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Balwant Jain

CA & CS ,

How to do Tax Planning for current year

 

Questions Answered

Q

guest: Hello sir, I am Aditya and I have been in US for more than 182 days in current taxable year. My question is regarding which taxable return shall I file? Do I need to pay any taxes in India?

Balwant Jain: No separate forms are prescribed for Non resident as such in India. The particular form to be filed will depend on the nature of the income. Though you are outside India for more than 182 days still any income arising in India will be taxable in your hand and you will have to file appropriate ITR form if the total of all such income arising or accruing in India exceeds Rs. 2.50 lakhs.
Q

guest: Capital gain tax calculation for selling eih ltd shares sold @ 187 today which I got father as gift on 06/04/2018? He got allotment decades back and rights bonus all decades ago.

Balwant Jain: Since you have received these shares as gift, the cost to the previous owner i.e. your father will be taken as your cost. Moreover the time for which these shares were held by your father will also be taken into account for determining whether these were long term or short term. I presume these were held by your father for more than one year. For the purpose of computing long term capital gains on listed shares, the market price as on 31st January 2018 will be taken as your cost and if the price realized is over the price as on that date, you are liable to pay long term capital gains tax @ 10%. However in case total long term profit during the year on all the listed shares and equity mutual funds schemes upto 1 lakhs is exempt and it is only for profit above 1 lakh in a year on which this 10% tax is applicable.
Q

guest: Hi My Wife’s Employer does not provide the facilty of PF to her. Where can she invest so that she can save Tax as well accumulate Some Funds(like PF)? Thanks.

Balwant Jain: For the purpose of accumulating corpus for long term your wife can invest in public provident fund (PPF) which is almost same as EPF in case the employer does not provide EPF option. She can get deduction upto Rs. 1.50 lakh in a year along with other eligible items for making investment in PPF. Even in my opinion equity linked saving scheme is also a good option for accumulating funds for long term if your wife is willing to take some risk and remain invested at least for 7 years. the e=average returns on ELSS are better than PPF or NPS. Over and above 1.50 lakh your wife can also deposit up to Rs. 50,0000/- and claim an additional deduction under Section 80 CCD(1B).
Q

guest: Hi sir, I earn around 7lac per annum after recent hike. I am 26 year old and have LIC premium of around 28k per annum, Rpli of 14k, ppf of 50k, Absl tax relief plan of 18k which I am going to invest this annum. Still I have been paying tax. Could you please suggest some tax saving options. My mail Id is achantasivakumar@gmail.com

Balwant Jain: It seems you are not exhausting the limit of 1.50 lakhs of Section 80C. for the short fall you can invest in ABSL tax relief 96 fund. For saving further tax you can think of putting upvto Rs. 50,000/- in an NPS account and claim under Section 80 CCD(1B). Both these amounts will take your deduction to Rs. 2 lakhs. It seems you do not have any health insurance which in my opinion is a must even when your employer provides you one. For your own health insurance you can pay and claim upto Rs. 25000 in a year. You can also pay the medical premium of your parents and claim deduction upto Rs. 25,000/-. In case your parents are senior citizen the deduction available is Rs. 50,000/-. In case your parents do not have health insurance policy or are not able to get one, you can claim deduction up to Rs. 50,000/- for their regular medication expenses including expenses incurred for check up and hospitalization under Section 80D. You can send me a detailed mail on jainbalwant@gmail.com
Q

guest: Hi. Is it a good idea to invest in NPS at the age of 30 years for the salaried person in the income range of 15 lakhs p.a.

Balwant Jain: As the Murphy`s law says the expenses expand according to the income available so it is always advisable to invest some money for very very long term and which you do not have access in normal circumstance. Money invested in NPS can only be withdrawn after you complete 60 years though in exceptional circumstances you can withdraw upto 25% of your contribution before that. This will help you create a corpus for long term specially for retirement planning. on maturity 40% of the corpus necessarily needs to be used for buying an annuity and 40% comes as exempt. for balance you have the option either to pay tax and use it or buy annuity from that too. Since presently you get an additional tax benefit of Rs. 50,000/- every year under Section 80 CCD(1B), I would strongly recommend you to go for it. Do not bother much about taxability of it in future. In next 30 years you do not know what the tax laws will be for NPS withdrawal. The tax benefit on contribution of 50,000/- offers instant gratification and go for it.`
Q

guest: Pls mention details of home loan declaration.. In which section I have to keep

Balwant Jain: The question is not clear. However for home loan you get deduction under two sections normally. For home loan principal repayment you get deduction under Section 80 C up to Rs. 1.50 lakhs and for interest on home loan you get deduction under Section 24(b). For self occupied house the deduction is restricted to Rs. 2 lakhs and for let out or deemed to have been let out property, though you can claim full interest but loss under the house property head shall only be set off against the salary or business income up to Rs. 2lakhs in a year and the loss not absorbed shall be carried for for set off in subsequent 8 years against the head of income from house property only.
Q

guest: If I have got capital loss due to sale of flat how can in ITR-2?

Balwant Jain: You have to show under the CG (capital gains) head in A1 or B1 depending on whether this is short term or long term.
Q

guest: why there is no income tax deducted till 3,00,000 Rs. though tax slab starts at 2,50,000 Rs.

Balwant Jain: I presume you are talking about deduction from salary. Though the basic exemption is 2.50 lakhs but there is a rebate under Section 87 A up to Rs. 2500/- for tax if your total income does not exceed Rs. 3.50 lakhs. Since tax on 3 lakhs income comes to 2500/- only against which rebate under Section 87A is allowed by the employer.
Q

guest: I want to plan my income structure for FY 2018-19 with my Company i.e. Whether Company should give me it as Salary or whether Company should give it to me as consultation fees. My yearly income from Salary is going to be Rs. 10,00,000 for 2018-19. So my questions are: 1) Will I be able to save more tax if Company shows the payout as as consultation fees paid to me on monthly basis rather than salary or do I have more scope to save tax if shown as salary? 2) Whether 80C, 80CCC, 80D etc. deductions will be available if I show as income from business or is it only available to individual salaried person? 3) If suppose above exemptions are not available to other than salaried persons then will be able to show some expenses as business expenses ? If yes what will be those expenses which I can claim. Can car loan being paid come under business expenses. Will home loan being paid come under it. Will house rent come under business expenses/deductions? I really need to compare both options and make my tax plan and inform my Company in next couple of weeks. Hence need advise on priority. Thanks in advance. :)

Balwant Jain: The question needs a detailed deliberation but within the space constraints I will attempt to answer> Against your salary income you will be able to get a standard deduction of Rs. 40,000 from this year. So in case you opt it as consultancy and show it as consultation income it will be beneficial if you are able to claim expenses for earning this income like conveyance, printing and stationery, telephone expenses etc. Yes the deduction for 80C , 80 CCC and 80 D are available to all the tax payers whether salried or doing business. Even for home loan the same rule apply. for car loan you can claim interest portion if you can establish the connection with running of your car and doing your job as consultancy. Even you will be able to claim car running expenses if not fully at least partially against your consultancy income.
Q

guest: Short term capital gain from sale of house related tax saving and how to claim maintenance/renovation related exemption?

Balwant Jain: There are not tax benefit for short term capital gains on sale of a house except the interest which you might have paid on money borrowed to buy the house and which is not otherwise claimed by you.
Q

guest: In FY 2012-13, I purchased an under construction apartment in Mumbai. As of FY 2018-19, construction is still in progress. If I wish to sell off the property and invest the complete proceeds into another ready-to-move-in home in Mumbai, what are the income tax implications?

Balwant Jain: Since you intent to invest the entire proceeds in a ready to move in house, you will be able to claim the tax exemption on full long term capital gains under Section 54F. So there are not tax implications for you.
Q

guest: Hi, I do pay a tax of 12000 rs approx. Help me out in saving more. except investing in NPS, I am saving to the full under 80C sec. I do have a housing loan with 51500 as emi

Balwant Jain: It seems you do not have any health insurance which in my opinion is a must even when your employer provides you one. For your own health insurance you can pay and claim upto Rs. 25000 in a year. You can also pay the medical premium of your parents and claim deduction up to Rs. 25,000/-. In case your parents are senior citizen the deduction available is Rs. 50,000/-. In case your parents do not have health insurance policy or are not able to get one, you can claim deduction up to Rs. 50,000/- for their regular medication expenses including expenses incurred for check up and hospitalization under Section 80D.
Q

guest: How can I save my tax. Where shall I invest for tax saving

Balwant Jain: This is very open ended question and answer can ne written in a book form. To answer it in short, you can save in various products for claiming deduction under Section 80 C up to Rs. 1.50lakhs. You can invest in NPS and claim deduction up to Rs. 50,000/- under Section 80 CCD(1B). For your own health insurance you can pay and claim upto Rs. 25000 in a year. You can also pay the medical premium of your parents and claim deduction up to Rs. 25,000/-. In case your parents are senior citizen the deduction available is Rs. 50,000/-. In case your parents do not have health insurance policy or are not able to get one, you can claim deduction up to Rs. 50,000/- for their regular medication expenses including expenses incurred for check up and hospitalization under Section 80D. You can send me your queries on jainabwalwant@gmail.com
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