Were you prudent with your investments last year? Did they help you save tax? Or did you end up paying more than you could afford?
What investment mistakes did you make last year? Are their ways to rectify them? What investment options should you go for this year? What should you do to bring your tax liability to the minimum level?
Direct tax expert
Vikas M Gandhi replied to many such readers' queries in an hour-long chat on Thursday. Here is the transcript:
Vikas Gandhi says, Hi Friends, Good evening and welcome again to the Tax Chat session.
jitu asked, Hi Vikas, I have a question regarding HRA benefit. I have changed my job in Bangalore after working for 6 months in noida. My first company has not been given HRA rebate though i declated it but while leaving company i have not submitted any document. THen how to get HRA rebate for first company? Whether i can get that HRA rebate in 2nd company?
Vikas Gandhi answers, at 2007-11-01 15:59:00If HRA did form part of your Salary from first employer, you will be able to claim HRA exemption even though your employer has not given this benefit while deducting tax. While filing return of income, you can claim this exemption in addition to the salary given in Form No.16. From the second company also you can claim HRA exemption provided your salary includes HRA and you are staying in a house taken on rent.
AmitTendulkar asked, On my salary income 14 lacs. I am already claiming 150000 exemption as interest on homeloan, 100000 on PF .... is there any other way I can save tax . Outflow of tax is 21000 per month... need serious help
Vikas Gandhi answers, You have already exhausted the exemption available in Income Tax for a Salaried person. I am afraid but there are no other tax saving options available. At the best what you can do is ask for restructuring of your Salary and include more allowances and reimbursements of expenses as part of your Salary.
ravii asked, Hi i m investing in equities & my salry is 9000 PM can i eligible for tax & if yes how to pay tax...i dont hve any idea abt tax..Pls reply.. thx
Vikas Gandhi answers, Since your salary is 9000 p.m, anually it totals to 108000 p.a. Since this income is below the taxable limit of Rs.1,10,000/-, you are not required to pay any tax or file any return, provided that you don't have any other income. As far as investing in equities is concerned, there is no tax implication till you sell the same. If you sell such equities within a year purchase, you will be taxed @ 10% on profit earned. It would be better if you keep the shares for 1 year and sell it thereafter, so that whatever profit you earn on sale will be totally exempt from tax.
Abhinav asked, Hi Vikas, I have bought a flat (under construction) whose possession will be given in September 2009, but my EMI has already started for the house loan. Can I claim tax benefit for it either this year or in subsequent years
Vikas Gandhi answers, Since your EMI has already started, you will certainly get tax benefit, but only to the extent of principal loan repayment u/s 80C. For interest payment, at present you won't get any tax benefit since the property is under construction. As you said since the property will be completed in September 2009, you will have to accumulate the interest paid upto 31st March, 2009. From the year ended 31/03/2010 onwards, you will be able to claim this accumulated interest in five equal instalments as deduction from the income.
nsc asked, I have 2 properties one is used for own residence & another ( being commercial) used for business. Do I have to declare any notional income for any one of these properties.
Vikas Gandhi answers, From the facts mentioned you don't have to declare any notional income for any of the properties. One property you are using for residence and hence it is totally exempt. Since other property you are using for your business purpose, it does not fall within the definition of a house property for the purpose of taxation and hence you are not required to delcare any notional income.
Sid asked, Hi Vikas I have taken a home loan jointly with my mother the instalment of which i m paying. aproperty is in the name of my mother. Can i claim the Tax rebate on the repayment beign made. Siddharth jain
Vikas Gandhi answers, Since the property is not in your name, you won't get any tax rebate for the repayment of housing loan made by you.
rama asked, If the taxes are deducted at source, do I have to file the income tax returns?
Vikas Gandhi answers, Yes. you do have to file income tax returns. This is because if your income is below the taxable limit, you will have to claim refund for the entire tax deducted. For this you will have to file return. And if your income is above taxable limit, the tax might be more than the amount of tax deducted and hence you will be liable to pay additional tax. All this is possible only when you file returns.
VenuMadhav asked, Hi Vikas, I have travelled from mumbai to cochin and back thru flight along with my family on a privilage leave. Can i claim the tickets fare under LTA? The problem is i have joined a new company now and i have travelled when i was with previous company.
Vikas Gandhi answers, With the new company you will not be able to claim LTA exemption, since during the period of travel you were not the employee of that company. What you can do is while filing the income tax return, you can additionally claim such rebate, provided you were receiving LTA from the previous employer.
AtulAtul asked, Hi, what risks do I run if I have not filed my IT returns by 31st Oct, given I am a salaried individual and do not have any other source of income
Vikas Gandhi answers, At the outset, you last date of filing was not 31st October but 31st July. So you have already missed the bus. As far risk of not filing the return is concerned, it depends upon what is your unpaid tax liability. If on calculation of tax, there is any unpaid tax, you will have to pay interest. According to me you should file the return as soon as possible. This is because if you file your returns after 31st
March, you will have to paya penalty of Rs.5,000/- in addition to tax and interest.
ganeshv asked, I heard that EMI paid on purchasing the flat or house is exempted from IT, is this case same for the purchase of a residential land(Plot)
Vikas Gandhi answers, Loan taken for residential plot of land would not entitle for any tax benefit.
tina asked, HI,...my question is....is that required that we have to pay tax for the perfomance incentives..?Are the perfomance incentives included in taxable income?
Vikas Gandhi answers, Performance incentive has to be included in your taxable income and it is fully taxable.
Adish asked, HI Me and my wife have taken a joint home loan and total amout which we are paying for this financial year is 3.5 lac towards interest and 50 thousand for principal. this payment is 50-50 from our salary accounts. Could you please tell me whether the rebate of 1.5 lacs for interest is applicable to both of us individually or we will get 75000 each. Property is on joint names her name first.
Vikas Gandhi answers, The rebate of 1.5 lacs is not per loan, but per tax-payer. Since you both are paying home loan instalments, both of you can avail the interest exemption limit of Rs.1.50 lacs, subject to the payment of interest.
mvsiva asked, Hi, I own two houses ( one at bangalore and one in Tamilnadu). Both the houses are rented out. I stay in a rented house. My total housing loan interest comes to nearly 3 lakhs. Can I claim deduction of the whole amount if if declare the rent as income? My company only considers 1.5 lakhs against housing loan interest and not 3 lakhs. Do I need to claim it back from IT after return submission?
Vikas Gandhi answers, Since you have given both the properties on rent, you can claim the entire amount of interest against the rent income. This is because the limit of Rs.1.50 lacs is applicable only in case of Self-occupied Property and not on renter property. Since your employer has given deduciton of Rs.1.5 lacs only, you can claim the additional interest while filing return of income. Do declare your rent income also.
Satyarthi asked, i have got a house is in my name and mother's name, can i give rent receipt in favour of my mother to save tax.
Vikas Gandhi answers, No. Since you are also co-owning the property, you cannot enter into such arrangement.
MRC asked, Dear sir, I am a student...i would like to invest in stock. My brother promise me to give 50K.I would like to apply PAN card. My question ...if i get the PAN then i need to fill in income return every year even i earn less than 1 lacks for year from investment.?
Vikas Gandhi answers, No. you are required to file your return only if your total income exceeds the exemption limit. So as far as your total income is below Rs.1,10,000/- (current exemption limit), you will not be required to file returns.
Rajeev asked, Is the car loan EMI considered for Income Tax reduction
Vikas Gandhi answers, No. Car loan EMI is not to be considered for Income Tax reduction. However if you are carrying on any business or profession, you can certainly claim such EMI for Income Tax reduction
manish asked, I havent got my refund for assesment year 2004-2005 and 2005-2006 and 2006-2007 what is the course of action one can take would paying a visit to ITO office help as they dont reply to letters and reminders
Vikas Gandhi answers, In such a scenario, I would advise you to personally visit the Income tax Officer and if need arise also visit his Senior Officials and discuss your grievance.
lancy asked, I am a salaried person & also LIC agent.I would like to know whether i would get the deduction for first premium commission &renewal commission showing commission as income from other sources
Vikas Gandhi answers, If your total commission income is less than 60,000/-, you will be able to claim adhoc deduction from your first premium commisison and renewal commission. In other case, you will have to maintain an acocunt of actual expenses and claim the same against your commission income.
abprasad asked, I believe, the tax on ST capital gains is 10% for shares. Is there any exemption possible like investing in a house etc? Thanks in advance
Vikas Gandhi answers, Against Short Term Capital Gains you cannot claim any exemption. You have to pay tax on such gain.
ankit asked, Hi vikas, I am a long term investor, say after 2 years if I sell all my stocks and and I earn some profit on it, Will In have to deposit the tax for the same and Will I have to disclose the same with IT department? Please answer
Vikas Gandhi answers, Since you will be selling your stocks after keeping it for 2 years, profit earned on such sale will be regarded as Long Term Capital Gain. At present Long Term capital gain is exempt from tax (assuming that you will sell the stocks in open market) and hence you will not be required to pay any tax on such profit. However you need to disclose such income in your Income Tax Return.
guru asked, Hi Vikas, My income is around 10 lac and I am claiming 1.5lacs as the interst and other 1 lac as the investments (which includes the principal payment also). Now if I give some part of my salary to my parents( senior citizens) as gift , can that amount be reduced from my taxable income.
Vikas Gandhi answers, Gift is not regarded as an expense and hence whatever amount of gift you give, you will not be able to reduce it from your taxable income.
rwar asked, while calculating the tax on equities, will be brokerage paid, STT and service tax be deducted from the amt received by sale.
Vikas Gandhi answers, STT paid will not be available for deduction. Balance amount viz: brokerage and service tax paid can be claimed as expenses and reduced from the sale price.
Vikas Gandhi says, That's all for the day friends. It's time to end the session and so friends Good-bye and have a happy week-end Diwali shopping.
Chat with Vikas every week!