Tuesday, May 14News That Matters

Taxation

Further Extension – Income Tax Return Filing Deadline for FY 2020-21 (AY 2021-22)

Further Extension – Income Tax Return Filing Deadline for FY 2020-21 (AY 2021-22)

Taxation
CBDT has further extended the due dates for filing the Income Tax Returns and various reports of audit for the Assessment Year 2021-22. This is primarily due to the challenges reported by taxpayers and other stakeholders.  In May, the Finance Ministry had extended the compliance deadlines stating that the extension of time limits for certain tax compliances is being given to provide relief to taxpayers in view of the severe pandemic. Now, these deadlines have been extended further. For individual tax payers (whose accounts are not to be audited), the due date has been extended to 31st Dec 2021. Earlier extended deadline Revised extended deadline Due date for ITRs for individuals whose accounts are not to be audited 30th Sep 31st Dec Due date for ITRs for Companies 30th Nov 15th F...
Tax Haven within India – This State has no Income Tax

Tax Haven within India – This State has no Income Tax

Taxation
You may have heard  in news about tax havens around the world. Companies set up offices in Mauritius, Cayman Islands etc. and pay no/ minimal tax in India. But you will be surprised to know that we have a tax haven within India. There is no income tax for people of one of the states. Amazed? It is in State of Sikkim. As per Section 10 (26AAA), following income of a Sikkimese individual is exempt from tax: from any income source in the State of Sikkim; or Income by way of dividend or interest on securities (generated in Sikkim or any other place). This exemption is not available to a Sikkimese woman who, on or after April 1, 2008 marries a non- Sikkimese individual. Explanation.—For the purposes of this clause, "Sikkimese" shall mean— an individual, whose name is recorded in the...
Cost Inflation Index Chart Table for FY 2021-22 (AY 2022-23) + Old Table 2001 – Calculator For Income Tax Capital Gain Purpose

Cost Inflation Index Chart Table for FY 2021-22 (AY 2022-23) + Old Table 2001 – Calculator For Income Tax Capital Gain Purpose

Featured, Taxation
How to Calculate capital Gains using CII Cost Inflation Index is used for calculating Long term Capital Gain. Every year, Income Tax department notifies Cost Inflation Index.  CII is very useful to calculate Long Term Capital Gain Tax. Capital Gain = Sales Consideration - Indexed Cost of Acquisition Indexed Cost of Acquisition = Actual Purchase Price *  (Index in year of Sale / Index in Year of Purchase) If the property is purchased before 2001, then you need to get the Fair market value of the property in 2001 and the use that for Indexed cost. In such cases,  Indexed Cost  = Fair Market value in 2001 *  (Index in year of Sale / Base Index i.e. 100) In the post (further below), I have explained how can you get the fair market value of the property in 2001 (in case the property is acq...

80C Investments deadline extended – some points for clarification

News, Taxation
Government has announced several measures to minimise the impact of coronavirus on the taxpayers and investors. As part of these measures, the Finance Minister has: extended the deadline for submitting belated ITR filing deadline for FY2018-19 to June 30 2020 extended the Aadhaar-PAN linking deadline to June 30, 2020. extended the timelines for making 80C investments for FY 2019-2020 from 31Mar2020 to 30June2020. After these announcements, there is some confusion over the tax issues. Following are some details to clarify such points of confusion: 1. Has FY2019-20 itself been extend to June 30 and whether the income in Apr - June 2020 will be taxable within FY 2019-2020? NO. The FY2019-20 will close on March 31, 2020 as usual. Only income till March 31, 2020, will be considered for...

CBDT clarifies – 10% TDS applicable only on dividend payment by mutual funds

News, Taxation
CBDT has issued a clarification that the requirement of deducting TDS @ 10% will ONLY apply for dividend payments by mutual funds. No tax shall be required to be deducted by the mutual fund on income which is in the nature of capital gains. There was lot of confusion on the budget announcement day if the TDS is applicable on both dividend and Capital Gains. The Finance Bill, 2020, has proposed the insertion of a new section — 194K — in the Income Tax Act, which states "any person responsible for paying income arising from units of mutual fund or a specified company must deduct tax at the rate of ten percent of such income". Experts were of the opinion that the term "Income" is very broad and open to interpretation. But CBDT has now clarified that TDS is only applicable for dividend in...

Indian Budget 2020 Highlights – New Income Tax slabs

Taxation
In the Union Budget 2020 that was presented by Finance Monster on 1st Feb 2020, a number of tax changes has been proposed: New Tax Slab rates (Optional) While there is NO change in the existing Income-tax slab rates for individuals, a new tax regime has been proposed under which individuals would be taxed at reduced tax rates if they forego exemptions and deductions. The new tax regime will be Old Rate Slab Rates Rates of Tax (New rate NIL upto Rs 2.5 lakh NIL 5% 2.5 lakh - 5 lakh 5% 20% 5 lakh - 7.5 lakh 10% 7.5 lakh - 10 lakh 15% 30% 10 lakh - 12.5 lakh 20% 12.5 lakh - 15 lakh 25% above 15 lakh 30% The new tax regime is optional. Individuals who opt to claim available exemptions/ deductions would be taxed as per the existing rates. But if you want to opt for the new ...
[How to] Save Capital Gains Tax on Sale of Property in India

[How to] Save Capital Gains Tax on Sale of Property in India

How to Series, Taxation
Over the years, property is one of the high ticket items in one’s investment portfolio. Now the buying / selling are more frequent with good appreication. However, the investor needs to consider taxation aspects when buying & selling properties. Any profit earned on sale of property is taxed as Capital Gains. The amount of tax depends of holding period of the property.   Short Term Capital Gain Long Term Capital Gain Holding Period Asset Held of less than 3 years Asset Held of more than 3 years Tax Added to Income and taxed at Individual's slab rates 20% after Indexation For long term capital gain, tax liability is determined based on indexed cost of acquisition and improvement.  Check – Cost Inflation Index & Calculation How to Save Capital Gains Tax on Sale of Pr...

Section 80EE – Additional deduction for Home loan Interest

Taxation
Section 80EE allows you to claim additional deduction of Rs 50000 per year for interest payable on housing loan. This deduction is available for individuals subject to following conditions: Value of residential house does not exceed Rs. 50 Lakhs Loan sanctioned does not exceed Rs. 35 Lakhs Loan is sanctioned between the FY 1/4/2016 and 31/3/2017 Assessee is a first time home buyer. Assessee does not own any other residential house as on the date of sanction of the loan. This house is supposed to be his self occupied property Loan must be from eligible financial institution - must be either a bank, or a “public company” formed with the main object of providing long term housing finance (registered with NHB).  Points to Note New clause The deduction is allowed for up to Rs 5...

Tax Saving options & deductions under 80D to 80U

Taxation
Hopefully, you are claiming deduction upto Rs 1.50 Lakh under Section 80C by investing  in various eligible options. If not, please read the article here about 80C tax deductions. After exhausting the limit of Rs 1.50 Lakhs u/s 80C, you must be thinking - Are there more avenues to save tax?   So, here are some options which are allowed as deduction from your income for purpose of tax calculation (other than 80C): Section 80C –  Deductions for eligible investments (upto Rs 1.50 lakh) Under this section, you can claim deduction upto Rs 1.5 lakh if you make eligible investments. Read my article on 80C deduction.   Section 80D – Deduction for  health insurance premium (upto Rs 1 Lakh) You can claim deduction upto Rs 25000  - for any medical insurance premium paid for yourself, spouse, de...

Section 80C Tax Saving Options & deductions (FY 2018-2019 / AY 2019-2020)

Featured, Taxation
In the month of March, most tax payers rush to invest their money in tax saving instruments. Though it is better to do the tax planning at the start of year & plan your investments over the whole year. Many salaried taxpayers has to submit the investment proofs etc to their employer in Jan.  Section 80C of the Income tax Act 1961 provides list of Investments / expenses which is allowed as Deduction from your taxable Salary. Under 80C, you can claim maximum deduction of Rs 1.50 lakh. List of deductions under Section 80C - Investment  Eligible for deduction u/s 80C PF/ EPF (Employee Provident Fund   PPF – Public Provident Fund   NSC – National Savings Certificate   5 year Tax Saver Bank FD   5 year Post Office Time Deposit   Senior Citizen Savings Scheme   NHB Suvriddhi Bonds ...