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

Stick to Good Fund Manager who Can Multiply Your Investment

A manager may be the difference between the best and worst funds. Here's how you can find the right one    Does a mutual fund manager make a difference to your investment? The answer may not be as easy as you think, since most best-performing mutual funds have moved away from individualistic fund management to process-driven methods, limiting the scope of an individual's role in investment decisions. In fact, many fund managers would speak at length about how the "system" their fund house has in place makes their task of picking stocks easy even though it restricts their freedom. Still, the question is important, especially after recent reports that the Securities and Exchange Board of India ( Sebi ) may ask fund managers to disclose to investors their track record of managing money. Let us take a look at the universe of large-cap funds over the past five years. According to Value Research, an independent mutual fund tracking firm, the topper in the category is DSP...

Tata Fixed Income Portfolio Fund dividend

Invest In Tax Saving Mutual Funds Online Download Tax Saving Mutual Fund Application Forms Buy Gold Mutual Funds Call 0 94 8300 8300 (India)       Tata Mutual Fund has announced dividend under the dividend option of Tata Fixed Income Portfolio Scheme B2 Plan A-DQ, Tata Fixed Income Portfolio Scheme B2 Reg-DQ and Tata Fixed Income Portfolio Scheme B2 Direct-DQ. The record date has been fixed as August 29, 2013. Happy Investing!! We can help. Call 0 94 8300 8300 (India) Leave your comment with mail ID and we will answer them OR You can write back to us at PrajnaCapital [at] Gmail [dot] Com --------------------------------------------- Invest in Tax Saving Mutual Funds ( ELSS Mutual Funds ) to upto Rs 1 lakh and Save tax under Section 80C. Invest Tax Saving Mutual Funds Onlin...

Bear markets may kill, but bulls always return with vengeance

Average Gain Between Any Two Downturns Has Been 186% IF you have lost a fortune in shares by now, the best way to make it up perhaps could be by buying some more. Since the Great Depression of 1929, the world has undergone 12 major bear market phases. The average bear market has lasted about 22 months, and the market has fallen by an average of 51%. However, the average gain during the bull market between any two downturns has been an eye-popping 186%. The index here in question is the S&P 500. Bull markets — after every recessionary phase — have always been good for investors. All major bull rallies since end-1930 have resulted in markets gaining between 50-500%. Historic numbers show that the magnitude (size or breadth) of a bull market is much heavier than that of a bear market. The million dollar question is: Are we at the threshold of another bull market rally? Markets could go up intermittently, but convincing rallies will take time to happen. The current bear phase is...

NRIs and direct taxes code (DTC)

DTC Proposes To Do Away With Special Provision That Allows NRIs Liberalised Duration Of Stay In Country      THE new direct taxes code could bring a large number of global Indians under the tax net, as it does away with a provision that allowed individuals to escape tax in any country citing double tax avoidance.    The new legislation, introduced in Parliament on Monday, says an individual shall be a resident of India in any financial year if he is in the country for more than 59 days in that year, and has been has been India for more 365 days in four preceding financial years. A number of Indian industrialists including Vedanta's Anil Agarwal and Essar's Ravi Ruia have acquired non-resident status over the years.    The DTC has only attempted to clean up the provision in line with the laws globally. A phrase "being outside India" in the existing income tax law exempted individuals who stay outside the country for six months from paying taxes. This was prone ...

How to gauge the risk profile of your mutual fund portfolio?

MUTUAL funds are considered to be an investment option for those who do not generally devote a lot of time to monitoring and managing their portfolios. Investors experience both good as well as tough times as far as mutual fund investments are concerned. But while evaluating the portfolio of their equity mutual fund holdings there are a few points that one should check to know about the level of risk that they are facing. Often there are situations where there is a higher risk than what was estimated initially. Here are a few ways to evaluate various risk levels. Individual holding exposure : The portfolio of the equity fund where one has invested or plans to invest needs to be scrutinised to see whether the risk levels are such that could lead to a larger volatility in the holdings. Depending upon this factor and the risk taking ability of the investor the choice about a particular fund as an investment should be made. One key point to watch out is whether there is a large ex...
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