Income Tax Expert Guide

Filing Income Tax Return

Income Tax | PAN | Salary Income | House Property Income| Interest Income | Fixed Deposit / NSC | Capital Gains | Capital Gain on Shares | Capital Gain on House | Clubbing Income

Tax Saving

Tax Saving under Section 80C | PPF | Mediclaim | Donations | Income Tax on Gifts | Tax Refund | Tax Payment | Tax Free Incomes

Tax Slab/ Income Tax Rates

Assessment year 2017-2018 (Previous year 2016-17)

Assessment year 2016-2017 (Previous year 2015-16)

Income Tax

1. What is Income Tax Return (ITR)?

Income Tax return is a document which is filed by you stating your Total Income in a Financial Year through various sources of income i.e

  1. Salary ,
  2. Business or Profession,
  3. House property,
  4. Income from other sources like: Interest income etc .
  5. Capital Gains – ie Capital gains from sales of shares or capital gains from sale of Property 

2. What is the Last Date for filing an Income Tax Return?

The last date to file your Income Tax Return is generally 31st July. However, for financial year ended on 31st March, 2016, the last date of filing return is till 31st July, 2016.

3. Is it mandatory for me to file an Income Tax Return if I have a PAN?

No. You need to file an Income Tax Return if your total taxable income exceeds the basic exemption limit before taking into account deductions.

For the financial year 2015-2016, the basic exemption limit is Rs.2,50,000. For women, the limit is Rs.2,50,000, while for Senior Citizens it is Rs.3,00,000.
You do not need to file an income tax return if your total taxable income does not exceed the basic exemption limit before taking into account deductions, even though you may have a PAN.

4. Filing tax returns is a complex and cumbersome process. I need a Chartered Accountant to help me file my tax returns, who will charge me one thousand Rupees?
Contrary to popular belief preparing and filing a tax return is actually quite simple.With www.incometaxreturnindia.com is quite simple. see FAQ’s section for more details. We are Chartered Accountants having offices in Faridabad and Gurgaon.

5. What are the consequences if I do not pay income-tax?
In case, you fail to pay due amount of income tax , you will be charged interest @ 1% per month from 1st April following the financial year, until you pay your tax.

6. What happens if a return is filed late?

If you miss the deadline, you can file a belated tax return by 31 March 2017. But, if there is balance tax payable, you will have to pay interest on the balance at the rate of 1 per cent per month. This can go up to 2 per cent if you have not paid the required advance tax. If you are entitled to a refund, you don’t have to pay any interest if you file late.

6. What is difference between Advance Tax and self Assessment ? 

What is Advance Tax :

All income tax payers has to estimate his total income during the financial year and pay advance tax quarterly.
If projected tax liability of the current Financial year is more than Rs 10000, you are supposed to pay Advance tax !

Advance Tax has to be paid paid in three instalments.

  1. 30 % by 15th Sept,
  2. 60% minus first instalment by 15th Dec and
  3. 100% minus 2nd instalment by 15th March.

For individuals who are earning only through salaries , the Advance Tax is taken care of through TDS by the employers and there is hardly any Advance Tax to be paid .

But for individuals who have other sources of income , they have to pay Advance Tax. Advance Tax is payable as per Income tax Slab.

Self-Assessment Tax – While filing your Return of Income, sometimes it may happen is that the Taxes paid either as Advance Tax or by way of TDS fall short of the Actual Tax Payable .
The shortfall so determined is called the Self Assessment Tax which is payable before filing the Return of Income.
View here on How to Deposit Self Assessment Tax Online.

 

7. What is the penalty for delaying or not filing a tax return??

  • A penalty of Rs 5,000 will be levied if the return is not filed by 31 March 2017. But, if there is a reasonable cause for delay, the penalty may be waived.
  • You can also be prosecuted if the tax payable (net of advance tax and TDS) is above Rs 3,000.
  • You can also be imprisoned for three months to three years, besides being fine.

So, it pays to start preparing tax returns early.

8. What to do in case i get notice from income tax department for non-filing of income tax return?
You can view this link on how to handle income tax notice for not filing income tax return

Income Tax Department Notice for Non Compliance & Non Filing of Returns

8. What documents are needed to correctly assesses and file your income tax return?
While no documents (see Checklist for filing tax return) need to be attached when filing an income-tax return, you need to do all the supporting paperwork and retain the records as you will have to produce them if your case comes up for scrutiny.

– Permanent Account Number (PAN), ( Also View how to verify PAN no)

– Salaried employees need Form 16

– Form No. 16A, which is also a TDS certificate issued for tax deduction on income from sources other than salary, from all those who have deducted tax at source, such as banks where you have term deposits.

– Details of all bank accounts operated during the year with details of deposits, withdrawals and interest earned.

– Property owners need to retain municipal tax receipts, rent details, and other such papers. If you have bought a house on loan, get a certificate of interest and principal paid.

– Bills, documents and contract notes for assets sold during the year are needed as are the corresponding purchase papers

– Details of tax payments made during the year are needed only if you have made or self assessed advance tax payments.

Form 26as, it is advisable to view your 26AS before efiling your income tax return.

8. Is ITR V required to be send to Bangalore CPC?
Now ITRV can be verified online using your Aadhar card or net banking. Watch our Youtube video on how to verify ITRV online.

You can also do ITRV electronic verification using EVC by following these steps.

PAN

1. What is PAN?
Permanent Account Number (PAN), is a ten-digit alphanumeric number, issued in the form of a laminated card, by the Income Tax Department. A typical PAN is AAPGP1308E.

2. Why is a PAN required?
Having a PAN is compulsory for all taxpayers. A PAN needs to be mentioned in tax returns, Challan’s for income tax payment and all other communication done with the Income Tax Department.

3. Is it compulsory to quote PAN on return of income?
Yes, it is compulsory to quote PAN on return of income. Without PAN no you will not be able to find your income tax return.

4. What if I enter an incorrect PAN?
The penalty for quoting an incorrect PAN is Rs.10,000.

5. How to apply for PAN?
Visit here for details on how to apply PAN.

5. How to verify PAN and check PAN Status?
Visit here for details on how to check PAN status.

 

Salary Income

1. What constitutes Salary Income?
Gross salary includes

  • basic salary,
  • commissions,
  • allowances and
  • perquisites.

Subtract certain deductions from this. The balance is charged under the head ‘salary income’.

Your basic, allowances, commissions and bonuses are fully taxable.

2. How much House Rent Allowance (HRA) is exempt from Income tax?
House Rent Allowance (HRA) is exempt up to a certain limit if you are actually paying house rent. The lowest of three amounts would be exempted:
1) Actual HRA received,

2) Rent paid in excess of 10 per cent of basic salary, and

3) 40 per cent of your basic salary (50 per cent for Mumbai, Kolkata, Delhi and Chennai),

Download HRA Calculator here

3. My tax is already deducted and form 16 is issued by employer. Do I have to still file my income tax return?
Form 16 issued by your employer is only certificate not a return which indicates

  • The total income you have earned during the year from him;
  • The total tax deducted by your Employer; and
  • The tax deposited by your employer with the government.

Even if no tax is payable, you must still file your income tax return.

4. My current employer, while calculating tax has not taken into account Interest paid on Housing loan? How can I get refund?
You can claim this benefit. Send us your form 16 and Housing loan interest certificate. We would calculate your refund and file your return with the income tax department. This would help you to get refund of excess tax amount deducted by your employer.

House Property Income

1. What is the maximum amount I can claim as Deduction from my total income against interest on housing loan?
If the property is used by you or your family then the maximum deductible amount is Rs.2,00,000/-(increased in budget 2014 from (Rs 1.5 lacs to Rs 2 lac).

In case of let out property, the entire Interest amount is deductible.

2. Can I consider my entire EMI as a tax benefit?
Your housing loan repayment is done through monthly EMI. This has got 2 components –

  • Interest and Principal. Both are deductible, but separately.
  • Maximum Interest that can be claimed as deduction to the tune of maximum of Rs 200,000/-, if the property is not let out.
  • Principal amount repaid can be claimed as deduction under section 80C with overall limit of Rs 1,50,000/-

3. I have booked a flat with builder, possession would be given in 2 years, Can I Claim benefits of Interest I am paying now?
Interest paid will become deductible only after you have received possession of Property.
The interest paid till the date of possession is called Pre-construction interest and you can claim a 20% deduction each year, for 5 consecutive years, starting from the year in which
you get the possession of the house.

4. Do I get tax benefits if I have taken loan for piece of land?
No, Tax benefits for interest is only against house property, benefit on interest is not available in case loan taken on land.

5. Property is in name of my father and bank have given loan against my name. Can I claim tax benefits?
No, You have to be co- Owner in the property to avail benefits of housing loan.

6. What is the maximum amount of interest can I claim as deduction, if the property is rented out?
You can get deduction of full amount in case of interest paid on rent out property. This would apply even if rent received is less then Interest paid on Housing Loan.

7. Can I claim the deduction related to interest and repayment of principal housing loan in case I have 2 house property?
Yes you can claim deduction.
In case you have two housing loans for two separate house properties and if you are residing in one of the houses, Then first House is considered self occupied and its value is nil,

However the other house will be considered as ‘Deemed to be let out‘ and the deemed rental value will be considered as taxable in the hands of the individual.

8. I have taken Housing loan from Relatives, Will i get income tax benefits on interest paid?
Yes , you can take income tax benefit for Housing loan Interest even if loan is taken from your relatives. However benefit of principal repaid would be lost u/s 80C.

9. My current employer , while calculating tax has not taken into account Interest paid on Housing loan? How can I claim the benefit?
You can claim this benefit. Send us your form 16 and Housing loan interest certificate. We would calculate your refund and file your return with the income tax department. This would help you to get refund of excess tax amount deducted by your employer.

Interest Income

1. Is Interest earned on my Savings Bank account and Fixed Deposit taxable?
Yes. Saving Bank interest and Fixed Deposit- however small the amount is – is your income and is taxable. Many taxpayers, usually employees, tend to miss this income while filing income tax return.

From year 2012-2013, Saving interest upto Rs 10,000/- is allowed as deduction under section 80 TTA. It therefore make sense to add interest income in your income tax return and claim deduction on Saving interest income.

( Please note benefit of section 80 TTA is available to saving interest only and is not available for Fixed deposit interest or/ recurring deposit interest)

Fixed Deposit / NSC

2. When do I declare interest from Fixed Deposit / National Saving Certificate( NSC) ?
There are 2 options to declare the interest:

  1. At the time of maturity of the Fixed Deposit or
  2. Every year, on the basis of accrual i.e., interest earned but not yet received

Best option is to declare interest income on accrual basis.

3. Am I required to also disclose tax-free income while filing my income tax return?
Yes, you are required to enter data of all income earned by you during the year. E.g. interest received from PPF though tax free, need to be shown in your income tax return.

4. I have earned interest income from fixed deposit. Where should I show this income in income tax return and will I get any benefit under section 80 for interest earned. ?
You need to add this interest income under the head ” Income from other Sources”

Benefit under section 80C is available for Investment made under section 80C only. Fixed deposit interest is your income ( not investment).

Capital Gains

1. What is Capital Gain?
Gain on sale of following investment/assets is known as Capital Gain:

  • Shares
  • Units of a mutual fund
  • Bonds/debentures
  • Immovable property
  • Jewellery, paintings etc

2. What is Long term and Short Term Capital Gain?
When investments are held for more than 36 months, such gains are termed as Long Term Capital Gain. However, for shares, mutual funds, listed bonds & debentures, zero coupon bonds, the period is 12 months.

When investments held for less than36 months, such gains are termed as Short Term Capital Gain. However, for shares, mutual funds, listed bonds & debentures, zero coupon bonds, the period is 12 months.

Visit here for more details on how to save income tax on sale of house property

Capital gain on sale of Shares

3. Do I have to pay tax on sale of shares that I have purchased one year back?
No, since you have hold the shares for more than one year, no Capital Gain tax is payable. Also please ensure that Income tax exemption would be available only if::

  1. Such shares are sold through a recognized stock exchange.
  2. Securities Transaction Tax (STT) has been paid on the sale of such shares.

4. What is STT?
STT stands for Securities Transaction Tax. It is a tax paid for transactions made on a recognized stock exchange.

5. Is STT borne by the buyer or seller?
Securities Transaction Tax (STT) is levied on both buy as well as sell transactions. Hence it
has to be borne both by the buyer and the seller.

6. Do I have to declare sale of assets even if it is at no profit no loss?
It is relevant for transactions where STT is not paid and for claiming indexation benefit.

Capital gain on sale of House

7. I have sold my Residential House at profit. Want to know how can I save income tax on such capital gain?

You can save income tax on capital gain on sale of House property.

If the house was held by you for more than 3 years then, on sale of such asset you can get income tax benefit, if you fulfills following conditions:
a) You have either purchased another residential house, one year before the Date of Sale or

b) You plan to purchase another residential house within two years from the date of sale; or

c) You plan to construct another residential house within three years from the date of sale.

In case of (b) or (c), you need to deposit the amount of Capital Gain in a Capital Gain Account Scheme before the due date of filing your income tax return.

7. Calculation of Capital gain is cumbersome. Do you assist in filing return for capital gains?

Yes, we assist in filing income tax return for capital gains. Just send the us details and select make payment using

8. I have just purchased new home for 55 lacs and have to Deduct TDS of 1%, How can  deduct TDS ?

Deduction of TDS is compulsory for property whose value is exceeding Rs 50 lacs. You can view Step by step guide TDS deduction on house property.

How to Pay TDS on sale of Immovable property

Clubbing Income

1 If I gift a house to my wife would be it taxable?

Gift of an immovable property between spouses is tax free. However, any income that is earned on the house, e.g., rental income in the case of the house being put on rent, will be clubbed with your income and taxable in his hands.

Tax Saving under Section 80C

1. How can I save Income Tax? What are Tax Saving Instruments available to me?
Under Section 80C benefits, you can get an exemption of up to Rs 1 lakh on contributions to a wide range of investments. These include :
Employee Provident Fund (EPF),

– Deposits in Public Provident Fund (PPF),

Sukanya Samriddhi Account for Minor Girl Child

– Investments in National Savings Certificate (NSC),

5-year bank fixed deposits,

Life insurance policy premium (LIC),

– Investment in equity-linked savings schemes (ELSS), and

– Unit linked insurance plans (Ulips), among others.

– You can also claim a deduction for the school or university tuition fees you pay for your children provided they are enrolled in a full-time course at any institute in India.

Home loan principal repayment also qualifies for deduction under the overall limit of Section 80C.

2. Can I get Income Tax exemption from Infrastructure Bonds?
Rs. 20,000 tax exemption is provided for investments in certain Infrastructure Bonds. This is in addition to the already allowed exemption (Rs. 1,00,000) in certain savings instruments. Effective from AY 2010-2011.

Please note as per Budget 2012, you will not get tax benefit if you make any Investment in Infrastructure Bonds. ie Effective AY 12-13, Infrastructure bonds  tax benefit is not available.

3. Can I claim a tax benefit of life insurance premium paid for my spouse’s or my child policy?
Yes. You can claim payment of premium on life insurance policies of your spouse and children. Visit here for Best return LIC plan- LIC Jeevan Saral.

Visit here for to view if payment made for family member eligible for deduction under section 80C

4. How much can I Invest in Public Provident fund

( PPF)?
In a year Rs 1,50, 000/- is the Maximum Amount that can be invested in PPF as per Section 80C of Income Tax Act.

 

Mediclaim

1. Can I claim medical insurance premium paid both for me and my dependent parents also?
Yes, You can claim medical insurance premium paid both for me and my dependent parents also. For more details visit link

Donations

1 Can I Claim Income tax benefits on donation paid?
Yes, you claim tax benefits on donations given. Deduction is available under Section 80G of the I-T Act in respect of donations made by an individual to certain funds and charitable institutions.

2. Are donations 100% tax-free?
The rate of deduction, is either 50 or 100 per cent, depending on the choice of trust. Besides, donations must be made to registered institutions only. Only donations of upto 10 per cent of your total income qualify for such a deduction.

Income Tax on Gifts

1. Is Gift received from Relatives Taxable?
Gifts received from specified relatives are exempt from income tax, and there is no upper limit also.

2. Under what circumstance gift received is tax free?

  • Gifts received from specified relatives are exempt from income tax.
  • Gifts of any amount and from anyone received during your marriage are totally tax-free.
  • Similar is the case with the gifts received under a Will or by way of an inheritance,
  • From a registered charitable or education organisation or in contemplation of death of the donor.

3. What is tax Implications on gifts received from Non-Relatives?
If one gets any gifts -cash or in kind from non-relatives exceeding Rs 50,000 in a year, one is required to pay tax on the excess amount exceeding Rs 50,000.

4. Is Immovable property received as gift with out consideration taxable?
Gifts received w.e.f. October 1, 2009, has also been brought under the tax net. These include immovable property, including land or building or both, shares and securities, jewellery, archaeological collections, drawings, paintings and sculptures as specified under the Act.

5. Who is a relative in the eyes of the law?

  1. Spouse of the individual
  2. Brother or sister of the individual, spouse or of either parent
  3. Lineal ascendants or descendants of individual or of spouse
  4. Spouse of person referred to in scenario 2 and 3 above

Income Tax Refund

1. What should I do to claim credit for TDS?
In order to get tax refund, you need to file your tax return. It is advisable to tax help of Income tax consultant/ Chartered Accountants. You also Contact us for filing your Income Tax return.

You need to obtain a certificate of Tax Deduction (TDS Certificate) from the person who deducted your tax.
Enter the income and deduction details from the certificate in your Income Tax return.

Income Tax Payment

1. I want to pay income tax. How do I pay it?
You can pay the tax by filling up a form called “Challan No.280” and submit it to any Nationalized Bank or pay it online through the website https://onlineservices.tin.egov-nsdl.com/etaxnew/tdsnontds.jsp 

Visit here on how to deposit Self assessment Tax online at NSDL Site.

3. I forgot to pay advance tax before 31st March, what should I do?
You can still pay the tax before you file your tax return. You will be charged some interest for late payment.

Tax Free Incomes

1. Can you tell me income sources where in i don’t have to pay income tax?
There are couple of sources from which you can earn income and don’t have to pay tax as well, They are-

  • Agricultural Income
  • Dividends from equity mutual funds and stocks
  • Long-term capital gains on stock transactions are not taxed if you have paid the securities transaction tax on the sale
  • Interest earned on PPF
  • Amount received on Maturity of LIC Insurance Policy
  • Gifts Received from relatives. (See Relatives)

Tax Slab/ Income Tax Rates

Income Tax Rates for  Assessment year 2017-2018 (Previous year 2016-17)

Income Tax Rates/Slab for Assessment Year 2017-18 (Previous Year 2016-17)  Rates/ %age
Up to 2,50,000
Up to 2,50,000 (for women)
Up to 3,00,000 (for resident individual of 60 years till 80 years)
Nil
250,001 – 5,00,000Up to 500,000 (for resident individual of 80 years and above, Tax is nil) 10%Nil
5,00,001 – 10,00,000 20%
10,00,001 upwards 30%
Tax rebate of Rs 2000/- to Resident Individuals whose Total Income is less than Rs 5,00,000/-Surcharge: is 15% is Income tax payable on Individuals whose taxable income is above Rs 1 crore
Education Cess: 3% of the total of Income-tax and Surcharge.

 

Income Tax Rates for  Income Tax Rates/Slab for Assessment Year 2016-17 (Previous Year 2015-16) Rates/ %age
Up to 2,00,000
Up to 2,00,000 (for women)
Up to 2,50,000 (for resident individual of 60 years till 80 years)
Nil
200,001 – 5,00,000
Up to 500,000 (for resident individual of 80 years and above, Tax is nil)
10%
Nil
5,00,001 – 10,00,000 20%
10,00,001 upwards 30%

Tax rebate of Rs 2000/- to Resident Individuals whose Total Income is less than Rs 5,00,000/-

Surcharge: is 10% is Income tax payable on Individuals whose taxable income is above Rs 1 crore

Education Cess of 3% is also applicable to Income Tax computed as per above slab.

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