The Orange Paper » Taxes

No filing of IT Return if salary and interest income up to Rs 5 lakh

Austin — Tue, 07 Jun 2011 03:40:50 +0000

In India, as many as 85 lakh salaried tax payers whose taxable income, including salary and interest income, is up to Rs 5 lakh, are not required to file income-tax return from now onwards.

“No income-tax returns is required for salaried persons whose annual annual taxable income including salary and interest is up to Rs 5 lakh. We would shortly notify this,” a Central Board of Direct Taxes official said.

However, he said this would not cover income from other sources like house property, capital gains and gains from profession and business.

The scheme would be applicable from assessment year 2011-12 onwards. This means that the salaried persons eligible under the scheme would not have to file returns for the financial year 2010-11 in 2011-12 (assessment year).

Under the scheme, those salaried persons who want to claim tax refund, would have to file income tax return.

As per the Memorandum to the Finance Bill 2011, the government will be issuing a notification exempting ”classes of persons” from the requirement of furnishing income tax returns.

Under the scheme, the salaried person wants exemption from filing IT return, has to disclose about the incomes like dividend and interest to his employer for tax deduction.

In the scenario, the Form 16 issued to salaried employees will be treated as Income Tax Return. At present, it is obligatory for all salaried persons to file income tax return under the Income Tax Act, 1961.

The idea behind the move is that in cases where there are no other sources of income, filing of a return is a duplication of existing information.

Source: Yahoo! Finance

This is a post from: The Orange Paper ~ A blog about Personal Finance, Indian Stock Market, Financial Planning, Investing, Wealth Building, Taxes and more.

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Due Date Of Filing of Income Tax Returns Extended To 4th August 2010

Austin — Mon, 02 Aug 2010 01:21:28 +0000

The Central Board of Direct Taxes (CBDT) has decided to extend the due date of filing of income tax returns to 4th August 2010 for taxpayers for whom the due date ends today, which is 31st July 2010. All paper returns or e-returns filed on or before 4th August 2010 will be considered as filed within the due date.

The decision was taken in view of some technical snags in the e-filing computer system, and inclement weather at various locations, due to which taxpayers have reported difficulties in filing or uploading income tax returns.

Password to open your ITR V/ ITR-Acknowledgement

Austin — Fri, 30 Jul 2010 17:13:26 +0000

Photo by .schill

After a lot of searching, have finally got the password logic for the ITR acknowledgement that’s made available to users who file their returns electronically through the www.incometaxindiaefiling.gov.in website.

The password is a combination of the pan (in lower case) and the date of birth in the format ddmmyyyy.

For example, 1) if the pan is AAAAA2222A and the date of birth is 07-Jan-1978, then the password will be aaaaa2222a07011978

Please note that you will need Adobe Acrobat reader to open the password protected PDF file.

14 tax-free incomes for FY 2009-10

Austin — Sat, 07 Nov 2009 16:49:33 +0000

In a few months’ time the taxman will coming knocking on your door. However, he cannot tax you on the following 14 important items of income and receipts, as they are fully exempt from income tax and which a resident individual Indian assessee can use with profit for the purpose of tax planning.

Know your challan status via SMS

Austin — Sun, 21 Jun 2009 09:13:41 +0000

photo by Erik Schlange

National Securities Depository Limited (NSDL) has launched a Short Message Service (SMS) based facility to know the status of challans. The procedure for availing this facility is as under:

1. The tax payer can send an SMS to 575758 with a message containing the word CSI followed by a space and CIN provided by the respective Bank at the time of making the Direct tax payment.

2. The CIN should be separated by comma (,).

3. Challan Identification Number (CIN ) consists of details such as BSR Code of Collecting Branch (seven digit) , Challan Tender Date (DDMMYYYY) and Challan Serial No (length less than or equal to 5 digit) and Amount.

4. The amount is an optional field. If the amount is entered by the tax payer he would get the confirmation whether amount entered is matched or otherwise as per NSDL database.

For e.g., if the tax payer input “CSI 0510001,11032009,5,5000” where in “0510001” is the BSR code of the collecting branch, “11032009” is the Challan tender date, “5” is the Challan serial number and “5000 is the amount paid by the taxpayer.

The tax payer will get the information against which TAN/PAN the payment has been accounted with the confirmation whether amount entered is matched or not. (This is an illustrative challan identification number, actual CIN should be provided in the SMS).

There will be special charges for these SMS. These charges may vary from one mobile service-provider to another. The charge structure can be obtained from the concerned service-provider. The status of the CIN based view will continue to be available from NSDL-TIN web-site www.tin-nsdl.com or NSDL Call Centre at 020-27218080 or Aykar Sampark Kendra at 0124- 2438000.

2 strategies to help save tax without spending a penny

Austin — Wed, 26 Mar 2008 07:59:01 +0000

Entry loads have been waived off on applications that are submitted directly to the mutual fund house. For MF investors, who invest either by way of SIP (Systematic Investment Plan) or as bulk investing, it could mean saving quite a sum of money – around 2% of the investment amount. So consider investing directly in ELSS (Equity Linked Savings Scheme) as it could be a smart and cost-effective way to do so. If you don’t have the money, churn the existing ELSS portfolio – as entry loads are not applicable for direct investing.

Let’s look at the 2 strategies that you could use to save tax; you may adopt any of the two that suits your situation:

SHUFFLE STRATEGY

As per the Income Tax Act, ELSS schemes are subject to a lock-in period of three years from the day of investing. And since there is no long-term capital gains tax for equity funds sold after a year of purchase, shuffling ELSS schemes practically entail zero costs. So how does the shuffle strategy work? Assume John had been investing Rs50,000 in ELSS every year for the past 6 years. Since there is a lock-in of three years for ELSS, his/her investment of last two years would not be redeemable. But those investments made more than three years ago could be redeemed and invested back into the fund to gain fresh tax benefits. Section 80C of the Income Tax Act, allows tax deduction up to Rs 1 lakh of ELSS investments made in any financial year for an individual.

Earlier Section 88 had a condition for claiming rebate that the investment should be made out of the income chargeable to tax. This was subsequently removed to provide relief to the individual tax payers. Current provisions for claiming deduction under Section 80C do not contain this restriction. Therefore, investments could be made out of the current year’s taxable income or even the past accumulated savings/investments to claim the deduction from taxable income by an individual tax payer. While previously, such reinvestments attracted entry loads, the new SEBI rule has done away with such costs for direct investing.

In this shuffling (investment) process, there is a possibility that the investor might make small profit or losses since the Net Asset Value (NAV) might move up or down during the shuffle process. Such shuffles while helping get tax benefits also gives a chance to have a relook at the MF portfolio and prune investments if necessary.

Shuffle it this way:

Fill up a redemption form to redeem your old ELSS (3 years or more)
Opt for direct credit to your bank account
Pick up application form for now investing in an ELSS
Fill and submit it directly to the mutual fund house (you save on entry loads)
Investment statement would be sent to your address
Use these statements for tax purposes

SWITCHING STRATEGY

Another quicker method is that of switching out proceeds to a liquid fund of the same fund house and switching it back into the same ELSS fund of the same fund house. Switching refers to the process of transfer of money from one scheme of a fund house to another scheme. While for taxation purpose, such switching is considered as redemption and taxed accordingly, the advantage for investors is in terms of getting NAV of the same day. So for instance, if an investor switches from an equity scheme to a liquid scheme, the same day NAV is applicable.

How does it work? Say for instance, an investor with previous ELSS investments does not have money to make further investment in the current financial year. He could consider switching it to a liquid fund and back into the ELSS fund. There are no loads applicable for doing it if done within a short period (10 days or lesser). At least that’s what Franklin Templeton MF and ICICI Pru MF allow for their respective schemes. The recent SEBI rules also state that waiver of loads would be applicable for “additional purchases done directly by the investor under the same folio ad switch-in to a scheme from other schemes if such a transition is done directly by the investor.”

Switch it this way:

Fill up a switch request form to switch from ELSS to a liquid scheme (of the same fund house)
Switching happens on the same day of NAV
A statement is sent by the MF house to your address
After a few days, switch it back to ELSS
Again a statement is sent by the MF house to your address
Use the latter statement for tax purposes

So, now on, ensure that you pocket the tax breaks the government has given you – of course without shedding that extra penny.