Documents Require To Claim Deductions

Documents-Require-To-Claim-Deductions
Financial Year is going to close. All Income tax Assesses are in hurry about their tax assessment. Getting sure about done adequate investment (Limit U/s 80C Rs.1,50,000/-) to  claim & save maximum tax rebate. Arranging documents pertaining to investment and tax return. 

First, all you need to know about Form 26AS. It is a summary of taxed deducted on your behalf and taxed paid by you. This summary is provided by Income Tax Department. It shows all details of deducted on your behalf by deductors, details of tax deposited by taxpayers and tax refund received in the Financial Year. This form can be accessed from Income Tax Department's Website.

Second, All Salaried Tax Assess needs to get Form 16 issued by their employer to get file their Income Tax Return.

Third, Documents Require for Interest Income, 
> Assesses needs to update his bank statement/pass book for interest on 
   saving bank account.
> Interest Income Statement (accrued or credited) on their Fixed Deposits.
> TDS certificate (Form 16A), if any, issued by banks or other financial 
    institution.
> Interest Accrue Certificate on NSC / Kishan Vikas Patra etc.

Fourth, Proof for Investment in Section 80C, Investment made under PPF, NSC, ULIPS, ELSS, RGESS are qualifies for deductions Under Section 80C.

Last Minutes Checklist to File Your IT Returns :
1. Pan Card
2. Bank Statement 
3. TDS Certificates
4. Tax Payment Challans (Advance Tax or Self Assessment Tax)
5. Form 16 / Salary Certificate received from the Employer.
6. Interest Certificates issued on your deposits
7. Rent Receipts copy (If You Are on Rent)
8. Life and Medical insurance payment receipts.
9. Tuition Fees Receipts.
10. Stock statement in case of trading in shares 
11. PPF Passbook for interest
12. Dividend warrants /amount
13. Interest Certificates on bonds
14. Details of interest accrue on NSC during the year.
15. Sale and Purchase deed of the property including Stamp Valuation of the           property (for land/building)
16. Repayment/Interest Certificate for Interest paid on housing loan and                 Principal amount Paid.
17. Donation Receipts for Section 80G (with PAN details of donnee)
18. Details of Expenses incurred on transfer of Re-Investment in property.
19. Any Other Tax Saving Investment receipts/proof.
20. Aadhar Card Copy (Mandatory for e-filing)

Remember all above documents are proof of income require for ITR filling purposes only does not require to attache along with ITR.

Tax Relief For Agents

Tax-Relief-To- LICAgentLIC agents main earning is commission. So, Income Tax Department allows some relief to favour Insurance agent. But this relief is for small commission earning agent. If commission earned from LIC insurance business is below Rs.60,000/- p.a. and if no separate books of accounts maintained then the entitlement for deduction is as follows:

i) On First Year Commission - deduction is 50%  

ii) On Renewal Commission - deduction is 15%

The LIC Commission after claiming deduction was mentioned above will be included and can be disclose with other source of income for tax purpose.

The benefit of Adhoc deduction will not be available to agents who have earned total commission of income more than Rs.60,000/- during the year.

In case gross commission earned by an Agent from LIC exceeds Rs.60,000/- per annum  then, he will be not entitled for claiming deduction referred above. He has to maintain books of accounts as required under the Income Tax Act. The following books and documents are recommended to be maintained :

1) Cash Book
2) Bank Book
3) Ledger Book
4) Journal Book
5) Vouchers And Bills
6) LIC Commission Statement
7) TDS Certificates Received from LIC
8) Bank Pass Book, Cheques Book, Deposit Voucher
9) All Other Connected Documents 


LIC Agents are entitled to claim all expenses incurred for generating LIC Commission such as :
a) Salary to Staff
b) Rent for Office Premises, in case own office then maintenance for the same
c) Fuel Expenses and maintenance for maintaining vehicles.
d) Books, Publications, Periodicals expenses connected to business
e) Printing And Stationery
f) Electricity Expenses
g) Travelling / conveyance Expenses
h) Telephone / Mobile / Internet Expenses
i) Postage Expenses
j) Depreciation Expenses on Vehicles, Computers and Other Office Equipment
k) Gifts, Diaries, Calenders Expenses etc.
l) Staff Welfare Expenses
m) Any Other Expenses related to generate commission.

Health Insurance And Tax Benefit

Health-Insurance-And-Tax-Benefit
Health is Wealth or You may say Health is the greatest assets for a human being. Our overall health is severely affected by our lifestyle. Unhealthy Eating Habits, Lack of Adequate Sleep, Stress can affect our health. A Mediclaim policy acts as savior & it protect you from facing a financial crunch in a medical emergency. Since Inflation has made medical bills costlier, having a heath insurance policy is necessary as other necessities.

There are dual benefits of the health insurance. First it ensures your financial stability and give coverage against expensive medical bills and also offer you benefit of Tax Deduction under section 80D upto Rs.25,000/- to Rs.30,000/- (for Senior citizen).

In order to enjoy tax deductions along with health coverage, you need to check which policy suits you & your family and how much premium required for. The premium amount paid by you can be utilize as Tax Rebate Tool. Remember, if the premium paid by your employer, you will not be eligible for tax rebate. Under the IT Act, 1961 medical allowance is not considered as an allowance, which is exempted. 

Generally, medical allowance is confused with medical reimbursement. Medical reimbursement is paid by an employer to their employees when they submit medical bills. 

When it comes to tax planning, people generally don't consider their parent's health insurance as a tax saving tools. If you are paying for your parents health insurance, you can claim upto Rs.30,000/- as tax deduction benefit in your annual income tax return. 

Service Tax Paid on Insurance Premium U/s.80C

Service-Tax-Paid-on-Insurance-Premium-U/s.80C
Many question arise about "can we take benefit of paying service tax paid on Insurance Premium!" If we check insurance premium receipts properly we get that the we pay three cost heads; Net Premium + Service Tax + E. Cess. On this basis final gross premium is calculated.

Now question is "can we take claim under section 80C of service tax paid along with insurance premium?"

The current tax rules states that "any amount paid to keep in force a life insurance policy qualifies for a tax deduction under section 80C." It is a common perception that Premium Paid all Life Insurance Policies are qualifies for deduction under section 80C of Income Tax Act, 1961. 

As per Section 80C(2) of the Income Tax Act, 1961 any amount paid to an insurer to buy or to keep a life insurance policy in force can be claimed as a deduction from gross total income by the policy holder. This implies that premium paid for a life insurance policy can be deducted from gross total income before arriving at taxable income subject to certain condition.

Section 80C(2) also clarifies that in order to claim the deduction from gross total income fro a particular year the gross amount of premium must be paid or deposited in that particular financial year itself.

But when you ask insurance provider to provide Total Insurance Premium Paid Statement then they will provide you only statement of net premium paid

Tax experts interpret this to mean that the entire premium inclusive Service Tax and Cess, qualifies for a tax deduction.

Ideally, you need to mention the entire premium or gross premium for the purpose of availing a tax deduction under section 80C.

Financial Duties Of An Individuals

Every citizen have some financial duties and rights that they should know but most of them are unknown to it. We have listed some are here Financial Duties here for your information.
Financial-Duties-Of-An-Individuals
(1) Duty to Pay Tax On Due Date:-


If your income is above taxable limit then you should consult a tax consultant and pay tax as per given slab. Income  Tax paid by you is used by the Government to build the infrastructure of the nation. you can be shock after knowing that only approx 3% of the population file Income Tax Returns and pay taxes. 

(2) Duty to be Truthful with Financial Planning:- 
Now a days livelihood is very expensive. Calculate your insurance cover properly to take adequate amount of insurance. Less or More may misplan your financial future needs. Declare true fact while you are filling proposal form of insurance, any incorrect information can result in your claim being reject.

(3) Duty to Nominate in Time:- 
Mentioning Nomination at the time of filling proposal form is better than later because unexpected risks may happen any time and dependent may come in problem in your absence.

(4) Duty to Sign Filled Form Only:- 
You should know that only you are responsible for the form you signed. So, don't handover any blank form. Fill out the form you are signing yourself or have it done in your presence. Self attested documents are good to prevent frauds.

(5) Duty To Pay Your Dues On Time:- 


Late payment of your dues may impact your credit ability in market. Some time late payment of credit card dues or loan installments can derail your financial planning. Late payment fees are hefty and so always try to avoid it.

Income Tax Rate Slab For F. Y. 2017-18 ( A.Y. 2018-19)

As per Budget 2017 proposed by our Fin. Minister  on 01.02.2017 new revised income tax rates in case of every individual (other than those mentioned in (ii) and (iii) below or HUF family or every Association of Persons or Body of Individuals, whether incorporated or not, or every Artificial Judicial person referred to in Sub-clause (VII) of Clause (31) of Section 2 of the Act (not being a case to which any other Paragraph of Part III applies) are as under : -



Income Tax Rate-For- F.Y. 2017-18 ( A.Y. 2018-19)-For-Individual-below-60-years

In the case of every individual, being a resident in India, who is of the age of sixty years or more but less than eighty years at any time during the previous year -

Income Tax Rate-For- F.Y. 2017-18 ( A.Y. 2018-19)-For-Individual-between-60-Years-to-80-Years

In the case of every individual, being a resident in India, who is of the age of 80 years or more at anytime during the previous years -

Income-Tax-Rate-For- F.Y. 2017-18 ( A.Y. 2018-19)-For-Individual-Above-80-Years


The amount of income tax computed in accordance with the preceding provisions of he Paragraph shall be increased by a surcharge at the rate of :-
(1) 10% of such Income Tax in case of a person having a total income exceeding Rs.50.00 Lakhs but not exceeding Rs.1.00 Crore.


(2) 15 % of such Income Tax in case of a person having a total income exceeding Rs.1.00 Crore.

*Rebate U/s 87A is applicable as earlier for those whose income is below Rs.5.00 Lakh.

From AY 2018-19, this rebate shall be available only for individuals having income up to Rs. 3,50,000/-

Further up to AY 2016-17, rebate u/s 87A was restricted to Rs. 2,000/- . 

Rebate was later increased to Rs. 5,000/- w.e.f. AY 2017-18. 

Now, w.e.f. AY 2018-19, rebate has been deflated to Rs. 2500/-.

It means, having regard to exemption limit of Rs. 2,50,000/-, tax could have bill NIL for Income up to Rs. 2,70,000/- up to AY 2016-17. 

For AY 2017-18, tax could be NIL on Income up to Rs. 3,00,000/-. 

For AY 2018-19, tax again would be NIL up to 3,00,000/-, because of tax rate being reduced to 5%.
Hence the reduction in tax rate by 5% has been compensated by reducing rebate u/s 87A.

Insurance And Tax Savings

Insurance-And-Tax-Savings-Tips
Earlier we says for Insurance nowadays we also add Insurance with Tax Savings. Mostly people invest for tax saving purpose. And before taking any insurance plan peoples ask how much tax benefit they may get!

Here highlighting some LIC Plans with tax benefit as per Income Tax Act.

1) Deductions Under Section 80C  
   
    (i) Life insurance premium paid in order to effect or to keep in force an insurance policy on the life of the assessee or on the life of the spouse or any child of assesee and in the case of HUF, Premium paid on the life of any member thereof under an insurance policy, (Other than a contact for a deferred annuity) issued on or before the 31st day of March 2012 shall be eligible for "deduction only to the extent of 20% of the actual capital sum assured or actual  premium paid whichever is less." 
   And issued on or after the 1st day of April 2012 shall be eligible for "deduction only to the extent of 10% of the actual capital Sum Assured or Actual Premium paid  whichever is less".
     Where the policy, issued on or after the 1st day of April 2013, is for insurance on life of any person, who is - 
     (a)a person with disability or a person with sever disability (Section 80U)
     (b) Suffering from disease or ailment as specified in the rules under section              80DDB.

   (ii) Contribution to deferred annuity plans in order to effect or to keep in force a contract for deferred annuity, on his own life or the life of his spouse or any child of such individual, provided such contract does not contain a provision to exercise an option by the insured to receive a cash payment in lieu of the payment of annuity is eligible for deduction.

  (iii) Contribution to Annuity Plans like - New Jeevan Dhara, New Jeevan Dhara -I and Jeevan Akshaya -VI.


Under Section 80CCC
 New Jeevan Nidhi Plan & New Jeevan Suraksha - I Plan :- A deduction to an individual for any amount paid or deposited by him from his taxable income in the above annuity plans for receiving pension is allowed.

*The aggregate amount of deductions under U/S 80C, 80CCC & 80CCD (1) shall not in any case exceed Rs.1,50,000/- (Rupees One Lakh Fifty Thousand)*

2) Deductions Under Section 80D

a)    Deduction allowable upto Rs.25,000/- if an amount is paid to keep in force an insurance on health of assessee or his family (i.e Spouse & Dependent children) or any contribution made to the central Government Health Scheme or such other scheme as may be notified by the Central Government in this behalf or on account of Preventive health check-up of the assessee or his family.
b)    Additional deduction upto Rs.25,000/- if an amount is paid to deep in force an insurance on health of parents or on account of Preventive health checkup of the parent of the assessee, whether dependent or not.
(c) In case of HUF, deduction allowable upto Rs.25,000/- if an amount is paid to deep in force an insurance on health of any member of that HUF.
(d) If the sum specified in (a) or (b) or (c) is paid to effect or keep in force an insurance on the  any person specified therein who is a senior citizen, then the deduction available will be up to Rs.30,000/-. Here senior citizen means the person who is of sixty year or more during the previous year.
(e) In case the amount are paid in (a) or (b) or (c) on account of preventive health check up, the deduction for such amounts shall be allowed to the extent it does not exceed in aggregate Rs.5,000/-
(f) For the purpose of deduction, the payment shall be made by  - any mode, including cash, In respect of any sum paid on account of preventive health check up and Any mode other than cash in all other cases.
(g) the insurance as mentioned above shall be in accordance with the scheme framed by (i) the GIC of India or any other insurer approved by IRDA.


3) Deductions Under Section 80DD
Jeevan Aadhar Plan - Deduction from total income upto Rs.75,000/- allowable on amount deposited with LIC under Jeevan Aadhar Plan, Jeevan Vishwas for maintenance of an handicapped dependent (Rs.1,25,000/- where handicapped dependent is suffering from severe disability)

4) Exemption in respect of commutation of Pension under Jeevan Suraksha & Jeevan Nidhi Plans : 
Under Section  10(10A)(iii) of the Income Tax Act, any payment received by way of commutation of pension out of the Jeevan Suraksha & Jeevan Nidhi Annuity Plans is exempt from Tax.

5) Income Tax Exemption on Maturity / Death Claims proceeds under section 10(10D) :
As per Section 10(10D) of the Income Tax Act, 1961, any sum received under a Life Insurance Policy, Including the sum allocated by way of Bonus on such policy is exempt from tax where the sum s received as a death benefit. However, to get exemption under above section for sum received other than death benefit.
* Policy shall not be issued under Section 80DD(3)  Or
* Policy shall not be issued as Keyman Insurance Policy  Or
* Policy which has been issued on or after April 1, 2003 and the premium paid      in any of the years during the term of the policy not exceeding 20% of the          Actual Capital Sum Assured.
* Policy which has been issued on or after April 1, 2012 and the premium paid      in any of the years during the term of the policy not exceeding 10% of the          Actual Capital Sum Assured.

Where the policy issued on or after the 1st day of April 2013 is for insurance on life of any person, who is - 
(i) a person with disability or a person with severe disability as referred to in section 80U, or 
(ii) Suffering from disease or ailment as specified in the rules made under section 80DDB,


*Exemption under this section shall be available only if the premium payable in any of the years is not more than 15% of the actual Capital Sum Assured.*


Income Tax Rate Slab for Financial Year 2016-2017 (A Y 2017-18).

It again time to recalculate our Income Tax liability on the basis of our Net Total Taxable Income. Tax is calculated on the basis of Income Tax Rate announce by Government every year in their Annual Union Budget in this month of February.
Government announced Income Tax Rate Slab for Financial Year 2016-2017 ( Assessment Year 2017-2018).
Normal Income Tax Rate applicable to a Resident Individual below the age of 60 years; Non-Resident Individual; Resident/Non-Resident HUF, AOP, BOI, and Artificial Juridical Person.
Income-Tax-Rate-Slab-for-Financial-Year-2016-2017 (A Y 2017-18).

Normal Tax Rates Applicable to a resident individual of the age of 60 years or above at any time during the year but below the age of 80 years.
Income-Tax-Rate-Slab-for-Financial-Year-2016-2017 (A Y 2017-18).


Normal Tax Rates applicable to a Resident Individual of the Age of 80 Years or Above at any time during the year.

Income-Tax-Rate-Slab-for-Financial-Year-2016-2017 (A Y 2017-18).

After taking the Deductions Under Section 80 (C) to 80 (U), and Rebate 87A(Applicable to those whose Total Income is below Rs.5,00,000/-) 
the tax is payable after adding the Cess and Surcharges (If applicable)



The Surcharge is levied @ 15% on the Amount of Income Tax where Net Income Exceeds to Rs.1 Crore. In case where Surcharges is levied, the Cess will be levied on the Tax Amount plus Surcharge.

Extract of Section 87A is as follows :-

The following section 87A shall be inserted after section 87 by the Finance Act, 2013, w.e.f. 01-04-2014 :

Rebate of income-tax in case of certain individuals:

87A. An assessee, being an individual resident in India, whose Total Income does not exceed Five Hundred Thousand Rupees (Rs.5,00,000/-), shall be entitled to a deduction, from the amount of income-tax (as computed before allowing the deductions under this Chapter) on his total income with which he is chargeable for any assessment year, of an amount equal to hundred per cent of such income-tax or an amount of two thousand rupees, whichever is less.

Know-What is ULIP ???

Know-What-is-ULIP-HistoryA Unit Linked Insurance Plan (ULIP) is a product offered by insurance companies that unlike a pure insurance policy gives investors the benefits of both insurance and investment under a single integrated plan. Unit Linked Plans refer to Unit Linked Insurance Plans offered by insurance companies. These plans allow investors to direct part of their premiums into different types of funds (Equity, Debt, Money market, Hybrid etc.)

History:-

The first ULIP was launched in India in 1971 by Unit Trust of India (UTI) with the Government of India opening up the insurance sector to foreign investors in 2001 and the subsequent issue of major guidelines for ULIPs by the Insurance Regulatory and Development Authority (IRDA) in 2005, several insurance companies forayed into the ULIP business leading to an over abundance of ULIP schemes being launched to serve the investment needs of those looking to invest in an investment cum insurance product.

Working Principle:-
 A ULIP is basically a combination of insurance as well as investment. A part of the premium paid is utilized to provide insurance cover to the policy holder while the remaining portion is invested in various equity & debt schemes. The money collected by the insurance provider is utilized to form a pool of fund that is used to invest in various markets instruments  (debt & equity) in varying proportions just the way it done for mutual funds. Policy holders have the option of selecting the type of funds or a mix of both (debt and equity) based on their investment need and appetite. Just the way it is for mutual funds, ULIP policy holders are also allotted units and each unit has a net asset value (NAV) that is declared on a daily basis. The NAV is the value based on which the net rate of returns on ULIPs are determined. The NAV varies from one ULIP to another based on market conditions and the fund’s performance.

Features:-
ULIP policy holders can make use of features such as top-up facilities, switching between various funds during the tenure of the policy, reduce or increase the level of protection, options to surrender, additional riders to enhance coverage and returns as well as tax benefits.

Types:-
There are variety of ULIP plans to choose from based on the investment objectives of the investor, his risk appetite as well as the investment horizon. Some ULIPs play it safe by allocating a larger portion of the invested capital in debt instruments while others purely invest in equity. Again, all this is totally based on the type of ULIP chosen for investment and the investor preference and risk appetite.

Charges:-
Unlike traditional insurance policies, ULIP schemes have a list of applicable charges that are deducted from the payable premium. The notable ones include policy administration charges, premium allocation charges, fund switching charges, mortality charges and policy surrender or withdrawal charge. Some insurer also charge “Guarantee Charge" as a percentage of Fund Value for built in minimum guarantee under the policy.

Risks: -
Since ULIP returns are directly linked to market performance and the investment risk in investment portfolio is borne entirely by the policy holder, one need to thoroughly understand the risks involved and one's own risk absorption capacity before deciding to invest in ULIPs.

Providers: -
There are several public and private sector insurance providers that either operate solo or have partnered with foreign insurance companies to sell nit linked insurance plans in India. The public insurance providers include LIC of India, SBI Life and Canara Life while some of the private insurance providers include ICICI Prudential, HDFC Life, Bajaj Allianz, Aviva Life Insurance & Kotak Mahindra Life.

Advantages: -
(1) ULIP has limited liquidity. One needs to stay invested for a minimum   period of time as specified in the policy before redeeming the units.

(2) ULIP gives you flexibility to invest as per your risk profile, financial commitments and convenience. You can choose to invest either in equity or in debt or in hybrid fund and even change your investment    strategy. Unit Linked Plans offer you a wide range of flexible options such as   -- 
        (a)  The option to switch between investment funds to match your changing needs.
       (b) The facility to partially withdraw from your fund, subject to charges and conditions.
       (c) Single premium additions to enable the policy holder to invest additional sums of money (Over and above the regular premium) as and when desired, subject to conditions.

(3) Market Linked Returns:  ULIP give you an opportunity to earn market- linked returns as part of the premiums are invested in market linked funds which invest in different market instruments including debt instruments and equity in varying proportions.

(4) Life Protection, Investment and Savings: ULIP offer the twin benefits of life insurance and savings at market-linked returns. Thus you have     the opportunity to invest you money to earn higher returns, while     taking care of your protection needs. Investing in unit linked plans    helps to inculcate a regular habit of saving and investing. Which is important for building wealth over the long term?


(5)  All ULIPs offer Tax benefits under section 80C upto a maximum of Rs.1,50,000/-




Missed To File Income Tax Return In Time…. You Missed These Benefit

Missed To File Income Tax Return In Time…. You Missed These BenefitDid you missed to file Income Tax Return in Time or thinking that I have Refund / Zero Tax so I can file my ITR upto 31st March. Failing this you are also loosing some benefit / facility also provided by Income Tax Department. For your information some important points are highlighted here:-

Avoiding interest under section 234A
Though interest under 234B and 234C is levied if there is tax due and taxpayer did not pay advance tax. Taxpayers can avoid paying interest under section 234A by filing their return on time. This interest is charged @ 1% per month. It is calculated from the due date till the date on which you actually file your return.


*Loss of Interest on Refund
If your calculation shows Refund and did not file ITR in its due course then you will loose interest @1% per month on the Refund Amount which is calculating from April to date on which your refund get process  .

Faster Refund Process 
Income tax department has been processing refunds faster for returns filed on time. Delays in filing also mean delay in receiving refund. Last year, the department processed refunds within 2-3 weeks of filing. So if excess TDS has been deducted on your income, do not delay your filing.

Revise Return Filing is Possible
Many times; taxpayers commit mistakes while submitting their returns. Forgetting to claim a deduction is common errors. Sometimes an income may not have been included. Filing your returns by due date makes revision possible.

Carry Forward of Losses
A lot of taxpayers have short term losses from equity shares. These losses can carried forward in your tax return and set off from capital gains in succeeding 8 years. To be able to do this, your return must be filed within the due date. Losses from business and profession are also allowed to be carried forward when return is filed on time. So remember to file on time if you have losses.


Paying Tax Dues Timely
A lot of taxpayers see a tax due in their return after they consolidate their incomes and prepare their submission. This may happen due to inclusion of interest income. If there is a tax due, interest keeps accumulating until it is paid. So filing on time makes sure taxes are paid in time and interest (under sections 234B and 234C) does not keep adding up. Why shell out extra money when you can file on time and save on penal.


Deduction U/s 57 for LIC Agents

Deduction U/s 57 for LIC AgentsDeduction U/s 57 of Income Tax Act, 1961 for Income earned by LIC agent as Income From Other Sources :-

The benefit of adhoc deduction to Insurance agents of the Life Insurance Corporation having total commission (including first year commission, renewal commission and bonus commission) of less than Rs. 60,000 for the year, and not maintaining detailed accounts for the expenses incurred by them, may be allowed as 
follows :  
(i)  where separate figures of first year and renewal commission are available, 50 per cent of first year commission and 15 percent of the renewal commission;
(ii)  where separate figures as above are not available, 100/3 per cent of the gross commission. In both the above cases, the adhoc deduction will be subject to a ceiling limit of Rs. 20,000.



The “gross commission” in (ii) above will include first year as well as renewal commission but will exclude bonus commission. The complete amount of bonus commission is taxable and will be taken into account for purpose of computing the total income, and no adhoc deduction will be allowed from this amount. The benefit of ad hoc deduction will not be available to agents who have earned total commission of more than Rs. 60,000 during the year. The admissibility of the expenditure claimed by such agents will be decided by the Assessing Officers as per the provisions of the Income-tax Act. —Circular No. 648, dated 30-3-1993 

How to Maintain Safe Distance from Income Tax Department?

How to Maintain Safe Distance from Income Tax Department?In day to day transaction, we do some transaction which may attract Income Tax Department to serve you a notice ask about. But we always want to keep an Arm’s Length Distance from the Income Tax Department!

But the question here is HOW???
Here are lists of expenses/ investments, which at any point of time performed by you may invite undue attention from the Income tax Personnel.

1) Depositing Cash aggregating to Rs.10 Lacs p.a. in your Savings Bank Account.


2) Making Credit Card Payments of more than Rs.2 Lacs p.a.

3) Investment in Mutual Fund Units worth more than Rs. 2 Lacs.

4) Investment in Debentures/ Bonds, amounting more than Rs. 5 Lacs

5) Investment in Shares worth more than Rs. 1 Lakh.

6) Investment in Gold ETF worth more than Rs. 1 Lakh.

7) Investment in RBI Bonds worth more than Rs. 5 Lacs.

8) Purchase / Sale of any Immovable Property exceeding Rs.30 Lacs.

9) Receipt of Cash Payment exceeding Rs.2 Lacs for sale of any goods/ services.

10) Cash deposits or withdrawals aggregating to Rs 50 lakh or more in a financial year in one or more Current Account.

The Next question which may strike us is how does the Income tax Personnel get to know about all these activities.

To keep an eye on such high value transactions of the tax payers, the IT Department has developed a statement of financial transactions called Annual Information Report (AIR).
On the basis of this AIR, the department shortlists their targets and further sends them a notice.

What do you mean by a Annual Information Report (AIR).

Annual Information Return (AIR) of ‘high value financial transactions’ is required to be furnished under section 285 BA of the Income-tax Act, 1961 by ‘specified persons’ in respect of ‘specified transactions’ registered or recorded by them during the financial year.
Who provides the high value transaction information to prepare the AIR?

     Banks
       Mutual Fund Companies
     Companies Issuing Bonds/ Debentures
     Companies issuing shares
     Credit Card Companies
     Sub- registrar offices on real estate deals.


How can I trace my High Value Transactions reported under AIR?

The assessee can trace his/ her high value transactions reported under AIR, in their 26AS Report under AIR section. Any transaction of the assessee which has been categorized as a High Value Transaction will be reflected therein.

In the end, one last question which everyone might have. 

How to avoid receiving a notice from the IT department?

The most important step is to file your Income Tax returns on time and file them correctly.

Always re-check your Tax Credit with the 26AS statement.

Disclose all your Taxable as well as Exempt income under the right head.
Related Posts Plugin for WordPress, Blogger...