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.

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.

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

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

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.

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.

five tips for save tax on madical cost

 Top five tips for save tax on medical cost:

1)Itemizing health insurance and medical expenses – If you itemize on your federal tax return you may be able to deduct medical expenses from yourtaxable income. According to IRS Publication 502, qualifying medical expenses may include monthly premiums you pay for coverage (including some Medicare premiums), copayments, deductibles, dental expenses, and costs for some services not covered by your insurance plan. You can even deduct mileage (at 19 cents per mile for the first half of 2011 and 23.5 cents for the second) accrued while driving to and from regular appointments. Keep in mind: you can only deduct the portion of your medical expenses that exceeds 7.5% of your adjusted gross income. That means this deduction isn’t for everyone, but if you (or one of your dependents) were seriously ill or hospitalized last year – or if you paid COBRA premiums in 2011 – you may qualify.

2)Expenses for the care for an aging parent – If your elderly parent earned less than $3,700 in 2011 (excluding Social Security) and you provided more than half of his or her financial support, you may be able to claim your parent as a dependent. This earns you an additional dependent exemption, even if your parent doesn’t live with you. And if you’ve paid for the medical or nursing care of a dependent parent, you may also be able to itemize your costs as qualified medical expenses.

3)Medicare premiums and medical home improvements – If you’re a retired senior, you may have an easier time meeting the 7.5% adjusted gross income threshold to deduct itemized medical expenses on your federal return. In addition to your out-of-pocket expenses for medical, dental or vision care, you may also be able to include capital expenses for the installation of home medical equipment or improvements of your property for wheel-chair access. In addition, premiums taken from your Social Security check to pay for Medicare Part B may qualify as deductible, as well as premiums you paid for Medicare Part D (Prescription Drug) coverage or a Medicare Supplemental plan.

4)Deducting health insurance premiums as a business expense – If you had self-employment income in 2011, you may be able to deduct health insurance premiums you paid for yourself and your dependents as an ‘above the line’ business expense (that is, without itemizing) on your federal tax return. Be aware, however, that you may not deduct premiums (including Medicare premiums) paid for any month in which you were eligible to participate in an employer-sponsored health insurance plan, and that the amount you deduct cannot be greater than your net self-employment income for the year. Also, keep in mind that you cannot include what you paid toward your monthly premiums as an ‘above the line’ expense and also itemize it. Talk to a tax professional to learn more about the different types of self-employment status and the tax implications of each in your state.

5)Getting the most from your Health Savings Account (HSA) – An HSA is a tax-advantaged savings account used in conjunction with an HSA-eligible health insurance plan. Account contributions, qualified distributions and earnings are all tax-exempt. An HSA allows you to deposit a portion of your pre-tax income into a savings account and use those funds to pay for qualified medical expenses. Unused money can be invested and accrue from year to year. If you have an HSA, be sure to deduct your contributions up to federally prescribed limits. Contributions to your HSA designated for 2011 and made before April 17, 2012 can be counted toward your 2011 federal taxes. According to IRS Publication 969, HSA contributions for the 2011 tax year are capped at $3,050 for individuals and $6,150 for families. If you’re over age 55, you may qualify to make an additional $1,000 contribution for the year.

Medical premium is deductible

Medical insurance premium paid for family, including parents is deductible

When you pay an Insurance premium of up to ` 40,000 (must be paid by cheque) during a

financial year for the health of self, spouse,dependant parents or children, it is allowed as a

deduction from income. Hence taxable salary reduces up to maximum of ` 15,000 (up to ` 20,000 for senior citizen). Therefore, you get “health bhi aur wealth bhi”. Even if your parents are not dependant, you can pay for medical insurance and claimdeduction. You must compare premium from different insurance companies, medical conditions and treatments covered and list of hospitals on the panel of the insurance company. We’d recommend that you go for cashless medical insurance. In cashless insurance, all hospital bills will be paid by the

insurance company. If you incur hospital expenses on your own and your claim is later reimbursed by the insurance company, then that reimbursement is not taxable. There is zero maturity value of a medical insurance policy - just like car insurance. It only helps to mitigate the medical expenses in case of a sudden health problem. The premium paid by an employer for

employee’s accidental cover is not taxable to the employee or the employer.

Even if your parents are not dependapay for medical

Ideal Home Loan

Ideal Home Loan

How much should I borrow for a house? This is a question many have asked us.

Generally, you should not borrow above 50% of your take home salary. The other monthly payments such as insurance premium must be deducted while calculating repayment capacity. You also need to consider the tax benefits of home loan and the rate of interest on home loan while deciding on how much to borrow.

IDEAL HOME LOAN - Home loan of ` 16 lakh @10% for 15 years is an ideal position to optimize on tax benefits per person. EMI comes to ` 17,194 X 12 = ` 2,06,328. Out of this, interest payable during the financial year is ` 1,57,817 and principal repayment is ` 48,511. You can use the home loan EMI chart for calculating the right plan for yourself.In case of joint home loan, the limit of 16 lakh will be doubled accordingly. The loan amount also depends on the value of the house you are buying as the banks typically

allow only up to 85% of the total cost. The interest on home loan is deductible from your salary income, provided that you have obtained possession of the house. If the house is under construction, then interest will be accumulated till you get possession. Thereafter, deduction will be allowed in five equal installments for next five years, along with interest of that financial year. The total interest deductible is limited to ` 1.5 lakh for self occupied house. The interest rate of home loan has been on the rise. However, even today the effective interest rates are attractive i.e., home loan interest at 10% effectively gets reduced to 7% assuming you are in 30% tax bracket. Therefore, you should take home loan if you have the opportunity and risk capacity to

invest in equities and mutual fund, as the average return of equities is higher than 7-8%

effective interest rate on home loan. You can prepay home loan if the interest is being charged @12% or more, instead of keeping money in fixed deposits, bonds etc.(@9%).Another way of saving money is to take home loan with overdraft facility so that you can save interest by depositing additional funds in the home loan account. Banks like SBI, HDFC, and HSBC offer these loans as home saver, smart home etc.You can claim full interest in case of let out property, even if it exceeds Rs. 1.5 lakh.

Form 43

                                      Form 43 (See Rule 9-H)

 Form of application by a dealer for obtaining clarification/advance ruling under Section 12-C of the Karnataka Tax on Entry of Goods Act, 1979
Before the Authority for clarification and Advance Rulings
Applicantion No.of
1.Name(s) of the applicant(s)............................
2.K.S.T. No........................................
3.K.T.E.G. No...................
4.Jurisdictional assessing authority...........................
5.Clarification on rate of tax applicable on which commodity (commodities) / exigibility of transaction involved on which advance ruling is required (specify).....................................
6.Statement of the relevant facts having a bearing on the aforesaid clarification(s) / transaction (s)..................
7.Statement containing the applicant’s understanding of rate of tax / exigibility in respect of the aforesaid clarification (s) / transaction (s).....................................................................................
8.List of documents / statements attached......................................................
9.Particulars of fee accompanying the application..................................................
                                                                                             
                                                                                                (Signed) Applicants(s)
                                                                                            (Signed) Authorised Representative”
VERIFICATION
I/We ......................................................... the applicant / applicants do hereby declare that what is stated above is true to the best of my / our knowledge and belief. I/ We also do hereby declare that the question raised in the application is not pending any officer or authority of the Department or Appellate Tribunal or any Court.
(Signed) Applicants(s)

SBI tax saving deposits

SBI tax saving deposits—can it really fetch you 17.77% return?

SBI’s tax saving deposits advertisement claims to give you 17.77% return. While it assumes you are in the 30% tax bracket at the time of investment, it conveniently calculates the return without considering tax obligation on the interest generated at the time of exit
During the tax savings season, people are desperate to save Rs30,900 in taxes by investing their hard-earned Rs1 lakh in certain kinds of savings instruments. One such avenue is a tax-saving fixed deposit (FD) which is for a five-year term without option for premature withdrawal. SBI has put a front page advertisement in Times of India and other leading national dailies claiming to give 17.77% effective annual yield. It assumes you are in the 30% bracket (which may not be true) and it gives an effective annual yield without considering the tax on the interest generated, which could be up to 30%.
While your effective annual yield will vary based on your tax bracket at entry and exit, SBI’s calculations in the advertisement shows the slick marketing which wants to consider highest possible tax savings on entry and no tax liability on exit. It is misleading to an average investor who can get dazzled by the big returns claimed in the advertisement.

This kind of advertisement is usually seen with infrastructure bonds giving tax benefit under 80CCF for Rs20,000 investment. Last year, IDFC bond claimed a tax-adjusted yield of up to 17.85% to investors on buyback (after five years for 10-year bond), which was confusing to the average investor. The company was offering 8% return last financial year.

On a positive note, SBI’s rate of interest for tax savings five-year FD is 9.25% per annum (p.a.) which is also the same as it offers for regular FD. In the past, tax savings deposit FD used to offer a little lower rate than the regular FD. With tight liquidity for banks, they want to entice deposits with high interest rates.

It is important to note that there is no option for premature withdrawal even with penalty for tax savings FD and the interest is taxable. There are other better options for tax savings under 80C. Consider all the options before jumping in with tax savings FD.

SBI has been advertising heavily for attracting big deposits. It is giving 8.5% p.a. interest for deposit of Rs1 crore and above for only seven-day FD. This is a good option for high-net-worth individuals, who want good return as well as liquidity.

How to cut tax by investing spouse's name

HOW TO CUT TAX BY INVESTING SPOUSE’S NAME

Financial planners contend that couplesshould ideally combine their finances. The meshing together of the investments of the husband and wife not only strengthens the household’s financial fiber but gives them a comprehensive view of the real situation.However, the tax man has set limits to this joining of the finances of the two spouses.He has no problems if one spouse gives money to the other. After all, it’s their money and spouses are in the list of specified relatives whom you can gift any sum without attracting a gift tax. But if that money is invested and earns an income, the clubbing provisions of the Income Tax Act come into play. Section 64 of the Income tax Act says that income derived from money gifted to a spouse will be treated as the income of the giver. It will be clubbed with his (or her) income for the year and taxed accordingly. For instance, if you buy a house in your wife’s name but she has not monetarily contributed in the purchase, then the rental income from that house would be treated as your income and taxed at the applicable rate. Similarly, if you give money to your wife as a

gift and she puts it in a fixed deposit, the interest would be taxed as your income. Don’t think you can get away by clever ploys involving other relatives. For instance,one may think of gifting money to his mother in law, a transaction that has no gift tax implications. Then a few days later, the lady gifts the money to her daughter, which again does not have any tax implications. The

money can then be invested without attracting clubbing provisions, right? Wrong. Given that

most big ticket transactions are now reported to the tax department by third parties (banks,

brokerages, mutual funds, insurance companies), it may not be difficult to put two

and two together. If the tax man discovers this circuitous transaction, you may be hauled up

for tax evasion. Are there ways to avoid the clubbing provisions without crossing the line between tax avoidance and tax evasion? Yes. If you want to buy a house in your wife’s name but don’t want the rent to be taxed as your

income, you can loan her the money. In exchange, she can give you her jewellery. For

example, if you transfer a house worth ` 10 lakh to your wife and she transfers her

jewellery for the same amount in your favour, then the rental income from that house would

not be taxable to you.One can also avoid clubbing of income by opting for tax exempt investments. There is no tax on income from the Public Provident Fund (although the 8% interest rate offered and the 15 year lock in does not compare with fixed deposits). There is also no tax on gains from shares and equity mutual funds if held for more than a year. So, if one invests in these options in the name of the spouse, there is no additional tax liability.

For the same reason, it’s better to gift gold jewellery instead of cash to your wife because

gold does not generate any income. Besides, in the past few years the appreciation on gold

has been higher than the returns offered by fixed deposits. The clubbing rule also applies in case of investments made in the name of minor children (below 18 years). The income earnedfrom such investments is clubbed with that of the parentwho earns m o r e .Earlier, you

could avoid this tax by investing in a long term deposit which would mature when your child turned 18. But this rule changed a few years ago. Now, the interest earned on fixed deposits and bonds is taxed every year even though the investor gets it on maturity. So, opening fixed deposits in the name of minors makes little sense any more. Instead, open a PPF account in the

name of the child because, as mentioned earlier, PPF income is not taxable at any stage.

The contribution to your own PPF account and that of the child cannot exceed the overall

limit of ` 70, 000 a year. However, the tax man does allow a few concessions to couples. If a wife saves a little out of the money given to her for household expenses, that money is treated as her own. If it is invested, the income will be treated as her income and not clubbed with that of the husband. But this clause is subject to a reasonable limit.Incidentally, a wife can help her husband save tax even before they get married. If a couple is engaged, and the girl does not have any taxable income or pays tax at a lower rate,her fiancé can transfer money to her. The

income from those assets won’t be included in his income because the transaction took place

before they got married. One can give up to` 1.9 lakh (the tax exempt limit for women)

without putting any tax liability on the girl.

If you buy property in your wife’s name but she has not contributed any money for the

purchase, then the rental income from that property would be treated as your income and

taxed accordingly

FORM 42

FORM 42[See Rule 88-A(5) (b)]

Entry Tax Paid Certificate
Sl.No.
Office of the
(Notified Authority)
This is to certify that entry tax payable under Section 4-B of the Karnataka Tax on Entry of Goods Act, 1979, in respect of the motor vehicle imported from outside the State of Karnataka described below has been paid vide Challan No./Cash receipts No...............................dated........................D.D.No.................................dated.........................Drawn on........................... Bank by the importer of the Motor Vehicle Sri ..........................................who has imported the Motor Vehicle not for sale within the local area but for own use.
OR
This is to certify that the importer of below described Motor Vehicle Sri...........................................is a registered dealer under the Karnataka Tax on Entry of Goods Act, 1979, with Registration No...............................has paid entry tax payable under Section 4-B in respect of the Motor Vehicle imported from outside the State of Karnataka described below vide Challan No./Cash receipt No................................dated...............................D.D. No............................... dated....................... drawn .....................................................Bank:-
Class of Motor Vehicle
Model
Engine No.
Chassis No.
1
2
3
4
                                                                                                                           Signature
                                                                                                      and Seal of the Notified Authority

How to apply PAN

HOW TO FILL ‘PAN FORM’

WHO HAS TO APPLY FOR PAN?

The following persons should apply for allotment of PAN in Form 49A-l Every person whose assessable income exceeds the maximum amount which is not chargeable to tax or any person carrying out business or profession whose total sales/turnover is likely to exceed Rs 5,00,000 in a year.l A person who is required to furnish return under sub-section (4A) of section 139.l An employer who is required to furnish return of fringe benefits tax.l The Central Government has power to specify by notification any class or classes of persons by whom tax is payable under

the Income-tax Act or any tax or duty is payable under any other law for the time being in force.

WHAT ARE THE IMPORTANT POINTS TO REMEMBER WHILE FILLING THE ‘PAN’ FORM (FORM NO. 49A) ?

The PAN form should be filled in by the assessee with due care and caution. There should be no corrections or overwriting and it should be properly signed and verified by the persons who is authorized to do so, under the provisions of IT Act. The following important points may be taken care of while filling up the form :

NAME & ADDRESS :

The name and address must be written in block letters and while filling up the same, one cage may be left blank after each word. No initials are allowed to be used while filling in the same. Full name has to be given.

STATUS

Correct code number of the assessee’s status/residential status may be filled in.

DATE OF BIRTH :

Date of birth is very important and should be filled correctly.

FATHER’S NAME :

Father’s name has to be given even in case of married ladies.

SOURCES OF INCOME :

A person should have at least one source of income to apply for PAN. So the relevant box should be checked in the form.

IN CASE OF COMPANIES, THE FOLLOWING ADDITIONAL

DETAILS HAVE TO BE FILLED IN THE FORM

l The ROC registration number of the company.

l The date of incorporation of the company.

l The date of commencement of business by the company.

l In which business activity the company is engaged in.

VERIFICATION :

The verification must be signed by the authorized person, and other particulars viz. Name, Assessment Year, Capacity, Place and Date should be correctly filled therein. Please note that any person making a false statement is liable-to be prosecuted under Section 277 of the Income-Tax Act.

WHO CAN VERIFY AND SIGN THE ‘PAN’ FORM ?

Individual : The individual filling his PAN form has to sign it. In case the individual is mentally incapable, then the PAN form may be signed by his Guardian or by any other person competent to sign on his behalf.

Incase the individual is absent from India or because of any other reason, he is not able to sign and verify his PAN form, then any person duly empowered by him through valid Power of Attorney may sign on his behalf. In such case, a certified copy of Power of Attorney must accompany the PAN form. Hindu Undivided Family : By the Karta or where he is absent from India or he is mentally incapacitated from attending to his affairs,by any other adult member  of such family.

Company : In this case by the following :-

i) Resident : The Managing Director or, where there is no Managing Director or he is not able to sign and verify the PAN form due to any unavoidable reason, by any director thereof.

ii) Non-Resident : The PAN form may be signed and verified by a person holding a valid Power of Attorney from the Non-Resident, which should be attached to the PAN form.

iii) Wound up/taken over by the Govt.: The PAN form should be signed and verified by the Liquidator or the Principal Officer as the case may be.

iv) Firm : Managing Partner, or, where there is no Managing Partner or due to some unavoidable reasons, he is not able to sign and verify the PAN form, by any partner thereof, not being a minor.

v) Local Authority : By the Principal Officer

vi) Association of Persons : By any member of the Association or the Principal Officer thereof.

WHERE TO FILE THE PAN FORM ?

Presently, the Pan application may be submitted at the UTIISL counters along with the following.

a) Two photographs of stamp size in case of Individual.

b) Proof of identity and proof of residence & date of Birth

c) Payment of fee of Rs. 60/- + Rs. 5/- (application form cost)

The tamper proof high security PAN card will be issued within 15 days from the date of filing of the application.

There is a Tatkal Scheme under which the PAN card will be issued within 2 days on payment of D.D of Rs. 150/- in case of urgency. To know the position of allotment, one may enquire with PAN query centre or PRO in Income Tax Offices. Further, there is a website available - www.incometaxindia.gov.in.

In case of transfer of an assessee from one Region to another, the fact of transfer has to be informed at the old station with a request for transfer of PAN to the present Region.

WHEN CAN ASSESSING OFFICER ALLOT PAN SUO MOTO?

The Assessing Officer may allot PAN to any person by whom tax is payable (or with effect from June 1, 2006 tax not payable). Besides, persons who are registered under the Central Sales Tax Act (CST) or general sales tax law or register after 11th Dec, 2001, then before making an application under the CST Act or general sales tax law should apply for PAN.