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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?
Direct tax expert Vikas M Gandhi replied to readers' queries in an hour-long chat on rediff.com. Here is the transcript:
Vikas Gandhi says, Good evening friends and welcome back to the tax chat session. It's 13th of September and hope all those who are required to pay advance tax have done so and if not please do at the earliest. The last date is 15th of September.
manoj asked, hi Vikas Good afternoon,pls tell us how much standard diduction one can get on HRA in taxable income if we are staying in rented house?
Vikas Gandhi answers, at 2007-09-13 15:59:14To calculate the exemption amount of House Rent Allowance, you need to consider following three factors and the least of the three factor is exempt from tax. a) Actual HRA received b) 50% of (Basic + Dearness Allowance). If the house is situated other than at metro cities, the rate is 40%. c) Rent paid in excess of 10% of (basic salary + DA) Calculate the above figures and know how much of your HRA is exempt
Kamlesh asked, my income is 7lac PA, how do i plan so that i need not have to pay tax
Vikas Gandhi answers, With an annual income of Rs.7 lac it would be difficult to pay Nil Tax. However at first you can avail the benefit given under section 80C. You can invest in various options such as LIC [Get Quote], PPF, NSC, Fixed Deposit with Bank, ULIP, ELSS, Pension plan. Amount invested in such options can be exempt upto Rs.1,00,000/-. For further reduction in taxable income, you can consult your employer for restructuring your Salary, wherein more emphasis should be given on allowance and reimbursements.
abhi asked, hi vikas. I am 28 yr old and have one son of 7 month. I want to invest for education of my son. What would you suggest that will save tax also. Is it ULIP or mutual fund ?
Vikas Gandhi answers, Given an option between ULIP and mutual fund, according to me you should go for ULIP. However do consult some financial consultnat before investing, as there are various options available today in the market, which would help you in planning and securing your childs future.
Vivekchand asked, Sir, My salary is 2,00,000 per annum (8500 basic, 4450 HRA, 800 conveyance, 1250 medical) Do I fall in incometax bracket. In what instruments how much amount I should invest if I fall in tax bracket. Can you recommend some good investment options by which I can earn good returns too. Thank you very much for your valuable advice.
Vikas Gandhi answers, Your answer cannot be answered fully. For this I need to know how much of HRA is exempt. Further the answer will be subject to the fact that you produce proper medical bills for claiming exemption of medical reimbursement. Assuming that other than basic salary all other emoluments are exempt, you would be within the exmepmtion limit and need not pay any tax. However in other case, you will have pay some tax and save that tax, I would suggest you to go either for Insurance premium or NSC (taking into consideration your payscale)
dfd asked, Hi vikas, my income is 4.15 lacs PA.i would like to know the sec 80c investment (1 lac).Plz let me now where to investwmnt which will benefit to me.
Vikas Gandhi answers, Your answer depends on how much risk bearing capacity you have. The normal and safer options of investment for claiming benefit are - a) Life Insurance Premium b) PPF c) NSC d) Fixed Deposit with Banks However if you have the capacity to take risk. you can even go for either investing in ELSS or Mutual Funds. However the maximum limit is Rs.1,00,000/-.
umes asked, hi i am from bangalore we have a house but it is in my fathers name and i am the only son i want to take a loan for renovating the house am i eligible to take all the benefits from incometax under sec80C as taken for housing loan or should i ask my father to transfer the documents to my name which is better
Vikas Gandhi answers, According to me there should not be any problem in claiming the benefit, as far as the loan documents are in your name. However the financial instituition should be ready to give loan in your name, as the property is in the name of your father.
vikasfan asked, Sir, I availed Housing Loan during 2005 and subsequently when I applied for addl loan, they granted same but the entire loan under "Mortgage Loan". Am I eligible to claim the benefits ?
Vikas Gandhi answers, Accroding to me Mortgage loan won't qualify for the benefits under Income Tax.
Anupam asked, hi vikas, nice to know that you are supporting using technology..my question is that i am earning 6.84 lakhs per annum and need to plan for my investment for tax planinng can you give be a board tax applicable value and how can i save using tax saving instrumnets..?
Vikas Gandhi answers, Income upto Rs.1,10,000/- is exempt from tax. Besides this you can further reduce your tax liability by investing various schemes, for which you get exemption upto Rs.1,00,000/-. Such schemes are given below. You can select any mix of option, keeping in view the risk factor, earning factor and your requirement of funds in future - 1. Life Insurance Premium 2. PPF 3. NSC. 4. ELSS 5. Mutual Funds 6. Fixed Deposit with Bank 7. Pension plan 8. Tuition fees of children 9. Principal payment of home loan. Besides this you can avail further deduction of Rs.15,000/-(maximum) by paying medical insurance premium. In addition to this if you are a salaried employee you can consult your employer for restructuring the salary package, wherein you claim more allowances and reimbursements. Beyond this nothing else can be done.
ajay asked, Hi,for my tax planing,i want to invest 24k either in PPF or in pension funds like franklin pension fund.Pls advice which will be a good choice.My age is 25.
Vikas Gandhi answers, This depends on how you want to plan for your future. PPF will mature after 15 years or in multiple of 5 years thereafter. Thus say for example you will be getting your amount back at the age of 40. However under pension funds, you will be getting the funds after a particular age (pre determied), but after age of 55 years. Here you have the option to get monthly payments or lumpsum amounts. According to me assess your needs, study the pension funds and then take a decision. Selection varies from person to person and hence a specific answer cannot be given. Other factors needs to be consdered.
Sankari asked, Sir, I am having a Demat account and I am holding some shares. I also sell and purchase some shares. The total trade in a financial year is less than 1 lakh. Ultimately I am having some shares for a value of one lakh. I don't know how much tax I have to pay. I am a housewife. I don't have any other source of Income. Kindly guide me. K.V.Sankari
Vikas Gandhi answers, As far as your total consideration from sale of such shares is less than Rs.1,45,000/-, you need not worry as the same is within the exemption limit and won't be liable to pay any tax. However this holds good only if you don't have any other income as mentioned. In any case, if the shares sold are long term and are traded through a broker in the stcok market, the same are exempt from tax itself and hence irrespective of the fact whether it is within or outside the exemption limit, you are not liable for any tax and hence you can relax.
piyal asked, Hi! Last year my office paid me some extra money and naturally I had to pay tax on it@ 33%. Now they are recovering the money this year. As this year's return is already filed how I will claim the refund?
Vikas Gandhi answers, You need to file a revised return and claim the refund.
amit asked, Hi Vikas, do fixed deposits have any schemes like SIPs where i can regularly deposit money in the same FD account?
Vikas Gandhi answers, Till date there is no such facilities available. You have to deposit lumpsum amount at the start itself.
bhavesh asked, sir, My Bank FD of Rs.1.00 lac is matured i want to know whether that is taxable or only interest amount is taxable? plz give ur feedback
Vikas Gandhi answers, On maturity of fixed deposit, only interest amount is taxable and not the entire amount.
yogi asked, sir what is maximum tax free limit for interest from fixed deposits ?
Vikas Gandhi answers, There is no tax free limit for interest from fixed deposit. Such interest has to be included with other income and such total income is exempt upto Rs.1,10,000/-.
pankaj asked, I heard that short term capital gain from stock trading are taxable only if gain is above 1 lakh. Is it true ? or any amount is taxable
Vikas Gandhi answers, The amount of Rs.1 lakh and now Rs.1,10,000/- is the basic exemption limit. This does not apply only to short term capital gain. Hence if your entire income including short term capital gain is within Rs.1,10,000/-, then you need not pay any tax, However if it exceeds such limit, your income will be taxable and you need to pay tax on such excess income.
prakul asked, What is difference in exemption if a particular sum is invested in land/ plot or a flat ?
Vikas Gandhi answers, YOu don't get any exemption for investment in land or plot or flat. It is only that if you have taken a loan for purchase of a residential flat, you get exemption u/s 80C (for principal payment of loan) and u/s 24 (for interest payment). However such exemption is not available for loan taken for purchase of land or plot
suprateep asked, hi i am an manager in a IT firm and i am looking at investing in the long term for the time being. Last year i put in 50k in mutual funds (SBI [Get Quote] 20k, ICICI [Get Quote] 20k, BNP Paribas 10K) and the rest in Life Insurance & PPF. This year i plan to invest in a similar fashion and probably invest in funds (growth option). The question is do i build aroudn these core funds (like last year) or invest in new funds?? Please advise which funds to go for????
Vikas Gandhi answers, It is always better and advisable to spread your investments over different funds. Avoid investing in same funds. As far as which find to go, you should personally contact a good financial advisor, who after taking into consideration your income profile, life style, future needs and other factors, will guide you a better option.
hari asked, Hi Vikas, Is there a way to save tax other than 80C and interest on HouseLoan?Thanks in advance.
Vikas Gandhi answers, There is no option other than 80C and interest on House loan.
jaytih asked, Please tell me whether filing tax returns is madatory for PAN holders especially for my mother who is a house wife.
Vikas Gandhi answers, Only if the gross income exceeds the basic exemption limit, a person is liable for filing tax returns. For females, the exemption limit is Rs.1,45,000/- for current financial year
phani asked, Is there any upper limit for PPF exemption for 80C
Vikas Gandhi answers, There is no specific upper limit for PPF exemption u/s 80C. Various investments are possible under sec 80C and overall limit for claiming deduciton under this section is Rs.1,00,000/-. However speaking specifically for PPF, banks are not allowed to accept more than Rs.70,000/- in one account in one year. Thus the upper limit is from bank and not from income tax department.
kamal asked, Hi Vikas,My wife is house wife ,if i deposit as FD in bank and she earn more than 10000 then she need to pay any tax..
Vikas Gandhi answers, Beware. If you keep fixed deposit in the name of your wife, the entire interest earned on this fixed deposit will be treated as your income and not your wife's income. This is called clubbing provisions, wherein if a wife earns any income from amount gifted to her by her husband, such income is considered to have been earned by husband and not the wife.
Vikas Gandhi says,
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