Pay Tax Online - No option left -RBI

Pay Tax Online - No option left -RBI

12:38 AM Add Comment
MANDATORY FROM 1.04.08 for certain category of tax payers

1.All Corporates.

2.person other than corporate but covered under section 44ab(compulsory Tax audit)

The e-payment means pay the taxes through net facility /internet/net banking or Credit or Debit card .Payment Facility to taxes through credit and debit card is yet to be finalised by the banks though allowed by income tax deptt. /CBDT in his circular/rules.

Now RBI has come up with a circular to implement the scheme and instruct the banks "not to receive payment from the corporate assesse in physical challan at all".In circular its is strongly written in bold letters that"Assesses who's pan's 4th digit is "C" can not deposit tax in to bank branches manually,Physical challans from such assesses shall not be accepted across the counter.

Moreover in circular RBI has instructed the banks that in case of person covered under section 44AB and required to deposit tax online ,there is no indication in pan itself ,so in this case taxpayers words will be final.

but this circular has raised a question once again .

Whether tds should also be deposited online compulsorily ???????

Earlier its hotly debated whether TDS is also a tax and to be deposited online by such assessee,
In rules issued by the CBDT taxes means taxes as explained in section 2(43) ,
further instruction issued on website by income tax deptt "how to pay tax online"define e-payment of taxes as under.
All Direct Taxes e.g. Income Tax, Corporate tax, FBT, BCTT (TDS, Advance tax, self assessment tax) to be paid online using net banking facility
But what RBI circular says that forth digist of the pan of the corporate assesse is "C" and banks should not receive physical challan from such assessee .
But TDS(tax deducted at source) is deposited against a TAN ,and TAN has no indication whether it is of the corporate assesse or what we may conclude from RBI circular
that RBI thinks that TDS is not covered under the compulsorily online payment of taxes.
that RBI has just missed to mention about Tan.
New tax norms in UK worries professionals

New tax norms in UK worries professionals

12:31 AM Add Comment
Britain over the years, has been likened to the world’s only onshore tax haven; it’s one of the few countries in the world, where till now, a Lakshmi Mittal, a Roman Abramovich or a Mohammed Al Fayed could pay taxes only on what they earn in the UK, or remit into the country as income, and not on their global income or assets.

It’s long been known as a magnet for the super rich to settle in, given that the UK tax authorities are also known to come to long term individual agreements with the filthy rich for tax purposes. And allowing the really wealthy to keep their assets and income in offshore tax havens, and not be taxed on those.

But thanks to growing stridency among the public and the media over the years, the British government has now moved to block this loophole that allowed the super rich get away almost scot free.

Unfortunately, it’s been done in a somewhat ham-handed manner that’s characterised the last few weeks of Gordon Brown’s government, and has ended up worrying a completely different target group - the not-super rich non-domiciled workers in the UK.

And while it’s difficult to estimate the impact, it’s likely to hit the hardest in the nerve centre of the UK economy, the City of London. Non-doms aren’t only the super-rich, or even your average high-net worth individual. It includes everyone from the Indian doctor and investment banker to the Polish plumber or French junior City worker.

The super-rich are, according to all preliminary reports, dismissing the new measures with a casual wave to their highly paid accountants who move their wealth around the globe on a constant basis.

In between setting up their next overseas offshore trust. The proposal says that anyone who’s spent 7 out of the previous 10 years in the UK should pay a flat rate of GBP 30,000 per annum, and give up a GBP 5000-odd personal allowance (equivalent to the standard deduction). It’s unlikely to make anyone who has minimum investments of over GBP 1.5 million outside the UK, and at least GBP 75,000 per annum, which is the Treasury’s estimate of the target group, even bother to shrug. As one wealth manager says, on grounds of anonymity, “I don’t know a single really rich individual who’s going to be even remotely bothered by having to pay GBP 30,000 a year. It’s small change.”

The peak rate of income tax in the UK is 40%, higher than India’s; and we’re talking incomes that nobody can even estimate here. Non-doms, as they are known, currently pay GBP 4 bn in UK tax on UK earnings, and the last official count puts the total number at 115,000, a figure that is hotly disputed. Of this, official figures put the number in the over GBP 1.5 m range at 15,000.

Meanwhile, talented foreign professionals working across a range of industries, including huge numbers of Indians in finance, healthcare and so on are frantically trying to rethink their financial planning and burning the wires to their accountants. But nobody - including the British government itself- seems to know exactly how many are affected, and that along with the real impact of the proposed measures is in the midst of an emerging controversy. Tax and finance professionals are yelling blue murder that this will drive talent out of UK, and send the men who man the money counters off to other financial centres such as Geneva. Not so, says Sharon Hardwick, CEO of the UK India Business Council.

“The proposals will affect only a very small number of people - those who spend a lot of time here but currently do not pay any tax - and are not targeted at anyone who lives here full time and pays UK income tax. So far as the many thousands of Indians who come to study, train and work here are concerned, the UK is open for business as usual,”Hardwick says.

Yogesh Shetty says, the London-based group managing director of Currencies Direct, one of Europe’s largest independent foreign exchange specialists, “The big advantage that the ‘domicile’ definition offers to people like me is that we can decide where we want to be taxed. I feel that calling UK a tax haven is incorrect,................................

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Ammendments For AY 2008-09

Ammendments For AY 2008-09

4:55 PM Add Comment
Service Tax extended to the following services :-
Mining of mineral oil or Gas
Renting of Immovable property for use in commerce or business.
Development and supply of content for use in telecom and advertising purposes.
Asset management services provided by individuals.
Design Services.
Services involved in execution of a works contract.
Optional composition scheme under which service tax will be levied at only 2% of the total value of the Works contract.

Exemption from Service Tax :
Services provided by resident welfare association to their members who contribute Rs.3,000/- or less per month.
Services provided by technology business incubators.
Incubators whose annual business turnover does not exceeds Rs.50 Lakh will be exempt from service tax for the first 3 years.
Charges for clinical trial on new drugs.
Ammendments for AY 2008 - 2009

Ammendments for AY 2008 - 2009

4:41 PM Add Comment
Exemption Limit

For Individual, HUF, AOP, & BOI                            Rs. 1,10,000
For Women ( below 65 years of age)                       Rs.1.45,000
For Senior Citizen
( both Male and Females and
         above 65 years of age)                                      Rs.1,95,000

                            Additional Secondary & Higher Education Cess @1% on Income Tax and Surcharges shall be levied on all assesses. [Educational Cess - 3%]

                            Surcharges of 10% on all items, Domestic Companies and other than Domestic Companies 2.5% shall now be levied only when taxable income exceeds Rs.1 crore.

                             Dividend Distribution Tax has been raised from 12.5% to 15% on dividend distribution by companies.

                                Banking Cash Transaction Tax has been raised the exemption limit for Individual and HUF’ from Rs.25,000 to Rs.50,000

                             Medical Insurance Premium u/s 80D has been raised from Rs.10,000 to Rs.15,000 and from Rs.15,000 to Rs.20,000 for Senior Citizen.

                          Service Tax Exemption rebate for small service provider has been raised from Rs.4,00,000 to Rs.8,00,000.

                  Section 36(1)(viii) will be available to special entity in respect of bad & doubtful debts.

                   5 Years holiday from Income Tax for 2,3, or 4 stat hotels.

                    Dividend by mutual funds attracting Dividend Tax raised to 15%
Due Dates for filing of Returns of Income

Due Dates for filing of Returns of Income

4:36 PM Add Comment
I Where the assessee is a Company - 31st Sept of the Assessment year.

II Where the assessee is a person other than a company :-
a) where accounts of the assessee are to be Audited or 2.a working partner of a firm whose accounts are required to be audited under the Income Tax Act or any other law - 31st Sept of the Assessment Year.

b) Where the return has to be filed under the one-by-six criteria - 31st Sept of the Assessment Year.

c) Any other assessee - 31st July of the Assessment Year

                              The due date for small firms and businesses with turnovers less than Rs 40 lakh is July 31. Besides companies, the due date is Sept 31 for businesses or firms with turnovers above Rs 40 lakh.
Income Tax Deductions

Income Tax Deductions

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Donations For Charity

Under section 80-G of the Income Tax Act, there are following relief in case of Donations:

Donation to certain funds, approved education institutions of national importance, charitable institutions.
The deduction will be 50% of the amount.

Deduction may be 100% if donation is given to Prime Minister Relief Funds, National Foundation for Communal Harmony, Blood Transfusion Council, The Africa Fund, Earth-quake Relief Fund.

In Case of Physically Handicapped Persons
A person who is suffering from permanent physical disability or mental retardation is entitled to deduction upto Rs. 40,000.

Handicapped must be certified by a physician, surgeon or a psychiatrist who is working in a government hospital.

Under section 80DD and 80U of Income Tax Act, physical disability must be one of the following:
Permanent or more than 50% disability in limb
Permanent or more than 60% disability in 2 or more limb
Permanent loss of voice
Permanent blindness
Mental Retardation in which mental intelligence is less than 50% of normal required intelligence
In Case of Treatment of Handicapped Dependents
All the person who are dependent on physically handicapped person comes under this category. There is provision of deduction in tax against expenditure on medical treatment, training & rehabilitation of handicapped dependents or amount paid in an approved scheme of LIC or UTI.

In Case of Repayment of Loan Taken For Higher Education u/s 80E
There is deduction in income tax in respect of repayment of loan taken by a student from a bank or any other financial institutions for higher education in India or worldwide.

In Case of Contribution To Pension Fund
Under section 80CCC there is a provision of deduction to an individual for any amount paid to keep in force annuity plan of the LIC for receiving pension from a fund set up by that corporation, as per section 10(23AAB) of Income Tax Act,1961. The amount received by assessee or his nominee will be taxable. There will be no rebate under section 88 to the persons whose deduction under this section has been approved.

In Case of Amount Paid as House Rent
Under section 80GG of the Income Tax Act there is a provision of deduction in tax on amount paid by a person (not a salaried person getting housing allowance) for residential accommodation. Deduction in tax will be measured under following parameters :-
The excess of actual rent paid over 10% of the total income (excluding long term capital gain & income, as per section 115A or 115D of Income Tax Act, 1961)
Deduction will not be allowed to an assessee who owns an residential accommodation at a place where he is temporarily residing
Deduction will not be allowed to an assessee who owns an residential accommodation at any place and has also claimed for deduction in respect of self occupied property

In Case of Remuneration Received in Foreign Currency by Employer
Under section 80RR an individual resident of India who is an author or writer or photographer or TV/ film cameraman or TV/ film director or musician or actor or sport person or other such artist whose source of income is foreign income and brings income to India according to foreign exchange regulation, then he is entitled to get a deduction of amount equal to 75% of such income as it is brought in India in convertible foreign exchange. This amount will be deducted from his taxable income within the period 6 months or period allowed by Chief Commissioner of Income Tax Department. It is necessary to show the documents in favor of your claim.

In Case of Remuneration Received For Services Rendered Outside India
Under section 80RRA of the income tax act, an individual who is getting remuneration in a foreign currency from an employer for his service in outside of India, will get a deduction of 75% of such income brought into India. This amount will be deducted from his taxable income within the period 6 months or period allowed by Chief Commissioner of Income Tax Department. It is necessary to show the documents in favor of your claim.

Case of Certain Investment
Under section of 80L of the Income Tax Act, there are few investment which is a matter of deduction in taxable amount. Here an assessee will get a deduction of amount upto Rs.12,000 - 15,000 from income on certain specified investments in government securities, UTI mutual funds, bonds and other tax saving schemes. An assessee will be entitled for deduction from his taxable income if he is getting interest or dividend on certain
Investments are as follows:

Investment in Securities of central or state government
Investment in National Saving Schemes
Investment in Debentures or Bonds of an institution/ authority/ public sector company/ cooperative society or other such organization notified by central government.
Investment in under National Deposit Schemes as notified by Central Government
Investment in under other schemes which are notified by central government like national saving schemes, time deposit schemes, recurring deposit schemes.
Investment in under monthly income scheme of the post office
Investment in units of UTI and Mutual Funds (under Section 10(23D) of the Income Tax Act)
Investment in with banking institutions
Investment in financial institution working for Industrial Development of India
Investment in an public company limited working for providing long term financing of housing accommodation
Investment in such authorities which are working for planning & development of cities and villages
Investment in co-operative societies

Interest on Securities
One of the most important deductions available to individuals and Hindu Undivided Families (HUFs) is the deduction for interest income in some cases. This deduction is limited to a maximum of Rs 9,000 a year, and is not available to firms or companies.

The interest incomes eligible for a deduction are:

-Interest on bank and co-operative bank accounts and deposits.
-Interest on National Savings Certificates -- VI, VII and VIII issues.
-Interest on some post office deposits and accounts.
-Interest on debentures/bonds issued by co-operative societies, some notified institutions like state electricity boards, IRCI, IFCI, and some public sector companies. Before investing, check whether you are eligible for a -Deduction on the interest income under Section 80L.
-Interest on deposits under the National Deposit Scheme.
-Interest on deposits under National Savings Scheme.
-Interest on deposits with financial corporations like IDBI and ICICI.
-Interest on deposits with public companies providing long-term finance for construction or purchase of houses.
The EMI route to tax savings

The EMI route to tax savings

11:19 PM Add Comment
Can housing loans aid in tax savings?


you could save up to Rs 40,000 more on your income tax outflow every year. Suppose your salary is Rs 30,000 per month. Any housing finance company will give you a loan of Rs 10 lakh. On a loan of that amount for 15 years, your monthly installments would be Rs 12,896. If the figure looks daunting, don't worry - your real outflow could be as little as Rs 3,000 per month, or even less. That is if you fall in the highest tax bracket. On a 15-year loan, you can save more than Rs 5 lakh in income tax (see Table). If you are in the 25 per cent or 20 per cent bracket, your saving will be correspondingly lower. It works like this. A monthly installment of Rs 12,896 translates into an annual outgo of Rs 1,54,752. Of this, the interest component is Rs 1,30,000, and the principal Rs 24,752. In last years budget, interest payment on a house loan up to Rs 100,000 and principal up to Rs 20,000 per year were exempted from income tax. If you are in the highest slab, you can save Rs 40,000 per year on an exemption of Rs 1.20 lakh. So, what do you have? In effect, an increase of Rs 3,400 per month in your net income, without your employer actually giving it! Add to that the rent that you will probably be saving every month, and your real outflow could be as little as Rs 3,000 per month - or even less. Isn't it time you thought of buying a house? A housing loan today is perfect for the middle-class salaried-income group, says S N Nagendra, area manager, HDFC. Earlier, the huge EMIs were scaring borrowers away. A family with a monthly income of Rs 20,000 would baulk at paying Rs 8,000 per month towards a house loan. Now, the burden looks less threatening, thanks to the tax break. But, there are many who still get touchy about a loan, especially a long-term loan. Despite the tax advantage, many borrowers rush to pay up their loan amounts before maturity and write off debts. Should you really do it? Not in the present environment. In fact, it pays to carry debt, particularly on a house loan. If you calculate your repayment schedule carefully, you can save a neat sum through tax rebates, and also get the benefit of inflation, as money gets cheaper by the year. The effective interest you pay is almost 40 per cent less than you thought. Together with inflation over 15 years, you really have a good deal going. But there is a time when you should think of prepaying your loan. On a 15-year, Rs 10,00,000-loan, for instance, it would make sense to pay off all the outstandings after the eleventh year, because the amount you save on interest payment is greater than the tax benefits you would get otherwise, by more than Rs 75,000! And the amount you have to repay - about Rs 5.5 lakh - would not be too much of a strain. Even the housing financiers agree with this. For one, the tax break on housing loans is unlikely to be discontinued. In fact, the housing finance companies are hoping for more sops in the next budget. Right now, it pays to borrow.

-cortesy popular website
Tax Saving Investments

Tax Saving Investments

11:15 PM Add Comment
Tax Saving Mutual Funds In India

A mutual fund is a trust that holds the savings of a number of investors - institutional and individual - who share a common financial goal. The accumulated money is then invested in capital market instruments such as shares, debentures, and other securities. The income earned through these investments and the capital appreciation realized are shared by its unit holders in proportion to the number of units owned by them. Thus a mutual fund is the most suitable investment for the common investors as it offers an opportunity to invest in a diversified and professionally managed basket of securities at a relatively low cost. Mutual fund investments are, however, subject to tax exemptions.

Income Tax exemptions on mutual funds of India:

Chapter III of the Income Tax Act, 1961 provides for exemptions in income tax. There are few specified incomes on which a person can get exemptions. It means that at the time of calculating annual income, this type of income will not be added. For claiming any of these exemptions, it is necessary to furnish documents which shows that your income comes under this list.

Income of specified Mutual Funds registered and/or set up under/by SEBI Act, 1992, public sector bank/financial institution/RBI fulfilling such conditions as specified. Ref. Income Tax Act 10(23D).

Some Tax Saving Mutual Funds India available, are -

-SBI Mutual Funds
-Prudential ICICI
-Bank Of Baroda
-Bajaj Capital
-DSP Merrill Lynch Mutual Fund India
-Franklin Templeton Mutual Fund India
-Standard Chartered Mutual fund India

Tax Saving Mutual Funds India generally maintains the following rules of the SEBI while granting tax benefits on their schemes -

Any special tax benefits for the mutual fund company and its shareholders (only section numbers of the Income Tax Act and their substance should be mentioned,without reproducing the text of the sections).
Tax benefits are to be declared under the column of "objects of the offering".

For further information on Tax Saving Mutual Funds India, visit


11:10 PM Add Comment
( comprehensive information on Tax Saving options in India)

Tax Saving Schemes

Post Office Savings Schemes
  -National Savings Certificates (NSC)
  -Public Provident Fund (PPF)
  -Kisan Vikas Patra (KVP)
  -Post Office Scheme (POS)
  -Postal Life Insurance
Investment in Mutual Funds / Units of UTI
Company Fixed Deposits
Bank Deposits
Bonds / Debentures
Capital Gains Investments u/s 54 EC
Government of India / RBI Bonds Shares / Life Insurance
Shares - Dividend
Special Schemes For Retiring Person


National Savings Certificates (NSC)
National Saving Schemes (NSC) is one of the popular Income Tax Saving schemes which is available throughout the year. It can be operated by single, joint, or minor with his/her parent or guardian. There is a return on this scheme at interest rate of 8%. The minimum investment limitation of the scheme is Rs.100/- and with no upper limit. Other investments can be done in multiple of Rs. 100/-. This scheme has a maturity period of 6 years. It is transferable and also there is a provision of loan on the basis of this scheme. Under section 88 of the Income Tax Act, 1961 any person can take benefit in income tax on amount invested in this scheme and under section 80L of Income Tax Act, 1961 there is a provision of benefit on interests coming from scheme.

Public Provident Fund (PPF)

Under this scheme, there is a return at the interest rate of 8% p.a. The minimum investment limit is Rs. 500/- and maximum limitation is Rs. 70,000/-. It can be opened any time throughout the year. It can be operated either single or jointly. In case of minor, with parent/guardian. There is also a facility of nomination in this scheme. This scheme has a maturity period of 15 years. The first loan can be taken in the third financial year from the date of opening of the account, or upto 25% of the amount at credit at the end of the first financial year. Loan amount can be returned in maximum of 36 installments. A person can withdraw an amount (not more than 50% of the balance) every year. Under Section 88 of Income Tax Act, 1961 there is a provison of tax benefit by investing in this scheme. Interest on this scheme is tax free.

Kisan Vikas Patra (KVP)
Money invested in this scheme doubles in 8 years. There is a minimum investment limitation of Rs.100/- with no upper limit. This scheme is available throughout the year. It can be operated either single or jointly. In case of minor, with parent/ guardian. Facility for nomination is also available under this scheme. Currently there is no tax benefit on investment under this scheme.

Post Office Scheme (POS)
It is one of the best Income Tax Saving Scheme. It can be operated by either single or jointly. In case of minor, with parent/ guardian. It is available throughout the year. There are several types of post office schemes depending upon the type of investment and maturity period. Post office schemes can be divided into following catagories:
Monthly Deposit
Saving Deposit
Time Deposit
Recurring Deposit

Special Schemes For Retiring Person
Government Employees : There is a return at the rate of 8% per annum. The minimum investment is Rs.1000/- and maximum, amount equal to the total retirement benefit. Maturity period of this scheme is 3 years. According to Income Tax Act, 1961 interest on this scheme is tax free.

Public Sector Employees: Under this scheme there is a return of 9.5% payable half-yearly on 30th June and 31st December respectively. There is a minimum investment limitation of Rs.1000/- and the maximum limitation is the amount equal to total retirement benefit. It can be operated by retired PSU employees in his/her own name or with the spouse, jointly. In this scheme, there is a facility of premature encashment. Entire balance or part thereof can be withdrawn after the expiry of three years from the date of deposit. Maturity period of this scheme is 3 years. According to Income Tax Act, 1961 interest on this scheme is tax free.

Postal Life Insurance
This scheme is in operation for the last 117 years. This scheme started in 1884 as a welfare measure for the employees of Postoffices & Telegraphs Department under Government of India to the Secretary of State (having dispatch No. 299 dated 18-10-1882). But after few years, various departments of Central and State Governments were extended its benefits. Now it is open for employees of all departments of Central as well as State Government, Nationalized Banks, Public Sector Undertakings, Financial Institutions, Local Bodies like Municipalities and Zila Parisads, Educational Institutions aided by the Government. According to Income Tax Act there is also a provision of special relaxation in income tax on the basis of investment done in urban or rural areas.

According to Income Tax Act,1961 there is a provision benefit in Income Tax if assessee has an income as a dividend on investment in any of the following:
Mutual Funds
Unit of UTI
This dividend can be given by any company or cope