Income Tax Planning and Advice

Does Fixed Deposit (FD) come under Tax Investment savings section 80 C

Q: I want to ask whether FD investment comes under section 80 C (tax investment) ? If it comes under section 80 C than what is the minimum duration someone has to go for.

Ans: Normal FD doesn’t come under 80C. But tax saver FD will come under 80C, which will have a lock-in of 5 years and offered by all banks. But, interest is generally 0.5 % less than the 1-year FD. Also, the amount that you get after 5 years is taxable.

Intimation U/S 143(1) – Whats the next step after paying the balance

Q: I am a salaried employee and I have filed my income tax for the AY 14-15 online. I have received Income Tax Intimation U/S 143(1) via both email and hard copy to my postal address. The file has net amount payable as Rs.1000/-. I have now paid this online (400 – Tax on Regular Assessment) and saved the Tax Payer’s counterfoil which gets generated after the payment is completed.

However, I have not received any further notification/acknowledgement via email or SMS that the demand has been paid.

I logged into the e-file portal and I see the status as “ITR V received” and it has not changed to “ITR V Processed”. Moreover, upon clicking the acknowledgement number, the last activity/status shows as “ITR processed demand determined”, but no further updates seen here too. Please advise if I need to submit the receipt of the demand paid as proof somewhere so that it gets recorded that I have paid the demand.

Ans: You will not get any notification like that, not its your responsibility to share with govt that you have completed things. So you have to revise your returns filing !

House Property:

Q: Can I avail Tax benefit of Interest paid on both Home loan ?

I have a two Home loan. One Home loan is in individual name and second Home loan is in Joint name with my wife. House registration is also with in joint names.These second home loan EMI payment through my elder brother saving account.

Ans: Since the first property is rented, the full interest in respect of loan can be claimed against the rental income under Section 24(b); However, the rent you receive will be treated as income from house property and is taxable

The taxable income of the let-out property will be arrived at by deducting full interest in respect of such property from the rent received by you in addition to 30% of the rent as standard deduction in respect of repairs, etc.

A borrower can get tax deduction benefit on a home loan for an under-construction property only from the financial year in which the construction of the house is completed irrespective of whether it is pre EMI or EMI on part payment. The interest paid during the period prior to the year of completion of construction will be permissible in five equal installments beginning from the year in which the construction is completed and possession taken. Any repayment of principal during the years when the property remains under construction is lost forever.

So, in respect of the Ghaziabad property, assuming it will be delivered this month, you will be entitiled to claim deduction of the interest payable for the year ended on March 2015 on the loan taken to purchase the property. If you reside in that property the deduction will be up to a limit of 2 lakh only. You can also claim income tax benefit towards repayment of housing loan on both properties put together but this has to be within the overall limit of

150, 000 under Section 80 in aggregate with other items of investments like life insurance premium, contribution to provident funds, etc.

None of these claims are affected in any manner by any claim for HRA exemption in respect of rent paid for Gurgaon flats

What exactly is “With Indexation” and “Without Indexation”

Q: Can someone please help me in understanding Indexation. I heard at many places “With Indexation” and “Without Indexation”

What exactly it mean and how it impact on tax calculation?

Ans:  Indexation is a technique to adjust income payments by means of a price index, in order to maintain the purchasing power of the public after inflation, while Deindexation refers to the unwinding of indexation.

How to get my Income tax assessment copy

Q: Status of my  Income Tax  assessment under sec143(1) for Year AY 2014-15 is being shown as “assessed and  no demand no refund ” in income tax department portal but unfortunately I have not received the copy of assessment order in my mail account since long which i need it for my record.

Please enlighten how can same be fetched without RTI route? I need it for Record . Please enlighten me how to get it

Ans: 1.  Login to Income Tax e-filing website

2. Go to “My Account” > “Request for Intimation u/s 143(1)/154?

3. Fill up details, submit and wait for few days

Is my Income earned in US is Taxable if I transfer it to India

Q: Recently, I have been shifted to USA for 6 months, from Mumbai, for office work. I will be here for around 6 months. During this time, company is paying me here some amount.

Money that will be saved here after my expenses will supposed to be transfer to India in my normal saving account. I want know, whether this income will be taxable or not?

Ans: If you have lived in India for more than 182 days in a financial year, you will be considered a resident of India under the Income Tax Act. So your income, including the one earned abroad, will be taxable in India. However, you may get benefit under the Double Taxation Avoidance Agreement if the income earned abroad is taxable in that country. If there is no such agreement between India and that country, check if you can get any benefit under Section 91.

If you give money to your friend as a loan, he will not have to pay tax. But if it is given as a gift, it will be taxable in India. Under Section 56, any sum received as a gift and exceeding Rs 50,000 a year is treated as income in the hands of the recipient. It excludes sums received from a relative. So your sister will not have to pay tax on the amount.

Q: Who is supposed to pay Income Tax?

Ans: Any Individual or group of Individual or artificial bodies who/which have earned income during the previous years are required to pay Income tax on it. The IT Act recognizes the earners of income under seven [7] categories. Each category is called a Status. These are Individuals, Hindu Undivided Family [HUF], Association of Persons [AOP], Body of individuals [BOI], Firms, Companies, Local authority, Artificial juridical person.

Q: What are the benefits of obtaining a Permanent Account Number or PAN Card?

A PAN number has been made compulsory for every transaction with the Income Tax department. It is also mandatory for numerous other financial transactions such as opening of bank accounts, availing institutional financial credits, purchase of high-end consumer item, foreign travel, transaction of immovable properties, dealing in securities etc. A PAN card is a valuable means of photo identification accepted by all government and non-government institutions in the country.

Why tds is first deduct from income then later set off against tax payable by assesee or refunded?

Q: I want to know that if a person deduct tds from his income and later then he claim tds against his return file by him. Then why tds is deduct from his income?

Ans: TDS is require to be deducted because the payee income comes into the record of income tax dept. as soon as TDS deducted + Paid + TDS return filled.
After deduction of tax, payee cannot skip such income in ITR since the same income is already in record of IT department.
If Payee try to skip any income on which TDS deducted then Income Tax Dept will issue notice.

Q:  What are the tax benefits available to an NRI? 

Ans. Tax benefits available to NRI are as follows.

  1. Bank Deposits are free from wealth tax in India.
  2. Interest earned on NRE and FCNR accounts is exempt from Indian income tax upto 31st March 2005.
  3. Gifts made out of NRE and FCNR accounts are free from gift tax in India. (Gift tax has been abolished for all types of gifts from the 1st October 1998.)

However, Any gifts received, either in cash or in cheque or any other mode, on or after 1st September 2004, in excess of Rs.25, 000/- would be taxed in the hands of the recipient. However, gifts received on marriage or from relative or under will or inheritance or from employer in recognition of the services rendered would not be subject to tax.

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