Monday 1 October 2012
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.
Sunday 9 September 2012
Thursday 6 September 2012
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.
Monday 3 September 2012
Do'nt Buy ULIP to Save Tax
DON’T Buy ULIP To Save Tax
The financial goals of an individual can be achieved
through ULIP (Unit-linked Insurance Plan). However, high cost, complexity in
policy and low transparency makes it a difficult choice for the common man.
Some of the key points about ULIP are:
• Investment in ULIP saves tax u/s 80 C up to ` 1, 00,000. This limit will be reduced to ` 50,000 after the implementation of the Direct Tax
Code (DTC). The minimum sum assured has been increased from 5 times of annual
premium to 20 times to be eligible for deduction in proposed DTC.
• ULIP gives insurance cover along
with investment in equities. If you need a high value
insurance cover, term insurance is better as its cost
has come down in the past. Also, buying
it online makes it cheaper.
• Daily NAV is declared as per IRDA rules and your investment is
controlled by experienced
professionals.
• ULIP makes you invest regularly and for long term, just like SIP
in mutual funds. Thus,
the chance of loss due to market fluctuations is
reduced. The minimum lock-in period has
been raised from 3 years to 5 years. Premature withdrawals
will become taxable after the
DTC implementation.
• There are a number of ULIP plans with multiple features offered
by insurance companies.
The best ULIPs are those which give fund value plus
risk cover in case of death.
• AVOID ULIP: If you do not want insurance cover or are already
sufficiently insured,
ELSS is a good option.
• If you do not want to take high risk of share market and are
happy with return around 8%,
PPF scores over it. ULIPs are more beneficial if
invested for long term, at least for 10 years. There is no limit for minimum or
maximum investment like PPF limit of ` 70,000
Sunday 2 September 2012
Tax Free Retirement
Tax Free Retirement by SWP
Mutual fund’s Systematic Withdrawal Plan (SWP) offers
great value in terms of tax free monthly expenses after retirement. Systematic
withdrawal plan is the opposite of system investment plan (SIP). You can
receive commuted pension at retirement and put the money in SWP. It is
convenient to manage SWP through ATMs/internet as compared to NSC or
post office deposits. A fixed amount will be
withdrawn every month from your SWP and deposited to your account. The balance
amount remains invested in Mutual fund. You can customise the cash flow as per
your needs.
How to build it: If you are young, start SIP in diversified equity fund and start
building your
retirement corpus. This category has given the best return
over the long term among all investments. Last ten years average of top ten
diversified funds is between 20% to 25% p.a. In case you want to take low risk,
opt for balance funds. At the age of 25 years, if you start investing ` 5000/- p m in a fund that grows as low as 12% a year,
even then your corpus at 60 will be ` 2,75,00,000/-. Start early and select the top performing mutual
funds instead of new fancy names. The mutual fund management expenses are
regulated by SEBI and maximum
limits are already there i.e. 2.25%. These expenses are
already deducted from the NAV, and are hence very transparent. The next decade
is projected for India’s best growth and wealth will be created.Don’t miss it.
All this is 100% tax free!!
Wednesday 29 August 2012
Gold Investment for Tax Free Retirement
Gold Investment For Tax Free Retirement
Invest in gold as it has edge
over equities: Investment
in gold works both in hedge market fluctuation and inflation. Gold prices are
less volatile than equities and gold gives a good return even in falling
markets. Gold can be bought in physical form or in the form of ETFs (Exchange
Traded Funds).It is easier to buy, hold and sell gold in ETF form. In case you
don’t have a demat account, then gold funds are also available like other
mutual fund units through SIP. Investment in gold is tax efficient too. As
there is no income during the holding period, the tax liability is nil. You can
also take a loan against gold as security for temporary needs at a reasonable
rate of interest within minutes. If you need to sell, then the long term capital
gain tax rates are also lower than normal rates. Moreover the cost of purchase
gets increased by inflation index. Thus zero tax liability in holding while
your money is appreciating more than the rate of interest or inflation in
general and lower tax liability in case of sale also – that’s the advantage of
buying Gold.Buy gold for long term needs, happiness and security. Buying gold
coins from banks or MMTC at a premium from market price does not help. You may
not be able to sell it at a premium too – your sale might be below the market
price. Hence buying in ETF form is best or buy jewellery, to make your loved
ones happy.
Buy
gold for
long
ter
What are taxabe income
What are taxable income?
All income needs to
be reported, whether exempt from income tax or not. Interest earned
on bank
accounts (savings and FD) are generally not reported due to misconception.
Interest
income,
including accrued interest on NSC is taxable. Money received due to compulsory
acquisition of land is also taxable. Even the rent received from cell phone
tower on roof of your
house is
taxable!Long term Capital gain on stocks and mutual funds is not taxable, but
still needs to be reported under exempt income in ITR2 form. TDS is deducted on
your estimated income at rates specified by the Income Tax Department.However,
your actual income may be
higher
or lower. Therefore, you have to compute your tax liability at the end of the
financial year.
Depending
on your income and TDS deducted,you may have to pay more taxes or you may be
eligible
for refund.In case you have refund due from income tax, do not forget to
mention bank details in your Income Tax Return.Returns after taxes are not good
to beat the inflation, hence there is a negative growth in your money. For
example the actual/average inflation rate is 10% and F D interest after tax is 6%
than your money has negative growth of 4%. Direct tax code has excluded these
tax saving investments. Now, superannuation funds,provident funds and pension
funds are allowedfor deduction.
Monday 27 August 2012
Reverse Mortgage
What is
Reverse Mortgage?
Reverse mortgage your home for nex
15 years after retirement and get tax free monthly cash flow from banks/ Housing Finance Companies to cover
regular expenses. This is the opposite of taking a home loan at the time of
purchase or construction of home. You can live in the house for life. You need not repay the loan amount the legal heir may get the house back after paying the outstanding loan amount. How to build it: To start with, buy home through home loan for 15/20 years during your service and start disciplined retirement planning. Start with a small house, say ` 10 lakhs, instead of waiting. You can buy a bigger house after 5 years for self use, in case the corpus needs to be increased and the standard of living is improved. There is no income tax liability as there are no rentals. Rather, you save tax on interest paid amount. The capital gains on sale of house are not taxable if invested in another house purchase. Over time, real estate has given inflation adjusted returns. Hence, it makes sense to buy a house taking
a loan instead of adding in fixed deposit for buying
a house later. This may have to change after the DTC kicks in. A major game
changer for life insurance is that the tax deduction limit will get reduced
from the present `
1 lakh a year to only ` 50,000 a year under the DTC. That’s not all. This ` 50,000 limit would also include the amount paid for
tuition fees of children as well as medical insurance. Hence, there won’t be
too much head room left for a big premium paid on an insurance policy. There
are other things to keep in mind too. Insurance agents like to lure buyers by
saying they can withdraw from their Ulips after a few years. This lock-in
period used to be three years but the Insurance Regulatory and Development
Authority has extended it to five years. Nonetheless, it is a widely used ploy
to sell Ulips because partial withdrawals are tax-free. Right now, any income
from insurance is tax-free except the premature surrender of a pension plan or
a Ulip before five years. But under the DTC, withdrawals from Ulips will
attract capital gains tax on the basis of the holding tenure. If you still want
to buy an insurance policy to save tax, make sure that the life cover it offers
is big enough. This would be possible if you take long-term plans (at least 20
years). Your agent might try to dissuade you from opting for a higher risk cover
in your Ulip. He would point out that a higher deduction for mortality charges
would reduce the funds available for investment. Don’t let that make you opt for
a plan that
might lose all tax benefits two years from now. For
investors who are comfortable taking
risks, equity-linked saving schemes are a better way
to save tax. These funds have given high returns in recent years and have a
lock-in of only three years, which is the shortest for any Section 80C option.
But being equity- oriented funds, they are subject to market risks and one
should enter only if he can stomach the ups and
downs. For those with a lower risk appetite,
the New Pension Scheme (NPS) is a great way to save
tax. NPS investors have the choice
of investing in funds managed by six mutual fund
houses. The NPS allows up to 50% equity
exposure and the charges are negligible compared to
the terribly high costs of investing in a Ulip or a unit-linked pension plan
from an insurance company. But NPS is not as liquid as ELSS funds and
investments that get tax deduction cannot be withdrawn before retirement.
Sunday 26 August 2012
5 reason why insurance would not save tax
Five Reasons why Insurance would not Save Tax
1)No deduction: Under DTC, an insurance policy that offers a cover of less than
20 times
the annual premium won’t be eligible for tax deduction.
2)Tax on maturity: If the 20 times life cover condition is not met, even the income
accruing
from the policy will be taxable.
3)Lower limit: The tax deduction limit for life
insurance will be reduced from the present ` 1 lakh to `
50,000 a year.
4)Tax on withdrawals: Partial withdrawals from an insurance plan before
maturity will be taxable under DTC.
5)Tax on surrendering: The surrender value of a plan will also be taxable.
How to salary package make tax efficient
How to make your salary package
tax-efficient
Make your salary package tax-efficient by planning
your income tax well.For income tax planning, you can structure your pay
package so that it includes various tax-free payments rather than getting it
all as basic salary.
Some of the common payments are:
• House rent allowance (HRA)
• Transport allowance
• Reimbursement of medical expense, hotel bills, foreign travel of
spouse, and books
• Car provided by company
• Food coupons
• Leave travel concession (LTC)
Your EPF (employee provident fund) contribution is at
your discretion; you may adjust it
depending on your other investment needs. It is a good
idea to raise your employer's contribution up to 12% of your salary, as it is
exempt from tax.Though you get tax benefit on certain allowances mentioned
above, all perquisites are taxable as normal salary. Some common perquisites
which are taxable as normal salary are:
• Loan at an interest rate lower than SBI PLR
• Rent-free accommodation
Saturday 25 August 2012
claiming under section 80c
Claiming
Under Section 80c
As a taxpayer, you are entitled to reduce your tax liability by
making certain investments
during the year. Section 80C is specifically meant
for claiming deductions in respect of payments/investments such as contribution
to Provident Fund, ULIP, ELSS, life insurance
premium, and investments in NSC.
The complete list of deductions is given below: year
• Contribution to provident fund
• Life insurance premium for self, spouse or child
• ULIP of UTI
• ULIP of LIC Mutual Fund
• ELSS of MF/UTI
• Annuity Plan of LIC
• Notified Pension Fund
• 10/15 yr CTD account at Post Office
• Deposit Scheme of PSUs Engaged in housing finance
• Deferred annuity
• Approved superannuation fund
• National Savings Certificate (NSC)
• Instalment for purchase/construction of new residential property
• Tuition fee of children
• Investment in public company engaged in infrastructure
• Fixed deposit in bank for tenure of 5 or more years
• Bonds issued by NABARD
39Claim
Friday 24 August 2012
Higher Education Loan is Deductitable
Interest on Higher Education
Loan is Fully Deductitable
As the Government, under section 80E, has said that
you can claim deduction if you have paid interest, out of your income
chargeable to tax, on the loan taken for your higher education or your relative’s
(spouse or children) higher education.Now the legal guardian is also allowed to
claim deduction. Higher education involves full-time studies for a graduate or
post-graduate
course in engineering, medicine, management; or for
post-graduate course in applied sciences, or pure sciences, including
mathematics and statistics. The vocational studies pursued after passing senior
secondary is also included.
Which loans qualify for deduction? The loan should be taken for
higher studies from any financial institution or approved charitable institution.
Personal loans from individuals, relatives and friends, are not eligible for
this deduction, as is the case with home loan. You can claim deduction for
interest for up to eight years from the start of the assessment year when
you begin repaying your education loan. There is no
limit on the amount of interest on which deduction is allowed for education loan.
Payment should be made from taxable income only.
Start paying interest right from the first year to maximize
income tax benefits. Banks charge lower rates of interest too from those paying
interest during the study period.Parents should encourage children to take
education loan and save their funds for retirement. This helps children save
money compulsorily, when they have a job but no family. Otherwise, they might
spend all their income in the initial years and you
will become dependent on them during retirement years.You can always support
your children as a surety for the higher education loans need but funds should be
borrowed keeping in view the rate of interest,repayment tenure, surplus income
of new joiners and no limit tax benefit.Taking a car loan will not help a
salaried person save tax . However if you have taken education loan,you can
keep your tax liability low and your parents’heads high.As a parent, a better
gift to your child is to fund his/her higher education, instead of a car!
Payment
Real investment is the best investment
Real estate is the best of all investments for
all investors, at any age.
• Home is a basic need further sweetened by tax benefits and lower rate of interest.• Do not be influenced by any preconceived notions and be a proud owner as soon as possible.
• Buy it with loan, its financial prudence. You don’t need to either put all your money in a less liquid asset, nor do you need to wait for funds to accumulate.
• Your house can be your tangible love for further generations. Plus, you can get reverse mortgage against your self-occupied house and plan your retirement with it - one of the best things that has happened for senior citizens.
• When you buy a house, buy it for medium to long term only, because changing a house is costlier in terms of stamp duty, brokerage,tax liability before 3 years, advertisement for buyer, etc.
• The allocation in real estate investment depends on your risk profile, liquidity, taxable income, and the time horizon for investment.As a rule of thumb, invest up to 20% of your portfolio in real estate besides your house.
Some helpful tips for filling wealth tax returns
SOME HELPFUL
TIPS FOR FILING WEALTH TAX RETURNS
The W.T. return for Individuals,
Hindu Undivided Families and Companies is to be filed in Form BA. Value of an
asset for an assessment year is to be declared as on the relevant Valuation
Date i.e. 31st March of each year. Thus, for the assessment year 2002-03, the valuation
date will be 31.3.2002, while for the A.Y. 2003-04, the valuation date will be
31.3.2003 & for A.Y. 2004-05, it will be 31.3.04. Value of an asset, other
than cash, is to be determined on the basis of the rules of Schedule III. The
details of calculation of the value of each asset under the relevant rule of
this schedule should be attached with the return. Also, Wherever any rule of
this schedule prescribes that a particular document in support of the valuation
is to be attached with the return, the same must be so attached.The assessee
must sign all attached documents.
IMMOVABLE
PROPERTY
Furnish in the given columns the
details of all immovable properties held by the assessee, including
agricultural land whether located in or outside India, and whether assessable
or exempt.Details of similar assets belonging to any other person but includible
in net wealth of the assessee should be given.Value of immovable property
should be declared as per rule 3 to 8, 20 and 21 of Schedule III. Where the
assets are held as assets of business for which accounts are maintained
regularly, the valuation should be done as per rule 14 of this Schedule.
MOVABLE PROPERTY
Furnish in the given columns the
details of all movable property held by the assessee, including those mentioned
in, Section 2(e) which are not assets for purposes of the Wealth tax Act,
whether located in
India or outside India, whether
assessable or exempt under section 5. Details of similar assets belonging to
any other person but includible in the net wealth of the assessee under section
4. Value of movable property should be declared as per rules 1, 2and 17 to 21
of Schedule III. Where the assets are held as assets of business for which
accounts are maintained regularly, the valuation should be done as per rule 14
of Schedule III.
HELD AS ASSETS
OTHER THAN IN BUSINESS OR PROFESSION
Indicate amount of cash in hand. Indicate
the form of gold, silver, platinum or other precious metal, its gross and net
weight in grams and its value as per rule 20 of Schedule III. Valuation of
jewellery is to be done as per rules 18 and
19 of Schedule III. In support of
the valuation of jewellery; the prescribed form to be attached with the return
is:-
l Where the value
of the jewellery on the valuation date is upto Rs.5 lakhs, a statement in Form
No. 0-8A as prescribed by rule 13(c), signed by the assessee, or l Where the value
of the jewellery on the valuation date exceeds
Rs. 5 lakhs, a report of
Registered Valuer in Form 0-8, as prescribed by rule 8D.
HELD AS ASSETS
OF BUSINESS OR PROFESSION
Indicate in the given column
details of movable properties held as assets of business or profession carried
on by the assessee as proprietor.Indicate here the value of each asset as
calculated on the basis of the provisions of the relevant rule of Schedule III.A
copy of the balance sheet or trial balance as on the valuation date and a copy
of the auditor’s report if any, must be attached. Where the assets are held as
assets of business for which accounts are maintained regularly, rule 14 of
Schedule III will apply for purposes of valuation. Give the description of
movable property and
also of claimed exemptions.After
showing such assets, if any as the case may be, these should be claimed as
exempt.
The amount of tax, penalty or
interest payable in consequence of any order passed under certain Direct Taxes
Acts, which is outstanding on the valuation date, and l If the amount is
disputed in appeal, revision or other proceedings,
orl Though not disputed
as above, if the amount is outstanding for more than 12 months on the valuation
date, it should be clearly indicated.l Indicate the net
amount of debt, which is deductible in the computation of net wealth. Indicate
in the given columns details, in respect of the following debts:-
a) Those which are secured or
incurred in relation to assets other then assets of business of profession
carried on by the assessee, and
b) Those which are not related to
any asset, e.g. a loan taken for purposes of marriage or education of children
or any other personal loans.
OTHER GENERAL
POINTS TO BE REMEMBERED ARE :
There should be no corrections or
overwriting and it should be properly signed and verified by the person who is
authorized to do so under the provisions of I.T. Act.The permanent Account
Number (PAN) given to the taxpayer
and under the Income-tax Act,
1961 and Ward/Circle/Range are to be quoted here.All parts and Columns must be
filled in. If any part or column does not apply, please mention NA (Not
Applicable) and do not put any
other mark or symbol.In case
space provided under any item of the Return Form is found insufficient, then
give computation in respect of such item on separate sheet (s) using the
columns indicated for that purpose under
the said item in the return Form
and attach that to the return. The sum totals of such computation done should
be indicated in the columns provided under the relevant item in the Return
Form. Similarly, any other information asked for in the, Form, which cannot be
completely furnished on account of paucity of space, maybe
furnished on a separate, sheet.
STATEMENT OF
TAXES
Wealth-tax payable on the net
wealth arrived at is to be indicated. The tax should be calculated according to
the rates specified in Part I of Schedule I. Indicate interest chargeable for
late filing of return. The net tax/interest payable or refund due, as the case
may be, is to be indicated.
Thursday 23 August 2012
Procedure for e-payment of tax
Concept paper e-Payment of Taxes
Introduction: The optional scheme of electronic payment of taxes for income-tax payers was introduced in
2004.
With a view to expand the scope of electronic payment of taxes, it is mandatory for the
following categories of taxpayers: -
1. All corporate assessee’s;
2. All assessee’s (other than company), to whom provisions of section 44AB of the
Income Tax Act are applicable.
The scheme of mandatory electronic payment of taxes for income-tax payers is made
applicable from 1st April 2008. This is applicable for all payments, irrespective of the
assessment year to which it belongs. That means, if any tax has to be paid for AY 2007-08,
also then it has to through be e-payment.
Taxes that can be paid are:
1. Advance Tax for Income Tax and FBT
2. Self Assessment Tax for Income Tax and FBT
3. Tax Deducted at Source
4. Tax Collected at Source
NSDL offers the gateway for Taxpayers to make electronic payment of taxes through the
Internet banking facility offered by the authorized banks. They will also be provided with an
option to make electronic payment of taxes through Internet by way of credit or debit cards.
Pre-requisites:
1. Valid TAN and PAN
2. Internet Banking Account
3. Good internet connection
4. In case TDS the amount of payment should be spilt based on:
a. Type of Deductee ( i.e deduction from Companies and from Non-Companies)
b. Nature of Payment (i.e. For each section like 94C, 94J etc for Companies and
from Non-Companies separately)
5. Sufficient balance in the bank to cover the amount of payment for immediate
transfer
Procedure [Flow Chart]:
List of banks, available for e‐payment of Taxes:
Following is the list of bank, currently providing this facility. Tax Payer should have Net‐Banking account
with any of these banks.
Allahabad Bank ICICI Bank State Bank of Indore
Axis Bank IDBI Bank State Bank of Mysore
Bank of Baroda Indian Bank State Bank of Patiala
Bank of India Indian Overseas Bank State Bank of Saurashtra
Bank of Maharashtra Oriental Bank of Commerce State Bank of Travancore
Canara Bank Punjab National Bank Syndicate Bank
Corporation Bank State Bank of Bikaner & Jaipur Union Bank of India
Dena Bank State Bank of Hyderabad Vijaya Bank
HDFC Bank State Bank of India Copyright: Relyon Softech Ltd
SaralTaxOffice.com | Indian tax Software
Step by Step Procedure for e-payment:
1. Visit www.tin-nsdl.com
2. Click on the link for "e-payment: Pay Taxes Online"
3. Select the relevant challan i.e. ITNS 280, ITNS 281, ITNS 282 or ITNS 283, as
applicable.
4. Enter its PAN/TAN as applicable. There will be an online check on the validity of the
PAN / TAN entered.
5. If PAN/ TAN is valid the taxpayer will be allowed to fill up other challan details.
1. Tax Collected from Companies or Non Companies
2. Assessment Year – Choose proper assessment year. Example, while making
payment towards TDS /TCS of Financial year 2007-08, select assessment
year 2008-09.
3. Valid TAN
4. Address where city, state and pin code is compulsory
5. Type of Payment i.e. in case of TDS 200 (TDS/TCS payable by Tax payer)
6. Nature of Payment – Section
7. Select your Bank Name
8. Pl note, the amount of payment is not to be entered here, but it should be
entered in the Bank website.
6. Click on Proceed to submit data entered. Now, a confirmation screen will be
displayed. If the taxpayer confirms the data entered in the challan, it will be redirected to the net-banking site of your bank. If data needs editing, the user can do
the same by clicking ‘Edit’.
7. In the Net banking site, the taxpayer should login to the net-banking site with the
user id/ password provided by the bank for net-banking purpose and enter relevant
payment details like basic tax, surcharge, cess, interest, penalty etc., Select the
relevant bank account in case you have multiple accounts with internet facility for
the same login.
8. On successful payment, a Challan counterfoil will be displayed containing CIN,
payment details and bank name through which e-payment has been made. This
counterfoil is proof of payment being made.
9. Please note that for each Challan, a separate payment has to be made.
10. On paying against all Challan and obtaining the CIN details, log out of the bank web
site
11.While it is mentioned that payment can be made either through credit card or debit
card, the same is yet to be made available to the taxpayers. Copyright: Relyon Softech Ltd
SaralTaxOffice.com | Indian tax Software
Notification:
NOTIFICATION NO. 34/2008, DATED 13-3-2008
In exercise of the powers conferred by sub-section (1) of 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. (1) These rules may be called the Income-tax (Fourth Amendment) Rules, 2008.
(2) They shall come into force from the date of their publication in the Official Gazette.
2. In the Income-tax Rules, 1962, after rule 124, the following rule shall be inserted,
namely:-
Electronic-payment of tax.
125. (1) The following persons shall pay tax electronically on or after the 1st day of April,
2008:-
(a) A company; and
(b) A person (other than a company), to whom provisions of section 44AB are
applicable.
(2) For the purposes of this rule:-
(a) Pay tax electronically shall mean, payment of tax by way of-
1. internet banking facility of the authority bank; or
2. credit or debit cards;
(b) The word tax shall have the meaning as assigned to it in clause (43) of section 2
of the Act and shall include interest and penalty.
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