Skip to main content

Tax Planning: Take Control of Your Taxes

 

 

File-Proof

Return filing is the final step in getting the tax equation right. Salaried persons (Forms 16 and 12BA are relevant only for them), businessmen and professionals can check out the papers they will need from this list

  • PAN card
  • Form 16 and Form 12BA (showing perquisites) from employers in financial year
  • Form 16A, showing tax deducted from income sources other than salary, such as bank term deposits
  • Bank statements showing interest earned and exact amount of any advance tax paid
  • House rent receipts for HRA deduction
  • Home loan principal and interest repayment certificate for financial year
  • Educational loan interest repayment certificate for financial year
  • Documents for assets sold and purchased
  • Gift deeds of monetary gifts, clearly showing that money was received without any consideration
  • Health insurance premium receipt
  • Receipts for contributions to Sec. 80C schemes

To get taxes right, you need to show in the tax return your income sources and the tax benefits you availed to minimise tax outgo in the financial year. To have control over the return filing exercise, keep all the relevant documents and submit the necessary information to the IT Department on time. You are not required to enclose the supporting papers with your return of income. Both salaried and non-salaried persons should securely keep the papers related to tax filing of the past seven years, including the current year, as the IT Department can seek them for scrutiny.

The tax benefits allowed and the papers required for filing return listed in File-proof are common for businessmen, professionals and salaried individuals except for Form 16 and Form 12BA which are relevant only for salaried people. These forms need to be taken from all the employers a person has worked for in the financial year. For a salaried person, the crucial task of enumerating the incomes and the deductions for tax benefits is done by his employer through these two forms. If you are a businessman or a professional, you need to figure it out yourself.

Tax control for businessmen and professionals. The amount of tax a business entity or a professional need to pay depends on the gross receipts minus the expenses incurred for running the business or profession. Expenses that satisfy two conditions qualify for deduction from income. One, they should be directly related to the running of the business or profession and two, they should have been incurred during the financial year. Documentary evidence in the form of bills and receipts needs to be furnished for such expenses.

If a car was used for your business, you can claim deductions, among other things, for petrol bills, insurance premium and maintenance charges. If you employed people to keep the work going, their salaries are eligible for deductions if you have documentary proof for it. Payments made through debit cards, credit cards and cheques can also be claimed for tax benefit as evidence can easily be traced and furnished to show that they were actually made. Personal expenses do not qualify for deduction.

If you are running the business or profession from your home, then electricity and home bills can be shown to claim tax benefit. However, claiming the full expense may be contentious for you. For example, a doctor who practises his profession from his home uses utility services like electricity and phone for both personal as well as professional purposes. Such expenses need to be shown as shared. Tax benefit can be claimed only on the proportion of such expenses that went into running the profession or business and not on the entire amount.

Similarly, if a multi-storey apartment taken on rent is used for both residential and professional purposes, expenses incurred on the apartment like rent and electricity cannot be claimed for tax benefit in entirety.

 

Popular posts from this blog

Mutual Fund Review: Taurus Tax Shield

    Taurus Tax Shield has seen a turnaround in performance since 2007, but still remains a volatile offering… The fund has seen a turnaround in its performance since 2007 and has delivered impressively during market rallies since then. The portfolio is also more diversified. It contained its downfall to an average level in 2008 but is still one of the most volatile offerings in this category. Bold investors can look at this fund.   Strategy The fund manager invests across the market capitalisation and sectors. The selection of stocks is made on the basis of long-term business prospects and value creation. Fund Insight Launched in March 1996, the fund was a laggard with just two annual outperformances. Concentrated stock bets and high exposure to mid and small caps led to it being hit harder during market downturns. The number of stocks in the portfolio never exceeded 20 and it was not rare to see the top 5 holdings account for around 60 per cent of the portfolio. After b...

Use Mutual Fund SWPs for getting fixed payments

Invest In Tax Saving Mutual Funds Online Download Tax Saving Mutual Fund Application Forms Buy Gold Mutual Funds Call 0 94 8300 8300 (India)   Investors time withdrawals optimally to save on tax The systematic withdrawal plan, or SWP, could be called the lesser known cousin of the much talked about and publicised systematic investment plan (SIP). There's yet another cousin — the Systematic Transfer Plan ( STP ). In SIP, you invest a fixed sum of money at regular intervals (monthly/ quarterly) to buy some units of a mutual fund scheme. In SWP, as the name suggests, you do the opposite: You redeem some mutual fund units from your portfolio to get a fixed sum of money at regular intervals (monthly/quarterly/half year/yearly). In SIP, you get a higher numbers of units when the markets are down, and lesser in a buoyant market. In SWP, going by the product logic, you redeem higher number of units when the markets are do...

AXIS Long Term Equity Fund - The Best Tax Saver Fund for 2016

  AXIS Long Term Equity Fund - Invest Online   History:   The open ended mutual fund was launched on December 21 in the year 2009. It is benchmarked against BSE 200 and managed by the fund manager JINESH GOPANI. Initially the scheme was called as Axis tax saver fund but later it was renamed as Axis long term equity fund with effect from September 2, 2011. Nature of investment: As far as asset allocation is concerned, 97.52% of the stocks are equity and 0.02% is debt based. The primary focus of the fund is to invest in diversified equity stocks that have higher growth potential. Total asset size of the fund is in the tune of 4,996 CRORE as of June 30, 2015. Performance: The performance of the fund for one year, 3 years and 5 years are 23.6%, 29.9% and 19.1 respectively which are far greater than 6.4%, 14% and 5.6% benchmark figures. It has also preformed fairly well against SBI magnum Tax Gain (G) and HDFC tax saver (G). The growth comparison is enumerated below;                        ...

Health insurance guide - Part I

Insurance, by definition, is morbid. What if I die suddenly? What if my home caught fire? What if I had to undergo expensive medical treatment? What if something that I thought happened only to others befell me? Insurers, who work with large samples, calculate the probability of such an event and, hence, the possibility of them having to pay out a sum of money to mitigate, to the extent possible, the effects of that disaster. However, the possibility of you undergoing some kind of expensive medical treatment during your lifetime is far more likely than you dying suddenly or your house burning down. Given that costs at private healthcare facilities, where you are most likely to land up, is high, and, doubling every four years 10 months or so, the rest of your money life could easily go out of whack if you had to incur such expenses. Just 12 per cent of India's population is covered with some sort of health insurance. Pared to the bone, for a comparatively small price, health insu...

IDFC Classic Equity Fund

Invest In Tax Saving Mutual Funds Online Download Tax Saving Mutual Fund Application Forms Buy Gold Mutual Funds Call 0 94 8300 8300 (India)   IDFC Classic Equity Fund IDFC Classic Equity is a large-cap equity fund which currently has assets under management worth Rs. 158.52 crore. It was launched in August 2005. The fund is benchmarked against the BSE-200 Index. Performance YTD 1-Year 3-Year 5-Year Since Inception IDFC Classic Equity 0.93 26.61 6.30 1.01 11.65 BSE 200 1.52 17.31 6.00 1.99 12.98 All figures in % as on January 31, 2013; Returns above one-year in CAGR terms ...
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