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Were you prudent with your investments last year? Did they help you save tax? Or did you end up paying more than you could afford?
What investment mistakes did you make last year? Are their ways to rectify them?
What investment options should you go for this year?
What should you do to bring your tax liability to the minimum level?
In an hour-long chat on rediff.com on Thursday, expert Vikas M Gandhi answered many such readers' queries. Here is the transcript:
Vikas. Gandhi says, Good evening friends and welcome back to this session of Tax Chat.
anant asked, Which is the better Investment option, PPF or Mutual Funds?
Vikas. Gandhi answers, at 2007-12-13 16:03:58The answer to your question depends upon your risk bearing capacity. PPF is extremely safe investments, however returns are although low, but ar stable and guaranteed. Whereas in mutual fund, returns are fluctuating and is risk-based, because it is directly related to share market. Hence it is always advisable to have some sort of balanced investments between safe investment and risk-based investments. Further while investing in Mutual Fund, invest in different mutual funds so that your risk is divided.
amithh asked, Hi sir, Can you please guide me how to calculate tax on income earned by equity share market, ( along with salary income).
Vikas. Gandhi answers, The income you earn on account of sale of equity shares are either termed as Short Term Capital Gain or Long Term Capital Gain, depending upon the period of holding of such equity shares. Calculation differs for each type of Capital Gains and they are also taxed at different rates. Simply speaking of equity shares, if you held the shares for more than one year and sold thereafter through stock market, your entire profit will be tax-free. In case the period of holding such shares is less than one year and have been sold in stock market, the profit will be taxed @ 10%. For detail calculation and understanding you can use the calculators given on various online sites. www.taxsmile.com is one of such site where you can calculate your capital gains.
xyz asked, Out of 1 lac qouta available under 80cc exemption, I have utilised as follows 30K-PF, 30K-Mutual funds, 10K-Insurance...please let me know where should I invest remaining 30K
Vikas. Gandhi answers, You can either increase the limit of existing investment, or you have other options like - NSC, Five year term deposit wih Banks, ULIP, ELSS etc.
santanukashyap asked, I need to know what are the options apart from Insurance to to safely invest money to save tax?
Vikas. Gandhi answers, If you looking for safe investments and at the same time want to save tax, PPF and NSC are the best option. You can even go for 5 years term deposit with bank. these are safe investments as compared to Mutual Funds, ELSS etc.
Naina asked, Good evening Sir, I have invested in PPF 70,000 & 20,000 Insurance premium balance Rs. 10,000 where should I invest, Pls tell me the best return option.
Vikas. Gandhi answers, Go for some risk-based investments, if you are looking for best return option. Invest the balance amount in mutual funds, ELSS etc.
tes asked, is profit from Mutual fund sale taxable.Do we need to show the profit amount in the return form.
Vikas. Gandhi answers, Your answer depends on what is the type of mutual fund. If the units are equity oriented, any long term capital gain is totally tax-free, whereas short term capital gain is taxed @10%, provided you have paid Securities Transaction tax on sale of such units. In case of other type of units, long term capital gain is taxed @20%, whereas short term capital gain will be added to your other income and taxed as per slab rate applicable to you.
anvi asked, whether there is any limitation on HRA deduction
Vikas. Gandhi answers, the exempt value of HRA is calculated as least of following values - a) Actual HRA received, b) 50% of Basic Salary + Dearness Allowance (if the house is situated at a place other than Mumbai, Delhi, KOlkatta and Chennai, the rate is 40%) c) Rent paid - 10% of Basic Salary & Dearness Allowance
anvi asked, what are the documents to be furnished to claim HRa DEDUCTION AND TO WHOM
Vikas. Gandhi answers, For claiming exemption from HRA, you need to provide Rent receipt or rent agreement to your employer, based on which your employer will calcuate the exemption and deduct TDS accordingly from your Salary.
anandngl asked, My profession is into teaching.. I got an estimate for Rs. 3.6 taxable income, after savings and exemptions. Any other way to reduce my taxable income?
Vikas. Gandhi answers, You have calculated your taxable income by reducing savings and exemptions. I assume that you receive Professional fees and hence you are eligble to deduct all the expenditure you incurr for earning such income. Hence deduct all the relevant expenses, which will still reduce your taxable income. Besides this, in the given scenario, it is difficult to hint on any other tax savings
Pandian asked, is it true..Housing loan principle amount also including of Rs.1 lk investment limit
Vikas. Gandhi answers, Yes, you also get deduction on account of repayment of housing loan principal amount and this amount is included in the limit of Rs.1 lac provided in section 80C.
raghavender asked, I have taken NSC'S FOR 65000 rs,will they come under tax avings?
Vikas. Gandhi answers, Investment in NSC are also covered under tax savings investments and hence you will be able to claim deduciton on account of such investment.
akhilesh asked, is insurance of my car is also exempted under 80c
Vikas. Gandhi answers, Car insurance premium paid is not eligible for any type of deduction. Only Life insurance premium and Medical insurance premium qualify for such deductions.
sanjoym2 asked, I had invested Rs 6.0L a few years ago in Post office MIS & the Monthly income from there used to be invested in Post office recurring deposit. The Rd is going to be matured next year. I want to know the tax liabity in this.
Vikas. Gandhi answers, If you had offered the interest income every year on accrual basis, on redemption you will have to offer only the reamining part of income which was not offered for tax, excluding the main investment of Rs.6.0 lac. However if you have not offered on accrual basis, you will to offer entire amount of income (excluding principal amount of Rs.6.0lac) as income in the year of redemption. The amount is taxable.
NVRao asked, i have capacity to save Rs.2000/-PM. which one is the best saving option
Vikas. Gandhi answers, If you are looking for long term investment and also hav capacity to bear some amount of risk, invest in some good mutual fund under SIP plan. Do consult some good financial advisor before deciding on any mutual fund.
Balaji asked, Hi, My company gives me sodexho passes worth 15000 every year. will this come under tax saving scheme?
Vikas. Gandhi answers, Sodexho offers two types of passes - Meal coupons and Gift coupons. Both this coupons normally form part of your salary and they are exempt from tax.
suman asked, what is the tax limit of a salaried person
Vikas. Gandhi answers, there is no separate tax limits for salaried person. the tax`rates are same for all, which is as under - Upto Rs.1,10,000 Nil From Rs.110000 to Rs.150000 10% From Rs.150001 to Rs.250000 20% Above Rs.250000 30% In case of female, the limit of Rs.110000 is extended to Rs.135000/-.
Vikas. Gandhi says, that's all for the day, friends. It's time to bid good-bye. So have a happy week-end.
Chat with Vikas every week
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