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?
In an hour-long chat on rediff.com on Thursday, direct tax expert Vikas M Gandhi replied to many such readers' queries. Here is the transcript:
Vikas Gandhi says, Good evening friends and welcome back to tax chat session.
Vikas Gandhi says, There are limited tax saving options available and hence it is very difficult to suggest best tax saving options. these options always depends upon your risk bearing capacity and your liquidity requirement.
Vikas Gandhi says, By purchasing a second house, in my opinion, you won't be saving any taxes. Infact you will be paying additional tax on notional income, if neither of the property is given on rent.
Naresh asked, Hi. I have a house in Pune which I have rented out and have bought another house in Mumbai. How can I get the maximum tax benefit?
Vikas Gandhi answers, at 2008-06-05 16:10:54What tax benefit you are looking out for? You have two properties -one is given on rent and other is occupied by you. If you have purchased the property at Mumbai by taking a housing loan, you can claim deduction on account of interest payment upto Rs.1,50,000/-. In addition to this you will also be able to claim deduction on account of principal repayment of loan within overall limit of Rs.1,00,000/- u/s 80C.
Vicky asked, Hi Vikas, What is the last date for filing returns this year?
Vikas Gandhi answers, The last date for filing returns for the year ended on 31/03/2008 is 31st July, 2008. However if you are required to get your books audited under Income tax law, then the due date is 30/09/2008.
raja asked, Hi, I made a profit of Rs 1 lakh from stocks. Is it taxable?
Vikas Gandhi answers, If this is the only income, you had during the year, then the profit is not taxable. However if this profit is in addition to other income than you will have to pay tax, provided such profit is not a long term capital gain.
Ramanathan asked, How is tax on profits in shares calculated,is it for each share or on consoldated basis for all shares, if there is a loss will it be adjusted?
Vikas Gandhi answers, Profits have to be calculated on individual basis. This profit gets divided into either Long Term or Short Term Capital Gain. If the gaion is Long Term Capital Gain, and you have paid Securities Trnasaction tax on sale, your capital gain is exempt from tax otherwise the same is taxed @10% or 20%. In case of Short Term Capital Gain, if you have paid Securities transaction tax, such profit will be taxed @ 10%, otherwise the profit will be taxed at normal rate of tax. Before calculating tax, if you have any loss, the same gets adjusted first and then tax is calculated on balance gain. However bera in mind that Long Term Capital Loss cannot be adjusted against Short Term Capital Gain.
dhiru asked, Hi Vikas, LIC as compared to long-term FDs, which are the best tax saving options?
Vikas Gandhi answers, Compared to long-term FDs, in my view, LIC is a better option.
itsmebuddy asked, I am showing HRA to company as if i am paying Rent to my Father, is this OK. He dosent have anyother income, do he need to file tax
Vikas Gandhi answers, YOu can claim HRA benefit by paying rent to your father. However for this the house should be owned by your father and you should be actually paying rent to your father by a cheque. If the rent income of your father is more than the exemption limit of Rs,1,50,000/- (F.Y.2008-2009), then he has to file income tax return.
L asked, I left a company after working there fro 2.5 yrs. I got some money due to my leaves getting encashed while leaving.Is that taxable ? How do I fill up the Income tax return to show leaves encahsed (while resigning from the organisation) as non-taxable ?
Vikas Gandhi answers, First you need to find out how of your leave salary is exempt from tax. This amount has to be calcuated and is least of the following - a. Period of earned leave to the credit at the time of leaving the job * Average monthly salary b. Average monthly salary * 10 c. Rs.3,00,000/- d. Leave encashment actually received. While filing income tax return, you have to show taxable leave salary as part of your salary and the exmept Leave salary under schedule of Exempt Income.
Reena asked, What I need to do to Claim HRA benefits.
Vikas Gandhi answers, For claiming HRA benefit, you need to be paying rent for the hosue in which you are staying.
anik asked, HI, I have a homeloan, but I am not living in the home for which home loan is taken. My mother and brother living there. I am not taking any rent from them. I am living in a rented house with my wife. Is it possible that I can claim both HRA and the loan repayment for tax exemption. Rented house and my constructed house both are in the same city
Vikas Gandhi answers, Since both of your house is situated in the same city, you will not be able to claim both the benefits
rsr asked, I sold a small flat (in New Mumbai) bought in 1995 in the year 2006 and deposited the proceeds in a Bank with the intention of buying federal bonds. Is the amount subject to Capital Gains Tax
Vikas Gandhi answers, Firstly you have not deposited the amount in Capital Gain Account Scheme. Further your intention is to purchase some Federal bonds and not another property. Hence the entire capital gain on sale of flat will be taxable.
radubey asked, Hi Vikas, let me know the LTCG tax percentage to be paid for a property sold after 5 years of buying.
Vikas Gandhi answers, Such capital gain will be taxed @ 20%.
ravi asked, pls. tell me whether i need to have form-16 filed if i am working in a software co. as a contract employee. working for their clients on contract basis. no pan card taken till now...
Vikas Gandhi answers, What you have to file is either ITR-1 or ITR-2 etc whichever is applicable and not Form No.16.
RahulK asked, Hi. I missed filing my return last year. Can I do it now ? I have a refund coming out. Also, can I file my return in a different city than where I was working or staying last year now ? rgds
Vikas Gandhi answers, Yes, you can still file your return for the last year. However since you are filing late, interest on refund will be given from date of filing of return and not from 01/04/2007. If you are filing returns for the first time, you can file return in the city where you are currently residing.
nath asked, I am planning to buy a house with land in my hometown in Kerala by taking a loan from Bank. Pl let me know whether I can claim for IT Rebate.
Vikas Gandhi answers, If this is going to be the only house in your name, then yes, you can claim all the rebates that a person gets for housing loan.
JGT asked, Can me & my wife both take tax exemptions on house procured by us by taking loan?
Vikas Gandhi answers, Both of you can claim tax exemptions, provided the house is also owned by both of you. Only availing joint loan does not make both of your eligible for claiming tax exemption.
Tejas asked, Is there any change in ITR-1,ITR-2,ITR-3 & ITR-4 as compair to last year ITRs.
Vikas Gandhi answers, There are some minor changes done in all the ITR's
pramod asked, I am a senior citizen, retired engineer having income from interest on FD,MIS (Post offoice), senior Citizen Saving Scheme. Now I have offer from a servising concern for a consultancy contract. For this I need to have broadband service, scanner/copier, phone etc. Will I be able to deduct expenditure on Phone, broadband rent, cost/ depreciation on scanner/copier ? If yes then to what extant?
Vikas Gandhi answers, The income that you earn will be treated as Professional Income and accordingly you can claim all expenses / depreciation that you incur for earning such income.
anil asked, I have made a profit of Rs. 600000/- from sale of a property. The gain is a long term capital gain. I have no other sources of income. Will I be able to able the slabs of the current income tax slab structure (of 0% for 1.5 lac, 10% for next 1 lac and 20% for next 2.5 lac) while computing the tax or will I have to pay tax on the entire profit
Vikas Gandhi answers, Firstly yhe profit of Rs.6,00,000/- is as per your books and not after applying indexed cost. Accordingly there will be some reduction in your profit. Since you don't have any other income during the year, you will be given the benefit of basic exemption limit. You will have to pay tax @ 20% on the profit after deducting the basic exemption limit.
Vikas Gandhi says, That's all for this session of tax chat, friends. Meet you next week at the same time.