can contact your Assessing Officer. He will take appropriate action against him and he can be penalised Rs 100 per day for the days default continues.

For efiling the income tax return you can go to following link
https://incometaxindiaefiling.gov.in/

For hassle free filing of income tax return you can also contact financetalkies@gmail.com or can call 9818879049.

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

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.

Must Know About Income Tax Refunds

Here are the few points that you must know about Income Tax refunds:

1. Taxpayers are entitled to receiving refunds after their returns have been processed by the Central Processing Centre in Bangalore.

2. The State Bank of India has been designated the banker for ensuring that refunds are paid to the bank accounts of taxpayers.

3. To ensure that the refund is deposited in the bank account, the assessee must provide correct bank details while filing the returns.

4. The Income Tax Department supports queries regarding the status of refund through the Tax Information Network (TIN) website. You can access it by providing the assessment year and PAN.

5. If the refund is payable, the assessee is provided the refund reference number, date of credit to the bank account or the dispatch details of the cheque.

6. Refunds for returns which are filed online are released early than the manual returns.

Tax Filing- Mandatory for Salary up to Rs 5 lakh per annum

Circular for compulsory filing of Income Tax Return, for people having salary up to Rs 5 lakh per annum, was issued on 22 July and last date of filing income tax return was 5 August. Considering that people got less time for filing returns and they may missed it, Income tax department allows you to file return for two preceding years, even after you crossed the deadlines.

If you have missed the deadline, you can still file the return. For assessment year 2013-14, you can file returns till 31 March, 2015.

If you file return by 31March,2014 the you will be charged a penal interest on monthly basis. The penalty is simple interest of 1% per month on the outstanding amount of unpaid tax. But if you have paid all the taxes prior to due date and only filed belated return, you will not have to pay any interest. In case you don’t file the return within one year i.e. till 31 March, 2014 then at the direction of assessing officer you may be charged a lump sum penalty of Rs 5000.

While filing belated return you need to be more careful that there should not be any errors as revised return in case of belated return is not possible.. If you annual income is up to Rs 5 lakh then you may file return electronically or manually. CBDT (Central Board of Direct Taxes) encourage filing returns electronically.

So HURRY, if you have missed filing return; file it now but take help of some expert as no errors will be entertained.

Income Tax Return Filing- After Due Date- Certain Limitations

The due date for filing income tax returns is 31st July,2013 except for those individuals who are engaged in business or profession and whose accounts are required to be audited as per the provisions of the Act. Individuals earning more than Rs 40 lakhs in a year in profession is required to get their accounts audited.

Last date for these individuals is 30th September. Tax returns filed after due date is considered as belated returns. You can file belated return for a particular financial year (within 2 years form the end of the relevant financial year under Section 139 (4) of the Act).

Here are the some limitations of the belated return :
Revision of tax return not possible. If there is some misstatement in the ITR then revised return cannot be filed if return has been filed after due date. When you have full taxes before due date then you could file the return after the due date without paying additional interest otherwise additional interest of 1% per month has to be paid. And if the taxes have not been paid entirely before the due date , you could end up paying additional interest on account of delay in payment of tax and subsequent delay in filing the return within the due date.

Incomes that should be declared

Here are some of the incomes that assessee should not forget to declare:

1. Interest earned from savings bank account (maximum exemption is Rs 10,000, but it should be declared first)

2. Interest earned from fixed deposit

3. Interest earned from recurring deposits

4. Cash Gifts (more than Rs 50000 should be declared as they are taxable, except in case of marriage)

5. Capital Gains or Losses(from trading equities, selling mutual funds, gold, etc., should be declared even if they are non taxable and losses should be declared as they help in offsetting gains in subsequent years)

6. Exempt Income(should be declared for auditing purpose only)

7. Dividend Income(should be declared while filing income tax by investor)

Tax Planning for Current Financial Year

Today people are earning more so they need proper tax planning but most of us wait till the last month for planning our tax. We should plan it at the starting of the year so that we can also get benefit of returns from those investments. Most of us know the deductions under section 80C but today we are discussing deductions under section 80s( other than 80C).

1. Section 80D- for premium paid for medical insurance- Rs15000 or Rs 20000 in case of senior citizens

2. Section 80DDB- for expenditure incurred in respect of medical treatment- max. Rs 40,000 or Rs 60000 in case of senior citizens

3. Section 80E- Repayment of education loan- Interest paid till 8years or till the interest is paid, whichever is earlier.

4. Section 80GG- Rent paid in respect of property occupied for residential use- least of : Rs 2000 per month, 25% of total income, Excess of rent paid over 10% of total income.

5. Section 80CCG- Rajiv Gandhi Equity Savings Scheme- max. 50% of investment upto Rs 50000, only one time investment for investors with total income up to Rs 10 Lakhs.

So its the right time to plan your tax for next assessment year.

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