GTC - India Income Tax


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Income tax Provisions and Rules - Residents and NRI's

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GTC - India Income Tax

  1. 1. Welcome
  2. 2. Types of TaxesDirect Tax 1. Income Tax 2. Wealth Tax 3. Property Tax Indirect Tax 1. Sales Tax- It is charged at the time of supply / sale of goods 2. Excise Duty – Levied and collected on goods manufactured in India. 3. Customs Duty- Collected on the goods imported or exported out of the boundaries of the country. 4. Service Tax
  3. 3. Index PAN Meaning, Planning and Pre-cautions: Salary House Property Business/Profession Capital Gain Senior Citizens NRI AIR Common Rules.
  4. 4. PAN - Compulsory Sale or purchase of immovable property of Rs. Five lakh rupees or more Time deposit with Bank, Post office exceeding Rs.50,000 Sale or purchase of Securities exceeding Rs. One lakh Opening a bank account Application for telephone / cell phone Payment to Hotel and restaurants exceeding Rs.25,000 at any one time Deposit in cash aggregating to Rs.50,000 or more during any one day. Cash payment exceeding Rs.25,000 in connection with foreign travel like ticket, foreign currency, travelers cheque etc., Deduction of TDS at lower / normal or NIL rate, before 1st week of April every year.
  5. 5. Income from SalarySalary Less than Rs.5 lacs of salary Income not required to file tax returns. Interest on housing loan on self occupied / let out property needs to be furnished to Employer.Tips for Tax Planning: a. In case of company leased accommodation, if the property is in spouse name of the employee, it would have additional tax advantage. b. Tax planning on Company leased accommodation – self lease, b. Submit Interest on Housing loan and investment u/s 80 C to you employer on time, to avoid excess deduction of TDS from salary. C. In case if you are paying insurance premium for your dependent parents avail the addition deduction upto Rs.20,000 u/s 80D c. Do not discontinue your tax filing. Though the return filing date is 31st July , the returns can be belatedly filed upto 31.03.2012, for the current assessment year. d. In case of an employee who has worked in more than one company during the year, where two Form 16s are issued, it is recommended to submit the first employers form 16 to the other, to avoid payment of additional tax liability and interest after the year end.Precautions:(i) Check Form 26AS to make sure that, your TDS matches with the amount remitted.(ii) Avail the workings on ESOP, FRA, other Perquisites, Gratuity etc.,(iii) In case of worked for more than two companies during the current year, pay advance tax before 15th March.(iv) Do not divert your salary income to your spouse’s name for investment. Clubbing provision will attract .
  6. 6. Income from House PropertyHouse : Income from every house property whether self occupied, let out or vacant is chargeable to tax. The annual value of self occupied property is NIL, for let out it is actual rent received and for vacant either actual rent received for part of the year for which it was occupied or reasonable rent.Tips for Tax planning: New property can be purchased in the names of different family members. Interest on housing loan is allowed even it is borrowed from family members. For let out property actual property tax paid during the year relating to previous years (arrears) allowed for deduction.Precautions: If you have more than one house, then the second house is said to be deemed to be let out.
  7. 7. Income from ProfessionProfession:Any income derived from Business, profession, trade , commerce is chargeable under“Business Income”Income from Profession more than Rs.15 lacs, audit of accounts compulsory.Tips for Tax planning: Avail maximum benefit available for all “Deductible Expenses” Where certain expenses are allowed only on actual payment bsis ensure that such payments are made before filing return of income. Acquisition of any new asset be planned before 30th September to avail full depreciation for the year.Precautions Failure to get the accounts audited in time attract penalty upto Rs.1,50,000. Non maintenance of books of accounts penalty upto Rs.25,000. Non filing of returns within due date, disqualifies for carried forward losses on business. Do not make any cash payment of Rs.20,000 or more in cash, otherwise the payment will get disallowed.
  8. 8. Capital GainsCapital Gain: Any profit or gain arising from the transfer of capital assets during the previous year is chargeable as LTCG/ STCG depending on the period of holding the asset. More than 36 months (12 months in case of securities)Tips for Tax Planning: Income below Rs.5lacs can plan for STCG since it is taxed under 10% slab, and above Rs.8 lacs can plan for LTCG @ 20%. STCG can be planned in the year when there is already a Short Term capital loss / it is likely to arise. Take the maximum benefit of exemptions u/s 54,54B to 54H.Precautions: Exemptions need planning prior to transfer of capital asset. Basic exemption limits not available to NRIs on LTCG.
  9. 9. Senior citizensSenior Citizens: For AY 2012-13, age limit for the category has been reduced from 65 years to 60 years. Applicability is not for during the year. Very Senior Citizen – 80 years and above.Tax Planning Tips: Pension is taxed under “Income from Salary” and any family pension is taxed under “Income from other source” with an exemption upto Rs.15,000 . Plan for Ancestral property and Partition of Assets.Precautions: Inform your PAN to Bank and file Form 15 H. Maximum amount upto which income is not taxable is Rs.2,50,000 p.a. Medical insurance premium Rs.20,000 u/s 80D and for specified deceases upto Rs.60,000. Register will or gift deed at appropriate time to plan for ancestral property. Pay no tax upto Rs.5,40,000.
  10. 10. NRI  If a NRI is paid salary outside India for his services rendered in India, this income is taxable in India.  For a person leaving India, tax clearance to be obtained from Income Tax Department, in that case, salary / any income is taxed in the same year of earning.  The money received from NRI thro’ NRE account is not taxable in the hands of the recipient.  Income from House Property and Capital Gains are taxed in the hands of NRI as Resident Indian.  Need not file his return if the taxable income is below the maximum amount not liable to tax ; TDS is done at 20%.  For LT and ST capital gain basic exemption limit is not allowed.  Interest earned on NRE account is tax free.  NRI can buy property but not agriculture land.  Your global income is not taxable if u r a RNOR. Say for 2 years after that global income is taxable in India.  Once u go abroad / become a NRI, need to intimate Banker DP about the status, so that NRO account is created.  After a stay of nine years abroad, if a person returns to India, during the current year Resident and for another 2 years, RNOR , later taxed according to DTAA  Its illegal to continue normal savings bank for a NRI, instead of NRE  NRO account is taxable and TDS is at 20 / 30% Case 1 : Purchase of property from NRI.
  11. 11. AIR- Annual Information Report There are certain specified persons like Banks, Credit Card Agencies, Mutual Funds, Sub Registrar, Companies issuing shares through public, RBI are required to submit reports on certain specified high value transactions like  cash deposit of more than Rs.10 lacs during the year in savings bank account  Credit Card payments aggregating to Rs.2 lacs or more during the year  Mutual fund purchase of Rs.2 lacs or more  Payment to purchase of shares of Rs.2 lacs  Purchase or sale of immovable property of Rs.30 lacs and more  RBI Bonds of Rs.5 lacs or more
  12. 12. Common Tips Creation of HUF / Trust. Joint Registration of Property. Joint Applicant / Co-applicant, on Housing Loan. Respond t0 Income Tax notice – personal appearance / Representation/ Rectification. Do not disclose you PAN number unless and until it is asked by authenticated agencies. Avoid cash deposits as much as possible. Continuity of filing income tax returns, though there is NIL income. File Income Tax returns on or before due date 31st July or belated return by 31st March. If you are a NRI specify in your income tax return Keep explanation of all credits and debits of >Rs.50,000 into your bank accounts.Online mechanism Filing of Tax returns Payment of Taxes Refund Status Tax credit verification - Form 26AS
  13. 13. Thank you CA. Sujatha RaghuramanEmail : Sujatha.raghuraman.blr@gmail.comPhone : 99455 98565