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Government takes big decision about Income Tax Exemption.

noreply@blogger.com (Dharmen) — Wed, 24 Mar 2021 15:30:00 +0530

EPFO Latest News: Income Tax exemption! Modi government takes big decision - Check what it is and how it will impact you

In a major development, Modi government on Tuesday raised the deposit threshold limit to Rs 5 lakh per annum in provident fund for which interest would continue to be tax exempt. This would be applicable to those cases where no contribution is made by employers to the retirement fund.

In her Budget presented to Parliament on February 1, Finance Minister Nirmala Sitharaman had provided that interest on employee contributions to provident fund over Rs 2.5 lakh per annum would be taxed from April 1, 2021.

Replying to the debate on the Finance Bill 2021 in the Lok Sabha, Sitharaman made the announcement regarding raising the limit to Rs 5 lakh in cases where employers do not make contributions to the provident fund.

The Finance Bill, which gives effect to tax proposals for 2021-22, was approved by voice vote. The bill was passed after acceptance of 127 amendments to the proposed legislation.

The minister also stressed that tax on interest on provident fund contribution affects only 1 per cent of the contributors, and the remaining are not impacted as their contribution is less than Rs 2.5 lakh per annum.

Referring to the issues raised by various members on higher taxes on motor fuel, Sitharaman said she would love to discuss the issue of bringing petrol and diesel under GST in the next GST Council meeting. She also sought to remind members that it was not just the Centre which taxes motor fuel and states too impose levies.

The finance minister also said rationalisation of customs duty structure will be undertaken to help domestic businesses, especially the MSME segment. On taxes, she emphasised on the need for widening the tax base. With regards to the equalisation levy, she said this is meant to provide a level playing field to domestic businesses which pay taxes in India.

Source: ZeeBusiness

5 Things i.e. LPG Cylender Price, Income Tax, EPF, Cheque Book and Banking Rules to TDS will change from 1st April, 2021

noreply@blogger.com (Dharmen) — Wed, 24 Mar 2021 15:28:00 +0530

Top 5 things that will change for you from April 1, 2021 - LPG cylinder price, income tax, EPF, Cheque book, banking rules to TDS

Financial Year 2020-21 is about to end and new Financial Year 2021-22 is going to begin from 1st April 2021. With the arrival of the new financial year, there are some major changes taking place which are going to affect an earning individual's money matter to a larger extent. Changes in LPG cylinder price, banking rules due to merger of banks, income tax rule changes in terms of EPF investment, TDS/TCS deduction, etc. are some of the glaring changes that are going to take place from 1st April 2021. We list out the top 5 changes that are going to have a direct impact on your budget and monetary affairs.

Change in LPG cylinder price

On the first date of every month, the central government announces the LPG cylinder price. In March 2021, LPG price in New Delhi was increased from Rs 769 per LPG cylinder to Rs 819 per LPG cylinder price. Since petroleum prices in the global markets are rising, there can be further rise in the LPG cooking gas price on 1st April 2021.

Cheque book, passbook of 7 banks to become non-functional

If you have bank account in any of these seven public sector banks — Dena Bank, Vijaya Bank, Corporation Bank, Andhra Bank, Oriental Bank of Commerce, United Bank of India and Allahabad Bank — then your passbook and cheque book will become non-functional from 1st April 2021. This will happen because of the merger of these banks in various other banks. Dena Bank and Vijaya Bank have been merged with Bank of Baroda, Oriental Bank of Commerce and United Bank of India have been merged with Punjab National Bank (PNB), Corporation Bank and Andhra Bank have been merged with Union Bank of India.

Income Tax rule on EPF investment

From 1st April 2021, one's investment in EPF account is no more free from the income tax. From 1s April 2021, one's investment in EPF above Rs 2.5 lakh in a financial year is taxed. One's EPF interest on EPF investment above Rs 2.5 lakh in a particular year is taxable.

Income Tax rule on TDS

Income tax rule for TDS (Tax Deducted at Source) will get changed from 1st April 2021, which is just a few days away. In her budget speech, Sitharaman said that if a person doesn't file income tax return (ITR), then in that case, the TDS rate on bank deposits would double. That means, even if an earning individual doesn't fall in the income tax slab, the TDS rate levied on them will be doubled (in case the earning individual does not file ITR)

LTC cash voucher scheme

The central government notified the Leave Travel concession or LTC cash voucher scheme's exemption in place of a leave travel concession (LTC). Under this scheme, an employee can claim an exemption under LTC allowance against the purchase of specified goods or services. This scheme is only available till 31st March 2021, i.e. money must be spent by this date to avail of the scheme.

Source: ZeeBusiness

Top 5 ways to save tax without investment in Fin. Yr. 2021-21

noreply@blogger.com (Dharmen) — Tue, 23 Mar 2021 12:23:00 +0530

The deadline (31st March 2021) for investment declaration to claim tax deduction for FY 2020-21 is fast approaching. Hence, earning individuals are busy finding ways to save their hard earned money meant for income tax outgo. While some people are busy buying insurance policies some are found investing in Section 80C investment options like Public Provident Fund (PPF), Post Office Saving Schemes, etc. However, for information to such earning individuals, one can save income tax without making any investments. They can claim income tax benefits for some of their regular expenses like tuition fees paid for their children at their school, home loan, health insurance and health checkups, etc. These are some of the expenses that one needs to add before making any investment to claim income tax relaxation.

Speaking on the income tax benefit offered by the Income Tax Department on other than investment options Pankaj Mathpal, Managing Director at Optima Money Managers said, "Regular payments like tuition fee of one's children paid at their school, medical check up of one's dependent, principal paid on home loan, medical expenses on one's parents (if they are not insured), interest paid on education loan, etc. are some of the heads that qualifies for income tax exemption." Mathpal advised earning individuals to mention these expenses in their tax deduction investments for the financial year 2020-21.

1] Tuition Fee: For those who have expenses related to the tuition fee of children can claim up to Rs 1.5 lakh incurred on the same under Section 80C of the Income Tax Act. This means if a parent pays Rs 60,000 each for two children then Rs 1.2 lakh can be claimed under the deduction. The tuition fee paid to any college, school, university, college or any educational institute in India can be availed for upto two children for a given financial year and is an effective way for reducing your burden.

2] Home Loan Principal Repayment: An amount of Rs 1.5 lakh can also be claimed under Section 80C against repayment of the principal amount of a home loan taken during a financial year. In fact, if you have bought the house in FY 2020-21, then you can claim income tax benefit on the stamp duty payment too. However, after claiming this income tax deduction, one won't be able to sell the property within five years.

3] Education Loan Interest Repayment: If an earning individual has availed education loan for its children or for itself, then in that case, one can claim income tax exemption on 100 per cent education loan interest repayment under Section 80E of the Income Tax Act.

4] Health Checkups: If the earning individual has spent on the health checkups of oneself and other dependents of the family like wife and children, then they can claim income tax deduction under Section 80D of the Income Tax Act.

5] Health Checkup Expense on Parents: If the earning individual's parents are not covered by any insurance, in that case health checkup expenses up to Rs 50,000 is exempted from any income tax outgo under Section 80D.

Source: ZeeBusiness

First Time Home Buyers can't afford to lose out Up to Rs 5 lakh tax benefits

noreply@blogger.com (Dharmen) — Tue, 23 Mar 2021 12:20:00 +0530

Buying a house means you have to pay home loan EMI on time. However, there are monetary benefits given by the Income Tax Department that the home loan applicant just cannot afford to miss claiming. As per the Income Tax Act, first time home buyers can claim income tax benefit of up to Rs 5 lakh under various sections. But, to claim these benefits, one has to be aware of these benefits too.

Speaking on the income tax benefits for the first time home buyers, Ravi Singhal, Vice-Chairman, GCL Securities Limited said, "Many first-time home buyers often remain confused about the Income Tax benefits that they can avail on home loan after the purchase of their first residential property. If you are buying home for the first time, you are entitled to get Income Tax benefits on home loan under three sections- Section 80C, Section 24 and Section 80EEA of Income Tax Act. These sections of Income Tax Act let you avail home loan benefit of Rs 5 lakh annually."

Income Tax benefit under Section 80C

Highlighting the income tax benefit under Section 80C of the Income Tax Act; Harsh Roongta, Head at Fee Only Investment Advisers said, "Under Section 80C of the Income Tax Act, a first time home buyer can claim tax benefit on up to Rs 1.5 lakh under Home Loan Principal and Stamp Duty component. However, to avail of this income tax benefit, the home buyer won't be able to sell out the property within five years of possession."

Tax exemption under Section 24

On income tax exemption for the first time home buyer under Section 24 of the income tax act, Harsh Roongta said, "Under Section 24, a first time home buyer can claim tax exemption on up to Rs 2 lakh income under home loan interest payment component. But, to avail of this tax exemption, the income tax assessee or any of the family members of his family should be residing in that house."

Tax benefit claim under Section 80EEA

On income tax benefit available under Section 80EEA of the Income Tax Act for first time home buyers, Harsh Roongta said, "A first time home buyer can claim tax benefit of up to Rs 1.5 lakh under Section 80EEA provided the Stamp Duty value of residential property is up to Rs 45 Lakh. Apart from this, the home loan approval should be dated from 1st April 2019 to 31st March 2022."

Ravi Singhal of GCL Securities said that there are five conditions that the income tax assessee needs to fulfill while claiming the income tax benefit under Section 80EEA:

Stamp duty value of property should be up to Rs 45 Lakhs;
Loan sanction date should be between 1st April 2019 to 31st March 2022;
Assesse should not own any residential property till sanction of loan;
Should not be claiming any amount under income tax section 80EE; and
Loan should be borrowed from Financial Institution only.

Source: ZeeBusiness

Tax Computation for Asstt. Year 2021-22

noreply@blogger.com (Dharmen) — Mon, 22 Mar 2021 16:31:00 +0530

Sec 115BAC – New Regime for Tax Computation

The government has been looking at avenues to make income tax provisions simplified and lessen dependencies on consultants. A step towards it came through the introduction of Sec 115BAC- Tax on Income of Individual/ HUF in the Budget of 2020, as an alternate to the existing regime.

Effective AY21-22 (FY 20-21), every individual and HUF has the option to either continue with existing tax rate where exemptions and deductions can be claimed or opt for the “new tax regime”; where the rates are lower but there are no exemptions or deduction. With some cost-benefit analysis taxpayers can now decide their avenue of savings and investments, i.e. whether to opt for taxable but highly rewarding schemes or tax-saving schemes with nominal return options.

Following are the tax rates applicable for AY 21-22:

The Assessee opting for New Scheme shall not be able to claim the following:

In case of a salaried employee:

Standard Deduction
Professional tax paid
Entertainment allowance (in case of govt employees)
Leave travel Concession
House Rent Allowance
Special Allowances provided u/s 10(14) except:
Transport allowance granted to a handicapped employee
Conveyance allowance
Any allowance granted to meet the cost of travel on tour or on transfer
Daily allowance

If Assessee has Income from Business and Profession:

Exemption to SEZ u/s. 10AA
Deductions u/s. 32AD, 33AB, 33ABA, 35(1)(ii),35(1)(iia), 35(1)(iii), 35(2AA), 35AD and 35CCC
Additional depreciation u/s. 32(iia)
Carried forward or unabsorbed depreciation of earlier years

All Taxpayers:

Interest paid on home loan on self-occupied house
All deductions provided under Chapter VIA (except 80CCD(2) and 80JJAA)

Benefits still available under new regime:

Interest received on post office saving account u/s 10(15)(i) Max Rs. 3,500
Gratuity received from employer Maximum Rs. 20 Lacs
Amount received from LIP on maturity u/s 10(10D)
Interest on PPF under Sec 10(11)
Employer contribution in NPS or EPF upto 12% of salary & Interest on EPF upto 9.5% P.A.
Interest and maturity amount of PPF or Sukanya Smriddhi Yojna
Pension commutation

How to choose whether to opt for Old or New Regime?

A comparison needs to be done on case to case basis, in order to decide which regime to opt for. The following table is an attempt to broadly classify which regime should be opted based on the income of the assessee:

Tax Payable (in Rs.)

Annual Income Old Scheme

(with exemptions)* Old Scheme

(without exemptions) New Scheme

Up to Rs. 2.5L –

Rs. 5L –

Rs. 7.5L – 65,000 39,000

Rs. 10L 65,000 117,000 78,000

Rs. 12.5L 117,000 195,000 130,000

Rs. 15L 195,000 273,000 195,000

*Considering exemption under Sec 80C, 80CCD(1B), Sec 80D and HRA of ~ Rs. 2.6L

Well the applicability of “new regime” may intuit dilemma and confusion amongst the Assessee; but with our next article, we shall endeavor to break down the section into simplified questions/ answers for better understanding.

Source : TDSMan

Taxpayer must complete 7 Tax Task before 31st March, 2021

noreply@blogger.com (Dharmen) — Mon, 22 Mar 2021 16:12:00 +0530

7 tax tasks to complete before 31 March 2021

There are certain tax tasks which we need to complete by the 31st March 2021. Here we are taking a look at some of them.

As we are approaching the end of the financial year 2020-21, there are certain tax tasks which we need to complete by the 31st March 2021. Let us discuss those tasks in detail.

1. Submitting the details of salaries received from earlier employer

If you are a salaried person and were employed with more than one employer in the current year, please furnish details of your salaries from the previous employer/s in Form No. 12B, to your current employer immediately so as to ensure proper tax deductions on your aggregate salary earning is made by the current employer. In case you fail to do so, you may get a shock at the time of filing of your income tax return (ITR) finding that you have huge tax (along with interest) to pay. This happens because all the employers would have given the benefits of initial exemption as well as various deductions, resulting into deduction of lower tax on aggregate basis.

2. Submit the proof of expenses to your employer

There are certain exemptions which are available to employees on expenses actually incurred. For items like House Rent Allowance (HRA) and Leave Travel Assistance (LTA) unless you submit the necessary documents, the employer will treat these allowances as taxable and deduct tax thereon. If you fail to submit the documents, you can still claim these items as exempt and claim the refund for the excess tax while filing your ITR.

3. Verify quantum of deductions available from your bank records

Most of us use ECS debit facility for items like life insurance premium, SIP for equity linked saving schemes (ELSS), home loan EMIs etc. It might have happened that, due to any reason, the ECS might not have been debited. Likewise, even in case you have issued a cheque for such items, the same might not have been yet presented to the bank. So please verify the details from your bank statement and cross check that for all the eligible deductions factored into by you amounts have been debited in your bank account. In case some items have not been debited, please ensure that either the payment is made for the same or investments are made in any alternate product available before the year end.

4. Payment of advance tax

You are required to pay advance tax on your current year’s income, in case your net tax liability for the year after reducing the tax deducted at source from all the sources exceeds ten thousand rupees. Senior citizens not engaged in any business or profession are not required to pay advance tax. Though advance tax has to be paid in four instalments in the ratio of 15%, 30%, 30% and 25%, but in case you miss all the four instalments, at least pay the same by 31st March, as advance tax paid by 31st March is also treated as advance tax. Failure to pay adequate advance tax attracts punitive interest.

Even if you are salaried and tax has been deducted from your salary, you still have to pay advance tax on any other income like rent, interest, dividend, capital gains etc. in case the aggregate tax liability exceeds Rs 10,000. For self-employed where the tax deducted is not sufficient enough to cover the aggregate tax liability, they also have to pay advance tax. Even in cases of interest income where the tax is deducted at source at the rate of 10%, you may still have to pay advance tax in case you are in a higher tax slab.

5. Minimum contribution to PPF account and NPS account

In case you have a PPF account either in your own name or in the name of children or spouse, you have to contribute minimum Rs 500 every year in each account to avoid the account becoming dormant. A dormant account can be made active by payment of a nominal amount and contribution of Rs 500 for each year of default. Likewise, in case you have an NPS account, you need to deposit minimum of Rs 500 every year in your account failing which the account gets frozen. A frozen account can be reactivated by paying a nominal penalty and one time contribution of Rs 500.

6. File your pending income tax return for financial year 2019-2020

In case you have not yet filed your income tax return for the last financial year, i.e. 2019-2020, you have the last chance to file it by 31st March 2021, that too with penalty.

7. Book long-term capital gains on listed shares and equity mutual funds schemes upto Rs 1 lakh

Section 112A long-term capital gains on listed equity shares and equity-oriented schemes are fully exempt upto Rs 1 lakh and the balance is taxed @10%. So you can book long-term capital gains upto one lakh of rupees before march 31st March, 2021 in case not yet booked. In case you have made these investments for long term, you may decide to sell the shares the same day and buy the same next day or carry out these transactions with different brokers on the same day. The purchase and redemption of the units can be done the same day. By this strategy you can minimise your overall tax liability.

Source : Financial Express

Updated version of form 64D as per notification no. 55/2020 is now available for filing

noreply@blogger.com (Dharmen) — Mon, 22 Mar 2021 15:52:00 +0530

MINISTRY OF FINANCE

(Department of Revenue)

[CENTRAL BOARD OF DIRECT TAXES]

NOTIFICATION

New Delhi, the 28th July, 2020

INCOME-TAX

G.S.R. 469(E).—In exercise of the powers conferred by sub-section (7) of section 115UB read with section 295 of the Income-tax Act, 1961 (43 of 1961), the Central Board of Direct Taxes hereby makes the following rules further to amend the Income-tax Rules, 1962, namely:-

1. Short title and commencement.—(1) These rules may be called the Income-tax (18th Amendment) Rules, 2020.

(2) They shall come into force on the date of their publication in the Official Gazette.

2. In the Income-tax Rules, 1962,-

(a) for rule 12CB, the following rule shall be substituted, namely:-

“12CB. Statement under sub-section (7) of section 115UB.—(1) The statement of income paid or credited by an investment fund to its unit holder shall be furnished by the person responsible for crediting or making payment of the income on behalf of an investment fund and the investment fund to the-

(i) unit holder by 30th day of June of the financial year following the previous year during which the income is paid or credited in Form No. 64C after generating and downloading the same from the web portal specified by the Principal Director General of Income-tax (Systems) or the Director General of Income-tax (Systems) or the person authorised by him and duly verified by the person paying or crediting the income on behalf of the investment fund in the manner indicated therein; and

(ii) Principal Commissioner or the Commissioner of Income-tax, as the case may be, within whose jurisdiction the Principal office of the investment fund is situated by 15th day of June of the financial year following the previous year during which the income is paid or credited, electronically under digital signature, in Form No. 64D duly verified by an accountant in the manner indicated therein.

2) The Principal Director General of Income-tax (Systems) or the Director General of Incometax (Systems), as the case may be, shall specify the,-

(i) procedure for filing of Form No. 64D and shall also be responsible for evolving and implementing appropriate security, archival and retrieval policies in relation to the statements of income paid or credited so furnished under this rule; and

(ii) procedure, formats and standards for generation and download of statement in Form No. 64C from the web portal specified by him or by the person authorised by him and he shall be responsible for the day-to-day administration in relation to the generation and download of certificates from the web portal specified by him or the person authorised by him.”

(b) in Appendix-II, for Form No. 64C and 64D, the following Forms shall be substituted, namely: -

Download Notification

Before Cash Withdrawals from PPF and POS must know rules - ITR Filing

noreply@blogger.com (Dharmen) — Wed, 17 Mar 2021 15:23:00 +0530

Before Cash Withdrawals from PPF and POS must know rules - ITR Filing

Income Tax Return (ITR) Filing: MUST know top 5 rules for cash withdrawals from PPF, post office schemes

Income Tax Return (ITR) Filing: The Department of Post has introduced a new income tax rules for tax deducted at source (TDS) deduction in respect of aggregate cash withdrawal above Rs 20 lakh by an account holder of National (Small) Savings Schemes, including Public Provident Fund (PPF).

New income tax provisions in Section 194N of the Income Tax Act will be applicable from 1st July 2020 for non-ITR filer under section 194N of Income Tax Act 1961 if a recipient has not filed the returns of income for the previous three assessment years.

Here are the top 5 income tax rules that an earning individual must know irrespective of the fact that they are filing ITR or not:

1] For non-ITR filers: If aggregate cash withdrawal exceeds Rs 20 lakh but does not exceed Rs 1 crore during a financial year, the income tax payable will be 2 per cent of the amount exceeding Rs 20 lakh.

2] For non-ITR filers: If cash withdrawal exceeds 1 crore during a financial year, the income tax payable will be 5 per cent of the amount above Rs 1 crore.

3] For ITR filers: If cash withdrawal exceeds Rs 1 crore during a financial year. The income tax payable will 2 per cent of the amount above Rs 1 crore.

4] These changes in the income tax rules are not yet incorporated and to facilitate Post Offices CEPT has identified and extract the details of such depositors for the period from 1st April 2020 to 31st December 2020.

5] CEPT will forward the list to concerned Circle/CBS CPCs of the concerned circles with details of the account, PAN number available along TDS amount to be deducted.

Source: ZeeBusiness

What is New in Income Tax from 1st April regarding Saving your Money.

noreply@blogger.com (Dharmen) — Wed, 17 Mar 2021 15:21:00 +0530

What is New in Income Tax from 1st April regarding Saving your Money.

This income tax rule will change from 1st April! Save your money, here is how

Income Tax Calculator: Finance Minister Nirmala Sitharaman announced in Budget 2021 that income tax rule for TDS (Tax Deducted at Source) will get changed from the new fiscal, which means from 1st April, 2021. As per her budget speech, if a person doesn't file income tax return (ITR), then in that case, the TDS interest rate on one's bank deposits would be charged double. That means, even if an earning individual doesn't fall in the income tax outgo slab, if he or she doesn't file ITR, then TDS rate will double on the earning individuals.

Elaborating upon the change in income tax rule on TDS and TCS for an earning individual who don't file ITR, SEBI registered tax and investment expert Jitendra Solanki said, "In order to discourage the practice of not filing income tax returns by the persons in whose case substantial amount of tax has been deducted or collected, the union budget proposal says that a person in whose case TDS/TCS of Rs 50,000 or more has been made for the past two years and who has not filed ITR, the rate of TDS/TCS shall be at the double of the specified rate or 5 per cent, whichever is higher. This provision shall not be applicable for the transactions where full amount of tax is required to be deducted e.g. salary income, payment to non-resident, lottery, etc."

On whether the TDS interest rate would be applicable on the senior citizens who are more than 75 years, Pankaj Mathpal, Managing Director, Optima Money Managers said, "Budget 2021 allows non-filing of ITR for those super senior citizens who have a single income source of pension. If a 75 plus year old person has a source of income other than pension too, then in that case the super senior citizen will have to file ITR and avoid double TDS interest rate charge being levied on them."

Source: ZeeBusiness

Public Provident Fund (PPF) can make you a 7 Digit Person.

noreply@blogger.com (Dharmen) — Wed, 17 Mar 2021 15:19:00 +0530

Public Provident Fund (PPF) can make you a 7 Digit Person.

PPF Calculator: Hot Money tip! Your Public Provident Fund account can make you a crorepati; here is how

PPF Calculator 2021: A Public Provident Fund (PPF) account is something in which an earning individual invests keeping retirement goal in focus.

Online PPF Calculator 2021: A Public Provident Fund (PPF) account is something in which an earning individual invests keeping retirement goal in focus. As per the income tax act, one's PPF investment, PPF interest rate and PPF maturity is free from income tax outgo. So, one's PPF account not only helps an investor accumulate a retirement fund, it also helps an earning individual to save income tax at the time of income tax return (ITR) filing.

Speaking on the income tax rules applicable on one's PPF account, Manikaran Singhal, Founder at goodmoneying.com said, "PPF investment falls under EEE category as the PPF investment up to Rs 1.5 lakh in a particular financial year is exempted from income tax under Section 80C. Apart from that, PPF interest accrued in one's PPF and PPF maturity amount is free from any kind of income tax liability." However, he said that a PPF account holder can't invest more than Rs 1.5 lakh in one's PPF account and one can't have more than one PPF account.

On PPF interest rate and retirement fund that one can accumulate from PPF account, SEBI registered tax and investment expert Jitendra Solanki said, "PPF account has maturity period of 15 years but one can extend PPF account by submitting Form-16H in the last year of the PPF maturity. This PPF account extension can be done in blocks of 15 years and there is no bar on how many times one can extend one's PPF account."

Assuming a person invests in PPF account for 30 years submitting Form 16-H on three occasions (15h, 20th and 25th year of PPF account opening), and PPF interest rate for the entire period at 7.1 per cent, the PPF calculator suggests that one's PPF maturity amount after 30 years will be Rs 1,11,24,656 or Rs 1.11 crore if he or she invests Rs 9,000 per month of Rs 1,08,000 in one year.

Source: ZeeBusiness

Salary Details - Part "B" of Form 16 for Salaried Employee

noreply@blogger.com (Dharmen) — Mon, 15 Mar 2021 15:15:00 +0530

Salary Details (Annexure II) : Form 24Q-Q4

Vide Notification No. 36/2019 by the Income Tax Department it had substantially modified the format of Part B of Form 16 (Salary TDS Certificate given to Employees) with effect from FY:18-19. Correspondingly, the information to be provided by the employer in Annexure II of Form 24Q-Q4 (Salary Details – providing tax computation of each employee) had also been changed. This came into effect for all Salary TDS Returns (Form 24Q) for FY:2018-19, Quarter 4.

Objective of the Department seems to consolidate information pertaining to the most frequently exercised exemptions & deductions being considered while determining the taxable income.

Highlights:

Break up of Salary and details of exemptions u/s 10 to determine the Total Salary (earlier only Total Salary had to be provided)

Standard Deduction u/s 16(ia) has been included (this is new provision applicable from FY-18-19 onwards)

Break up of Other Income (Other than Salary) – in two broad heads; Income / Loss from House Property and any other Income clubbed together (earlier this was one consolidated value)

Detailed breakup of deductions under Chapter VI (earlier it was only in two broad categories – all sections with a consolidated cap of Rs. 1,50,000 and rest of the sections altogether)

Source: TDS Man

Top 5 Tax-Saving Investments under Section 80C

noreply@blogger.com (Dharmen) — Mon, 15 Mar 2021 11:21:00 +0530

Top 5 Tax-Saving Investments under Section 80C

1. Public Provident Fund (PPF)

This is a 15-year lock-in account that can be opened with a bank or post office. Maximum contribution that can be made in a year is Rs 1.5 lakh.

2. ELSS funds

Mutual fund houses have specific recognised tax saving schemes known as Equity Linked Savings Schemes (ELSS) with a lock-in period of three years. Investments in these schemes of up to Rs 1.5 lakh in a financial year can be eligible for tax exemption under 80C.

3. Insurance plans

One can choose to invest in a traditional insurance plan which offers endowment benefits or a unit linked plan that provides market linked returns to take this tax exemption benefit.

4. Tax saving FD

Banks offer fixed deposits that have a maturity period of five years and are designated as tax saving FDs. These deposits usually carry a lower rate of interest vis a vis other lower maturity deposits.

5. Sukanya Samriddhi Yojana

Contributions made to the Sukanya Samriddhi account maintained for the girl child are also eligible for deductions and the maximum investment per financial year is limited to Rs 1.5 lakh.

Source: The Economic Times

Individual Tax payer's should know 10 major changes in tax - Budget-2021

noreply@blogger.com (Dharmen) — Mon, 15 Mar 2021 11:18:00 +0530

Pre-filled ITR forms: ITR to have pre-filled information on dividend, interest & capital gains to ease compliance. To further ease filing of returns, details of capital gains from listed securities, dividend income, and interest from banks, post office, etc. will also come pre-filled.

EPF contribution: Interest on employee’s share of contribution to EPF on or after April 1, 2021 will be taxable at the stage of withdrawal if it exceeds 2.5 lakh in any year. This will lead to additional tax liability, especially for HNIs, who make higher contributions, and will also discourage voluntary provident fund (VPF) contributions. This along with taxation of aggregate employer’s contributions in excess of 7.5 lakh to EPF, NPS and superannuation fund and interest thereon introduced last year, may make EPF an even less attractive retirement scheme.

Dividend payments to REIT/ InvIT: For ease of compliance, the government proposed to make dividend payments to REIT/ InvIT exempt from TDS. Further, as the amount of dividend income cannot be estimated correctly by the shareholders for paying advance tax, the government proposed that advance tax liability on dividend income shall arise only after the declaration/payment of dividend. In the previous budget, the government had abolished dividend distribution tax to incentivise investment and dividend was made taxable in the hands of shareholders. Amrish Shah, Partner, Deloitte India, said: "The abolition of TDS on dividend received by InVit/REIT would help in reducing the uncertainty around receiving refunds and blocking of cash. This will propel more investment through such business trusts.”

Higher TDS for non-filers of income tax returns: Budget 2021 proposed to insert a new section 206AB in the Income Tax Act as a special provision providing for higher rate for TDS for the non-filers of income tax return.

The proposed TDS rate in this section is higher of the followings rates: Twice the rate specified in the relevant provision of the Act; or twice the rate or rates in force; or the rate of 5%. The term "Rate in force" means rate as per the Income Tax Act, 1961 or Relevant DTAA rate, whichever is more beneficial.

No income tax filing required for senior citizens above 75: In a bid to make individual taxpayers' life easier, Finance Minister Nirmala Sitharaman, in the Union Budget 2021, announced that senior citizens above the age of 75 years, who only have pension and interest as a source of income will be exempted from filing the income tax returns. Senior citizens who are above 75 years of age are not exempted from paying tax. However, they are exempted from filing an income tax return (ITR) if they fulfill certain conditions. The exemption from filing income tax returns would be available only in the case where the interest income is earned in the same bank where the pension is deposited.

Tax on ULIPs: Proceeds from ULIPs issued on or after February 1, 2021 will be taxable as capital gains if the annual premium exceeds 2.5 lakh in any year (except when received on death). Where a taxpayer pays premium for more than one ULIP (issued after February 1, 2021) exemption shall apply to those ULIPs where the aggregate premium does not exceed 2.5 lakh. With this proposal, the disparity between ULIPs and equity mutual funds has come to an end, which was a long pending demand of the mutual fund industry.

Advance tax: Taxpayers will not be required to estimate their dividend income while making advance tax payments. Advance tax will now be payable only when a dividend is declared or paid by the company. Till now taxpayers used to pay the interest due to underestimation of dividend income in advanced tax calculation. But with the recent proposal, taxpayers will get relief on this front.

LTC scheme notified: The Union Budget for 2021-22 has proposed to provide tax exemption to cash allowance in lieu of Leave Travel Concession (LTC). The scheme was announced by the government last year for individuals who were unable to claim their LTC tax benefit due to covid-related restrictions on travelling. Aditya Hans, Partner, Dhruva Advisors LLP, said: "Individual employees can still avail exemption for leave travel concession (LTC) of one-third of specified expenditure or INR 36,000 whichever is less, for the block of 2018-21, if they have incurred expenditure on purchase of goods/ services liable to GST @ 12% or more, provided the payment is made via non-cash mode and incurred during the period 12 October 2020 to 31 March 2021."

The time limit for filing delayed (belated)/revised income-tax return to be reduced by 3 months: The last date to file a revised income-tax return or belated return on voluntary basis now stands at December 31 after the close of the financial year. The Times of India in a report mentioned that although this will reduce the overall tax compliance timelines, it may create practical difficulties for taxpayers with overseas income in claiming tax exemption or relief where such benefit is dependent on tax filing in the other country.

Tax holiday on affordable housing extended

FM Sitharaman announced the extension of tax holidays for the affordable housing segment. Additional interest deduction of Rs 1.5 lakh for loans taken to purchase an affordable house was announced in the 2019 budget. This relief will now be eligible for loans taken up to March 31, 2022. With an aim to keep up the supply of affordable houses, the Finance Minister proposed that affordable housing projects can avail a tax holiday for one more year, till March 31, 2022.

Niranjan Hiranandani, co-founder & Managing Director of Hiranandani Group believes that this incentivization will help sustain the revival momentum and allow more players to enter into the affordable housing segment. "The sagging real estate sector definitely wants to work hand and glove with the government and apex authorities to recuperate it faster and sustainably. Therefore, an extension of tax holiday for affordable housing projects will foster growth in this segment. This continued incentivization will fuel entrants of new players and new projects coming up in FY22 across the country," he said.

"Tax exemption for notified affordable housing for migrant workers, and the deduction on payment of interest for affordable housing being extended by a year will give a fillip to this emerging segment. As affordable housing attracts only 1 per cent GST and Rs 1,000 stamp duty in the state of Maharashtra, this will augment the production of affordable housing in the state," he added.

Source: www.timesnownews.com

How to select the best tax-saving plan.

noreply@blogger.com (Dharmen) — Mon, 15 Mar 2021 03:00:00 +0530

How to select the best tax-saving plan.

Harsh is a salaried professional n the 30% tax bracket. The tax saving season is on and he is evaluating his investment options. As an investor, he believes he should look for options that not only help him save tax but also generate tax-free returns. If the income earned is taxable, the scope to make money over the long run gets constrained as the taxes eat into the returns and adversely impact compounding benefits. For instance, his post-tax return on a 5-year bank fixed deposit of 7% will roughly come down to 4.9% per annum. He wonders what would be the right products for him this year.

PPF is an ideal choice for investors who do not want volatility in returns akin to equity. However, for long-term goals and to mitigate risk of high inflation, some equity exposure may be considered, preferably through equity mutual funds, including ELSS tax saving funds and not depend entirely on PPF. Having said that, ELSS does not enjoy the EEE (exempt- exempt- exempt) benefit any more. Harsh will have to pay a 10% tax on long-term capital gains exceeding Rs 1 lakh in a financial year. Moreover, dividends from ELSS will also be taxable in Harsh’s hands at his marginal rate of taxation (30%). Hence, for someone investing in ELSS, choosing the growth option over the dividend option will yield better tax-effective returns. After the initial three-year lock-in period ends, Harsh may continue with the ELSS investments similar to any open-ended mutual fund scheme.

Ulip is a hybrid product, a combo of protection and saving. As per the latest provisions, if the annual premium of a new Ulip investment is more than Rs 2.5 lakh, the maturity proceeds will no longer be tax exempt. In case Harsh is comfortable investing in ELSS and simultaneously holds a pure term insurance plan, he need not buy any Ulips. Also, Harsh must ensure that the goal timeline for saving through Ulips must be at least 10 years.

Traditional insurance plans could be an endowment, money-back or a whole life plan, which have a savings element and come with a fixed term and a fixed sum assured. While the premium paid qualifies for tax benefit under section 80C, the maturity value and the death benefit is tax-free. However, the traditional insurance plans typically yield low returns and are largely in the range of 4-7% per annum and provide limited scope for compounding over a period of time. The same may stand true for other guaranteed products that also provide tax exemption u/s 80C. Sukanya Samriddhi Yojana (SSY) offers the highest tax-free return, currently in the government saving schemes category, with a sovereign guarantee and comes with the exempt-exempt-exempt (EEE) status.

For most investors like Harsh, choosing tax savers that come with EEE status would be ideal. Both the principal invested and the returns are tax exempt under the Income Tax Act. Having said that, while choosing a product, he must also be mindful of its overall return and wealth-building potential.

Source: The Economic Times

Income Tax Slab for Fin. Yr. 2021-22

noreply@blogger.com (Dharmen) — Sat, 6 Mar 2021 08:42:00 +0530

Income tax calculator for F.Y. 2021-22

The Union Budget 2021 has not provided any income tax relief to tax payers. The finance minister Nirmala Sitharaman made no changes in income tax slabs or rates have been proposed. Nor did she give any additional tax exemptions or deductions. With no change in the basic exemption limit, income tax slabs and tax rates, an individual tax payer will continue to pay the tax at the same rates applicable in FY 2020-21.

Effective from April 1, 2020, a salaried individual has to choose between the new and old income tax regimes. Budget 2020 introduced a new income tax regime with reduced tax rates for those willing to forego 70 tax-exemptions and deductions under it.

This new tax system has been made optional and continues to co-exist with the old/existing one.

Income tax rates and slabs under new tax regime for FY 2021-22

Total income (Rs)	Income tax rate
Up to 2.5 lakh	Nil
From 2,50,001 to Rs 5,00,000	5 percent
From 5,00,001 to Rs 7,50,000	10 percent
From 7,50,001 to 10,00,000	15 percent
From 10,00,001 to Rs 12,50,000	20 percent
From 12,50,001 to 15,00,000	25 percent
Above 15,00,000	30 percent

Under the old tax regime, the basic tax exemption limit for an individual depends on their age and residential status.

This is the latest income tax slabs for FY 2021-22 under old tax regime:

Income tax slabs for resident individuals below 60 years of age for 2020-21

Taxable income slabs	Income tax rates and cess
Up to Rs 2.5 lakh	Nil
Rs 2,50,001 to Rs 5,00,000	5% of (Total income minus Rs 2,50,000) + 4% cess
Rs 5,00,001 to Rs 10,00,000	Rs 12,500 + 20% of (Total income minus Rs 5,00,000) + 4% cess
Rs 10,00,001 and above	Rs 1,12,500 + 30% of (Total income minus Rs 10,00,000) + 4% cess

Income tax slabs for resident individual between 60 and 80 years of age (Senior Citizen) for FY 2020-21

Taxable income slabs	Income tax rates and cess
Up to Rs 3 lakh	Nil
Rs 3,00,001 to Rs 5,00,000	5% of (Total income minus Rs 3,00,000) + 4% cess
Rs 5,00,001 to Rs 10,00,000	Rs 10,000 + 20% of (Total income minus Rs 5,00,000) + 4% cess
Rs 10,00,001 and above	Rs 1,10,000 + 30% of (Total income minus Rs 10,00,000) + 4% cess

Income tax slabs for resident individual above 80 years of age (Super Senior Citizen) FY 2020-21

Taxable income slabs	Income tax rates and cess
Up to Rs 5 lakh	Nil
Rs 5,00,001 to Rs 10,00,000	20% of (Total income minus Rs 5,00,000) + 4% cess
Rs 10,00,001 and above	Rs 1,00,000 + 30% of (Total income minus Rs 10,00,000) + 4% cess

Source: The Economics Times

https://economictimes.indiatimes.com/wealth/calculators/income-tax-calculator

F.D. and Tax Saving.

noreply@blogger.com (Dharmen) — Fri, 5 Mar 2021 15:00:00 +0530

Generally speaking all bank FDs are safe as banks are rigorously monitored by RBI. The FD in Government owned banks like SBI, PNB are the safest. This is because government would intervene and pay the depositors. Next is big private banks like ICICI & HDFC followed by smaller private banks. After this we have small finance banks. Co-operative banks are worst of the lot and I

would not trust them with my money. So until there are compelling circumstances keep away from co-operative banks. You can learn from recent example where Yes Bank was rescued by the government and no depositors suffered. However depositors of PMC Bank (a co-operative bank) are still suffering. You can learn more about this in our detailed article about How safe is your Bank Fixed Deposit?

Tax Calculator for Salaried Employee for Fin. Yr. 2020-2021

noreply@blogger.com (Dharmen) — Fri, 5 Mar 2021 15:00:00 +0530

The Finance Minister announced the Budget 2021 and mentioned that No Any Changes in Income Tax structure for Fin. Year 2021-2022. That's why the calculation of Income Tax for Salaried Employee is no change as Fin. Yr. 2020-21.

To Calculate Tax Click Here

How to save tax without fresh investments

noreply@blogger.com (Dharmen) — Fri, 5 Mar 2021 12:15:00 +0530

The month of March marks the end of the financial year and is the time when taxpayers needs to evaluate their tax liability taking into account eligible deductions, based on their income for that financial year (FY). Not availing certain eligible deductions can result in higher tax outflow.

It is to be noted that from FY 2020-21, a taxpayer can choose to pay tax under the new, concessional tax regime. In case the taxpayer opts for the new tax regime, he/she will have to forego most tax deductions and exemptions. In some cases, the taxpayer may want to opt for the existing tax regime but due to liquidity issues, especially considering the Covid-19 pandemic situation, may not be able to make further tax-saving investments. Such taxpayers need not get disheartened as certain expenditures are also eligible for tax deduction.

The deductions a tax payer is eligible for are to be claimed from gross total income thereby reducing the taxable income and consequently the tax payable.

Here is a look at expenses/deductions which can be used to reduce tax payable under the old tax regime.

1. Leave Travel Allowance

Section 10(5) of the Income tax Act grants deduction towards the leave travel allowance (LTA) based on provision of proof of travel and related expenditure, which are subject to certain conditions. This deduction can be availed only for a maximum two journeys within India in a block of four calendar years (2018-2021).

However, in FY 2020-21 many taxpayers were not able to undertake actual journeys due to pandemic-related travel restrictions. Taking this into consideration, the government has launched the 'LTC Cash Voucher' scheme.

Under the scheme, an employee can avail exemption for cash allowance received in lieu of LTC subject to certain conditions which are required to be fulfilled by the taxpayer.

Considering that that eligible category of goods and services is vast, the benefit of such scheme can be easily availed by salaried taxpayers. However, it is pertinent to note that employees who have already availed the LTC exemption twice for their current block 2018 -21, are not eligible to avail this scheme. Additionally, in the private sector, only those employees who have LTA as part of their salary structure can avail of the scheme if their company offers the scheme to them.

2. Deduction of interest income

Taxpayers deriving interest income from savings account held in a bank or post office are eligible to claim deduction under section 80TTA of the Income-tax Act. The amount of deduction will be the lower of, interest derived or Rs 10,000. For resident senior citizens, this limit is Rs 50,000 under section 80TTB. Senior citizens can also avail the deduction under section 80TTB on interest income derived from fixed deposits, Senior Citizen Savings Scheme etc.

3. Children's tuition fees, education and hostel allowance and tuition fees

Any allowance (up to specified limits) for education of children as well as hostel expenditure (generally referred to as Children Education Allowance & Hostel Allowance) granted to an employee by his/her employer is allowed as an exemption under section 10(14). The exemption for children's education allowance and hostel expenditure allowance is restricted to Rs 1,200 and Rs 3,600 annually, respectively, up to a maximum of two children.

Also, under section 80C, tuition fees paid to any recognized university, college, school or other educational institution situated in India, for the purpose of full-time education of any two children is eligible for deduction. Any individual taxpayer (salaried and non-salaried) can avail of this deduction, if tuition fee as described above is paid for his/her children. However, the amount allowable as tuition fees would not include payment in the nature of development fees or donation or capitation fees or payment of similar nature. Further, the deduction is not available if payment is made to a foreign educational institution.

It is also pertinent to note that children education allowance is different from tuition fees. Children's education allowance is available as a deduction only if it forms part of the salary component and the taxpayer has actually incurred expenses towards education of his children. The amount of allowances deductible is Rs 1,200 annually per child, up to two children. However, in case of tuition fees, it is allowable on the basis of actual expenditure incurred for education of children to an extent of Rs 1.5 lakh under section 80C, even though the same may not form part of the salary component of taxpayer.

4. Deduction of interest on education loan

Section 80E provides for deduction of interest paid on education loan availed from a financial institution or approved charitable institution. The deduction can be claimed from gross total income of the taxpayer thereby reducing the taxable income. The deduction is available for a period of 8 consecutive years beginning from the year in which the taxpayer starts paying the interest. The loan should have been taken for the purpose of higher education, i.e., any course after passing Senior Secondary Examination or its equivalent, in India or abroad. The education loan can be taken for the education of the taxpayer, spouse, children or student for whom the taxpayer is a legal guardian.

5. Deduction in respect of medical insurance, expenses and preventive health checkup

Section 80D provides for deduction in respect of medical insurance premium paid, preventive health check-up expenses and other medical expenditure subject to conditions. Deduction up to Rs 25,000 can be claimed for medical insurance premium paid for self, spouse or dependent children. An additional deduction up to Rs 25,000 can be claimed for medical insurance premium paid for parents below 60 years of age. The deduction is also available in case of buying Covid-specific health insurance policy like Corona-Kavach.

Further, in cases where the insured is a senior citizen, the above deduction limit is Rs 50,000. For a senior citizen, who does not have medical insurance, medical expenditure can be claimed as a deduction under this section subject to an overall limit of Rs 50,000. The section also allows for deduction towards preventive health check-up expenditure up to Rs 5,000. This expense is included in the overall limit, as applicable. The above expenses have to be incurred by any mode other than cash. However, preventive health check-up expenses can be incurred in cash. The deduction shall be available to Senior Citizens even if medical expenditure is incurred by them in cash.

6. Deduction in respect of interest on loan taken for residential house property

If a residential property is bought by taking a home loan, an individual can claim two types of tax breaks - deduction for repayment of principal of home loan under section 80C and deduction for interest payment made on the home loan u/s 24. The latter deduction would be restricted to a maximum of Rs 2 lakh annually in case of a self-occupied property.

Further, if one has bought a house in the affordable segment, they get a deduction of Rs 1.5 lakh in a financial year under section 80EEA. This deduction is available over and above the Rs 2 lakh deduction available on the interest payment on housing loan. It is available on the home loan taken between April 1, 2019 and March 31, 2021 for acquisition of a residential house whose stamp duty value does not exceed Rs 45 lakh. Thus, the total deduction available to an individual taxpayer on the interest payment of a housing loan for buying an affordable house is Rs 3.5 lakh in a financial year.

7. Deduction under section 80CCD(2): Employer's contribution to NPS

Under Section 80CCD(2), an employee can get deduction in respect of employer's contribution towards the employee's National Pension Scheme (NPS) account. Such deduction will be limited to a maximum of 14% of basic salary plus DA in case of a Central Government employee, and 10% of basic salary in case of any other employee, subject to the combined upper limit of Rs. 7,50,000 which is applicable in respect of employer's contribution in a year to NPS, superannuation fund and recognized provident fund. Further, interest, dividend etc. earned on the excess contribution will be taxable as well.

The deduction under Section 80CCD(2) is in addition to the deduction available under section 80C, where the overall limit is Rs 1.5 lakh and 80CCD(1B) which is Rs 50,000. Also, this deduction can also be availed by a person opting for the new, concessional tax regime.

8. House Rent Allowance or deduction for rent paid

The House Rent Allowance (HRA) is a common component of the salary structure. Employees who stay on rent can avail of the deduction of HRA based on the actual rent paid by them. With respect to HRA, Section 10(13A) provides for an exemption of least of the following amounts:

(i)40 per cent/50 per cent (in case of metropolitan cities) of the salary amount;

(ii)Actual amount received as HRA;

(iii)Amount of rent exceeding 10 per cent of the salary

The employee/taxpayer will have to provide the necessary rent receipts/agreements and other details to the employer in order to enable the employer to compute the exemption amount. Even if rent receipts are not submitted to the employer, the employee can claim the tax benefit at the time of filing ITR.

With respect to taxpayers not receiving HRA, section 80GG provides for deduction in respect of rent paid. It is pertinent to note that the benefit under this section is available subject to the certain conditions. The taxpayer claiming this deduction or his spouse or minor child should not own any residential house property at the place where he ordinarily resides for performing his duty or the taxpayer himself should not own any other house property which he is claiming as self-occupied for the purpose of calculating income from house property. Section 80GG provides for deduction of least of the following amounts:

(i)An amount of Rs 5,000 per month, i.e., Rs 60,000 p.a.;

(ii)Actual rent paid in excess of 10 per cent of total income;

(iii)25 per cent of total income.

In the above computation, the total income shall include the total income arrived at after considering all deductions under Chapter VI A other than under this section. For claiming deduction under section 80GG, the taxpayer is required to file a declaration in Form 10BA.

9. Employees' Provident Fund (EPF)

Employees' contribution towards recognised provident fund, which is deducted from their salary on a monthly basis, shall be allowable as a deduction with an overall limit of Rs 1.5 lakh under section 80C.

10. Standard deduction on salary

A standard deduction up to Rs 50,000 is available to all salaried employees. This deduction is considered by the employer while computing tax liability of each employee and deduction of TDS from salary. The deduction is to be claimed in the ITR form at the time of filing ITR. While planning your taxes for FY 2020-21, one must consider standard deduction as well to compute the total tax liability if one is opting for the old tax regime.

Source: The Economics Times

Link- https://economictimes.indiatimes.com/wealth/tax/how-to-save-tax-without-fresh-investments/articleshow/81323915.cms

Now, P.F. interest also Taxable then what other viable investment opportunities for tax savings ?

noreply@blogger.com (Dharmen) — Thu, 4 Mar 2021 11:37:00 +0530

Finance Minister Nirmala Sitharaman has announced in the Union Budget 2021-22 that PF contributions over Rs 2.5 lakh in a financial year will be taxable from the next financial year.

To curb wealthy people from parking excess money in Provident Funds (PFs) to earn higher tax-free interest, Finance Minister Nirmala Sitharaman has announced in the Union Budget 2021-22 that PF contributions over Rs 2.5 lakh in a financial year will be taxable from the next financial year.

“The budget 2021 has placed a strong emphasis on infrastructure development be it social, physical, or financial infrastructure to re-energise the Covid-hit economy. On the direct tax side, changes pertain to simplification of REITS & InVITS and compliance related announcements,” S Ravi, Former Chairman of Bombay Stock Exchange, Founder & Managing Partner a of Ravi Rajan & Co.

Get tax benefits on education loans for higher education abroad?

noreply@blogger.com (Dharmen) — Thu, 4 Mar 2021 11:36:00 +0530

As per Section 80E, anyone taking loan from any financial institution or approved charitable institution for pursuing higher education, whether in India or abroad, can claim deduction equivalent to the entire amount of interest paid on the borrowed sum for a consecutive period of eight years, beginning from the assessment year in which the individual has started paying the interest on loan or until the assessment year in which the interest is paid by the individual in full, whichever is earlier. The loan can be taken for the education of self, spouse, children or the student for whom the individual is the legal guardian.

How section 80C of the Income-tax Act works to Save Tax

noreply@blogger.com (Dharmen) — Wed, 3 Mar 2021 12:56:00 +0530

Tax saving: How section 80C of the Income-tax Act works

One of the most common deductions available under the Income-tax Act, 1961 is section 80C.

The deduction under this section can be claimed only if an individual opts for the old/existing tax regime in a financial year. On the other hand, if an individual opts for the new concessional tax regime, then the individual will not be able to claim deduction under this section.

Here is how this section works and helps an individual save tax in a financial year.

1. Through section 80C, an individual or an HUF can reduce up to Rs 1.5 lakh from their gross total income in a financial year thereby reducing their net taxable income and tax payable thereon. Full utilisation of this deduction can save up to Rs 46,800 (inclusive of cess at 4%) for those in the highest tax bracket of 30%.

2. To claim this deduction, a taxpayer is required to invest the amount in eligible investment instruments or spend the money on the specified deductible in the same financial year. The tax payer can claim tax benefit under this section by investing/spending up to Rs 1.5 lakh in the specified avenues under this section.

3. Eligible investment instruments include Employees' Provident Fund (EPF), Public Provident Fund (PPF), Equity-linked savings scheme (ELSS) mutual funds, Sukanya Samriddhi Savings Scheme, National Savings Certificate (NSC), five-year tax-saving fixed deposits with a bank and/or post office, National Pension System (NPS), and Senior Citizen Savings Scheme (SCSS).

4. Do keep in mind that each of the eligible investment has its own investment limit, rate of return, liquidity, and tax treatment on its returns.

5. Specified expenditures that are allowed under this section include expenditure on the life insurance premium, repayment of principal of a home loan, children's school fees.

Source: The Economics Times - https://economictimes.indiatimes.com/wealth/tax/tax-saving-how-section-80c-of-the-income-tax-act-works/articleshow/81150504.cms

How to save tax via NPS by investing Rs 50,000 additionally

noreply@blogger.com (Dharmen) — Wed, 3 Mar 2021 12:41:00 +0530

How to save tax via NPS by investing Rs 50,000 additionally

Investment in National Pension System (NPS) has been a trending topic of discussion in the recent years from a tax saving perspective for individual taxpayers, considering various changes in the income tax laws. Tax benefits are available in respect of contributions to NPS made by the employer as well as employee/self-employed person to the NPS Tier 1 account.

The tax benefits at the stage of contributions are summarised below:

Employee contributions
Section 80CCD(1) of the Income-tax Act, 1961, provides deduction in respect of contributions made by an individual taxpayer towards NPS. An individual who has deposited any amount in his/her NPS account during the financial year is allowed to claim deduction from his/her gross income limited to 10% of basic salary for salaried individuals and 20% of gross total income for self-employed individuals. This deduction is for contributions made by the individual either directly or through the employer, i.e., as deduction from salary. However, the deduction available under this section is also restricted to the overall limit of Rs 1.5 lakh prescribed under Section 80CCE of the Act.

Section 80CCE specifies the aggregate level of deduction available under sections 80C and 80 CCD(1) of the Income-tax Act. Thus, investment in section 80C basket (EPF, PPF contributions etc.) and section 80CCD (1) (NPS contributions - directly or via employer) in a financial year cannot exceed the specified limit of Rs 1.5 lakh in a financial year.

Currently, Section 80CCE allows an individual to deduct up to Rs1.5 lakh from gross total income (before calculating tax payable) if this Rs 1.5 lakh is invested in specified avenues (including NPS). Certain specified expenditures also qualify for deduction under this Rs 1.5 lakh limit of section 80CCE. Examples of specified expenditures include repayment of principal amount of home loan, children school fees etc.

Source: The Economics Times - https://economictimes.indiatimes.com/wealth/tax/how-to-save-tax-via-nps-by-investing-rs-50000-additionally/articleshow/81209654.cms

TDS Return FVU Ver. 7.0 release with new features.

noreply@blogger.com (Dharmen) — Wed, 3 Mar 2021 12:28:00 +0530

TDS Return FVU Ver. 7.0 release with new features.

e-TDS /TCS returns prepared for FY 2007-08 and onwards (i.e. Forms 24Q, 26Q, 27Q and 27EQ) can be validated using this utility.

The e-TDS/TCS FVU is a Java based utility. JRE (Java Run-time Environment) [versions: SUN JRE: 1.6 onwards] should be installed on the computer where the e-TDS/TCS FVU is being installed. Java is freely downloadable from http://java.sun.com and http://www.ibm.com/developerworks/java/jdk or you can ask your vendor providing computer facilities (hardware) to install the same for you.

The e-TDS/TCS FVU setup file (e-TDS/TCS FVU.exe) comprises of three files namely:

TDS FVU Readme.rtf: This file contains instructions for setup of the e-TDS FVU.

e-TDS FVU Setup.exe: This is a setup program for installation of FVU.

These files are in an executable zip file. These files are required for installing the e-TDS/TCS FVU.

“Please download and replace the existing folders with the latest version of FVU and RPU folders available at TIN website. Replacing only the FVU Jar file in the old folder may lead to the rejection of statement at the time of submission of the file.”

FVU for quarterly e-TDS/TCS statement pertaining to FY 2010-11 onwards

e-TDS/TCS FVU.exe (Version 7.0) | New features/Validations

FVU for quarterly e-TDS/TCS statement up to FY 2009-10

e-TDS/TCS FVU.exe (Version 2.166) | New features/Validations

Instructions for extracting the files are given in:

e-TDS FVU Extract

Extraction of e-TDS/TCS FVU

To extract these files, double-click on 'e-TDS FVU.exe'.

A 'WinZip Self-Extractor - e-TDS FVU.exe' will open.

By default, the path selected for extraction of the three files will be 'C:\e-TDS FVU'.

The files can also be extracted in any other location (other than C:\e-TDS FVU). In that case, the appropriate path has to be defined by clicking the 'Browse' button where the three files should be extracted.

Thereafter, click on 'Unzip' button.

On clicking the 'Unzip' button, the three files mentioned above will get extracted to the specified path (i.e. in folder 'C:\ e-TDS FVU' by default or at the specified path).

Installation of e-TDS/TCS FVU

The e-TDS/TCS FVU can be setup as per the procedure mentioned in the 'e-TDS FVU Readme.rtf' file (one of the three files extracted).

Running the FVU

The procedure to run FVU is given in the Readme button on the window opened by clicking e-TDS/TCS FVU icon.

Source: https://www.tin-nsdl.com/services/etds-etcs/etds-file-validation-utility.html

Aadhaar links to PAN fo E-filing of Income Tax Returns

noreply@blogger.com (Dharmen) — Tue, 2 Mar 2021 10:59:00 +0530

In simple way Income Tax Department shall take you to a webpage outside www.incometaxindia.gov.in. to link Aadhaar to PAN for e-Filing of Income Tax Returns and regarding this the contents of the linked on www.incometaxindia.gov.in page.

The following Details for this process:
Assessee's Name, Date of Birth and Gender as per PAN will be validated against your Aadhaar Details.

Assessee ensure that "Aadhar Number" and "Name as perAADHAAR" is exactly the same as printed on your Aadhaar card.

The Circular of UIDIA No. F.No.K-11022/631/2017-UIDIA with regard to discontinuation of partial match in Demographic Authentication w.e.f. 01.12.2017 by UIDIA.

Income Tax Department issues notification for extension of due date till 31st March, 2021 for filing DTVSV Forms under DTVSV Act, 2020

noreply@blogger.com (Dharmen) — Mon, 1 Mar 2021 15:53:00 +0530

Central Board of Direct Tax extend deadlines for filing DTVSV Forms by 31st March, 2021 under DTVSV Act, 2020, which is as under

MINISTRY OF FINANCE
(Department of Revenue)
(CENTRAL BOARD OF DIRECT TAXES)
NOTIFICATION
New Delhi, the 26th February, 2021

S.O. 964(E).—In exercise of the powers conferred by section 3 of the Direct Tax Vivad se Vishwas Act, 2020 (3 of 2020), the Central Government hereby makes the following amendments in the notification of the Government of India, Ministry of Finance, (Department of Revenue), number 85/2020, dated the 27th October, 2020, published in the Gazette of India, Extraordinary, Part-II, Section 3, Sub-section (ii), vide number S.O. 3847(E), dated 27th October, 2020, namely:––
In the said notification,––

(i) in clause (a), for the figures, letters and words “28th day of February, 2021” the figures, letters and words “31st day of March, 2021” shall be substituted;
(ii) in clause (b), for the figures, letters and words “31st day of March, 2021” the figures, letters and words “30th day of April, 2021” shall be substituted; and
(iii) in clause (c), for the figures, letters and words “1st day of April, 2021” the figures, letters and words “1st day of May, 2021” shall be substituted.

[Notification No. 09/2021/ F.No. IT(A)/01/2020-TPL]
SHEFALI SINGH, Under Secy., Tax Policy & Legislation Division

Note: The principal notification was published in the Gazette of India, Extraordinary, Part-II Section 3, Sub-section
(ii) dated the 27th October, 2020 vide number S.O. 3847(E), dated 27th October, 2020 and was subsequently amended by notification number S.O. 4804(E), dated 31st December, 2020 published in the Gazette of India, Extraordinary, Part-II Section 3, Sub-section (ii) dated the 31st December, 2020 and notification number S.O. 471(E), dated 31st January, 2021 published in the Gazette of India, Extraordinary, Part-II Section 3, Subsection (ii) dated the 31st January, 2021.

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