Did you miss the tax filing deadline? Not to worry

The last-minute rush of filing tax returns is over. Hounded by the 31 July deadline, most people manage to scrape through, filing their returns on time. Yet, there are some who, for one or the other reason, fail to do so. If you are among the latter and worried about breaching the law or facing a heavy penalty, don't press the panic button just yet. You can still file your returns and chances are you won't have to pay a penalty.

The return for income earned in the financial year ending on 31 March should ideally be filed by 31 July for non-business taxpayers. But if the taxpayer has missed the deadline in spite of having four months in hand, he can do so till 31 March 2013.

In such a case, the penalty to be levied would depend on the status of the tax to be paid.

If tax has been paid

If you have paid your taxes, there's little to worry because you can file the returns before 31 March without paying a penalty.But if you push the new deadline and file the return only after 31 March 2012, the assessing officer may impose a penalty of Rs 5,000,. This amount may depend on the discretion of the assessing officer.

If tax has not been paid

If you have not cleared the taxes, you will have to pay a penalty at the rate of 1% per month for the period after 31 July. If the tax due is more than Rs 10,000, you are supposed to pay an advance tax on your income in three tranches (see table). In such a case, the 1% penalty per month will be applicable from the period you have not paid the tranche.

If Form 16 has an error

If your employer has made an error in Form 16 and this has crept into your returns, it will have to be corrected. In case a rectification is required, you should go ahead and file the return anyway. Subsequently, you can request your employer to correct the mistake, and after you receive the fresh Form 16, you can file the revised return.

Income tax on House Property

To get the maximum benefits and save tax you would need expert guidance. Incometaxreturnindia.in provides professional and expert Income tax guidance. To get more details you can reach us any time. Our tax experts will help you reduce your tax liability. You can save Income tax through multiple options couple of them have been discussed below:

is computed by taking what is called Annual Value.

The annual value (in the case of a let out property) is the maximum of the following:

Income from House property

• Rent received
• Municipal Valuation
• Fair Rent (as determined by the I-T department)

For more queries on Income tax on house property Please visit here.

Section 80DD for Medical Treatment of Handicapped Dependents

If you are incurring expenditure for the treatment of your handicapped dependent, you could claim a deduction under section 80DD.

Available Deduction - Rs 50000, or actual expenditure incurred, whichever is lesser. For severe handicap conditions Rs. 1,00,000 is the deduction limit.

Scope of Deduction - Deduction can be claimed for dependent parents, spouse, children and siblings. Dependents must not have claimed any deduction for their disability.

Deductions are permissible in either of the following cases.

a) Costs incurred for medical treatment, training or rehabilitation of a disabled dependent, including amount spent for nursing.

b) Amount paid towards an insurance scheme for the maintenance of your disabled dependent in case of your untimely death.

Meaning of Disability- Disability means a person suffering from 40% or more of any of the below disabilities. A severe disability condition is 80% or more of the disabilities.

a) Blindness and Vision problems

b) Leprosy-cured

c) Hearing impairment

d) Locomotor disability

e) Mental retardation or illness

Key factors

a) Individuals would need to produce a copy of the disability certificate as issued by the central or state government medical board to claim deduction.

b) Insurance policy obtained must be in your name and should be a policy for life. It could pay either an annuity or a lump sum amount for the benefit of the dependent on your death.

c) If the disabled dependent predeceases you, the policy amount is returned to you, and treated as income for the year in which you receive it, thus fully taxable in your hands.

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Income Tax Deductions - Donations Section 80G

Section 80G offers a tax deduction for donations to certain prescribed funds and charitable institutions. Here are the details of the section.
 
Eligible Assesses
This section is applicable to all assessees, who make an eligible donation, whether an individual, HUF, NRI or a company.
 
Deduction Limit
The extent of deduction is either 50% or 100% of the contribution, depending on the charitable institution donated to.
  
For certain funds, the aggregate deduction is limited to 10% of the “Adjusted Gross Total Income”. So, in such cases, even if you do make a donation larger than 10% of your Adjusted Gross Total Income, the donation amount eligible for claiming a deduction would be capped at 10% of the Adjusted Gross Total Income.
 
The Adjusted Gross Total in this case, is the gross total income minus long-term capital gain, short term capital gain and all deductions u/s 80CCC to 80U except any deduction under this section.
 
Scope of Deduction

• The donation may be paid either out of taxable or exempted income.
• Only donations made in cash or cheque are eligible for deductions. Donations made in kind, in the form of food, clothing, medicines etc are not eligible.
• Donations to foreign charitable trusts or to political parties are not eligible for any deduction.
• For donations made to Indian Olympic Association, any association notified u/s 10(23) for development of infrastructure for sports or games, or for sponsorship of sports or games, only a company is eligible for deduction.
• Donations made to not all charitable institutions qualify for a deduction. Here is a list of approved charitable institutions and funds that qualify for a deduction.

                 

Donations with 100% deduction without any qualifying limit:

1. Prime Minister’s National Relief Fund
2. National Defence Fund
3. Prime Minister’s Armenia Earthquake Relief Fund
4. The Africa (Public Contribution - India) Fund
5. The National Foundation for Communal Harmony
6. Approved university or educational institution of national eminence
7. The Chief Minister’s Earthquake Relief Fund, Maharashtra
8. Donations made to Zila Saksharta Samitis.
9. The National Blood Transfusion Council or a State Blood Transfusion Council.
10. The Army Central Welfare Fund or the Indian Naval Benevolent Fund or The Air Force Central Welfare Fund.

             

Donations with 50% deduction without any qualifying limit.

1. Jawaharlal Nehru Memorial Fund
2. Prime Minister’s Drought Relief Fund
3. National Children’s Fund
4. Indira Gandhi Memorial Trust
5. The Rajiv Gandhi Foundation

       

Donations to the following are eligible for 100% deduction subject to 10% of adjusted gross total income

1. Donations to the Government or a local authority for the purpose of promoting family planning.
2. Sums paid by a company to Indian Olympic Association

      

Donations to the following are eligible for 50% deduction subject to 10% of adjusted gross total income

1. Donation to the Government or any local authority to be utilized by them for any charitable purposes other than the purpose of promoting family planning.

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Section 80D in Respect to Health Insurance Premiums

Investments made towards payment of health insurance premiums, qualify for a tax deduction under section 80D.

Available Deduction - For individuals less than 65 years of age, amount of health insurance premium paid or Rs. 15,000, whichever is lesser. For senior citizens above 65 years, amount of health insurance premium paid or Rs. 20,000, whichever is lesser.

A further deduction of Rs 15,000 could be claimed, for buying health insurance policy for your parents (Rs 20,000 if either of your parents is a senior citizen). This is irrespective of whether they’re dependent on you or not. No deductions can be claimed for in-laws.

Scope of Deduction - Individual assesses can claim deduction for premiums paid towards health insurance of self, spouse, parents and children.

For HUF assesses, premium paid for insuring the health of any member of the HUF, can be used for deduction.

Key Factors to keep in mind

1.      The premium may be paid by any mode of payment, other than cash.

2.      The health insurance premium that you pay must be from the taxable income applicable for the year you claim. Premiums should not be from gifts received by you.

3.      Part payment of premium is allowed. For example, suppose your parents contribute 50% of their health insurance premium and you pay the balance 50% of their premium. In such a case, you could avail the deduction for the amount contributed by you and your parents too could avail deduction for their contribution.

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Income Tax on Leave Travel Allowance

Leave Travel Allowance (LTA ) is one of best Tax saving tools available to employees.

As per the Rules, you can claim the LTA benefit only twice during the block of 4 years. For this purpose, following condition should be satisfied:

1) You should be on leave.

2) You should travel any where in India.

Family includes spouse, children as well as dependent parents, brothers and sisters. In respect of children born on or after 1.10.98, the exemption will be restricted only to two surviving children unless the birth after one child has resulted in multiple births.

The expense incurred by you is exempt up to the LTA received.

Obviously, if your wife and other family members travel, without you accompanying them, no LTA can be claimed.

For further query/ clarification you can drop us email at info@incometaxreturnindia.in

3) During such travel you may have your family with you.

Impact of late filing of Income tax return & issue related to due date

1.    1) Interest u/s 234A:If there is tax due after deducting advance tax ,TDS and self assessment tax than interest will be applicable @ 1% per month and part thereof up to the date of filing of the return besides interest applicable u/s 234B or 234C. Means this interest is applicable only if there is any tax payable in your return .

2.   2) Loss of Interest on refund: You may loose interest on refund u/s 244A as delay in filing is attributable to assessee for the period by which you have filed late return.

3.   3) Audit Report:Person who are liable to get their accounts audited should get the audit report on or before the due date of filing return i.e 30.09.2011. Audit repot is only to be prepared and not to be filed any where.In simple word or boldly we can say that if audit report has been signed before 30.09.2011 that is enough,you can file return late and report particulars will be filled when ever you filed your income tax return.

      

      4) Revised return :Late /belated return can not be revised .   

5.    Some of deduction under subsection 80 are not available for late return.

6.    Due date of income tax return is related to TDS deposite and disallowance u/s 40A(ia).

7.    Due date of Income Tax return is related to tax saving u/s 54, 54B, 54F and some other issues in capital gain saving account deposit scheme.

8.   5) Not able to carry forward the losses under various heads: you are not able to carry forward following type of losses if file return after due date

·         a) Speculation loss

a)     b) business loss excluding loss due to unabsorbed depreciation and capital exp on scientific research

·        c)    short term capital loss

·         d) long term capital loss

·         e) loss due to owning and maint. of horse races

However there is no impact on following type of losses even if return is furnished after the due date

·         loss from house property

·         business loss on account of unabsorbed depreciation and capital expenditure on scientific research.

(though delay can be condoned as per circular 8/2001 DT 16.5.2001 on fulfilling of certain condition)

so if you are ambit of the above  points then you should furnish your return up to 31.07.2011 or 30.09.2011 as the case may be without any penalty.

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Direct Tax Code (DTC) - Highlights

What is Capital Gain?

What is Capital Gain?

Gain on sale of following investment/assets is known as Capital Gain:

Shares

Units of a mutual fund

Bonds/debentures

Immovable property

Jewellery, paintings etc

What is Long term and Short Term Capital Gain?

When investments are held for more than 36 months, such gains are termed as Long Term Capital Gain. However, for shares, mutual funds, listed bonds & debentures, zero coupon bonds, the period is 12 months.

When investments held for less than36 months, such gains are termed as Short Term Capital Gain. However, for shares, mutual funds, listed bonds & debentures, zero coupon bonds, the period is 12 months.

 Am I required to pay any tax if I sell my shares after holding them for more than 1 year?

When you hold shares for more than 1 year, they become Long Term Capital Assets. Any profit earned is exempt from income tax, if the following conditions are fulfilled:

1. Such shares are sold through a recognized stock exchange.

2. Securities Transaction Tax (STT) has been paid on the sale of such shares.

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House Rent Allowance

House Rent Allowance (HRA) is best tax saving tools available to employees. With these you can save upto 50% of your salary if you reside in Metro(40% of your salary if you reside in non-metro).

As per income Tax act,  for calculation House rent allowance least of the following is available as deduction :

• Actual HRA received
• 50% / 40%(metro / non-metro) of basic 'salary'
• Rent paid minus 10% of 'salary'. Basic Salary for this purpose is basic+ DA forming part+ commission on sale on fixed rate.

Cities Like, Delhi, Mumbai, Chennai and Kolkata constitutes Metro. All cities other than these are non-Metro. So if you resides in cites like Gurgaon, Faridabad, Bangalore, Hyderabad,  etc it would constitutes as Non metro and only 40% deduction will be allowed.

If actual rent paid is lower than 10% of your basic salary you receive no exemption. The other key point is that you cannot claim any exemption under this section if you live in your own home or if you are not paying rent to anyone.

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