Income Tax in India - Who has to pay & How to save?
In simple terms Income tax is a kind of tax one has to pay on his personal income to the Central Government, according to act a person has to pay Income Tax when his total income exceeds the maximum exemptible limit is liable to pay Income Tax at the norms fixed in the Finance Act.
Last date to file Income Tax and penalties
The due date for filing returns is 31st July. The last date is 31st March 2010
One has to file his returns within scheduled date fixed by the concerned authority, if one fails to submit his returns and penal interest of 1% per month will be levied on the total tax due from that person who fails to file his returns, and if he has not file his returns even before 31st of March 2010 then one has to pay a fine of Rs.5,000.
One can get back the excess tax paid in the assessment year for that purpose one has to obtain a TDS [Tax Deducted at Source] certificate from his employer, the excess tax paid will be refunded after necessary calculations.
Slabs of Income Tax in India
Income Tax in India – How to save Tax through Savings & Investments
Let us discuss who are eligible for tax saving through investment.
Only individuals or Hindu Undivided Family are eligible, and those investments, contributions and payments made out of the income of the relevant financial year were only considered. Such income should have been taxable in India only, monetary limits set for each such type of investments or/and contributions or/and payments had to be adhered.
Such individuals and Hindu Undivided Family members are entitled for deduction up to Rs.1,00,000 on investments, contributions and payments who have made payments towards insurance, housing loans and also towards PPF, infrastructure bonds or in any other allowable norms, this contains no sub limits excluding PPF which is restricted to Rs.70,000.
The other popular investment options to save Income Tax in India
Public Provident Fund which can be had with Post offices or with banks, which deducted and paid by the employees with a minimum of Rs.100 and an maximum limit of Rs.70,000, tenure will be minimum 15 years and such investments has to be made every year. This can be opened in any nationalized banks or at any post office branches, and withdrawals from such investments is restricted 50% of the balance at the end of the fourth year.
Life Insurance which is under a maximum limit of Rs.1,00,000 for which premium paid on every year must not exceed 20% of the sum incurred and the sum paid in excess to 20 percent will not be allowed under such deductions and tax free status is limited only to direct taxes and not to other type like service tax paid on the maturity of insurance.
Unit Linked Insurance Policies is a combination of an investment as well as an insurance policy, minimum limit should be Rs.15,000 and annual contribution must be of Rs.1,000 and the maximum limit must be of Rs.2,00,000 with an annual contribution limited to Rs.20,000, age of such investors must be between 12 years to 55 years and 6 months, this kind of savings is also exempted from wealth tax, this may charged with service tax as the cover of insurance is already taken.
ELSS or Equity Linked Savings Scheme, the maximum limit here is Rs.1,00,000 and this has the benefit in terms of equities with tax benefits with a 3 years lock in period, an option of liquidations is curtailed, though this has the risk but ensures a maximum returns up to 47 percent sometimes.
National Saving Certificates or NSC, here this has the option of flexibility like PPF and moreover it is available in any branches of post offices which starts from a minimum denomination of Rs.100.
Infrastructure Bonds, here the investments will be in the form of shares, debentures and also in the form of bonds issued by some reputed public financial institutions, but it offers no opportunity of making any kind of capital gain but will be useful as a long run investment comparatively money will returned in a short period of time like 3 years and 5 years etc, and the rate of interest is also on prevailing rates.
Monthly Income Scheme or MIS, this carries 8% of interest with a 10% maturity bonus, this will be with a minimum investment of Rs.1,000 with a maximum limit of up to Rs.3,00,000 and if it is invested through joint account can be invested up to Rs.6,00,000, the maturity period in this scheme is 6 years with 3 years lock in period and 3.5% will be deducted if withdrawn before 3 years and moreover if withdrawn between 3 to 6 years bonus will not be paid.
Kisan Vikas Patra, investment under this scheme will be doubled in 8 years and 7 months, moreover this is available in all the branches of post offices with a starting denomination of Rs.100, 500, 1,000, 5,000 and even denomination like Rs.50,000 is also available, but the interest will be paid only after maturity.
More articles: Income Tax India
No responses found. Be the first to comment...