Filing Tax Return… Remember these points
It is important to pay your taxes properly or the income tax department will come back knocking on your doors with a penalty that may range from 100% to 300%, not to forget the monthly interest @1.5%. Kindly make sure that you include income from not only your salary, but other income like, winning of lotteries, gifts, rental income, any business income, capital gains and even income earned in the hands of your children. Lets look at such incomes which you often miss out:
You can receive tax free gifts of up to Rs. 50,000 from strangers. Any amount received over this Rs. 50,000 has to be included in your total income. These include gifts other than cash. Gifts received on your wedding and any inheritance is exempted from tax.
Any profit arising by way of sale of property, including gold, comes under capital gains. However the tax liability depends on whether the capital gains arising out of such transactions are short term or long term. For example sale of equity based mutual funds held for a period of more than 1 year falls under long term capital gains and enjoy 100% tax exemption. If there are any short term capital losses, the same can be set off against short term as well as long term capital gains and can be carried forward to the next 8 years, subject to filing of income tax before the due date which is 31st July.
The interest income earned on your saving bank account, NSC and bank fixed deposits have to be included in your total income. This includes interest income from such deposits in the name of your minor children. However, you can claim exemption of up to Rs 1500 per child in a year (max 2 children)
Income from property
If you own a more than one house , and even if one is lying vacant, you are liable to pay tax on the notional rent.
Any amount received as gratuity before his retirement or death is taxable. If the employee receives the gratuity amount after retirement, it is exempted upto Rs. 10,00000
While you are required to include all other incomes, you can save taxes by way of careful planning and investments. Some of the ways to effective tax planning are:
1.. Invest in a home by taking a home loan. You can avail tax benefit on repayment of principal for up to Rs. 1,00,000 and Rs 1.5 lakh on the amount paid towards interest on housing loan annually
2.. As a salaried individual if you are getting House Rent Allowances (HRA) from your employer and also taken loan to buy a home, then you can get the deduction of both HRA as well as housing loan repayment & interest.
3.. Subject to some conditions, deduction under sec 80GG can be claimed on the rent free furnished or unfurnished accommodation provided by the employer at concessional rent.
4.. Create HUF. It doesn’t cost more than a couple hundred rupees.
5.. Payments made towards tuition fees for children to any school or college or university or similar institution can be claimed for deduction under 80 C. (Maximum for 2 children).
6.. Utilize more such benefits and exemptions u/s 80 C (up to Rs. 1,00,000), 80 D for health insurance (mediclaim policies), 80G for donations made, expenditure for the treatment of your handicapped dependent u/s 80DD, 80DDB, 80U for individuals with disability.
7.. Under the newly introduced Rajiv Gandhi Equity Savings Scheme, a new investor in equity will be able to claim 50% of his investment in direct equity as deduction, subject to maximum investment of Rs. 50,000, and provided his taxable income is below Rs. 10,00,000. This investment is subject to a lock in period of 3 years.
8.. Learn from this year. Start planning for next year right now. If you wait for the last minute, you might not get sufficient time to research the competitive products. Estimate how much shall be tax this year and how you can minimize it.