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Best tax saving options? Here's help!

January 23, 2009 09:03 IST

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 there 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 Thursday, direct tax expert Vikas M Gandhi offered some valuable tips. Here is the transcript:

Vikas Gandhi says, Good evening friends and welcome back to the tax chat session.

Harpreet asked, I have taken a home loan for which Im paying the Pre EMI (interest) everymonth. The possession of the home will be in 2010. Can I get take rebate in 2008-2009 on the interest Im paying now?
Vikas Gandhi answers,  at 2009-01-22 16:00:08Since the possession of the property is expected in 2010, you won't be getting any tax benefit on account of interest payment in 2008-2009. You will be able to claim interest benefit only from 2010. However interest paid till 2010 can be accumulated and tax benefit can be claimed @ 20% of the accumulated amount till 5 consecutive years.
KP SRI asked, What is the maximum Tax exemtion limit of Medical Expences+chiltren Tution Fee
Vikas Gandhi answers, By Medical expenses, I presume you mean mediclaim premium. If so be the case, the tax exemption limit for medical premium is as under - a> An individual can claim tax benefit maximum upto Rs.15,000/-. If any of the member is senior citizen, the limit extends to Rs.20,000/-. b> if the person pays medical premium of his / her parents, they can claim additional benefit maximum upto Rs.15,000/-. If any of the parent is a senior citizen, the limit gets extended to Rs.20,000/-. As far as children tuition fees is concerned, the deduction for the same is covered under section 80C. The overall limit for this section is 1,00,000/-. there is no separate limit for children tuition fees. However you can claim deduction only for tuition fees paid for two children.
Rakesh asked, Hi Vikas, I have two houses for which i have taken loan. At present i am claiming tax benefits against one loan only. Can i claim tax benefits for 2nd home as well?
Vikas Gandhi answers, If you are owning two houses, none of which are rented out, then as per Indian Income tax law, one of the property will have to be assumed as having been let out and accordingly notional income will be taxed. You can claim interest repayment against this rent income and for which there is no restriction.
Vikas Gandhi answers, It is preferrable that you declare your income on accrual basis, as by doing so you will be able to spread your income over several years. This would lead to lower tax payment (in certain cases) and even there would not be much complication in claiming tax deducted, if any.
Vikas Gandhi answers, If you have received tax scrutiny notice then in such event you will have to visit the Income Tax Officer either in person or through a representative. The Income Tax officer would ask for all such documentary evidence as he deems fit, in order to cross verify the income tax return filed. Such documents will include copy of bank pass book, Form-16s, investment proof etc. As mentioned in your question, if you have not declared salary income from second employer, this fact will be caught when you submit your bank pass book and for this you will be penalised. If you have not yet received the notice, but fear of receiving the same, it would be advisable to file a revised return, incorporating the second employer salary income.
Vikas Gandhi answers, Income tax paid is not allowed as an expenditure, irrespective of the status of the tax payer and the type of income earned during the year.
sdf asked, Hi Gandhi. I am pradeep. I am applying for home loan now. The house papers are in my fathers name. Can i avail the tax benefit from the home loan. If yes, please tell me the procedure.
Vikas Gandhi answers, You can claim tax benefit for home loan only if you are the owner of the house. In your case since the property is in the name of your father, you will not be getting any tax benefit although you are repaying home loan.
Karan asked, Respected Mr.Gandhi , This is my 3rd time chat ( every week i send message ) with you and still watting for your answer for my question - I will receive Rs.50,000 from LIC after every 5 years. Is this money receive from LIC is taxable or not. Hope you will reply me at this time. Thanks
Vikas Gandhi answers, Amount received from Insurance company is normally treated as a capital receipt and hence amount received on maturity is exempt from tax.
SUNJAY asked, Sir,Can I avail tution fee benefit for self. I am studying in the evening college and I have paid Tution fees.Sunjay
Vikas Gandhi answers, Tuition fees paid for children is eligible for deduction. Fees paid for self, unfortunately is not eligible for any deduction
muthupandi asked, I have lost Rs 75000 in share trading (intra day). i got 3.5 lakhs pa salary from company. Can i claim tax benefits for my loss?
Vikas Gandhi answers, Intra-day share trading loss is considered as business loss and as per Indian Income tax law, business loss is not allowed to be adjusted against salary income. The loss will have to be carried forward to subsequent year and adjusted against business income only, if any.
kapoor asked, I vikas I have taken education loan of Rs 2.5 L for MBA, Plz tell are pricipal also attract tax rebate??
Vikas Gandhi answers, For the Education loan taken, only the interest component is eligible for tax deduction u/s 80E. The principal repayment of loan does not enjoy any tax benefit.
Swaminathan asked, Is a father entitled for tax saving if a loan is taken for daughter's education?
Vikas Gandhi answers, If the loan is taken for higher education of daughter, father can claim tax benefit on the interest component paid during the year.
Nitin Jain asked, Hi Vikas. My cousin is doing CA. Can his father take exemption under section 80E claiming the fees paid to the Institute for registration as Tuition fees.
Vikas Gandhi answers, Tuition fees is not restricted to minor children only. It can be paid for major child also and claim rebate. The only condition is that the payment should be in the nature of tuition fees and that it should have been paid for children.
JB asked, Is rent agreement necessary for claiming tax rebate in HRA? My previous company only asked us to submit rent reciepts.
Vikas Gandhi answers, In my view, there is no necessity for rent agreement for claiming HRA rebate. However rent receipts are required.
asdf asked, You asked, can i get any tax befinit for deposite the amount in PPF and what is the tax lability at the time of part withdrwan or maturty
Vikas Gandhi answers, Amount deposited in PPF A/c is eligible for deduction u/s 80C within the overall limit of Rs.1,00,000/-. Further amount received on maturity of PPF a/c is totally tax-free. Neither principal, nor interest on PPF is taxable.
PRATIP asked, If I want to show the F.D interest on accrural basis,my own calculation will be sufficient or I have to take certificate from bank even though i show more than that of actual
Vikas Gandhi answers, When you show your income on accrual basis, it would be beneficial / preferable that you take a certificate from bank to that extent. This would help, particularly when tax has been deducted on such accrued income.
partha asked, Hi Mr. Gandhi, Please let me know that if I have a house loan in Kolkata and am staying in a rented house in Delhi, can I claim both th ebnefits under IT act?
Vikas Gandhi answers, Since bothj your houses are situated in different state, wherein it is difficult to commute on every day basis, you will be able to claim both the tax benefits.
Vikas Gandhi says, That's all for the session, friends. Chat with you next week. Good-bye.