Income Tax Return : Due Date extended

Due to power failure and disturbance of normalcy for this in a large portion of the country, the due date has been extended to 31st August 2012 for the A.Y. 2012-13.

"Central Board of Direct Taxes, in exercise of powers conferred under section 119 of the Income Tax Act, 1961, hereby extends the ‘due date’ of filing of returns of income for the Assessment Year 2012-13 to 31st August 2012 in respect of assesses who are liable to file such returns by 31st July 2012 as per provisions of section 139 of Income Tax Act, 1961."

View the Notification

Budget 2012-13 Impact on Salaried Employees

1.Raises exemption limit to Rs 2 lakhs from Rs 1.8 lakhs.

2.Income Tax at 10% for Rs 2-5 lakh.

3.Income Tax at 20% for Rs 5 lakh to Rs 10 lakh.

4.Income Tax at 30% for income of over Rs 10 lakh.

5.Health insurance deduction upto Rs 5000 for preventive health checkup.

6.Interest income from banks tax-free upto Rs 10,000.

7.Direct cash subsidy for LPG.

8.To implement DTC at the earliest.

9.GST to be operational by August 2012.

10.Income Tax deduction of 50 per cent on investments of up to Rs 50,000 in savings scheme named after Rajiv Gandhi.

11.Addressing malnutrition, black money and corruption in public life among five priorities in the year.

source:tkbsen.com

Direct Tax Code (DTC) and Its impact on salaried people

The New Direct Tax Code (DTC) is said to replace the existing Income Tax Act of 1961 in India. DTC bill was

tabled in parliament on 3oth August, 2010. There are big changes now in monsoon session and There are now much less benefits as compared to what were in the original proposal. During the budget 2010 presentation, the finance minister Mr. Pranab Mukherjee reiterated his commitment to bringing into fore the new direct tax code (DTC) into force from 1st of April, 2011, but same could not be fulfilled and now it will be applicable from 1st April, 2012.The following factors of DTC which will impact on salaried peolpe.

Removal of most of the tax saving schemes:
DTC removes most of the categories of exempted income. Unit Linked Insurance Plans(ULIPs), Equity Mutual Funds (ELSS), Term deposits, NSC (National Savings certificates), Long term infrastructures bonds, house loan principal repayment, stamp duty and registration fees on purchase of house property will loose tax benefits.All these schemes earlier came under savings u/s 80c exemption.

New tax saving schemes:

Tax exemption to those with income up to Rs 5 lakh?

The previous year, just a few weeks before the tax return deadline of 31 July, the Central Board of Direct Taxes (CBDT) exempted those with an income of up to Rs 5 lakh from filing returns. But, as ET Wealth pointed out, the conditions were so restrictive that no one was eligible for the exemption.

For instance, you were eligible for the exemption if you had reported the interest income from your savings bankaccount to your employer and tax had been duly deducted on that income. The CBDT hadannounced this at the end of June 2011, when most companies had already finished preparing the Form 16s of their employees.

The CBDT has woken up early this year. Last month, it announced a similar exemption for the current financial year as well. But the conditions are no less impractical than they were in 2011.

No income from investments

The exemption is for salaried taxpayers who have income only from salary and the interest from their savings bank account. Surely, a person earning Rs 30,000-40,000 a month would have invested in fixed deposits, recurring deposits, bonds and other investments as well. This includes tax saving investments in NSCs, infrastructure bonds and tax saving fixed deposits.

If the taxpayer puts money in any of these options, he would also earn interest from these investments, which will disqualify him for the exemption from filing returns. Only a person who has no tax saving investments and lets all his money idle in a savings bank will be eligible.

Investors in property also won’t make the cut. If they have any rental income, they are not eligible. Even if their second house is lying vacant, they will have a notional income from the property.

Practical difficulties

Even if the taxpayer has no income other than his salary and the bank interest, there is a practical difficulty. The interest on a savings bank account is credited to the account on a half-yearly basis. The interest from October 2011 to March 2012 will get credited after 31 March. But since it accrued this year, tax will have to paid on it right now.

However, the CBDT says that to avail of exemption from filing his return, the taxpayer should have declared his bank interest to his employer. It should be mentioned in the Form 16 and tax should be deducted on it. To do this, the taxpayer will have to estimate the interest income on the basis of his bank balance in the past 5-6 months.

Source:tkbsen.com

Access IT Returns on Cell Phone

Soon you will be able to access details about your income tax returns (ITR) and its processing on your cellphone. As the income tax (I-T) department is all set to enhance host of taxpayer-related services and shift to a new e-return filing platform in the coming months.

The new platform will come with various services, including one which will allow tax payers to check details such as refunds, deductions and tax demands on their cellphone.

“The new software, which allows taxpayers to access details of his ITR on smart phone, is being developed with the help of TCS. The new service will be part of the upgraded online return filing portal which will be launched in the next couple of months,” said DIT (investigation) Ahmedabad, Harish Kumar who has been recently transferred to the city from Delhi.

Kumar was speaking at an ‘E-filing & Processing of Tax Returns’ open house session organized in the city on Thursday. The department

The Form 16 treated as Income Tax Return for salaried individuals with a total taxable income of up to Rs 5 lakh

Salaried individuals with a total taxable income of up to Rs 5 lakh do not have to file income tax returns. However, in case tax payers  want to seek an income tax refund , they will have to file their returns.

In the above case, a salary people has income from other sources like dividend, interest etc.not exceeding Rs.10 thousand  and does not want to file returns, he has to disclose such income to his DDO.

The Form 16 is issued by DDO to salaried employees may be treated as Income Tax Return.

 According to the notification, individuals having total income up to Rs 5 lakh for financial year, after allowable deductions, consisting of salary from a single employer and interest income from deposits in a saving bank account of up to Rs 10,000 are not required to file their income tax return.

Such individuals must report their Permanent Account Number (PAN) and the entire income from bank interest to their DDO, pay the entire tax by way of deduction of tax at source, and obtain a certificate of tax deduction in Form No. 16

Tax exempt may increase from 1.8 lakh to 3 lakh

New Delhi, Feb 10,2012(PTI):Hiking the exemption slab for personal income tax from Rs 1.8 lakh to Rs 3 lakh, indexing rates to inflation and freeing assesses with up to Rs 5 lakh annual income from the burden of filing returns are among the recommendations being considered by Parliament’s standing committee on finance.

The draft report of the committee on UPA-2′s ambitious  is expected to suggest several amendments including linking to consumer price indexes to allow an automatic adjustment of rates.

The proposal to index tax rates to inflation can do away with the need to mention tax rates, even if they are unchanged, in the budget statement made by the finance minister every year.

Tax rates the committee is expected to propose are 10% for the slab of Rs 3 lakh to Rs 10 lakh, 20% for upto Rs 20 lakh and 30% beyond that. Three crore assesses will stand to benefit from not having to file returns if the committee’s view of a Rs 5 lakh ceiling is accepted.

There are several recommendations the committee is expected to consider at its meeting on Friday and while the panel headed by BJP leader Yashwant Sinha is not rejecting the DTC bill, it hopes the government is receptive to its suggestions.

Income Tax Bonanza for Salaried People FY-2012-13

New Delhi,Feb7,2012: Budget 2012-13 is in process. The government is planning to enhance tax slabs of salaried class persons.
According to reports, Union Finance Minister Sh. Pranab Mukherjee may announce the income tax slab rates soon. The basic tax exemption may increase from 1.8 lakh to 2 lakh. Further the income between Rs. 2-5 lakh will be taxed at 10 percent, Rs. 5-10 Lakh be taxed at 20 percent and income above Rs. 10 Lakh will be taxed at 30 percent rate. 

 The present tax structure is that incomes between Rs 1.8 lakh and Rs 5 lakh are taxed 10 percent, those between Rs 5-8 lakh taxed 20 percent while 30 percent tax is slapped on incomes above Rs 8 lakh.

PAN to be most potent tool against tax evasion: I-T Dept

New Delhi, Feb 5, 2012, (PTI): Come next financial year, the PAN card is likely to become the most potent tool for the Income Tax Department to unearth black money, tax evasion and instances of criminal financing in the country.

A recent directive of the Central Board of DirectTaxes (CBDT) to the I-T Dept has asked its officials to launch a special drive against those who have“not furnished their PAN (Permanent Account Number)” while entering into high value transactions.

The drive will end on March 20, eleven days before the current fiscal closes.

Income tax on Retirement Benefits

On retirement, an employee normally receives certain retirement benefits. Such benefits are taxable under the head ‘Salaries’ as “profits in lieu of Salaries” as provided in section 17(3). However, in respect of some of them, exemption from taxation is granted u/s 10 of the Income Tax Act, either wholly or partly. These exemptions are described below:-

1.  GRATUITY (Sec. 10(10)): (i)   Any death cum retirement gratuity received by Central and State Govt. employees, Defense employees and employees in Local authority shall be exempt.

(ii)      Any gratuity received by persons covered under the Payment of Gratuity Act, 1972 shall be exempt subject to following limits:-
(a)      For every completed year of service or part thereof, gratuity shall be exempt to the extent of fifteen days Salary based on the rate of Salary last drawn by the concerned employee.
 (b)      The amount of gratuity as calculated above shall not exceed Rs 10 Lakh.

Deduction under section 80 E for Interest on Education loan taken for self and relatives

Have you taken an education loan to support higher studies of yourself or of your spouse, Children or for the student of whom you are legal guardian and you are not aware of the tax benefits that you are entitled to. Then here is a guide that will assist you to know tax benefits on education loans. These benefits help you to reduce the overall cost of your education loan.

The deduction under section 80E is available to an individual if following conditions are satisfied:

1. Deduction available only to Individual not to HUF or other type of Assessee.

2. Deduction amount: – The amount of interest paid is eligible for deduction and moreover there is no cap on the amount to be deducted. You can deduct the entire interest amount from your taxable income. However there is no benefit available on the repayment of principal amount of the loan.