By Babar Zaidi | ET Bureau|Jan 08, 2018, 06.30 AM IST | Economic Times
Most of us are aware of deductions available to a taxpayer on gross total income. The most well known are the deductions under Section 80C. Here are a few more breaks available under 80C and various other sections of the Income Tax Act that you can make the most of to further reduce your taxable income.
1. Education loan
If you have taken an education loan for yourself, your spouse or children, or a student you are legal guardian to, you can claim this deduction under Section 80E for the interest paid on the loan amount. The entire interest paid in a financial year is eligible for deduction without any limit. School tuition fees also qualify for tax benefit under Section 80C. The amount of tax benefit is within the overall limit of the section of Rs 1.5 lakh a year. For tax purposes, the fee lowers the total gross income of the taxpayer, which in turn, reduces the tax liability.
2. Medical insurance premium
The amount paid as medical insurance premium is eligible for deduction under Section 80D. The maximum deduction that can be claimed under this section is Rs 60,000, but there are many sub-limits. An individual can avail a maximum deduction of Rs 25,000 for premium paid for themself, their spouse or dependent children. An additional deduction of Rs 25,000 is allowed on premium paid for parents. If the policyholder is a senior citizen, the deduction limit is Rs 30,000. One can also claim a tax break of Rs 5,000 on preventive health checks.
3. Home loans
- Repayment of the principal amount of a home loan is allowed as tax deduction under Section 80C. This deduction is available irrespective of the year for which the payment has been made. The amount paid as stamp duty and registration fee is also allowed as a deduction under Section 80C.
- A tax break for payment of interest on home loans is allowed under Section 24. The maximum tax deduction allowed of a self-occupied property is Rs 2 lakh.
- Section 80EE provides for an additional deduction of Rs 50,000 for interest on home loans for first-time buyers. In this case, the loan amount should be below Rs 35 lakh and the value of the house should be lower than Rs 50 lakh.
4. Interest on savings account
Interest earned on savings bank account is allowed as deduction under Section 80TTA. The maximum amount that can be claimed is Rs 10,000. This does not mean that interest of up to Rs 10,000 is exempted income. You should show this amount as income from other sources in your ITR and then claim deduction under Section 80TTA.
Source : https://goo.gl/gUB5Ss
Written by Renu Yadav | Last Updated: December 22, 2015 09:06 (IST) | NDTV Profit
Receiving an income tax notice can be scary for most people. From not filing returns to hiding interest income, the reasons can vary for attracting a notice. Avoid these most common mistakes if you don’t want to get an income tax notice.
1) Not filing income tax returns
According to income tax law, if your gross income (without any deductions) is above the exempted limit of Rs 2.5 lakh in case of individuals, Rs 3 lakh for senior citizens (60-80 years of age) and Rs 5 lakh for super seniors (above 80 years), you are liable to file a tax return. Also, irrespective of the fact that your employer has deducted the tax at source (TDS) or not, you have to file an income tax return. Many people also believe that since they don’t have a tax refund to claim, they don’t need to file return. But that’s a misconception.
According to Preeti Khurana, chief editor of Cleartax.in, “If you are a resident Indian and you own a foreign asset or are a signing authority in a foreign bank account, you have to file an income tax return irrespective of your income.” If you fail to do so, you may get a notice from the income tax department, she added.
2) TDS errors
If there is mismatch between the TDS deposited by your employer and the income tax return filed by you, you may get an income tax notice. You should always check your tax credit statement (Form 26AS) online before filing the return. If a wrong TDS has been credited to your account or it has been credited to a wrong PAN, despite it being deducted from your salary, you can come under scrutiny.
3) Hiding interest income
Many people knowingly or unknowingly don’t include the interest income from their saving account, fixed deposits and recurring deposits in their income tax returns. The interest from saving account up to Rs 10,000 is tax deductible under Section 80 TTA while interest on fixed deposits and recurring deposits is fully taxable. In case of fixed deposits and recurring deposit, a TDS will be deducted in case the interest income exceeds Rs 10,000 in a financial year. But whether the interest is taxable or not, you have to disclose all your interest income in your tax return. So reveal the interest income in your return and then avail the deduction if any. Not doing so can result in a tax notice.
4) Mismatch or concealment of income
If your actual income, expenditure or investments differ from the one declared in your income tax return, you can get an income tax notice under Section 143(3)/143(7). You would be asked to provide clarifications and documents for re-calculation of your income.
“Notice is issued when tax authorities are of the opinion that you have concealed a part of your income while filing your return of income. Penalty for concealment of income can be up to a maximum of 300 per cent of tax payable.” says Neha Malhotra, executive director of taxation at Nangia & Co.
“The tax authorities can send notices pertaining to years gone by as well. So it is advisable to preserve the tax records for eight years, but where the assessee has any asset situated outside India, he should preserve the documents for past 18 years,” she said.
5) Defective income tax return
You should be careful while filing your income tax return. If the income tax authorities find any error they can issue a notice to you under Section 139(9) and direct you to file a revised return on income after correcting the error.
Source : http://goo.gl/9F1yT1
by Moiz Mannan | December 14, 2014 – 1:33:12 am | The Peninsula, Qatar
The continuing growth in financial investments of non-resident Indians (NRIs) in their home country shows not just the kind of faith they have in the Indian economy, but also that they are wise enough to keep all options open.
While it is prudent to save and invest a part of the foreign earnings in India, the NRIs also need to understand taxes so that they can make the most of their money. Those who have recently moved out of India need to be aware of the tax implications.
The income earned by NRIs abroad is not subject to tax in India, but they are liable to pay tax for any income that is earned or accrued in India. If any income from business transactions and also income generated from assets and investments in India crosses the basic exemption limit of Rs.200,000 they are required to file their returns. Unfortunately, the higher exemption limit for women and senior citizens who are resident do not apply to non-residents in these two categories.
Now, how and where can they possibly earn Rs.200,000 or more in India? Recent data show that the end of March 2014, NRI deposits in India were estimated at $104bn. Between June 2013 and June 2014, the NRI deposits in commercial banks in Kerala alone shot up by 24 percent.
Other than interest on deposits, the NRIs have also been buying commercial and housing property for the sake of investment. The rental income from property in India adds to their taxable income here. In this area too there is an apparent discrimination against NRIs. The rental income earned in India by non resident Indians are subject to tax withholding at the rate of 30 percent as opposed to 10 percent for resident Indians.
In case an NRI has only one property in India and it is vacant, a rental value cannot be attributed to the same. However, if he owns two properties and both are vacant, he has to pay income tax on one of the properties as if the same was rented. In case of more than one property, the NRI would also have to pay wealth tax at the rate of one per cent on the value if it is in excess of Rs.1.5 m.
Similarly, there is the issue of taxation on capital gains for those NRIs who have been booking profits from equity investments.
Thus, even middle income NRIs who have invested wisely and are enjoying recurring income rather than notional long term gains, face the prospect of being taxed. In such cases, income tax returns have to be filed if the income exceeds the taxable limit, or to claim refund if the tax deducted at source is more than the tax payable, or to claim the amount set off against capital losses.
The Indian authorities have been trying to make taxation simpler for NRIs. Already, interest earned by an NRI on the balance in an NRE account is exempt from income tax. The Income Tax Department last year lowered the limit to mandatorily e-file tax returns from Rs.1m to Rs.500,000.
In certain cases where investments are made in specified assets such as savings certificates, capital gains on transfer of foreign exchange assets is not charged. Incomes of NRIs are exempt from income tax interest on various specified securities or bonds.
NRIs who pay health insurance premium in India for dependents can claim a deduction under section 80D. Deductions under section 80G are also available to NRIs donating to an approved charitable institution.
Some short and long term capital gains from sale of investments or assets are taxed in the case of NRIs even if the total income is below the basic exemption limit. These include short term capital gains on equity shares and equity mutual funds where tax rate is 15 percent and long term capital gains on securities and assets where tax rate is either 20 percent or 10 percent without indexation.
Source : http://goo.gl/kaY6vv