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For persons earning above Rs.10,00,000/- ( Net Taxable Income), they have to pay extra 10% Surcharge on Tax. Agricultural Income has to be added to your Salary or Business Income for rating purpose. If you invest in L.I.C, PF,PPF,NSC,ULIP,HBA up to Rs.1,00,000/- , this Rs.1Lakh can be deducted from your total Income. Plus if you Invest in Medical Insurance ( Self and family) up to Rs.15,000/-, you can deduct from Total Income. Plus if the Individual has dependents who is Physically handicapped or Mentally Retarded or Suffering form disease, then up to Rs.75,000/- is deductible from Total Income. If you invest in 5 year deposit in Post office, Time Deposit up to Rs.1 Lakh is deductible from Total Income TAXATION FOR THE MALE A Male individual, whose Income exceeds Rs.1.5 lakhs, need to file Tax Returns. Taxes to be deducted from earnings regularly or if one has other Incomes, then total all the Incomes and calculate benefits like 80C,80CCA,80L and Sec 24 (i). If he has other Incomes, he has to pay Tax by way of Advance Tax in Nationalized Banks. Advance Tax :- Payable by chalan in September 15th, December 15th, and March 15th as 30%, 30% and 40% Heavy penalties like 234A,234B,234C are levied if the Tax is not paid by due dates or not deducted in time. An individual has got incomes like :- Add up all incomes and give relief respectively . EXAMPLE.
Gross salary earned during the year 6,20,000 Income from rent from your property ( - ) 60,000 Section 80 C LIC, PPF, NSC etc., ( - ) 1,00,000 4,60,000 ---------------- Loss on House Gross 3,10,000 Net Taxable income Rs.3,10,000 Tax payable Rs.17,000 Cess 3% Rs. 510 Total Tax payable Rs.17,510 This Tax has to deducted in Salary or paid by way of Advance Tax. LADIES They have Additional benefits like Income up to Rs.1,80,000 --- No Tax Ladies do not continue employment till 58 years or so. Generally the ladies work up to the time of marriage and resign. Rarely they continue beyond marriage. So they can choose best savings plans like 1) PPF 2) Mutual funds 3) Post office deposits. If you plan well, the investments made on wife and children, husband can claim tax benefits. SENIOR CITZENS Their earnings up to Rs.2.25 lakhs in a year is exempt from Taxation. To avoid Tax on incomes, they can choose investments like Mutual funds, Post office time deposits, Senior citizen Postal deposits, so that they can deduct these Investments under Sec 80C. The best policy would be Mutual funds. Lock in period is 3 years. It is a one-time investment. Principle + interest is wholly tax free. Next best is Money back policy in L.I.C. This policy gives installment payments once in 5 years, and also gives Bonus for the whole policy value. Term of this policy should be short like 15 years or 20 years only PPF Public provident fund The best account that anyone can open in a nationalized bank or post office. Minimum to open the account is Rs.500/-. One can deposit 12 times in a year, but total contributions in a year should not exceed Rs.70,000/- Principle and interest in a years wholly exempt from Taxation. One can continue the account beyond the maturity period. Up to Rs.70,000/- in a year, amount invested in this account can be deducted from your salary / other incomes under section 80C. One can open this account on a newborn baby also and claim Tax benefits. MUTUAL FUNDS There are many funds. But one can not predict the results. Small investments can be made in mutual funds. Always Remember :- Your money should be distributed in various baskets and import of all is 1) Liquidity 2) Safety 3) Better capital appreciation. 4) Better Interest. HOUSE WIFE A house wife can earn up to Rs.1.80 Lakhs in a year but need not pay Tax. She should always share the husband's income and become an assessee. If husband earns more than Rs.1.5 Lakhs, then if he puts deposits in his name in Banks, Companies, he has to pay Tax on the interest at 30 %. Therefore he should distribute the money to wife and children. She can then apply for Pan No and become an assesse. PAN NO: Pan no is must who ever earns more than Rs.1.5 lakhs in a year. He or she should apply for Pan No. in Unit Trust of India or other approved offices. Any one who opens deposit in a Bank or buys a property or has turn over in business exceeding Rs.5 lakhs or purchase of vehicles or Time deposits or Telephone connection or Foreign travel or payment to anyone beyond Rs. 50,000/- MUST APPLY for a Pan No. BUSINESS Every individual can do business with his or her own capital. Certain deductions are permitted for business. Business income can be from Sale. Agency commission, Brokerage, Distribution, and so on. He can claim the following deductions
After deducting the above expenses, he should calculate the Tax payable and pay the tax by way of advance tax in a year. He should also file Tax returns regularly every year. He should maintain books of accounts and keep the expenditure vouchers all the time. DOS AND DONTS
1. Keep the bank pass book entries perfectly A.V.S.Sathyanarayana Income Tax consultant Chennai |
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