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?
In an hour-long chat on rediff.com on Thursday, tax expert Vikas Gandhi replied to many such readers' queries. Here is the transcript:
Vikas Gandhi says, Good evening friends and welcome back to tax chat session.
IndianBull asked, I have earned around Rs. 75000 from the stock market in year 2007-08. will i have to pay tax @10% or being the small amount i won't get noticed, henc eno need to pay tax?
Vikas Gandhi answers, at 2008-01-24 15:59:57Any income you earn, you have pay tax for the same. You won't be having only this income. There will be other income also, which will make your total income above the exemption limit. Hence you will have to pay tax on the same. However if such gain from stock market is on account of long term holding (i.e you kept the shares for more than 1 year and then sold) the entire profit of Rs.75,000/- is exempt from tax.
tapan asked, My total income is 240000.I am paying 30000pa against house loan and 35000 LIC still then i have to pay tax.What more should I do pay nill tax
Vikas Gandhi answers, Based on the information given, your net income works out to Rs.1,75,000/-. For you to pay no tax, you will still have to invest Rs.65,000/-. You can either invest this amount in PPF or NSC or bank fixed deposit. If you have risk bearing capacity you can even go for ULIP or ELSS.
prss asked, is it possible toclaim both HRA for living in rented house, as well as house loan exemption, on the ground that the house i have bought is too far away frm my office and hence only my parents stay in it while i stay at a rented house?
Vikas Gandhi answers, You can certainly claim both the deduction.
anand asked, Hi Mr Vikas, If I sell a share within six months of purchase should I pay Short Term Capital Tax. Pl Clarify. Thanx and Regards, A. Ananda Rao.
Vikas Gandhi answers, YOu certainly have to pay Short Term Capital Gain tax. Assuming that you intend to sell such shares in open market, you will have to pay tax @10% on such profit
Arun asked, what are the other options of tax saving investments other than Insurance and Mutual funds where i can get my funds back in a short period
Vikas Gandhi answers, Other instruments which you can for a short term is Bank fixed deposit which has lock-in-period of 5 years or N.S.C wherein lock-in-period is 6 years. If you are looking for higher returns and having capacity to bear risk, ypu can for ELSS, wherein the lock-in-period is 3 years.
VINAY asked, hi vikas: Iwork at MUMBAI WHERE AS MY FAMILY STAYS AT NAGPUR DUE TO MY DAUGHTER'S EDUCATION . I HAVE SPEND GOOD AMOUNT ON MY AIR TRAVEL TO NAGPUR TO UNITE WITH THE FAMILY. DOES INCOME TAX HAS ANY PROVISION TO SHOW THESE EXPENSES AD DEDUCTION FROM MY TAXABLE INCOME? PL GUIDE ME
Vikas Gandhi answers, Sorry to answer but income tax law does not provide for any exemption on such expenditure.
kumar asked, Can we claim Monthly postal RD Savings as tax exemption
Vikas Gandhi answers, No. Monthly postal RD savings are not eligible for any tax savings. Only Term Deposit with Banks and NSC issued by Postal Department are eligible for tax exemption.
anand asked, Bangalore has been declared A1 City frm October 2007. To calculate the taxable HRA should we consider 40% of basic or 50% of basic kindly clarify as I have to rework all my collugues taxable salaries.
Vikas Gandhi answers, Although Bangalore has been declared as A1 city, the Income Tax Rules have not been amended to that effect. It still speaks of only four cities and hence for HRA calculation you will have to consider 40% of salary only.
srwearwe asked, is there limit of LTA to be exempt from tax (provided receipts are submitted) with respect to basic salary. For example if my basic 20k and I configure my LTA as 40k and have airtickets for 40k will the total 40k would be eligible for tax deduction.?
Vikas Gandhi answers, The exemption on account of LTA is minimum of amount spent or actual LTA granted to you in your Annual CTC. Thus irrespective of your Basic Salary, you can claim entire amount of airfare, provided it does not exceed the amount of LTA granted to you by your employer.
Pradeep asked, Hi! I had received a prize money of 3000 Euros for my PhD thesis from French Embassy and SAFRAN (a group of French companies). Is this amount taxable? If so what will be the taxable amount? Thanks.
Vikas Gandhi answers, Since you are a resident Indian, any income you earn whether in India or outside India, is taxable in India. Since as per Income tax Act, winnings is also considered as income, you will have to pay tax on such winnings also.
ramkumar asked, Do we need to pay the short term capital gain tax for selling the shares with in a year even though my total income is less than Rs1,50,000?
Vikas Gandhi answers, Although the income is less than Rs.150000/-, it is more than the exemption limit and hence you nedd to pay tax and file return of income.
aditya asked, SIr, I wish to know what is the income
tax I have to pay if I sell shares within one year of buying and also if I sell after one year ?
Vikas Gandhi answers, If you sell shares within 1 year of purchase, you need to pay tax @10% on such profit. And if you sell shares after 1 year, the entire profit is tax-free. However this holds true only when you sell such shares in open market through a share broker.
NM asked, MY INCOME COMPRISES OF SALARY, SHORT TERM AND LONG TERM CAPITAL GAINS FROM SHARES AND MUTUAL FUND & INTEREST ON NSC ETC. I WAS ALLOTED PAN NO WHEN I WAS STAYING AT JAIPUR HOWEVER AROUND 5 YEARS BACK I HAVE SHIFTED TO PUNE. I AM FILLING MY IT RETURN AT JAIPUR AND GIVING MY RELATIVE ADDRESS WHICH IS OTHER THAN ADDRESS GIVEN AT THE TIME OF ALLOTMENT OF PAN. WHAT IS LEGAL POSITION. WHAT SHOULD I DO NOW
Vikas Gandhi answers, As a first step you need to fill up PAN Change Application form and get your address changed with Department Authorities. Secondly you need to inform the Income tax officer at Jaipur about the change of address and request him to transfer your records to Pune Income Tax Officer, based on the new address.
g asked, I am working in a private limited company and also I have a professional income during this year. Can I show the business loss/income in my form 16 under other income and calculate my tds ? please suggest
Vikas Gandhi answers, YOu can declare any income other than salary to your employer and get the tax deducted.
rupesh asked, Hi Vikas, My mother is house wife .if i gift my mother some amount will that be exempted from tax. How can i save my tax by giving some gifts to the dependents. Thanks
Vikas Gandhi answers, Gifts are not allowed as an expenditure and hence you can not claim any benefit out of gift given. As far as your mother is concerned, gift received from you will be exempt from tax in her case.
nav asked, I am a salaried person in 30% bracket. how and when can i deposit the tax on additonal inocme made through other sources?
Vikas Gandhi answers, In case of other income, you need to pay on the same in three instalments on 15/9, 15/12 and 15/3 in the instalment of 30, 30 and 40. Since two instalments are already gone, you now need to pay entire 100% of tax by 15th March, to avoid penal interest.
Kishore asked, hi.. recently I moved to new company.. they are considering previous company sal also for tax calculations.. reason..?
Vikas Gandhi answers, They need to consider your previous employment salary to accurately calcuate your tax component and deduct TDS accordingly. If they don't consider previous salary, they will calcualte tax as if this is the only income and give you the basic exmeption limit of Rs.110000/- again. this basic exmepiton limit has alreday been taken into consideration by your previous employer. So what happens is when you prepare your income tax return, although both the employers have deducted tax, there will be some additional tax liability which oyu will have to pay alongwith interest. Hence to save you from such botheration, previous employments salary has to be considered. Your employer is correct and it is in your interest, so please co-operate with him.
piyush asked, i had few shares which i transferred in the name of my brother. Now at the time of sale how will the duration will be calculated, whether only that period for which it remained in my brother account will be considered or the combined time period
Vikas Gandhi answers, When your brother sells such shares , the period of his holding will only be considered for calculation of capital gain. As far as cost is considered, if you have transferred free of cost, it will be the purchase cost you incurred.
anand asked, Hi Vikas, Some say that we can claim children education fees upto one lakh and some say 1000/- which is correct for the current fy.
Vikas Gandhi answers, Any tuition fees paid for children (restricted to two children) is eligible for tax exemption within the overall limit of Rs.100000 granted in sectgion 80C. There is no specific limit for tuition fees itself. All your tax saving instruments (LIC, PPF, NSC etc) combined with tuition fees get a tax exemption upto Rs.1 lakh.
Sunam asked, Hi, can I pay rent to my wife and claim tax refund? If yes, how much is the limit?
Vikas Gandhi answers, If the house is in the name of your wife you can pay rent and claim HRA deduction. There is no specific limit of payment of rent.
ccc asked, I AM STAYING AT BANGALORE AND MY FAMILY STAYING AT CHENNAI. i AM PAYING RENT AT BOTH THE PLACES WILL I GET HOUSE RENT EXEMPTION FOR BOTH THE PLACES
Vikas Gandhi answers, You can claim HRA deduction only for one house which you are staying on account of your employment.
Manish asked, Can loss in shares (short term loss)be adjusted against tax paid for the year ?
Vikas Gandhi answers, No, not at all. Loss incurred in shares cannot be adjusted against tax paid. Basically any loss incurred cannot be adjusted against tax payment. Loss has to be adjusted only against income. However since you have incurred loss in shares, you can adjust such loss only against profit from shares. In case the profit is not sufficient, you will have to carry forward such loss to subsequent year and adjust in such years.
Vikas Gandhi says, That's all for this session, friends. Meet you next week. Till then good-bye and wish you all a happy Republic Day.
Chat with Vikas Gandhi every Thursday, 4 pm