Skip to main content

Income Tax Planning: Have extra income apart from salary? Time to Count your tax is now

THE second installment of advance tax for individuals has to be paid by December 15. This is an opportunity to ensure easy completion of the tax process on time.

However, a lot of people think that they are not impacted by the advance tax requirements, and hence, do not pay attention to this area. But in reality, there are reasons why individuals need to look at specific aspects of advance tax.


Salaried individuals: Under most circumstances salaried people are not concerned with advance tax because the required tax on their income is deducted by their employer at the time of paying the salary.

There is a factor here that needs attention, which is that the tax is deducted only with respect to their salary income.

In cases where an individual has given details of other income to their employer, it will also be taken into consideration for deduction of additional tax.

Usually individuals do not give details about their additional income to their employer.

This will result in a position where there will be other income on which tax will have to be paid. If this additional tax amount exceeds Rs 10,000, then the payment of advance tax becomes essential.

This is the reason why even the salaried should check their extra income, which includes interest earned, professional income earned or other onetime receipts, and calculate whether they have to pay any tax on this additional income.
Shortfall: People also believe that if there is some amount of tax that is deducted on their earned income then the process is complete. But this is not the case every time because the rate for the deduction of tax is often lower than what has to be paid.

So, for example, if the rate of deduction on interest earned is 10 per cent, the individual might have to actually pay income tax at 30 per cent on this figure.

This will again give rise to the need to pay advance tax as the difference between the two rates will still attract tax.

There are a lot of areas where such shortfalls may arise between the tax that has to be paid and the figure that is deducted at source when the salary is received.

This can also result in a position where the tax that needs to be paid keeps on increasing and this can be tackled through the advance tax payment route.


No last moment rush: In all areas of planning that involves money it is always better to start early and then complete the process over a period of time.

The same is true with respect to tax payment. There are various options over the year to pay part of the total tax liability in instalments and individuals should make use of the available opportunities.

If this is not done, the burden of entire payment will come right at the end of the financial year in March.

The month of March is usually a very stressful month as there are a lot of payments lined up including completing the necessary tax investments.

In such a situation, paying the entire tax amount in a single shot might add to the financial stress.

On the other hand, breaking up the payment over the year is easier to manage.

Apart from this, there is also a penalty in the form of interest that has to be paid if the schedule related to the advance tax payment is not met and due to this reason some attention to this area will be beneficial. The downside of ignoring advance tax is high and it can be easily avoided.

 

Popular posts from this blog

Surrender ULPPs

  ICICI Pru LifeTime and ICICI Pru Lifestage are Unit Linked Pension Plans. Such insurance linked retirement plans are neither good investments nor do they offer sufficient insurance cover. As you can see, these have turned out to be bad deals. In the Lifetime plan, the fund value is not even equal to the total premiums that you have paid and in the Lifestage plan your return is just about 6% which is quite low. The mortality charges are as per your age which is why they have increased. Moreover, once these plans matures, you will have to compulsorily opt for annuity (regular income) and the annuity rates are generally modest. Assuming these plans mature in the next one year, it will be wise to surrender the plan now and curb your future commitments.   Before you choose to buy a term plan, you have to consider a few points. You need to insure yourself, only during the time you are working and your family is financially dependent on you. At the age of 59, not all insurance companies w...

ICICI Pru Constant Maturity Gilt dividend

Invest ICICI Prudential Constant Maturity Gilt Fund Online ICICI Prudential Mutual Fund   has announced dividend under the following schemes: Scheme Dividend ( R /unit) ICICI Pru Constant Maturity Gilt-DQ 0.26543239 ICICI Pru Constant Maturity Gilt Direct-DQ 0.27171609 ICICI Pru Q Interval Plan I-D 0.10617296 ICICI Pru Q Interval Plan I Direct-D 0.10703967 ICICI Pru Q Interval Plan I Ret-D 0.10617296             The record date has been fixed as June 13, 2016.   ----------------------------------------------- Invest Rs 1,50,000 and Save Tax under Section 80C. Get Great Returns by Investing in Best Performing ELSS Mutual Funds Top 10 Tax Saver Mutual Funds to invest in India for 2016 Best 10 ELSS Mutual Funds in india for 2016 1. BNP Paribas Long Term Equity Fund 2. Axis Tax Saver Fund 3. Franklin India TaxShield 4. ICICI Prudential Long Term Equity Fund 5. IDFC Tax Advantage (ELSS) Fund 6. Birla Sun Life Tax Relief 96 7. DSP BlackRock Tax Saver Fund 8. Reliance Tax Saver (ELSS) ...

NPS Investment Choice for Safe Investors

Invest NPS Online       Whether they invested through SIPs or put in a lump sum amount, risk-averse individ uals have earned the highest returns. These are investors who stayed away from stocks and divided their NPS corpus between G class gilt funds and C class corporate debt funds. On average, gilt funds have given 9.75% annualised returns while corporate debt funds have churned out more than 11% in the past five years. As a result, the average return for ultra-safe investors in the past five years is in double digits. Even in the short term, ultrasafe investors have been the biggest gainers among NPS investors. Will the good times continue? The gilt funds of NPS are holding long-term bonds with an average maturity of over 19 years and a modified duration of about 9 years.These funds have done well because interest rate cuts have pushed down bond yields. But experts say this trend will not stay forever. NPS is a long-term investment and the bonds are predominantly held to matu...

Buy Health Insurance Plan even if you are covered with my Employer

Buy Health Insurance Plan Online Yes, getting a private insurance cover now, which extends beyond your retirement age, is recommended There are a few reasons why buying a health insurance plan may make sense even though you get medical insurance from your employer. Here are the points you need to think about. Firstly, your employer's insurance coverage will only protect you as long as you are employed with the company. The policy will terminate when you quit the job or when you retire. Post retirement is perhaps the phase when one needs it the most but you won't have it then. Moreover, buying a new insurance policy after the age of 50 means that there will be no coverage for pre-existing diseases.   Lastly, health insurance policy you get from your employer may or may not cover your dependants. ------------------------------ ----------------- Invest Rs 1,50,000 and Save Tax under Section 80C. Get Great Returns by Investing in Best Performing ELSS Mutual Funds Top 10 Tax Saver M...

SBI MAGNUM MIDCAP ONLINE

Invest SBI MAGNUM MIDCAP ONLINE   SBI MAGNUM MIDCAP fund didn't fare well in its initial years but, in recent years, has steadily improved its performance under the capable hands of its current fund manager. Although investing predominantly in mid-cap stocks, the average market capitalisation of its portfolio is lower than other category peers.   Although the stock selection approach is mostly bottom-up , the fund manager doesn't shy away from taking bold sector bets , as is reflected in its large exposure to the healthcare sector. She is equally adept at handling performance across market cycles--the fund has captured more of the upside during market upticks and contained the downside during downturns in a better manner than its peers.   Given its superior risk-reward equation, the fund is a worthy pick in its category.     ----------------------------------------------- Invest Rs 1,50,000 and Save Tax under Section 80C. Get Great Returns by Investing in Best Performing EL...
Related Posts Plugin for WordPress, Blogger...
Invest in Tax Saving Mutual Funds Download Any Applications
Transact Mutual Funds Online Invest Online
Buy Gold Mutual Funds Invest Now