How to save taxes in india
M ost salaried individuals generally believe that there is nothing more to saving taxes beyond Section 80C.
However, is there a way whereby you as a taxpayer can save more on taxes than the Rs 1,00,000 limit set under Section 80C? If yes, then what are the other options in front of you?
In a chat with readers on August 7, Get Ahead tax expert Mahesh Padmanabhan discussed these and other tax-related issues affecting the taxpayers.
For those of you who missed the chat, here is the transcript.
arun_kumar asked, Hi Mahesh,for my tax planning i have 40% debt(LIC)and 35% equity(ELSS). Where should i put remaining 25%? Should i go for PPF or pension fund or semething else? Pls advice
Mahesh Padmanabhan answers, You have not specified your total exposure to various funds (ie. debt or equity) and also your risk appetite needs to be understood to define the investment mix. In this regard it would be difficult to state the best product mix. However, SIP in equity oriented mutual funds would be good idea. In case of fixed interest investment, it would be advisable to go in for PPF as the interest thereon is tax free.
malik asked, Hi mahesh I have sold a residential flat after keeping it for two years what is the tax implications and what are the avenues to save tax on the capital gain arises?
Mahesh Padmanabhan answers, In your case as the residential flat has not been owned for a term of in excess of 36 months, the same would be treated as a short term asset and any capital gain resulting thereon would be short term in nature. Short term gains do not carry any scope of tax reduction by way of reinvestment and are taxable at your applicable slab rate.
Jeetu asked, Hi Mahesh, apart from the Rs.1,00,000 savings that a male individual can do, are there more ways to save the tax?
Mahesh Padmanabhan answers, Apart from the Rs. 1 Lakh investment under section 80C there are other avenues of saving on tax. You could take medical insurance cover on your health as well as your family and the premium paid is available as deduction under section 80D. You could make actual donations to recognised institutions and avail of deductions either for the full or part amount of donations made.
If you are planning to acquire a home then you could utilise the interest payout as a deduction to the extent of Rs. 1.5 Lakh in case the home is used for self occupation. These are certain deductions. Further deductions or palnning methods could be drawn up based on your income source etc.
mm asked, Is it any useful to put money in ppf in sake of tax saving alone? then which is the best option for tax saving rather than Mutual Fund?
Mahesh Padmanabhan answers, PPF investment is a good avenue of savings with the interest being tax free. But this investment is restricted to the extent of Rs. 70000 per annum per individual. However, you could max out the Rs. 1 Lakh ceiling with additional PPF investment in the
name of any other dependent family member such as wife or children and claim the deduction.
Raju asked, Upto January I worked for one company. February i didnt work anywhere. March I worked for someother company. But while filing tax returns I filed only for the first company. Will it be any problem, if I dont file for 1 month in new company?
Mahesh Padmanabhan answers, The risk of not including your 1 month salary being noticed by the income tax authorities would be real in case of analysis of the Company TDS returns. Your second company might have deducted some tax at source and would have included your name in their TDS return which might not match with the income disclosed by you. You could go ahead and revise your return so as to include the 1 month salary and pay whatever additional tax. This would ensure that you are clear in your conscience and records of the income tax authorities.
Sumit asked, After PF deduction of my annual salary and LIC premiums it goes to somwhere around 1 lakh..so Should i do some more saving not for tax saving but for future?
Mahesh Padmanabhan answers, You are bang on target. Most individuals confuse tax investments as the only investments and hence end with wealth that is not commensurate with their income potential. You would do well if you go ahead talk to a financial / investment planner and go about investing the surplus money you have.
RAGHAVANPVV asked, My PPF Account is maturing for repayment next year. Is it advisable to continue with the same or withdraw the amount since the Govt. is exploring various sources of tax mobilisation? We have come across information that the Finance Ministry would like to bring it under EET net. At the moment, the investments, interest accrued & amount withdrawn are exempt since they are coming under EEE.
Mahesh Padmanabhan answers, Your concern is correct but the investments already made may be excluded from the tax ambit proposed under the EEE structure. Moreover, this structure might take some time to be implemented and would be notified in advance. You can take a call then as to whether to withdraw or retain. For the moment atleast you could continue holding the PPF investment.
mahendra asked, Mahesh, I was in singapore for last few years. Now shifted to Mumbai..So I need to file the IT return for the last year.
Mahesh Padmanabhan answers, In case you have had no taxable income in India by virtue of you being a resident of Singapore, then you would not be required to file your returns in India for the financial year 2006-07. Also, you need to note that Singapore residency is based on calendar year concept whereas India follows the financial year (i.e. April to March)system. Hence you need to determine if you clearly are a resident in India, if yes then you may be needed to file your returns in India.
Tomorrow: Part II
Mahesh Padmanabhan is principal advisor -- direct taxes group, RelaxWithTax Consultants Pvt Ltd, a Mumbai-based personal taxation and finance solutions provider.Source: www.rediff.com