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

Mutual Fund Review: Religare Tax Plan

Tax Plan is one of the better performing schemes from Religare Asset Management. Existing investors can redeem their investment after three years. But given the scheme's performance, they can continue to stay invested   Given the mandated lock-in period of three years, tax saving schemes give the fund manager the leeway to invest in ideas that may take time to nurture. Religare Tax Plan's investment ideas revolve around 'High Growth', which the fund manager has aimed to achieve by digging out promising stories/businesses in the mid-cap segment. Within the space, consumer staples has been the centre of attention for the last couple of years and can be seen as one of the key reasons for the scheme's outperformance as compared to the broader market. It has, however, tweaked its focus and reduced exposure in midcaps as they were commanding a high premium. The strategy seems to have worked as it returned a 22% gain last year. Religare Tax Plan has outperformed BSE 100...

Good time to invest in Infrastructure Funds

Download Tax Saving Mutual Fund Application Forms Invest In Tax Saving Mutual Funds Online Buy Gold Mutual Funds Leave a missed Call on 94 8300 8300   Good time to invest in infrastructure The Sensex has gained almost 10 per cent from May 15 till date, while the CNX Infrastructure Index has gained almost 17 per cent in the period. The price to earnings ( P/ E) ratio of the BSE Sensex is 18.96; for the CNX Infrastructure Index, it is 24.57. The estimated P/ E for next year is 14.04 for the Sensex. Of the 24 companies that make up the CNX Infrastructure Index, six have a P/ E higher than 20. Does this mean infrastructure is fairly valued? Or, has it run up quite a bit? According to experts, barring stray companies, the infra sector is fairly valued and it is a good time to invest. Even if some companies are facing debt restructuring problems, once interest rates come down and regulatory norms become flexible, they will start giving good re...

Birla Sun Life Mutual Fund Merges Birla Sun Life Basic Industries and Birla Sun Life Freedom with its other funds

    Birla Sun Life Mutual Fund has announced the merger of Birla Sun Life Basic Industries Fund into Birla Sun Life Infrastructure Fund and Birla Sun Life Freedom Fund into Birla Sun Life 95 Fund, with effect from October 21, 2011. Investors of Birla Sun Life Basic Industries Fund and Freedom Fund have the exit option from September 22, 2011 to October 21, 2011. They do not have to pay any exit load during this period.   -----------------------------------------------------------------   Also, know how to buy mutual funds online:   Invest in DSP BlackRock Mutual Funds Online   Invest in Reliance Mutual Funds Online   Invest in HDFC Mutual Funds Online   Invest in Sundaram Mutual Funds Online   Invest in Birla Sunlife Mutual Funds Online   Invest in IDFC Mutual Funds Online   Invest in UTI Mutual Funds Online    Invest in SBI Mutual Funds Online   Invest in L&T Mutual Funds Online   Invest in Edelweiss Mutual Funds Online  

Mutual Funds: Past Performance is not just everything

Many a times your agent / distributor / relationship manager tries to push you some mutual fund schemes by enticing you with a typical sales pitch…"Sir, this scheme has generated 20% returns in the past one year." And this sales pitch often gets louder when the market conditions have been favourable. Some of the agents / distributors / relationship managers have another unique way of luring you. They say, "Sir / madam this scheme has been awarded the best scheme award in the past by a leading business channel"... And hearing all these sales talks you investors very often get attracted and sign a cheque in favour of the respective scheme.   But please ask yourself do you hear these sales talks when the capital markets turn turbulent? Why is it so that your agent / distributor / relationship manager avoids talking to you during turbulent times of the capital markets and doesn't boast about returns generated by the respective funds or awards being conferred on t...

What are Tax savings Bank Fixed Deposits?

Invest In Tax Saving Mutual Funds Online Download Tax Saving Mutual Fund Application Forms Buy Gold Mutual Funds Call 0 94 8300 8300 (India)   These are a special type of bank fixed deposits, of five-year tenure, which allow you to have tax benefits for investments of up to Rs 1 lakh per person per financial year. Investments in these FDs give tax benefits under 80C of the Income Tax act. These are not very liquid investments because the money is locked-in for five years. One also has the option to continue the FD for another five years after the lock-in ends. 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 ...
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