In major bonanza to the salaried class, the government on Friday proposed to increase the income tax exemption limits from Rs 1.10 lakh to Rs 1.50 lakh, in addition to restructuring the tax slabs.The proposals may result in a benefit of over Rs 50,000 to a taxpayer having an income of Rs 5 lakh annually.
What effect is this year's Budget going to have on your tax liabilities?
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?
In an hour-long chat with rediff.com on Saturday, personal finance expert Vikas Gandhi replied to many such readers' queries. Here is the transcript:
Vikas Gandhi says, Good afternoon friends and welcome to special tax chat on budget proposals.
jigar asked, 1.if i buy a house on a loan would i get total deduction on my whole amount 2.can i buy a home on loan and then put it on rent and still get deduction if not how should i invest my money to have tax deduction as much as possible and have a home also within 5years.I am a software engineer by profession and its my first year to my job
Vikas Gandhi answers, at 2008-03-01 13:54:201. If after buying a house on loan, if you yourself are going to occupy the house, you will be able to claim maximum benefit of Rs.1,50,000/- on account of interest paid on loan and Rs.1,00,000/- (overall limit for section 80C) for principal repayment of loan. 2. You will be able to claim interest benefit even if you give your house on rent. In this case there is no upper limit and you will be able to claim entire interest payment as deduction.
Motilal asked, Is dividends from equity markets are taxable?
Vikas Gandhi answers, No dividend are not taxable
raaj asked, Hello Sir, Does this mean that anyone who gets a salary of 1,50,000 Rs pays no tax but a person who gets 1,50,001 pays 10% of that i.e 15,001 rRs tax ?
Vikas Gandhi answers, No Tax calculation does not work in this manner. Post budget, any income upto Rs.1,50,000/- is exempt. This if you are having an income of Rs.1,60,000/-, first Rs.1,50,000/- is exempt and you will be taxed for balance Rs.10,000/- @ 10%. Thus you will end up paying Rs.1,000/- (excluding education cess) on an income of Rs.1,60,000/-.
vivek1232 asked, FROM 01-04-08 TO ONWARDS STT TREATED AS ADVANCE TAX OR EXPENDITURE ? CAN GOVT. TAKEN AS ANY AMOUNT AS ADVANCE TAX LATER ON TREATED AS EXPNDITURE ?
Vikas Gandhi answers, The change proposed in relation to treatment of STT is as under - Till date for a person trading in shares were allowed tax rebate on account of STT paid from total tax. It is now proposed to treat the entire STT payment as an expenditure against the income from trading of shares. However for investors, who claim their profit as Capital Gains, there is no such provision. STT paid is neither to be treated as expenditure nor they get any tax rebate.
ramu asked, Sir, please tell me, is there any limit for children education fee under sec 80c
Vikas Gandhi answers, Under section 80C, there is no specific limit for children education fees. There is only an overall limit of Rs.1,00,000/-.
rameshr asked, hello sir, if the income and short term capital gains from shares dont cross the min. income limit(Rs. 1.1 lakhs)will there be any tax liability from those gains from shares?
Vikas Gandhi answers, No, if the total income after including all types of income is not exceeding the overall limit of Rs.1,10,000/-, then there will be no tax liability.
nitin asked, plz tell me what exactly short term gain (how many days (period) is short term & long term
Vikas Gandhi answers, In case of shares and securities, if you sell such shares after keeping them for more than 1 year, then the profit or loss is treated as Long Term Capital Gain / Loss, otherwise the same is Short Term Capital Gain / Loss. In case of property and other assets, the period of holding is extended to 3 years for considering them as Long Term.
nbansalca asked, there is any change in surcharge schedule
Vikas Gandhi answers, No there is no proposal for change in surcharge schedule.
ratan asked, is amount paid to any pvt commarce classes & paid to CA institute of india is allowed as deduction U/CH VI A.
Vikas Gandhi answers, If this amount is paid for your children, then such expenses are allowed as deduction u/s 80C. However if such expenses are for yourself, you won't be getting any such deduction.
tsnrao asked, Mr Chidambaram said in his speech that Postal Time deposits will also be allowed as deductions under Section 80C. Can you give some details about Postal Time Deposits?
Vikas Gandhi answers, Postal Time Deposits are similar to Fixed Deposit that you keep with Bank. For claiming deduction, the minimum period for which you should keep such Time Deposit is of 5 years. You can contact Post Office and get more details about such deposits.
madan singh bisht asked, Sir what is the limit of 80 C and 80 D
Vikas Gandhi answers, For the current year ending on 31/03/2008, the overall limit for 80C is Rs.1,00,000/- and for 80D is Rs.15,000/-. Further if such mediclaim premium is paid for senior citizen, the limit of Rs.15,000/- gets extended to Rs.20,000/-
sanjaybhoir asked, Dear Vikasji, pl. let me know whether I can claim stamp duty registration charges paid for purchase of Home on resale for IT benefit/ exemption.
Vikas Gandhi answers, You cannot claim such expenses paid on resale of property as deduction.
HariSharma asked, I have not filed my last year return(2006-07)Shall I file it now??
Vikas Gandhi answers, You should file it and better file it before 31/03/2008, to avoid any penal consequences.
Abhijit1979 asked, Hi Vikash. My CTC is around 4.2 Lacs per annum. what would be the total tax amount I have to pay in 2009?
Vikas Gandhi answers, Assuming that the entire amount of Rs.4,20,000/- is taxable, the amount of tax you will have to pay for the financial year 2008-2009 will be 40,170/- (including 3% education cess).
LKP asked, any saving limit is changed???
Vikas Gandhi answers, There is no change proposed in saving limit.
tmj asked, Whether new due dates for filing of returns for corporates & assessee covered u/s 44AB applicable for A.Y. 2008-09?
Vikas Gandhi answers, Yes, from A.Y.2008-2009 itself, the due date for filing returns for corp[orates and assessees covered u/s 44AB has been preponed to 30/09.
souva asked, ca u tell me Monthly income scheme is Tax exempted
Vikas Gandhi answers, Monthly Income scheme is not tax exempted.
prist127 asked, Hello Sir, Last Year The Income tax Limit was Rs. 1,10,000/- & There was possibilty of Saving Rs. 1,00,000/- more by Long Term, Insurance Plan. The same will be continue with Rs. 1,50,000/- + Rs. 1,00,000/- Please Advice.
Vikas Gandhi answers, Yes. The deduction of Rs.1,00,000/- for investing in tax saving instruments still continues over and above the exemption limit of Rs.1,50,000/-.
Amit asked, Hello Vikas, I have a question. Does LIC and PPF comes under 80C? Also, i have taken the home loan with my wife but the property is in my wife's name? Can i claim tax relief on the interest part. We both pay 50-50 EMI.
Vikas Gandhi answers, Yes LIC and PPF both come under Section 80C. As regards home loan, since the property is not in your name, you will not be able to claim the deduction.
Ganapathi asked, sir ,if i get Performance Incentive in my company, Is it applicaple for tax?
Vikas Gandhi answers, Performance Incentive is fully taxable.
Capriati asked, Hello..Does it mean that an increase of 5% on short term capital gains means I have to pay more tax if I do share speculation?
Vikas Gandhi answers, The increase of 5% in the tax rate of Short Term Capital Gain will in no way affect if you are in speculative business. Income from speculative transaction is considered as Business income and not Capital Gains.
ManojPoddar asked, STT will be allowed only as general business expenditure. Does it mean indirectly withdrawl of sec 88E
Vikas Gandhi answers, Yes. Section 88E is proposed to be deleted w.e.f. A.Y.2009-2010
hh asked, dear vikas, as I am a physically handicapped salaried person, someone has told me that instead of claiming conveyance allowance of Rs. 800 per month I can claim vehicle maintenance allowance of Rs. 1600 and Rs. 600 as salary of Driver per month. Pl confirm if it is true and under which section I can claim this. Thanks
Vikas Gandhi answers, In case you are physically handicapped, you can claim conveyance allowance of Rs.1,600/- per month which is totally exempt from tax. This exemption is available in section 10(14). However there is no other exempt allowance as mentioned
Azmathulla asked, when the surcharge will be applicable, I mean from which amount, pl. clarify sir.
Vikas Gandhi answers, When your total taxable income (after deducting various deductions) exceeds Rs.10,00,000/-, surcharge will be applicable
RakeshPatel asked, Hello sir, My monthly salary is 28 after tax exception of 1.5 lacs. what would be the total amount of tax i am liable to pay and how much investment i have tom make to save that
Vikas Gandhi answers, On a monthly salary of Rs28,000/-, your total income works out to Rs.3,36,000/-. On this income you will be paying a tax of Rs.22,866/-. You won't be able to save the entire tax, as you can claim deduction only upto Rs.1,00,000/- and hence you will still have to pay tax. Assuming you invest Rs.1,00,000/-, your tax liability will reduce to Rs.8,858/-.
kishor asked, What about the TDS deduction rates will it be same? ie on Rent 15.45%
Vikas Gandhi answers, NO changes have been proposed in TDS rates and hence they would be the same for the next financial year also.
inder asked, Sir, I have filed the return (2006-07) through internet facility, but personally I have not submitted the same to the tax authorities. ( means taking rubber stamp on the paper ) Please advise what is to be done?
Vikas Gandhi answers, While filing electronically, you must have shown acknowledgement in Form ITR-V. This will be available on I.T Department site once you login. Take two print-out of the same and submit it to the Department. However since you didn't file such copy within 15 days of e-filing, the actual date of filing will be considered as the date on which you submit one copy of ITR-V to the Officer. In such case you might also have pay interest for late filing if demanded later on.
Vikas Gandhi says, That's all for this session, friends. Have a happy week-end and Good-bye.
Chat with Vikas Gandhi every Thursday at 4 pm
(Due to circumstances beyond our control, date and time of chat may change)