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Thursday 13 September 2012

Relaxation from compulsory e-filing of return of income


Relaxation from compulsory e-filing of return of income

subject: Relaxation from compulsory e-filing of return of income for assessment year 2012- 13 - for representative assesses of non-residents and in the case of private discretionary trusts -reg
Rule 12 of the Income-tax Rules, 1962 mandates that an individual or Hindu undivided family, if his or its total income or the total income in respect of which he is or it is assessable under the Act, during the previous year, exceeds ten lakh rupees, shall furnish the return electronically for the assessment year 2012-13 and subsequent assessment years.
2. It has been brought to the notice of the Board that the agents of non-residents, within the meaning of section 160(1) (i) of the Income tax Act, are facing difficulties in electronically furnishing the returns of non-residents. This is because there may be more than one agent of the non-resident in India for different transactions or a person in India may be an agent of more than one non-resident. Such situations are not covered by the existing e-filing software which functions on the principle of one assessee-one PAN-one return.
3. It has also been brought to the notice of the Board that ‘private discretionary trusts’ having total income exceeding ten lakh rupees are facing problems in filing their return of income electronically in cases where they are filing their return in the status of an individual. This is because status of a private discretionary trust has been held in law as that of an ‘individual’. The existing e-filing software does not accept the return of a private discretionary trust in the status of an ‘individual’.
4. Accordingly it has been decided by the Board that: (i) it will not be mandatory for agents of non-residents, within the meaning of section 160(1) (i) of the Income tax Act, if his or its total income exceeds ten lakh rupees, to electronically furnish the return of income of non-residents for assessment year 2012-13; (ii) it will not be mandatory for ‘private discretionary trusts’, if its total income exceeds ten lakh rupees, to electronically furnish the return of income for assessment year 2012-13.

Tuesday 11 September 2012

Non reporting of income tax mistakes


Non Reporting of income Tax Filing Mistakes

Non reporting of any kind of income is quite a common tax filing mistake. Here are the most
Commonly not reported types of income:
Not Reporting Exempt Income: Several incomes, such as dividends and long-term capital gains
on listed securities, are exempt from tax. Even though you do not need to pay any tax on these
incomes, you must report these in your tax return. Since these incomes are reported to income tax department by companies and brokerage firms, you must also make sure to provide these details in your tax return. Otherwise, data reconciliation by income tax department may lead to notice.
Tax and Penalty for Not Reporting Income from Previous Employer: Every employer deducts tax on the basis of annual salary of the employee. While computing the amount of tax to be deducted (TDS),employers provide the benefit of basic exemption and deductions to the employee. If one has changed jobs during the year, both the employers will give the tax benefit of basic exemption and deductions to the employee and hence less TDS would be deducted from salary. This leads to additional tax liability at the time of filing return. In case you do not report previous employer income in your tax return, you will get income tax notice when the TDS data is reconciled with your return data.
Income Tax Notice for Not Reporting Bank Interest Income: It is a common misconception
that either the interest income from savings or fixed deposit accounts is not taxable, or that tax
has already been deducted on interest income by bank. In fact, banks only deduct 10% TDS on
interest income, whereas you may be in the 30% tax slab. Income Tax department has recently
started reconciliation of TDS data received from banks and the interest income reported by individuals in their returns. Non-reporting of interest income in the income tax return is a sure
shot reason to receive a notice from income tax department.

Wednesday 5 September 2012

Tension free retirement by PF


Provident Fund
Regular income and a health cover are of priority while you plan retirement. Indians are
known for saving more than 25% of their incomes but they invest in low return assets
(deposits @ 3.5% to 8%). Post tax, the yield is not enough to cover the loss of value due to
inflation over the years. There are various options available depending upon the risk profile and required fund flow of individual.The factors which generally impact the retirement corpus are - years to retirement, risk profile, inflation and tax liability on income earned as well as withdrawals. You can have complete tax free retirement life if planned with low risk. There might be investment where funds are coming at their own pace instead of the needs and you are paying tax thereon.
Employee provident fund (EPF): The employee share gets deducted from the salary
and equivalent amount is added by the employer. The amount is generally 12% of the basic salary plus DA. The returns are 8.5% p.a. Fixed, safe and its 100% tax free. The best part of EPF is that it gets invested before the salary reaches you. Hence, no more action is required, and thus there are no delays. It starts from the very beginning of your career and your employers are getting it doubled, without rating your performance. The returns are guaranteed by Govt. of India. Post tax returns are better than fixed deposits @ 12% in terms of safety too. The banks are offering up to 10% however corporate deposits can get 12% .
Public Provident Fund: You can deposit from ` 500 to ` 70000/- during the financial year. The
returns are 100% safe and tax free. PPF account can be opened in your spouse’s or child’s name also. The account is opened for a term of 15 years and it can be further extended for 5 years. This is the best investment for investors looking safe and steady returns. The investment of ` 70000/- p.a. for 15 years will help you to create a corpus of ` 20 lakh for your retirement.
Voluntary retirement or termination money isexempt up to ` 5 lakh. Money received up to ` 5 lakh at voluntary retirement or termination is exempt. You can take voluntary retirement benefit from multiple employers, but the tax-free amount is limited to ` 5 lakh. For claiming exemption
employee must have completed 10 years of service or 40 years of age. Tax-free amount paid
at voluntary retirement is limited to minimum of
1) 3 months of salary x number of completed year of service, or
2) Balance months left before retirement age x monthly emoluments at the time of retirement.   Vacancy caused by voluntary retirement should not be filled up by replacement. It should be
a reduction in workforce.
You can have complete
tax free retir

Beware of Receive Money


Beware of Receive Money

Any gift received from or given to non relatives above ` 50,000 is taxable. If you receive more than ` 50,000 during a financial year without any consideration,then, the entire sum is taxable. Below mentioned points are some exceptions to the case:
• On the occasion of marriage
• Under a will or by way of inheritance
• Gift from a relative
• In contemplation of death
The limit of ` 50,000 is for the entire financial year (Apr 1, 2010 to Mar 31, 2011),irrespective of the number of people from whom you have received the money. For example if you received Rs. 10,000 from six persons, you will have to pay tax on the entire sum of ` 60,000.
Also a gift received in kind, such as property, paintings, bonds, debentures and jewellery without consideration is also taxable. If you are gifted a painting worth` 2 lakh, it will be included in your income and taxed as per your slabs.However if a property is received on consideration which is less than stamp duty value, then it will not be included in your income.