Tuesday, December 27, 2005

Finance | Tax | PAN

PAN Related links

What is PAN?
Permanent Account Number (PAN) is a ten-digit alphanumeric number, issued in the form of a laminated card, by the Income Tax Department.
A typical PAN is AABPS1205E.
Read much more at < http://incometaxindia.gov.in/PAN/Overview.asp>
How to get the new PAN card?
The Unit Trust of India Investor Services Limited (UTI-ISL) has started despatching Income Tax Permanent Account Number (PAN) cards from Friday.
Getting the new PAN card
Application for PAN should be made in prescribed form (Form 49A) and submitted in any of the I-T PAN Service Centres set up and managed by UTIISL across the country.
I-T PAN Service Centres
From July 1, 2003, I-T PAN Service Centres have been set up in all cities or towns where I-T offices are located.
For further convenience of PAN applicants in major cities there will be more than one I-T PAN Service Centre.
Location and other details about I-T PAN Service Centres in any city can be obtained from local Income Tax Office or offices of UTI or UTIISL in that city or from Web site of the Income Tax department (http://http://www.incometaxindia.gov.in/) or of UTIISL (http://www.utiisl.co.in/).
These I-T PAN Service Centres shall supply and receive PAN applications on behalf of all Assessing Officers, assist PAN applicants to correctly fill up the applications, check documents to be submitted as proof of 'identity' and 'address' by the applicant and issue acknowledgment for correct and complete applications

Read More at http://www.rediff.com/money/2003/jul/11pan.htm

Remember PAN is required for transactions at various institutions, eg. for a deposit of Rs 50K and above cash, you have to give your PAN number, your credit card companies (atleast HSBC does) will ask you for PAN, your demat/share broker will ask you for a PAN.

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Finance | Tax Rebates

Hello
Everyone of us would like to pay the least tax. So the IT deptt has some rebates listed.

Deductions/Rebate
  1. Interest earned on notified bonds/debentures of any public sector company is eligible for deduction u/s 80L of the IT act.
  2. In case you are planning to get a loan for pursuing higher studies, it would be better to get the loan yourself rather than your parents.Section 80E envisages deduction of any amount paid by an assessee out of his income, by way of repayment of loan for this purpose subject to an outer limit of Rs 25,000 (Increased To Rs.40,000 from F/Y 2000-01). This facility is not allowed for parents financing their children's education.
  3. Inspite of one per cent cut in the PPF rates, it still is the best tax saving investment option. As this tax-free return of 11 per cent is equivalent to a taxable return of 14.16 per cent and 16.41 per cent for those in the 22 and 33 per cent tax bracket respectively.
  4. It is wiser to avail deductions under sections 80CCC to 80U as regards rebate under section 88, in case the taxable income is marginally over Rs. 60,000, as surcharge is levied if the taxable income exceeds Rs. 60,000.
  5. Makes full use of Rebates: Don’t under invest. Just look at the returns. The normal return on an investment is about 11 per cent. Add your tax rebate of 20 per cent and that is a whopping 31 per cent!
  6. Employee's contribution to approved superannuation fund is eligible for tax rebate at 20 per cent of the total amount invested u/s 88 of the IT act.
  7. Monetary donations made to approved institutions established in India for charitable purposes are eligible for deduction u/s 80 G of the I.T Act.
  8. Senior citizens rejoice, tax relief available to them has been increased from Rs 10,000 to Rs 15,000. This means senior citizens can annually earn Rs 1,30,000 and still pay not a penny to the government.
Complete info can be had from the official website :
http://incometaxindia.gov.in/FileYourReturn/Rebate.asp
Regards
Kanuj

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Finance / Investment | Equity-linked Savings Schemes

Hello
Equity-linked Savings Schemes are a smart way to save tax.
The following links will be helpful for you.

Equity-Linked Savings Schemes are by far the most exciting of all the tax-saving schemes: the returns offered by some of the mutual fund schemes over the past 12 months have been more than 100 per cent. But be warned: if the returns are high, so are the risks..... Read more at http://in.taxes.yahoo.com/taxelss.html

Statistics have proved that over the long term, equities are known to have outperformed other forms of investment.
Some other tax savings instruments like PPF, NSC, NSS, bonds etc do offer tax benefits but now at lower returns. Hence ELSS is an attractive investment avenue for those who seek tax savings coupled with the potential of high returns.
One interesting investment option that emerges for the great Indian middle class salaried Indian in these resurgent times are the Equity Linked Saving Schemes (ELSS) of Mutual Funds. ELS schemes offer tax rebate under Section 88 for an investment upto a maximum of Rs. 10,000. These schemes typically bestow on their investors two distinct advantages namely – tax exemptions under Section 88 and capital appreciation due to investment of at least 80 per cent of their corpus in the equities markets. An investment that could reap rich dividends in resurgent times!.................. Read more at http://www.indiainfoline.com/mufu/feat/idb1.html
One technical term used in these is "Lock in period-which means the minimum time the shares/stocks/mutual fund units have to be kept. If sold before that period, tax will be calculated . Some complications abt which rates will be taken (but the second link should help in this too)"
Regards
Kanuj

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Finance | Tax

Hello
Most of you might have got mails from the finance (payroll) people to submit investment details.
You can check the details of your tax-tax calculation at your personnal manager> Fianance > Income tax calculation. It is very clearly explained there.
I am sending some links which will be helpful.

One tip I got from elders:
Better not to pay tax than to expect a "timely" return of excess tax paid. (For those who didnt get this, whatever tax you overpay will be returned back to you but it takes a long time-sometimes 1-2 years for it to come back . e.g. for the last financial year, most of us might have paid some tax, but it was wrongly calculated by the payroll as we were not liable to pay any tax as our taxable income was less than the limit. So that extra tax will come back...but when..dont know)

........................
1. Cut your tax liability by 20%, invest in the following schemes : http://www.myiris.com/tax/section88.php3

2. http://www.taxmann.com/TaxmannDit/DisplayPage/dpage1.aspx ; Search for '80C'

I hope this helps

Regards
Kanuj

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Finance | Tax Saving Schemes

Tax Saving Schemes
 
After assessing your tax liability, the next step is tax planning. It involves selecting the right tax saving instruments and making investments accordingly.
Deductions from Taxable Income:
Deduction under section 80C
This new section has been introduced from the Financial Year 2005-06.
Under this section, a deduction of up to Rs. 1,00,000 is allowed from Taxable Income in respect of investments made in some specified schemes. The specified schemes are the same which were there in section 88 but without any sectoral caps (except in PPF).
Specified Investment Schemes u/s 80C-
  1. Life insurance Premiums
  2. Contributions to Employees Provident Fund/GPF
  3. Public Provident Fund (maximum Rs 70,000 in a year)
  4. NSC
  5. Unit Linked Insurance Plan (ULIP)
  6. Repayment of Housing Loan (Principal)
  7. Equity Linked Savings Scheme (ELSS)
  8. Tuition Fees including admission fees or college fees paid for Full-time education of any two children of the assessee (Any Development fees or donation or payment of similar nature shall not be eligible for deduction).
  9. Infrastructure Bonds issued by Institutions/ Banks such as IDBI, ICICI, REC, PFC etc.
  10. Interest accrued in respect of NSC VIII issue.
Notes:
1. There are no sectoral caps (except in PPF) on investment in the new section and the assessee is free to invest Rs. 1,00,000 in any one or more of the specified instruments.
2. Amount invested in these instruments would be allowed as deduction irrespective of the fact whether (or not) such investment is made out of income chargeable to tax.
3. Section 80C deduction is allowed irrespective of assessee's income level. Even persons with taxable income above Rs. 10,00,000 can avail benefit of section 80C.
Please note that because the deduction is allowed from taxable income, the exact savings in tax will depend upon the tax slab of the individual. Thus, a person in 30% tax stab can save income tax up to Rs. 30,600 (or Rs. 33,660 if annual income exceeds Rs. 10,00,000) by investing Rs. 1,00,000 in the specified schemes u/s 80C.
Deduction under section 80 CCC(1)
This section allows a deduction of up to Rs. 10,000 to an individual in respect of contribution to 'Pension' scheme of LIC of India or any other Insurance Co. Accordingly, a person who is in 30% tax bracket can save income tax of Rs 3,060 (or Rs. 3366 if annual income exceeds Rs 10,00,000) by contributing Rs 10,000 towards Pension plan in a year .
Some of the popular pension plans are Jeevan Suraksha by LIC, Life Time Pension By ICICI Prudential Life Insurance, Aviva Life - Pension Plus by Aviva Life Insurance, Max-Easy Life policy by Max New York Life, Nirvana Plus by Tata AIG Insurance Etc.

Section 80 CCE
Aggregate deduction u/s 80 C, u/s 80 CCC and 80 CCD can not exceed Rs. 1,00,000.
Deduction under section 80D.
Under This section, a deduction up to Rs 10,000 (Rs 15,000 in case of senior citizens) is allowed in respect of premium paid by cheque towards health insurance policy, like "Mediclaim". Such premium can be paid towards health insurance of spouse, dependent parents as well as dependent children.
Accordingly a person who is under/in 30% tax bracket can save income tax up to Rs 3,060 (or Rs. 3366 if annual income exceeds Rs 10,00,000) by paying Rs 10,000 as premium in "Mediclaim" policy in a year.

Deduction under section 24(b)
Under this section, Interest on borrowed capital for the purpose of house purchase or construction is deductible from taxable income up to Rs. 1,50,000 with some conditions to be fulfilled.
 
 
 

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Finance | Tax Planning Tips

Tax Planning Tips
 
First step to plan tax is to assess your income tax liability. Once you have identified your tax liability, you can then create the right plan. Please note that this applies only to salaried individuials.
.............
(applicable to present financial year)
 
Read the complete article at
http://www.bajajcapital.com/taxplanning/taxplanningtips.html
Courtesy : http://www.bajajcapital.com
 
(couldnt be put here bcos of tables formatting)
 

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Finance | Tax planning

Tax Planning : Introduction
 
Proper tax planning is a basic duty of every person which should be carried out religiously. Basically, there are four steps in tax planning exercise. These four steps in tax planning are:
  1. Calculate your taxable income under all heads ie, Income from Salary, House Property, Business & Profession, Capital Gains and Income from Other Sources.
  2. Calculate tax payable on gross taxable income for whole financial year (i.e.,From 1st April to 31st March) using a simple tax rate table, given on next page.
  3. After you have calculated the amount of your tax liability. You have two options to choose from:
    a.Pay your tax (No tax planning required)
    b.Minimise your tax through prudent tax planning.
  4. Most people rightly choose Option 'B'. Here you have to compare the advantages of several tax saving schemes and depending upon your age, social liabilities, tax slabs and personal preferences, decide upon a right mix of investments, which shall reduce your tax liability to zero or the minimum possible.
Every citizen has a fundamental right to avail all the tax incentives provided by the Government. Therefore, through prudent tax planning not only income-tax liability is reduced but also a better future is ensured due to compulsory savings in highly safe Government schemes. We sincerely advise all our readers and clients to plan their investments in such a way, that the post-tax yield is the highest possible keeping in view the basic parameters of safety and liquidity
 
 
 

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