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 readers' queries in an hour-long chat on rediff.com. Here is the transcript:
Vikas Gandhi says, Good evening friends and welcome again to tax chat session
Sarat asked, I want ot save upto 50K for this year, which option is better can i go with Mutual Fund if so whci of the MF's are best and gives best returns or it not MF then what is the best suitable option to save so much amount as i am having 20 k for the LIC policies
Vikas Gandhi answers, at 2007-10-11 15:59:03Mutual funds are certainly a better option these days as you get good returns on it. However since investment in Mutual Funds are directly connected with the stock market, the risk attached with the investment is very high. Hence unless and until you have the capacity to bear the market risk you should not go for mutual fund. You may go for safer options like PPF, NSC, Fixed Deposit with Bank etc. Even if you want to invest in Mutual Fund, invest some part in it and some part in safer investments as mentioned above.
seelujangra asked, I take a loan of Rs 150000 for buy a home. How much deduction i can take on interest.
Vikas Gandhi answers, Any housing loan taken after 01/04/1999 makes a person eligible for a maximum deduction of Rs.1,50,000/- on account of interest in a year.
maheshbhusari asked, i want to prepay rs. 50000 for my home loan account. what part is exempted under it or will i get full exemption
Vikas Gandhi answers, Under Income Tax Act, you get exemption for principal payment and interest payment of housing loan. It hardly matters whether the loan is prepaid or not. The law is only concerned with principal and interest component and accordingly exemption will be given
swapnil asked, i have a bought a house with my wife as the co-borrower in the housing loan. I am paying the EMI for the bank and claiming the tax benefit on the housing loan , i pay.If my wife repays some part of the loan then can she too claim tax exemption on the housing loan.
Vikas Gandhi answers, Besides being co-borrower of the loan, your wife should also be a co-owner of the house. If such is a case, your wife will also be able to claim exemption on account of interest and principal payment provided the payment for her share is been made from her source of income.
ram asked, hi vikas, can i show the lic policy which is on my sisters son name for tax benefit
Vikas Gandhi answers, For the purpose of tax benefit you can claim life incurance premium paid for your wife and children. Premium paid for sister's son will not make you eligible for tax benefit
pravin asked, Hi Vikas Good Afternoon.. i would like to know whether the amount paid for registeration and stamp duty for purchasing of home is deductible under which section of IT and also let me know investment option of ELSS mutual fund ,when should i invest in elss for this fina year 07-08 i want to invest 50k.. thanks..
Vikas Gandhi answers, Registration and stamp duty paid for purchase of house is eligible for tax benefit under section 80C of the Income tax Act. As regards investment in ELSS you have to make the investment at anytime before 31st March, 2008.
Abbey asked, Hi Vikas, I have filed for my tax returns from last year and awating my returns ... whats the time frame for the returns??
Vikas Gandhi answers, I assume that you are speaking about refunds and not returns. As regards refunds there is no specific time frame for the issue of the same. If substantial time has passed after filing returns, you may first write a letter to your Income tax Officer requesting for issue of refund and subsequently personally follow-up for the same.
neelakanthan asked, I have taken a education loan for my child's higher education in foreign country. interest is paying regularly on monthly. Am I eligible for tax relief
Vikas Gandhi answers, For getting eligible for tax relief for interest paid on loan taken for higher education, you need to fulfil following condition - a) the loan should be taken for higher education b) such loan is taken for higher education of self or for spouse or for children. b) the loan should be taken from any financial institution (including bank) or a charitable institution c) interest has been paid during the year On fulfilment of above condition you will be able to claim tax relief on acocunt of interest paid during the year under section 80E of the Income tax Act.
Jacob asked, For whether Interest on Housing Loan must be deducted from Salary by Employer prior calculation of Tax ?
Vikas Gandhi answers, If you have informed your employer about such interest payment, he has to take such interest payment into consideration before deducting tax from your salary income.
SUMIT asked, RECIVED RS. 55650/- AS LEAVE SALARY AT THE TIME OF RETIREMENT , WILL IT BE TAXABLE ? AT THAT TIME MINE SALARY WAS RS.18550/-P.M. , AND I WAS IN SERVICE FOR 24 YEARS.
Vikas Gandhi answers, There are other factors also which needs to be considered to know whether the leave salary received is taxable or not. There are online sites available wherein you can enter your details and know how much of your retirement benefits is taxable and tax-free. www.taxsmile.com is one of such site. Such calculators are normally available free of cost.
Gopal asked, If I invest in stocks for more than 1 year. is it extemped frm tax? in view of long term investment.
Vikas Gandhi answers, If you invest in shares and sell the same after a period of one year, any profit earned on such sale will be considered as Long Term Capital Gain.
If you have sold such shares through a stock market and paid STT, the entire capital gain is exempt.
Nakul asked, Hi Mr. Gandhi - Is the dividend given on ELSS and other Mutual Funds taxable??
Vikas Gandhi answers, No. Dividend given on ELSS and Mutual Fund are not taxable.
TEST asked, Hi Vikash, I have profited 10000 from F&O trading and paid 2000 as Brokerage. Will i need to pay tax for 10000 or 8000?
Vikas Gandhi answers, You will be taxed on an amount of Rs.8000/- and not Rs.10000/-
jayanarayan asked, i have done a fixed depost of 50000.00 in SBI with 9.25% interest for 4 year.Could i show it for getting tax benefit under section 80 C
Vikas Gandhi answers, For being eligible for tax benefit, the minimum period of fixed deposit has to be of 5 years. Since the period you have mentioned is 4 years, you won't be eligible for the tax benefit u/s 80C.
Dev asked, Hi I have filed my returns in July and am eligible for a refund or Rs 15000 as per my filing. When can I expect the refund and is there any way I can know the status from IT Dept
Vikas Gandhi answers, There is no specific time frame for issuance of refund. Normally refunds are expected to be released from the month of January. There is no way in which you can know the status of your refund.
rojans asked, Opting for SIP or one-time equity schemes is beter?.How does home loan helps in tax exemption?
Vikas Gandhi answers, According to me SIP is better, as you have control over the investment. As far as home loan is concerned, you get exemption for the amount of interest paid (upto Rs.1,50,000/-) on such loan and also for principal payment of such loan (u/s 80C - within the maximum overall limit of Rs.1,00,000/-).
kiran asked, Hai!Iam Kiran a salaried employee.can i get tax depreciation or any kind of tax exemption on purchase of a new car under loan? Pls.advise. Thanks in advance.
Vikas Gandhi answers, A salaried employee is not allowed to claim any sort of depreciation as from its income. Also no tax exemption is available on car loan.
ajay74 asked, If I rentout my purchased house taken on home loan, how is the tax implications
Vikas Gandhi answers, The entire rent income which you received is taxable. However for the purpose of taxation it is not only the amount of rent that you received that is taxable. The rent that you receive is compared with the following factors a) Fair Rent - rent fetched by similar property in a similar area b) Rent as per Municipal valuation - as fixed by municipal authority The higher of this amount is treated as your rent income. From this income you get deduction for the amount of municipal tax paid during the year. You also get a standard deduction @30% on account of repairs. this is irrespective of whether you have spent this amount or not. You also get deduction for the amount of interest paid on loan taken for the purchase of property.
Nitin asked, Hi Vikash i am paying IT. so can i gift a car to any of my close relatives?
Vikas Gandhi answers, You can certainly gift a car to any of your close relative. In the way the tax provisions have been brought to statute only cash gifts received by the receiver is taxable. Gifts received in kind is not taxable and hence neither you nor your relative or any one else receiving such gift should worry from the taxation point of view.
venky asked, I have paid Rs.58,000 towards housing loan and cleared the entire loan. can i claim this amount for IT deduction? Please clarify
Vikas Gandhi answers, You can certainly claim such amount for IT deduction.
sunilbhai asked, dear vikas, do futures & options go in short & long term captial gains....
Vikas Gandhi answers, Transactions done in Futures & options are not Capital Gains. Such transaction are considered as Speculative transactions and are accordingly treated under Business Income.
Sudhakar asked, Hi Vikash, Will i need to pay the tax for the gain from the mutual fund, which i sold within a month from purchase date. If yes, will it be a flat 10% or will that profit be added into my taxable income?? Please advice..
Vikas Gandhi answers, If the units that you sold were Equity oriented fund and you paid STT on sale, then the profit would be taxable @10%, otherwise the profit will be added to your total income and taxed at normal tax rates applicable to you.
HYD asked, In last finanncial year, I worked at 2 employers. In first company, I paid TDS. In 2nd company, they didn't cut anything since my income over there was less than 1lakh. I did n't file my returns since I am in Dubai now. What is solution for me? Shall my brother file returns in Vijayawada on behalf me since I am not in India?
Vikas Gandhi answers, You have to file your income tax return. Since you were working with two employers, and since TDs was deducted by the first employer, there are good chances that on adding salalry income from second employer, you might have to pay additional tax also. Hence you need to calculate and file tax as early as possible. Since e-filing is reality in India this year, and various online sites are available for preparation of online tax returns, you may use this facility and fulfill your obligation of filing returns. www.taxsmile.com is one of such site which allows you to compute tax and prepare tax return.
kvr asked, if i buy an apartment No.1, sell it after 20 months and ploughed the profit I into another apartment No.2, should I pay short term capital gain tax?
Vikas Gandhi answers, Since the profit will be a short term profit you will have to pay tax on such profit and cannot claim exemption for second apartment purchased.
Vikas Gandhi says, It's time to wrap up and so friends good-bye and have a happy week-end.
Chat with Vikas every week!
