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Tag: Income tax rules

  • Here is how one can cut back your TCS in your international journey

    New TCS rule from subsequent month: In the Union Budget 2023, the tax assortment at supply (TCS) for international remittances underneath the Liberalised Remittance Scheme (LRS) was raised from 5% to twenty%. This can be relevant to worldwide journey, sending cash overseas, and different remittances. The increased charge of TCS is not going to apply to training bills incurred overseas or for medical causes. This new rule will come into impact from subsequent month,  October 1, 2023.

    International journey plans will get costlier and TCS on abroad tour packages will now entice a better TCS charge of 20% as an alternative of the earlier charge of 5% if the full spend is above ₹7 lakh. However, the 5% charge will proceed to prevail if the full price of the package deal is underneath ₹7 lakh.

    “It has been clarified by the federal government that the acquisition of worldwide journey tickets and resort bookings on a standalone foundation is not going to qualify as an Overseas Tour Program Package,” said Archit Gupta, Founder and CEO, of Clear

    The government has also clarified that payments made overseas using one’s credit card will remain outside the purview of TCS for the time being. Other payment modes, like debit cards, cash, and wire transfers will continue to attract TCS at the applicable rates, Gupta added.

    How to minimise TCS burden

    One can plan their outward remittances to minimize the TCS burden. With an example, Gupta explained that if a person has multiple outward remittances planned for the year for foreign travel, investment, education, and or medical purposes, then the first spend can be towards transactions attracting a higher rate of TCS viz, travel and investment and thereafter, remittance can be made towards education and medical purposes which attract a lower rate of TCS.

    How you can reduce TCS on your foreign trip?

    “This change means that limiting your total expenses to ₹7 lakhs would be a wise move to optimize your trip expenses,” Abhishek Soni CEO and Co-founder Tax2win. 

    Here are some suggestions that will help you save in your international travels as advised by Tax2win CEO

    Avoid Packaging of the Trip: Instead of choosing a bundled tour package deal, vacationers can think about making standalone bookings for his or her abroad lodging, journey tickets, and different related bills earlier than September 30, suggested Soni.

    Buy Forex in Advance: It’s advisable to chorus from last-minute foreign money alternate and, as an alternative, buy Forex upfront. “Until September 30, foreign exchange orders over ₹7 lakh can be topic to solely 5 p.c tax,” stated Soni.

    Use Credit Cards with Caution: The authorities has additionally clarified that funds made abroad utilizing one’s bank card will stay outdoors the purview of TCS in the meanwhile. As per Tax2win CEO, this modification may impression your subsequent deliberate journey. Stay up to date and plan accordingly.

    Disclaimer: The views and proposals made above are these of particular person analysts, and never of Mint. We advise buyers to verify with licensed consultants earlier than taking any funding selections.

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    Updated: 22 Sep 2023, 02:31 PM IST

  • ITR submitting deadline: Penalties and different outcomes when you miss due date

    Income tax return (ITR) submitting for FY 2022-23: The due date for earnings tax return (ITR) submitting is thirty first July 2023, which implies taxpayers have only a week in hand to file their ITR. In order to keep away from late charges or penalties, the earnings tax division has been urging taxpayers to file their returns as quickly as potential and never wait till the final minute.   

    Will Govt prolong July 31 ITR submitting deadline?

    “As the deadline for submitting ITR for FY 2022-23 (AY 2023-24) nears on thirty first July 2023, over 4 crore taxpayers have already filed their returns. Despite some taxpayers hoping for an extension, it’s unlikely that the federal government will grant any additional delays past the set date,” mentioned Abhishek Soni CEO and Co-founder Tax2win.

    Here’s what occurs when you miss July 31 deadline

    Filing ITR on time is very advisable to keep away from last-minute errors. “The penalties of lacking the deadline may end in penalties. Taxpayers who fail to file their ITR by the deadline might incur a penalty of ₹5,000 underneath Section 234F. However, for people with an earnings of lower than ₹5 lakh, the penalty might be a diminished quantity of ₹1,000,” said Abhishek Soni

    Tax and investment expert Balwant Jain said, “If an incomes particular person misses submitting ITR inside the given due date, then she or he would have the option to take action by paying the late payment. The late payment could be ₹5,000 if the annual taxable earnings is ₹5 lakh or extra whereas the late payment could be ₹1,000 if the taxable earnings is beneath ₹5 lakh.” 

    Missed to file ITR? You may land in jail too

    Mumbai-based tax expert Balwant Jain added that the Indian government has the power to initiate prosecution against the salaried individuals who have missed filing ITR by 31st December 2023 

    “Current earnings tax guidelines prescribe a minimal sentence of 6 months of imprisonment and a most sentence of seven years of imprisonment. It shouldn’t be that the division can launch prosecution towards you in each occasion of failure to file the ITR. The earnings division can launch prosecution solely in case the quantity of tax sought to be prevented exceeds ₹10,000,” Balwant Jain mentioned.

    Over 4 crore ITRs filed for FY23 to date

    More than 4 crore earnings tax returns (ITRs) for the 2022-23 monetary 12 months have been filed to date and about 7 per cent of those are new or first-time filers, CBDT chairperson Nitin Gupta mentioned on Monday. He mentioned that greater than half of those ITRs have been processed resulting in 80 lakh refunds until now. The chairperson was talking at an occasion held right here to mark the 164th Income Tax Day on 24 July

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    Updated: 25 Jul 2023, 12:30 PM IST

  • ITR submitting: How to say revenue tax reduction on advance, different wage arrears

    Income tax return (ITR) submitting: The due date for ITR submitting for the monetary 12 months 2022-23 or for the evaluation 12 months 2023-24 is thirty first July 2023. However, it’s advisable to file one’s revenue tax return as quickly as doable as it could allow an incomes particular person to get ITR refund at earliest doable time. But, whereas submitting ITR one wants to take a look at all doable revenue tax relieves, which incorporates wage arrears like advance wage, bonus, household pension arrears, compensation on termination, and so on.

    According to tax and funding consultants, revenue tax is levied on an incomes people whole revenue obtained through the 12 months. Under part 89(1) of the revenue tax act, if somebody has obtained any previous dues on account of delay in cost, one can declare revenue tax reduction on such funds. If somebody somebody is eligible for revenue tax reduction on obtained wage arrears, then her or she will declare it in present 12 months’s ITR by merely submitting Form 10E. It ought to be famous that Form 10E submission is necessary to say revenue tax reduction on delayed funds.

    Income tax reduction below part 89

    Speaking on how wage arrears are taxed in India, Archit Gupta, Founder & CEO at Clear mentioned, “Section 89(1) of the Income Tax Act offers relief from receipt of past income in the current year for any change in taxation laws. The relief is provided by recalculating the tax outflow on such arrears of income according to the taxation rules applicable in both the years, year of receipt, and the year to which the income pertains. Any increase in the tax outflow due to change in taxation rules in the year of receipt is allowed as relief under section 89(1).”

    On how advance wage is taxed, Sujit Bangar, Founder at Taxbuddy.com mentioned, “If an employee receives an advance salary, it is taxable in the year of receipt. However, if the employee repays the advance amount in subsequent years, they can claim relief for the repaid amount in those years, subject to certain conditions.”

    Sujit Bangar went on so as to add that revenue tax obligations are computed primarily based on the overall revenue obtained by a taxpayer through the monetary 12 months. In the occasion that the assessee has obtained a portion of their wage in arrears or upfront, or has obtained Family Pension in arrears, the provisions of part 89(1) of the Income Tax Act allow them to say tax reduction. Filing Form 10E is a requirement to avail advantages laid out in part 89(1). You can conveniently submit this type electronically via the revenue tax e-filing portal.

    What revenue tax reduction u/s 89 imply on wage arrears?

    On what does revenue tax reduction below Section 89(1) imply for an revenue taxpayer, Archit Gupta of Clear mentioned, “Tax is calculated on your total income received during the year. If your total income includes any past dues paid in the current year, you may be worried about paying a higher tax on such arrears (usually tax rates have gone up over the years). To save you from any additional burden of tax due to delay in receiving income, the tax laws allow a relief under Section 89(1). If you have received any portion of your salary in arrears or in advance, or you have received a family pension in arrears, you are allowed some tax relief under Section 89(1) read along with Rule 21A.”

    How to say revenue tax reduction on wage arrears?

    “In simple words, you are saved from paying more tax because of delay in payment to you. If an individual is eligible for tax relief on salary received in arrears or advance, he/she must file Form 10E. It is mandatory to fill out Form 10E when an individual wants to claim tax relief under Section 89(1) of the Income Tax Act 1961. Section 89(1) provides tax tax relief for delayed salary received in the form of arrears or received a family pension in arrears,” Archit Gupta of Clear concluded.

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    Updated: 24 Jun 2023, 07:00 AM IST

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  • ITR submitting: Tax tips on income from residence property that your should know

    Interest a part of dwelling mortgage for one let loose residence includes spherical Rs. 3.50 lakhs. I receive a month-to-month lease of ₹15,000 p.m. I preserve in a rented residence. Under the circumstances can I declare loss from the house let loose by me as deduction in opposition to my wage income?

    For computing taxable income, you may be allowed to say an unusual deduction of 30% of the lease acquired by you. In addition to the standard deduction, you may be moreover allowed to say deduction in respect of curiosity paid on money borrowed for buying, organising, renovating and repairing the house. In case the house is self-occupied, you may be allowed to say most of two lakh deduction for optimum of two self-house property taken collectively.

    However, in case the house property is about free chances are you’ll declare deduction for full curiosity paid on the money so borrowed nonetheless the loss beneath the head “Income from House Property” could also be set off in opposition to totally different income all through the equivalent financial 12 months as a lot as Rs. 2 lakhs and any unabsorbed loss over 2 lakhs have to be carried forward for set off in opposition to residence property income in subsequent eight years.

    Against your rental income of Rs. 1.80 lakhs, you may get an unusual deduction of Rs. 54,000/- leaving Rs. 1.26 lakhs. After adjusting curiosity of Rs. 3.50 lakhs the loss beneath the head “Income from residence property” head includes Rs. 2.24 lakhs. Since chances are you’ll set off most of solely two lakh of loss in opposition to your totally different income collectively along with your wage income the steadiness Rs. 24,000/- unabsorbed loss have to be carried forward for subsequent eight which can be solely be set off in opposition to the constructive income beneath the house property head.

    (Balwant Jain is a tax and funding expert and could also be reached on [email protected] and @jainbalwant on his twitter cope with)

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  • ITR submitting: Tax tips on income from residence property that your must know

    Interest a part of dwelling mortgage for one let out residence entails spherical Rs. 3.50 lakhs. I receive a month-to-month lease of ₹15,000 p.m. I preserve in a rented residence. Under the circumstances can I declare loss from the house let out by me as deduction in opposition to my wage income?

    For computing taxable income, you is likely to be allowed to say an odd deduction of 30% of the lease acquired by you. In addition to the same old deduction, you is likely to be moreover allowed to say deduction in respect of curiosity paid on money borrowed for buying, organising, renovating and repairing the house. In case the house is self-occupied, you is likely to be allowed to say most of two lakh deduction for optimum of two self-house property taken collectively.

    However, in case the house property is ready free chances are you’ll declare deduction for full curiosity paid on the money so borrowed nevertheless the loss beneath the top “Income from House Property” could also be set off in opposition to totally different income all through the equivalent financial 12 months as a lot as Rs. 2 lakhs and any unabsorbed loss over 2 lakhs have to be carried forward for set off in opposition to residence property income in subsequent eight years.

    Against your rental income of Rs. 1.80 lakhs, you may get an odd deduction of Rs. 54,000/- leaving Rs. 1.26 lakhs. After adjusting curiosity of Rs. 3.50 lakhs the loss beneath the top “Income from residence property” head entails Rs. 2.24 lakhs. Since chances are you’ll set off most of solely two lakh of loss in opposition to your totally different income collectively together with your wage income the soundness Rs. 24,000/- unabsorbed loss have to be carried forward for subsequent eight which can be solely be set off in opposition to the constructive income beneath the house property head.

    (Balwant Jain is a tax and funding expert and could also be reached on [email protected] and @jainbalwant on his twitter cope with)

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  • What earnings tax rule says on premium paid for all occasions insurance coverage protection protection of associate

    My partner and me have life insurance coverage protection insurance coverage insurance policies of ₹25 lakh each. My partner would not have any earnings. Can I declare deduction u/s 80C in respect of the premium paid for her?.

    Premiums paid by an individual for all occasions cowl taken for self, associate, and children are eligible for the deduction u/s 80C. As far as payment of premium for kids is anxious it isn’t important that the children must be relying on you. So the child for which you will pay the life insurance coverage protection premium might be essential or minor, married or single. This will be utilized to optimise the tax outgo inside the family as a result of the incomes children have so many eligible objects like school value and reimbursement of home mortgage beneath Section 80 C that in most of the circumstances these items overflow their bucket of half 80 C whereas the mom and father particularly the retired don’t want many avenues to say deduction beneath Section 80C. So they may pay the life insurance coverage protection premium on the lifetime of their incomes children which in every other case would have not been eligible for deduction of their palms. Please phrase the children cannot declare deduction for payment of life insurance coverage protection on the insurance coverage insurance policies of their mom and father nevertheless can declare deduction beneath Section 80D for payment of medical insurance coverage premium even when the mom and father often should not relying on the child.

    Let me inform you the purpose of buying life insurance coverage protection is to protect the dependent family members inside the eventuality of incomes member of the household’s dying and will in no way be bought for the purpose of saving taxes. Since your partner would not have any earnings, you should not have bought any life insurance coverage protection protection on her life and it’ll make further financial sense so that you could have taken a protection of ₹50 lakh in your life instead of distributing the quilt, besides there are some professional causes to take motion which I’m not able to acknowledge.

    (Balwant Jain is a tax and funding expert and might be reached on [email protected] and @jainbalwant on his twitter cope with)

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  • How income tax rule applies on residential residence proceeds — outlined

    I’m salaried specific individual. I’ve supplied a residential property for ₹1.10 Crore inside the month of March 2023 which was purchased in June 2002 for ₹20 lakh. I don’t intend to buy one different property immediately. Can I nonetheless lower my tax obligation on the income from the sale?.

    Answer: Income from sale of any capital asset along with a residential house is taxed as capital useful properties after deducting the value of acquisition from the net sale proceeds. In case the house is obtainable after 24 months, you are allowed take listed worth as your worth of acquisition for computing long term capital useful properties. In case the property is obtainable inside 24 months, the excellence is taxed as transient time interval capital useful properties on the slab payment related to you.

    Indexed worth of an asset is computed by multiplying the value of acquisition by Cost Inflation Index (CII) of the yr of sale and dividing the similar by CII of the yr of purchase. In your case, the value of acquisition is ₹20 lakh and the listed worth will be spherical ₹63.05 lakh, taking 105 as a result of the CII for yr of purchase and 331 CII for yr of sale. The listed long term capital useful properties is ₹46.95 lakh (Rs. 110 lakhs – Rs. 63.05 lakhs). The related will be taxed @ 20.80% (20% with indexation + cess 4%).

    Since you do not wish to buy a residential residence immediately, it might prevent tax on this long term capital useful properties by investing Rs. 46.95 lakhs in capital useful properties bonds of any of the required financial institutions like IRFC (Indian Railway Finance Corporation), PFC (Power Finance Corporation), NHAI (National Highway Authority of India) and REC Ltd. inside six months from date of sale of the property the place one could make investments most of fifty lakhs in a financial yr. The bonds have lock in of 5 years. The money obtained on maturity of these bonds is tax-free. These bonds presently provide 5.25% curiosity which is taxable.

    If you alter your ideas inside six months and resolve to buy property eventually, you’ll deposit the amount of listed capital purchase in a checking account beneath the Capital Gains Account Scheme (CGAS) sooner than due date of submitting of the ITR which is thirty first July 2024 for salaried people. This money could possibly be utilized for getting a ready to maneuver in residential residence inside two years from date of sale of the property or inside three years for self-constructing a house or reserving an beneath improvement residential residence. There will be no tax on the capital useful properties if this money is used to utilized as above else it might develop to be taxable when the interval of three yr expires.

    (Balwant Jain is a tax and funding skilled and could possibly be reached on [email protected] and @jainbalwant on his twitter take care of)

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  • How loss harvesting in IT shares might make it simpler to comprise income tax in FY24

    ITR submitting: With the beginning of current financial yr, an income taxpayers first job is to start financial planning and check out all avenues that will save one’s money. Finding out income tax saving decisions are one in all them. For a stock market investor, it is little powerful presently as numerous the small-cap and mid-cap shares may be discovered at discounted prices and subsequently future merchants should accumulate extra to do the averaging and sit up for bounce once more of their portfolio shares. However, from income tax return (ITR) perspective, portfolio shares at discounted worth provides a window of different to stock market merchants, notably IT shares as in closing one yr, Nifty IT index has shed to the tune of 17.50 per cent and numerous the IT shares may be discovered at discounted worth presently.

    According to tax and funding specialists, ensuing from dump in IT shares in closing one yr, stock market merchants having publicity in IT shares has a chance to reap the advantages of current IT stock positions sing loss harvesting method. They said that stock merchants desires to look out out loss harvesting shares from the IT part as they’re anticipated to proceed beneath stress in near time interval after US Fed flagged off monetary slowdown jitters ensuing from monetary establishment catastrophe in US. as a result of the financial yr 2023-24 has merely begun and IT shares are anticipated to remain weak, notably after the beneath par TCS and Infosys This fall outcomes, IT stock merchants can e-book loss at current ranges and re-enter at lower ranges as soon as extra. This will permit to set off the capital loss in the direction of the capital good factors whereas submitting their income tax return (ITR) for the financial yr 2023-24. However, they advised taxpayers to steer clear of timing the market after reserving the lack of their stock positions.

    How loss harvesting shares can comprise income tax

    Explaining the income tax pointers in regard to loss harvesting shares, Vinit Khandare, CEO & Founder at MyFundBazaar said, “Investing in equity funds, an investor is known to make capital gains – taxable based on how long one stays invested in the particular fund. However, in tax-loss harvesting, the investor sells their stocks/fund units at a loss to reduce their tax liability on capital gains – a lucrative method to offset the capital gains made on equity against the capital loss suffered to pay a lesser amount of tax. Additionally, a few factors need to be kept in mind in tax-loss harvesting – a long-term capital loss can be set off only against only long-term capital gains.”

    Vinit Khandare of MyFundBazaar went on in order so as to add that the investor cannot set off long-term capital losses in the direction of short-term capital good factors. Whereas short-term capital losses is perhaps set off in the direction of each short-term capital good factors or long-term capital good factors – a method to offset the capital good factors made on equity in the direction of the capital loss suffered to pay a lesser amount of tax.

    Advising taxpayers to try IT shares to look out out loss harvesting shares, Avinash Gorakshkar, Head of Research at Profitmart Securities said, “IT stocks are more ideal as most of the IT stocks are available at discounted price and these stocks are expected to remain under pressure for next one to two quarter as US Fed has raised concerns about the looming economic slowdown due to bank crisis in US. Due to this, US dollar driven stocks like IT is expected to remain under pressure as they draw around 40 per cent of their business from the BFSI sector.”

    In closing one yr, Nifty IT index has shed from spherical 34,350 ranges to twenty-eight,342 mark. Among prime 5 Indian IT shares — Infosys, TCS, Wipro, HCL Technologies and Coforge — Wipro share worth has shed to the tune of higher than 30 per cent in closing one yr whereas Infosys shares have shed spherical 15 per cent whereas TCS share worth has corrected spherical 10 per cent in closing one yr.

    Speaking on Nifty IT index outlook, Sumeet Bagadia, Executive Director at Choice Broking said, “Nifty IT index is looking weak on chart pattern and it may become further weak if the index breaches the current support placed at 28,300 levels. IT stocks are expected to attract buying interest by market bulls only when the Nifty IT index gives breakout above 29,100 levels.”

    Disclaimer: The views and proposals made above are these of explicit individual analysts or broking firms, and by no means of Mint. We advise merchants to confirm with licensed specialists sooner than taking any funding choices.

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  • How earnings tax rule applies if husband buys plot inside the establish of his partner?

    I had purchased two adjoining plots in March, 2003 for ₹6 lakhs each. One was purchased in my establish and the second was purchased in my partner’s establish. I had paid for every these plots. Now I want to advertise every the plots and rely on to get spherical ₹75 lakhs. I’m a salaried specific particular person and my partner is dwelling maker. How can we get exemption from Long time interval capital constructive features on sale of these plots? I private two residential flats in my establish.

    Answer: Purchase of the other plot by you in your partner’s establish is likely to be dealt with as current made by you to your partner. As per the provisions of Section 64 of Income Tax Act, when an asset is offered by one accomplice to a unique, any earnings arising on such gifted property is required to be clubbed with the earnings of the accomplice transferring such asset. The clubbing provisions will proceed to make use of till the marriage subsists even when the transferred asset is reworked into totally different asset. The clubbing provisions will apply on earnings from the asset so transferred nonetheless on the earnings which arises on earnings so clubbed and extra invested.

    So capital constructive features on sale of every the plots is likely to be taxed in your palms. One can avail tax exemption on sale of a plot if held for higher than 24 months each by investing the sale proceeds in a residential residence beneath Section 54F or by investing the capital constructive features in capital constructive features bonds beneath Section 54EC. Since you already private two flats in your establish you are not eligible to avail tax exemption beneath Section 54F.

    However, you presumably can nonetheless declare exemption beneath Section 54EC by investing in capital constructive features bonds of Rural Electrification Corporation (REC), National Highway authority of India (NHAI), Power Finance Corporation (PFC) or Indian Railway Finance Corporation. Your listed worth of every the plots includes spherical Rs. 18.91 Lacs and the listed long term capital constructive features come to Rs. 56.09 lakhs. Since one could make investments most Rs. 50 lakhs in a yr and in respect of long term capital constructive features of a yr, you may should pay tax at 20% on the steadiness long term capital constructive features of Rs. 6.09 lakhs. The funding in bonds have to be made inside six months from the date of sale of the capital asset.

    (Balwant Jain is a tax and funding skilled and might be reached on [email protected] and @jainbalwant on his twitter cope with)

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  • Income tax rule: Proceeds from life insurance coverage coverage to be taxable from April 1?

    New revenue tax rule 2023: After ushering in new monetary yr from 1st April 2023, an excellent variety of revenue tax guidelines are going to alter. These revenue tax guidelines have been modified on the premise of Union Budget 2023 proposals which were handed by the parliament in just lately by means of Finance Bill 20223. As per this Finance Bill, proceeds from the revenue tax insurance policies over the annual premium of ₹5 lakh will now turn out to be taxable from 1st April 2023 i.e. from tomorrow. So, it isn’t that every one life insurance coverage coverage proceeds shall be taxable. Only these life insurance coverage proceeds which have an annual premium of over ₹5 lakh shall be taxable from subsequent monetary yr.

    Union Finance Minister Nirmala Sitharaman had proposed to levy tax on proceeds of life insurance coverage coverage with annual premium of over ₹5 lakh whereas presenting the Union Budget 2023 citing, “It is proposed to provide that where aggregate of premium for life insurance policies (other than ULIP) issued on or after 1st April, 2023 is above ₹5 lakh, income from only those policies with aggregate premium up to ₹5 lakh shall be exempt. This will not affect the tax exemption provided to the amount received on the death of person insured. It will also not affect insurance policies issued till 31st March, 2023.”

    In the Union Budget 2022, Finance Minister Nirmala Sitharaman had imposed revenue tax on proceeds from ULIP (Unit Linked Insurance Plan) on annual premium over ₹2.5 lakh. So, from 1st April 2023, proceeds from ULIP on annual premium as much as ₹2.50 lakh and proceeds from life insurance coverage on annual premium as much as ₹5 lakh shall be revenue tax exempted.

    Some different revenue tax rule modifications from 1st April

    – From tomorrow, new revenue tax slab will turn out to be by-default tax regime for incomes people. Now, if an incomes particular person want to go together with the previous tax regime, must go for the previous tax regime.

    – Standard deduction of ₹50,000 has been handed on to each previous and new revenue tax regime.

    – Tax free revenue for salaried people has now gone as much as ₹7 lakh each year from 1st April 2023.

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