Ask Anil: How to rectify tax-filing mistakes

'What is the procedure for changing the minor head on the challan?

Anil Rego, CEO, Right Horizons, answers your personal income tax queries.

Loveneesh Aghi: I am 47 years old businessman. I have a query regarding term insurance plan. How many term plans can a person buy? I mean if I have more than 1 term plan then will my nominee get claim from all of them or is there a limit to it?

Anil Rego: There are no specific limits to the number of life insurance policies (including term covers) you can own and you can claim benefit from all of them. However, the insurance companies seek a disclosure of the other insurances you hold at the time of submitting your application form, which they use for financial underwriting.

You can also have different nominees or same nominees for all these plans. The nominee will get a benefit whether it is one policy or more than 1 policy.

nath sumanendra: My total salary for the year 20-21 financial year till Jan 21 is 681991. My salary per month after deduction is 72000/- p.m. My total investment and deduction is as follows:

1. Housing principal-218886/-

2. Housing Interest-118632/-

3. Child school fees-37800/-

4. LIC- 45000/-

IT deduction by company till date = 18000/- till date. 4500/ Rs is deducted since october 2020.

What should i do to save tax?

Anil Rego: As per the details mentioned above section 80C is completely covered.

In order to avail further benefit, you can avail medical insurance premium under section 80D. You can claim deduction upto 25,000 on premium paid towards medical insurance for self, spouse and children and parents below 60 years of age and Rs. 50,000 if parents are above 60 years of age.

You can also avail an additional deduction of 50k by investing in NPS.

Ajith Kumar: My wife is 53 Yrs of age. She is in 30% Tax bracket and just has only 80C exemption. Though house property is in my name, the loan given by bank is in her name. Can she claim home loan benefits? Any other tax exemption options? Can she take NPS? Request for a detailed reply.

Anil Rego: A person should be owner or co-owner in the property to claim deduction and avail tax benefits. Many banks prefer having a co-borrower, even though the co-borrower is not an owner as per the property documents. In such a case you would not be able to claim tax benefits.

You may evaluate her paying a rent to you and claiming HRA. You would need to add the rental income in your IT return. (There is a deduction of 30% of Rental Income which you can claim).

Apart from this, she can avail NPS, medical insurance premiums deduction -80D for family and parents in general to avail tax benefit.

Naveen Srinivasan: I have a question that am stuck with. I filed my return for FY 2019-20 (AY 2020-21) last year. There was a net taxable amount I had to pay, which I did before filing the return. While paying that online, I paid the challan under the Minor Head “300 - Self Assessment Tax", instead of the Minor Head “400 - Tax on Regular Assessment. This reflects in my 26AS for the correct AY.

My IT return got processed yesterday and I just got a notification of 143 (1), where this amount was NOT considered as paid, where the reason quoted is “Challan is not available for the AY”. I wanted to understand two things: 

1. Could paying the amount under 300 - self assessment category be the reason for this? If so, what is the procedure for changing the minor head on the challan? On the tax website, it says to contact the Assessing Officer. If so, how do I reach that person? 

2. If it is not the reason, what else could be the reason for mismatch? 

3. Should I just go ahead the file a rectified return with the same details again? 

Please advise on the next steps. 

Anil Rego:You can consult your auditor to help understand the computation as one needs to look at the details. Minor Head 300 is for the payment of self-assessment tax and minor head 400 is for the payment of tax on regular assessment.

The Challan is ITS 280 in both the cases.

The best way to resolve the issue is by applying for a rectification of the notice issued to you. You can state the details of the tax paid, and attach a copy of the challan, 26AS copy and Pan card.

If you are in hometown, you can also approach the Assessing officer with a copy of the tax paid challan and other details mentioned above. He will rectify it for you in the system.

This would not take much time. Or you can connect with the IT Dept customer care to support you.

There is a procedure to get the rectification done by the bank at which the tax was paid, but in your case, it appears that this time has passed.

Biswajit: I am 44 years old with take home salary of Rs 100,000 per month. Which pension scheme will be best for me to invest? How much do I have to invest for pension of Rs 50,000 or Rs 30, 000 per month from 65 years onwards? Kindly guide me.

Anil Rego: You can choose to invest in pension/monthly income plan of insurance companies. Alternatively, you can use other financial investments like mutual funds, bonds, etc. which may require some matching of cash flows and also managing the reinvestment risk (If interest rates fall when you look to renew your deposit).

We recommend using a combination of avenues to plan for your pension, based on your risk profile.

In general, to get a payout of 50,000 for 25 years to a lifetime, you will need to invest 50k/ month for 10 years and this will change based on the rate of return during the contribution phase and also at the payout phase. This will significantly increase if you plan for inflation post retirement.

A MAJUMDAR: I am an employee of PSU. I have purchased a JEEVAN SHANTI annuity single premium policy from LIFE INSURANCE CORPORATION OF INDIA ON 01/03/2021. Against the premium paid I have applied for tax exemption against LTC cash lump sum policy as announced by GOVERMENT OF INDIA for purchase of any item including insurance policy from the period of OCTOBER till 31/03/2021.
As per what I have read a single premium policy along with GST amount is eligible for tax exemption against LTC cash lump sump benefit. Can you throw some light regarding whether a single premium policy is applicable for getting Tax exemption benefit against LTC cash lump sum policy?

Anil Rego: Premium on insurance policies attracts 18 per cent GST. Premium paid on new life insurance policies (issued between October 12, 2020 and March 31, 2021) is allowed as eligible services under the LTC Scheme.

Please note that GST is not charged on the entire premium (GST is charged on 10%of premium for single-premium policies, amounting to 1.8% GST on the entire premium). In this case even though premium attracts 18% GST, the effective claim of GST is only 1.8%.

It was clarified that policies purchased between 12.10.2020 to 31.03.2021 are eligible under the LTC Scheme. So as per this clarification, you can claim this insurance policy for deduction under LTC.

Do you have any personal income tax query? Please mail us at getahead@rediff.co.in with the subject line 'Ask Anil' and Anil Rego will answer all your tax queries.

Anil Rego is the founder and CEO of Right Horizons, an investment advisory and wealth management firm that focuses on providing financial solutions that are specific to customer needs.

Feature Presentation: Ashish Narsale/Rediff.com