Having Pleasure on the Plate but Safety in the Mind

Rajesh Choudhary

THE HONEYMOON IS OVER WHEN THE BRIDE BEGINS TO FEEL LIKE SHE WAS NEVER ANYTHING BUT A TAX DEDUCTION TO HIM.

content... • Why Tax ?• Basic Knowledge/Terminology on Income Tax?• Tips For Income Tax Computation Of Salary

Income (F.Y.2007-08) ?• How to Compute Tax on such Income? • Tips For Computing Income From House

Property ?• How(eg.Tricks) to Save Tax ?• Refund Funda?• How to file Return ?

***

PLAN YOUR FAMILY’S FUTURE.NOT JUST YOUR TAXES

WHY TAX ?PUBLIC EXPENDITURE ?

DEBTNational

Debt,Public Debt

DIRECT TAX

INCOME TAXFBT,GIFT TAX

WELATH TAX,BCTT

INDIRECT TAX(EXCISE DUTY,CUSTOMS

CST,VAT,EXPENDITURE TAX,LUXURY TAX,ENTERTAINMENT TAX,

OCTROI,CESS,SERVICE TAX)

NOTHING IS CERTAIN BUT DEATH & TAXES contd…

Basic Terminology

• FINANCIAL YEAR: Beginning from 1st April and ending on subsequent 31st March.

• PREVIOUS YEAR : Financial Year in which the Income is earned. E.g.2005-06

• ASSESSMENT YEAR :Next financial year of Previous Year eg. 2006-07 for Previous year 2005-06.

• ASSESSEE :Tax Payee I.e.Individual/Firm/Company etc.• HEADS OF INCOME :Key heads:Salaries,House/Property

Income,Business/Professional Income,Income from Purchase & Sale of assets (Capital Gain),Other Source like Lottery,Dividend & Interest etc

A Fine is a Tax for doing something wrong.A Tax is fine for doing something

Right.

contd… Basic Terminology• PAN (PERMANENT ACCOUNT NUMBER)

• UNIQUE NUMBER 10 CHARACTER ALLOTTED BY INCOME TAX DEPTT- PERMANENT IN NATURE IN SPITE OF CHANGE IN ADDRESS/STATION/ASSESSING OFFICER.

• PAN SHOULD BE QUOTED BY EVERY PERSON IN RELATION TO FOLLOWING TRANSACTION:

• Deposit in cash/Preparation of DD for ( =>Rs.50000/=) with a Bank on one day.

• Installation of Telephone including Cellular Connection.• Sale or Purchase of Land/Buliding/Vehicle.

A person required to apply for PAN shall furnish an application in Form.49A alongwith proof of Identity and proof of address.

• Form.49 A can be obtained from offices of UTI Investor Services Ltd. Or IT PAN Service Centres.Multi-purpose laminated PAN card can be issued from the said offices within 15 days of application.

• IT IS MUST FOR SALARIED EMPLOYEES FAILING TO ATTRACT PENALTY OF RS.10000/=.

Basic Terminology• SUVIDHA & SAHAYATA :’Helpline-Income Tax’ & ’ Help Centres’ to

assist Tax Payers in preparing returns of Income Challan and filing PAN applications.

• SAMPARK : Aayakar Sampark Kendra (ASK) will enable tax payers to obtain information and forms.Just dial 0124-2438000 for :

- Information for forms for PAN. - Status of your PAN Applications. -Return of Forms. - Help on payment of Taxes.

Forms or challans shall be sent by FAX or e-mail.

A POLITICAL PROMISE TODAY MEANS ANOTHER TAX TOMORROW

[A] TOTAL SALARY=[BASIC+DA+HRA+CCA+AREA ALLOWANCE+OT+EPI+PPI+INCENTIVE+(LTA - EXPENDITURE OF FAMILY RESTRICTED TO AC IST CLASS AGAINST PROOF OF EXPENDITURE)+PDA+HONOURARIUM+LEAVE ENCASHMENT+INT_SUBSIDY+LUNCH SUBSIDY+CREDIT CARD ALLOWANCE+ENTERTAINMENT ALLOWANCE+GARDENER CHARGES+CONVEYANCE (I.E.MONTHLY REIMBURSEMENT-800 PM)+PF INTEREST>7.5% CREDITED IN PF BALANCE+MEDICAL EXP.>15000 INCURRED IN HOSPITAL OTHER THAN BEL/GOVT.APPROVED HOSPITAL+OTHER TAXABLE ALLOWANCES+CONCESSIONAL INTEREST ON LOANS >20000+Colony Charges at Bangalore (i.e.15% of former elements-Rent Paid)

[B] HRA EXEMPTION

 LEAST OF THE FOLLOWING :1ACTUAL HRA RECEIVED 2.RENT PAID (-) 10% SALARY (I.E.BASIC+DA]. 3.50% OF SALARY (FOR ACCOMODATION SITUATED AT MUMBAI/CHENNAI/KOLKATA/DELHI) 4.40% OF SLARY (FOR ACCOMODATION AT OTHER PLACES)

•

Contd…[C] SALARY INCOME =[A] -[B]

[D[PROFESSIONAL TAX

[E[ GROSS SALARY INCOME=[C] - [D]

[F] OTHER INCOME=HOUSE PROPERTY+CAPITAL GAIN+OTHER SOURCES I.E. INTEREST(BANK+NSC/NSS/KVP+DEBENTURE)+ GIFT>50000+Lottery etc.. [G] GROSS TOTAL INCOME=[E] + [F]

[H] DEDUCTION: [I] SAVINGS (Restricted to Rs.100000)[U/S 80C]: PF CONTRIBUTION (UPTO 42% OF (BASIC+DA),PPF,NSC, INTEREST ACCRUED ON NSCS, LIC/LIC'S JEEVAN SURAKSHA/INS.PREMIA,ULIP,MF, HOUSING LOAN TOWARDS PRINCIPAL, TUITION FEE @12000/= PER CHILD (MAX. 2 CHILDREN), INFRA. BOND, (AT LEAST) 5 YEARS FIXED DEPOSIT IN SCHEDULED BANK+ [II] MAXIMUM OF RS.15000/= FOR MEDICLAIM OF LIC/ANY INS.CO+ DONATION AS PER 80G OF I.TAX ACT / RS.50000/= U/S 80DD./INTEREST ON LOAN FOR HIGHER EDUCATION OF SPOUSE/CHILD/OTHERS

[I] NET INCOME =[G]-[H][J] TAX ON TAXABLE INCOME=ADDITIONS OF COL.(2)+(3)+(4) MENTIONED IN TABLE OF NEXT SLIDE.

INCOME TAX TARIFF[F.Y. 2007-08]    

TAXABLE INCOME LIMIT

INCOME TAX RATE SURCHARGE EDU_CESS

[I] [2] [3] [4]

UPTO 110000(FOR MEN) & 145000(FOR WOMEN) & 195000(FOR CTIZEN>=65 YEARS) NIL NIL 3%

110000-150000 10% NIL 3%

150001-250000 20% NIL 3%

250001-1000000 30% NIL 3%

1000001 PLUS 30% 10% 3%

•

   

PARTICULARS LET OUT SELF OCCUPIED  

(A) RENT RECEIVED/RECEIVABLE DURING THE YEAR LESS MUNICIPAL TAXES

TO BE CONSIDERED NOT TO BE CONSIDERED  

(B) LESS:DEDUCTIONS:   NOT  

REPAIRS [30% OF (A)]TO BE

CONSIDERED TO BE CONSIDERED  

(C )INTERST ON HOUSING LOAN      

(i) Upto Rs.150000 for on/after 01/04/1999

TO BE CONSIDERED TO BE CONSIDERED  

(ii) Upto Rs.30000 for loan before 01/04/1999      

(D) INCOME FROM HOUSE PROPERTY =(A)-(B)+(C ) =(C )  

       

IT Calculation for Individual Man

     

BASIC (30000*12)   360000

DA (24000*12)   288000

GROSS SALARY   648000

LESS: DEDUCTION    

U/S 80 C FOR PF   100000

TAXABLE INCOME   548000

TAX CALCULATION    

FIRST 110000   NIL  

NEXT 40000 @ 10% 4000  

NEXT 100000 @ 20% 20000  

NEXT BALANCE @ 30% 89400  

TOTAL TAX   113400  

EDUCTIONAL CESS @ 3% OF TOTAL TAX   3402  

TOTAL TAX LIABILITY[F.Y.2007-08]   116802

How to Save Tax ?A MAN HAVING AGGREGATE INCOME OF Rs.375000-NOT TO PAY ANY TAX

INCOME FROM SALARY/BUSINESS/OTHER SOURCES   375000

INCOME FROM HOUSE PROPERTY(FULLY SELF-OCCUPIED) Nil  

Less:INTEREST ON FUNDS BORROWED FOR ACQUIRING PROPERTY (Note:1) 150000 -150000

Less:Deduction u/s 80C(Life Insurance Premia,PPF etc.) 100000  

Deduction u/s/80D for Medical Insurance 15000 -115000

   

Total Income 110000

Tax Payable   Nil

(Note:1) :Funds for acquiring the house may be borrowed from any family members,who do not have taxable Income

PLAN YOUR FAMILY’S FUTURE.NOT JUST YOUR TAXES

REFUND FUNDA• IF AMOUNT OF TAX PAID(TDS BY BANK

ON INTEREST INCOME ( EG. >10000) IS MORE THAN AMOUNT CHARGEABLE TO TAX FOR A YEAR.REFUND OF THE EXCESS TAX PAID CAN BE CLAIMED BY ASSESSEE FROM INCOME TAX DEPTT.

• REFUND CAN BE CLAIMED IN I.TAX FORM(.30/ITR-1/2) WITHIN ONE YEAR.

• ******************************

Pay Tax – Karo RelaxFile by July 31st.: That’s all…..!!!

CRITERIA OF FILING IT RETURN (in Return form ITR-2) ALONG

WITH FORM.16 LATEST BY JULY’31ST [ -APPLICABLE FOR FOLLWING PERSONS.]

• FILING OF RETURN IS COMPULSORY IF THE TAXABLE INCOME EXCEEDS

THE BASIC EXEMPTION LIMIT (110000(FOR MEN) & 145000(FOR WOMEN) & 195000(FOR CTIZEN>=65 YEARS) EVEN IF THE TAX PAYABLE IS NIL OR REFUNDABLE.

ANYONE OF SIX PARAMETERS TO JUDGE ECONOMIC CONDITIONS

• 1.HOUSE IN SPECIFIED CITY• 2.MOTOR CAR• 3.CREDIT CARD• 4.CLUB (ENTRANCE FEE >25000/=)• 5.CONSUMER OF ELECTRICITY FOR 50000/= .p.a. in previous

year. • 6.TRAVEL TO FOREIGN COUNTRY (OTHER THAN PILIGRIMAGE TO HAJ,MANSAROVAR &

NEIGHBOURING

COUNTRIES)