About Saving Income Tax

All You Need to Know About Saving Income Tax

Recommended ways to save taxes under Sec 80C & 80D

  • Make an investment of Rs 1.5 Lakh under Sec 80C to reduce your taxable income
  • Buy medical insurance and claim a discount up to Rs. 25,000 (50,000 rupees for seniors) for medical insurance premiums under Section 80D
  • Claim a discount of up to Rs 50,000 on interest on a housing loan under Section 80EE

Investment options under Sec 80C

The most tax-saving options available to individuals and HUFs in India are under Section 80C of the Income Tax Act. Section 80C includes many investments and expenses that can be used to claim discounts. The maximum section of 80 ° C is 1.50 in the fiscal year, which means that you can use this amount in full to reduce taxable income.

Investment options under Sec 80C

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Other options for saving taxes outside Sec 80C

Apart from the discounts available under Section 80C, there are many other deductions under Section 80 which can also be claimed to provide income tax. These deductions include health insurance premiums and tax benefits on mortgages

  • Buy medical insurance and claim a discount up to Rs. 25000 (50,000 rupees for seniors) for medical insurance premium
  • Claim a discount of up to Rs 50,000 on interest on a housing loan under Section 80EE
  • A home loan also helps you reduce your taxable income. The main part of the home loan can be claimed under Section 80C up to Rs. 1.5 crore. The interest portion can be claimed as a deduction from the homeowner’s income

How to plan your investments to provide taxes for the year

The best time to start planning your investments to provide tax is at the beginning of the fiscal year. Most taxpayers stall until the last quarter of the year and end up making quick decisions. Instead, if you plan at the beginning of the year, you can make investments that can also help you achieve your long-term goals. Tax-saving investments should be used to build wealth as well, not only to provide taxes.

Use the following indicators to plan your tax savings for the year:

  • Check the tax savings you are already making and can claim. This includes expenses, such as premium, tuition fees for children, Contribution of EPF, repayment of housing loans, etc.
  • This amount is deducted from $ 1.5 lakh to find out the amount of investment. There is no need to invest the full amount if the expenses are covered.
  • Choose your tax savings investments based on your goals and profile. ELSS, PPF, NPS, and fixed deposits are among the common options.

That way, you can figure out how much you need to invest to save taxes. It is best to start investing in the first quarter of the financial year so that you can distribute investments throughout the year. This will not affect you at the end of the year, and will also allow you to make informed investment decisions.

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Missed filing tax return (ITR) for FY 2016-17? Here’s what you should do!

Individuals with income more than basic tax exemption limit are mandatorily required to file their tax return, under the Income Tax Act. The due date for filing tax return for the immediate past Financial Year was July 31 each year.

However, tax return can also be filed after the above due date as “Belated tax return”.

Income Tax Returns for FY 2016-17 – New Change

However, the Finance Act, 2016, has stipulated that belated returns can be filed within one year from the end of relevant assessment year (AY) or the completion of the assessment, whichever is earlier. So, for the Financial Year (FY) 2016-17 (Assessment Year 2017-18), the due date for a belated return is March 31, 2018, which is just gone by now.

What should you do if you have still not filed your returns for 2016-17 and what consequences you might face if returns have not been filed?

Non Filing within Due Date – Possible Impact

=> Interest of 1% on the balance tax payable for each month of delay in filing a tax return.

=> From FY 2017-18 onward, in case return is not filed within the due date, a fee of Rs 5,000 is applicable

=> If it is delayed beyond December 31, of the relevant assessment year then it is Rs 10,000.

However, this will be restricted to Rs 1000 in case of individuals with income up to Rs 500,000;

=> Assessee will lose the ability to carry forward any eligible losses;

=> Will also lose out on claiming a refund of any excess taxes paid and consequential interest;

=> In case of failure to file a tax return from FY 2016-17 onward, a penalty of 50% of tax payable (as under-reported income) is applicable;

=> There may be penalties under the Black Money Act for an individual who is ordinarily resident and has/had foreign income/ asset;

=> In case of serious willful attempt to evade taxes, rigorous imprisonment may be considered by the tax authorities which may extend to 7 years;

Apart from the above, the tax return may also be required as documentary evidence for any application for visas or for loans, etc.ca, income tax , gst, auditors

Steps to be Taken

While one should endeavor to file a tax return within the due dates, the applicable taxes should definitely be deposited into government treasury along with applicable interest if the return has not been filed for any reason.Such payment should be communicated to the jurisdictional tax officer by filing a letter along with tax paid challan.

In an event where it is noticed by tax authorities that the individual has not filed the tax return, but applicable taxes are already paid by way of tax deduction at source, advance tax or self-assessment tax,

Revenue Authorities may choose to not to levy penalty (as indicated earlier, fee for delay in filing tax returns from FY 2017-18 would still be applicable).

Certain types of income on which tax may not be deducted at source, include, say, interest from savings bank accounts. In such cases, one must remember to pay the applicable taxes and inform authorities.

Also, in case you have paid excess tax and also have carry-forward of losses, it is possible to approach tax authorities with an application for condonation of delay, subject to certain conditions.

This can be possible only if robust documentation can be provided to support the tax payment claims and also to demonstrate that there was a reasonable cause due to which the return could not be filed within the due date.

No Property Sale On Power Of Attorney!

NO PROPERTY SALE ON POWER OF ATTORNEY

Property sales through the common practice of general power of attorney (GPA) will not give ownership title to the buyer.

In a landmark judgment that is expected to send a large number of property owners into a tizzy, the Supreme Court held that the GPA method of immovable property sales is not a valid form of transfer of property. 

NO PROPERTY SALE ON POWER OF ATTORNEY

A three-judge bench presided over by Justice R. V. Raveendran said that property can be lawfully transferred only through registered sale deeds.

A power of attorney is not an instrument of transfer in regard to any right, title or interest in an immovable property.

However, the bench said the judgment will not affect “genuine transactions” under the GPA.

Genuine Transactions

The judgment delivered on Wednesday would have an impact on both freehold and leasehold properties and affect the mode of transfer of property in Delhi and the National Capital Region (NCR) where GPA sales are very common. Even though it can cause some hardship to those who have already purchased property through the GPA, the order will help curb evasion of duties, the flow of black money into real estate and also save people from being cheated by unscrupulous owners selling the same property to several people.

The court’s decision will help to curb the circulation of black money to some extent in the real estate sector where titles are manipulated. Besides, many property transactions where prices are rounded off will be affected. However, overall there won’t be any significant impact on normal property sales.

The apex court said there can be no mutation of property in municipal and revenue records on the basis of such documents. The bench, however, clarified that its order should not be a ground for disturbing mutations already affected by the Delhi Development Authority (DDA) or any other authority.

But, there is little relief for thousands of people who hold property without mutation as GPA sales can only be treated as existing sale agreements. An application of the order with prospective effect would have protected their interest. The court, though, stressed that it had merely reiterated the well-settled legal position that such transactions cannot be treated as completed transfers.

The court could not make the order applicable with prospective effect as it had not laid down any new law. However, it said that those who had already bought property through GPA before its judgment could use the documents to apply for regularization of allotments and leases by development authorities.

Nothing prevents affected parties from getting registered deeds of conveyance to complete their title. The said transactions may also be used to obtain specific performance or to defend possession under section 53A of TP (Transfer of Property) Act.

In order to ensure that GPA continues to serve its purpose, the court said its judgment will not affect the validity of sale agreements and powers of attorney executed in genuine transactions.

Additional Ruling

A person can enter into a development agreement with a land developer or builder for developing the land either by forming plots or by constructing apartment buildings. In that connection, he can execute an agreement of sale and grant a power of attorney that will allow the developer to further sell the property to prospective purchasers.

While hearing a matter on the subject, the court had decided to clarify the law on the issue as such transfers had not only led to evasion of stamp duty and registration charges but had also provided scope for investing black money in real estate. Besides, such transfers were giving nightmares to bona fide purchasers as the same property could be sold to several people in the absence of verification or certification of title. A proper verification of ownership was possible only if all property were transferred through registered sale deeds.

Noting that such transactions were now not just limited to Delhi but had spread to neighboring areas, the court had sought the views of the Centre and the states of Delhi, Haryana, Punjab and Uttar Pradesh. There was a near unanimity that such transactions should be discouraged as it caused loss of revenue and increased litigation due to defective titles.

Going into the legality of such transfers, the court said any contract of sale which was not a registered sale deed would fall short of the requirements of the relevant provisions of the Transfer of Property Act and could not confer any title.

The court said a transfer of property by way of sale could only be by a sale deed.

In the absence of a deed of conveyance (duly stamped and registered as required by law), no right, title or interest in an immovable property can be transferred.