Ask The Tax Expert

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Question

I have two mediclaim policy for my parents whose age is not above 65 years, & i paid for this Rs.17500/-totally. In this case how much Tax benefit i get....?

Answer

Dear Asif,

As per Income Tax guidelines, you will be eligible for an additional deduction of Rs. 15,000 if you have taken a mediclaim policy on your parents (in case your parents are senior citizens then the Tax benefit will extend to Rs. 20000). In your case, since your parents are not senior citizens, you will be eligible for tax exemption of Rs.15000 u/s section 80D.On remaining amount i.e. Rs. 2,500 (17500-15000), you cannot claim any tax benefit

For more information on Tax Deductions Click here

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Cheers,
The Yogi

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Question:

As per DTC, from 1st April 2012, will the dividend from equity mutual funds be taxed in the hand's of the tax payer. Also, what about the investments done in mutual funds before 1st April 2012, will their dividend also be taxed.  If yes, what is the rate of taxation? Many thanks

Answer:

With effect from April,2012, dividends received on equity mutual funds is taxed at the rate of 5% on dividend paid in the hands of the investors. As long as there is no notification/circular with respect to Tax on dividends from equity mutual funds, it is assumed that the Tax Implication would be prospective which means the new tax rate would be applicable only on Equity mutual funds bought after April,2012.

(You can open a free account with us where you can transact mutual funds online at free of cost.To know more Click Here)

Cheers,
The Yogi

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Question:

How much Tax calculated on Mutulfund Income ? Interest of Savings A/c is Calculated in total income or not ?

Answer:

Dear Sundeep,

Taxation of Mutual funds are as follows
Dividend Income:
Exempt in the hands of investors for both equity and debt schemes. However, AMC is liable to pay DDT in case debt schemes.
Capital Gain Tax on Equity Scheme
LTCG - Exempt subject to payment of STT
STCG - Taxed at 15% plus cess/surcharge subject to payment of STT.
Capital Gain Tax on Debt Schemes:
LTCG - Taxed @ 20% (with Indexation) or 10% (without Indexation) – Plus applicable surcharge and Education cess
STCG - Taxed at the normal rate of tax as applicable to the assesse

Interest on savings bank account is included in the total income and taxed as per the slab rate you belong

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Cheers,
The Yogi

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Question:

I've taken house loan in 2009. The apartment is still under construction. Yearly interest portion of my EMI is 1.1 lac and principal payment is approx. 35000. I want to know-
1) Am i eligible for exemption on interest?
2) Which income tax return form should i fill?
3) If eligible, Where should i mention the rebate on interest in income tax return form?

Answer:

Dear Sidharth,

As per income tax guidelines you cannot claim Tax exemption on house which is under construction .You may be wondering then how to claim the tax exemption, here the pre-EMI term comes into the play. The real loan repayment will start only when the entire loan amount is disbursed to the builders.

1. You can use the home loans for tax savings only when the construction is completed. In this case, pre-EMI is paid while the house is under construction. So, you cannot use the pre-EMI as the tax deduction source. Once the construction is completed, the total pre-EMI interest paid is shown in the five equal installments in the subsequent years

2. You need to file ITR-1 form

For example, if you have paid Rs.100000 as the pre-EMI, then Rs.20000 will be shown in the next five years as tax deduction. Note that pre-EMI is only the interest paid during the period. If you have paid any principal amount, that is not eligible for the tax deduction. That is lost for ever.

(You can open a free account with us where you can transact mutual funds online at free of cost.To know more Click Here)

Cheers,
The Yogi

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Question:

One of my relatives is an NRI in US. He has not opened any NR accounts in India. He transfers funds to his existing resident account, and invests in banks.At present his income in India does not exceed the taxable limit .
Is it compulsory that he should have an NR account?
If his income exceeds the taxable limit, can he make investments to avail the benefits of sec 80c?
When his income gets taxable, can he file return here
as any other resident?
Could you please clarify these doubts?

Answer:

Hello Sobhana, it is mandatory for every individual to inform the banks or companies where he got investment about the change of its residential status within a reasonable time. It is illegal for a NRi to hold a normal bank account in india.

• So, it is compulsory that he should get his existing bank accounts converted  in to NRO account
• Like other residents, he will also be allowed to make investments to avail the benefits of sec 80C
• Yes, he can file his return in india like any other resident

Cheers,
The Yogi

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Question:

For professional, what is the min limit for service tax registration

Answer:

Hello, every individual who has provided a taxable service of value exceeding Rs. 9 lakhs in the preceding financial year is required to register with central excise or service tax office having jurisdiction over the premises or office to which he belongs

Cheers,
The Yogi

Thank you for writing in to us. Below is the answer to your query
Question:
What is the rate of interest for Profession Tax Payment for Financial Year 2009-10 & 2010-11 in andhra pradesh?

 
Answer: Hello Savan, Professional Tax is State matter and is levied in respect of any profession, trade, calling, and employment undertaken in the State. The set of professional tax slabs in India are different for all the 28 states in India and some of the states have formulated different professional tax slabs for men, women, and the senior citizens of the respective states.

Professional tax levied in AndhraPradesh is as follows

For Financial Year 2009-10 and 2010-11

Cheers,
The Yogi

Question:what is the taxability of interest on Provident fund deposits ?

 
Answer:Hello, the tax treatment of interest on Provident Fund is as follows

Recognized Provident Fund:Interest on provident fund is exempt up to 9.5%. Interest exceeding 9.5% will be added to employee's salary income
Unrecognized Provident Fund: Not Taxable
Statutory Provident Fund: Fully Exempt
PPF: Fully exempt
 

Cheers,
The Yogi

Question: Dear Sir/Madam,I am a regular reader in your site and it is very informative. i would like to ask about a question about TDS on FD deposit:
1. I have a some fixed deposits in the name of my wife at Federal Bank in Kerala and there some TDS Tax deducted on deposits. Is there any way to claim that TDS tax as she doesn't have any other income and she has PAN card as well ? Is there any way to avoid such TDS in the future ?. She is having investment in mutual fund-ELSS. whether it will be helpful to claim that TDS ?

 
2. Regarding My Case, I am an NRI and I have some NRO deposits in Federal Bank. It attracts TDS  @10 % or something in that range even after mentioning my PAN card.Ipay Rs.10000 every year as Life insurance premium to LIC. Is there any way to claim this TDS, too?  Kindly note that we dont have any other income from anywhere and both of us have PAN card. We do not come under high tax bracket as we dont have any other income.  We would appreciate if you suggest the ways to claim these TDS and ways to avoid such TDS Tax.

  
Answer: Yes, there is a way to avoid TDS i.e. by submitting the 15 G form to the Banker. As per the Income Tax guidelines, banks are required to deduct TDS on deposits if the total interest earned in a given financial from all the deposits exceeds Rs.10,000. TDS Rate is 10% plus education cess 0.3% (3% on 10) total 10.3%.But, if your income is within the maximum tax exemption limit, then you may inform your bank about the same by submitting the 15G (form available at the bank).
Investment in mutual funds-ELSS will not help you in claiming TDS. The only way to claim the TDS is by filing a return showing taxable income within the tax exemption limit and then claiming the TDS through Form 16A which the banker issues when TDS is deducted.

 
For the Second question, an NRI can file form 15 G provided your income fall within the maximum tax exemption limit. 
You can avoid TDS from your deposit by splitting your bank deposits in two or more banks or branches, so that the total interest earned at one branch or bank is less than Rs.10000 in given financial year.

  
Click here to check out the tax saving options for NRIs.

 
Cheers,
The Yogi

Question:i Have receive the below mail. What is its implication. I filled the ITR through a 3rd party vendor."Non - Receipt of ITR-V at Income Tax Department?-CPC, Bangalore ".
What should i do if i dont have an ITR-V. Also please help if i can get it from internet/IT Office

Answer: Hello Satish, in case an individual e-files his return with out digital signature then an ITR-V form will be generated which is nothing but an acknowledgement *** verification form. The tax payer has to verify the form and duly send the verified form to "Income Tax Department - CPC, Post Bag No - 1, Electronic City Post Office, Bangalore - 560100, Karnataka, " BY ORDINARY POST OR SPEEDPOST ONLY within 120 days after the date of transmitting the data electronically.

 
In your case the ITR-V form hasn't reached the Income tax department as mentioned above.So,you Contact your third party vendor and check up weather they have send across your ITR-V form to the department. If they have send across check the status here .

If in case they have not send across the form then you have to download the form from the website and send it across to the Income tax department, if not the return you have furnished will be considered as unfurnished return

Question:are planning to take a House loan jointly (father and me). The property is owned by father only. In this case will I get tax exemption?

 
Answer:Hello Velayudhanraj, As per the income tax guidelines only the co owners are eligible for tax exemption in respect of home loan repayment. In your case your father being the sole owner of the property, the tax benefits will be available only to your father. However, you can reap the tax benefits, provided if your father declares you to be a co owner legally by entering in to an agreement. This way you will become the co owner of the property and can avail the tax benefits in proportion to your share of ownership
For Example,

Cost of the House property: Rs 10,00,000
Ownership share: 60% (Father), 40% (Son)
Loan: Rs 6,00,000

Amount to be brought in by Father: Rs 6,00,000
Less actual contribution by Father: Rs 2,00,000
Father's share in the loan: Rs 4,00,000

Amount to be brought in by Son: Rs 4,00,000
Less actual contribution by Son: Rs 2,00,000
Son's share in the loan: Rs 2,00,000

Interest payment: The maximum limit of Rs 150,000 on interest paid will apply individually to both (i.e. the total deduction will be limited to Rs 300,000).

Principal repayment: The tax benefits on the principal will be shared in the ratio of 2:1 between the Father and Son since that is the share of the loan for Father and Son. The limit is Rs 100,000 for each.

Cheers,
The Yogi

Question:Right now the single premium paid under Jeevan Akshay Scheme of LIC which entitles you to receive annuity for life is exempt from Tax up to Rs 1 Lac under Sec 80C.Will the same exemption continue from 1/4/2012 when the DTC comes into effect?

Question: Got to save Rs. 500000 for sister's marriage in 2013, and  Rs. 400000 for own marriage in 2015. Monthly income Rs. 50,000. Advise needed on tax saving investment schemes for fulfilling above goals.

                   
Answer: Dear Mayur, in order to achieve a corpus of Rs 5 lakhs for your sister's wedding in 2013, you need to set aside ~ Rs 19,200 per month; in addition to this, you need to also set aside ~ Rs 7,000 per month for your own wedding corpus of Rs 4 lakhs in 2015. You can set aside this money in a bank Recurring Deposit, post office scheme or a balanced or debt mutual fund scheme depending upon your risk appetite and tax saving strategy for FY 2010-11.

                       
We recommend you avail our premium investment planning service which we are currently offering for a minimal fee of Rs 999 only. Your investment plan will be chalked out by our Financial Plan Experts and will take into account your risk profile and tax planning for current financial year. This will ensure you get the best of investment recommendation and also helps you save on taxes.

Warm Regards,

TaxYogi

Question: Is investment in in mutual fund (any) has tax exemption under80c

               
Answer: Dear Mr Mishra, investment in specific equity mutual fund schemes qualify for tax deduction under section 80C. They are called ELSS mutual fund schemes and come with a lock-in period of 3 years during which you will not be allowed to withdraw the invested amount. ELSS funds are long-term investments that aim at capital growth. Click here to know more....

               
Click here to check out the various tax saving options for FY 2010-11.

Warm Regards,

TaxYogi

Question: I already have HL of 10lacs to repay. Is it a good idea to invest in another property (2bhk apt/site) with joint HL. I have 2lacs in hand to start investment. Please suggest.

            
Answer: Firstly, the decision to buy a second house or not is entirely yours. A house is always considered a great investment as the value of land only appreciates in the long run.

              
In case you are going to go for a joint  house loan, the entire interest paid during a financial year is tax deductible apart from the principal deduction one is entitled to under section 80C. Each co-owner *** co-borrower will be allowed separate deductions under the IT Act subject to the overall limit of Rs 1 lakh per annum per individual under section 80C and Rs 150,000 per annum per individual under section 24b (in case of self-occupied property).

Warm Regards,

TaxYogi