IGNORANCE OF LAW IS NOT AN EXCUSE -I
Article is written in email format
Dear ITR ians
This email is applicable (relevant) only for people who had filed their tax returns (ITR) for 2009 & 2010. Others can ignore this
Many of you have heard of this saying “Ignorance of law is not an excuse”.
Above saying is also applicable to Income Tax Act & filing of tax return. Many times a tax payer makes many mistakes while filing his tax return. Namely:
1. Claimed 80C deduction more/less than actual investment
2. Interest income from FD is not disclosed
3. Not accounting 2nd Form 16 when there is change in job
4. Not disclosed Short term capital gain from shares
5. Not corrected errors in Form 16 (you need to calculate tax correctly even though form 16 has wrong calculation – (Sec 240A – Self Assessment)
6. Not disclosed Rental income
7. PF/Gratuity withdrawal (These have some exemptions too)
8. Wrong claim of benefits of Section 54 when sale of house property.
9. Wrong or No Claim of HRA
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This post have authored by CA. Chikkerur CR. The author is a Praticsing Chartered Accountant. CA. Chikkerur CR, B com, ACA, MBA DISA and recently completed LLB in 2010. He had 5 years of rich experience in one of the Big 4 firms in the service industry before starting his own CA FIRM in BANGALORE. E Mail : chidu_11@yahoo.com|, Website: http://www.chikkerur.co.in
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Few of above mistakes will increase tax liability of the assessee & few of them will decrease the tax liability (it may result in tax refunds/benefits to the assessee).The tax payer usually misses above points may be because 1) He is not so serious or in hurry to file his return 2) He will not disclose above details with his CAs/ Tax experts while filing tax return 3) Tax payer may not knowing these points while filing return & he would be under impression that he can avoid tax.
But following may be the consequences of not disclosing:
1. He may get notice from IT dept to make payment of extra tax with Interest (234A, B & C)
Eg: If your tax liability is Rs. 20,000 arrived because of not disclosing all incomes or claiming wrong or more deductions as above discussed
2. Concealment of Income Section 271(c) – ITO has even power to levy penalty of 300% of Tax liability other than above interest. But this provision is being used rarely.
3. Failure to comply with any order from the IT department- This may result in penalty of Rs. 10,000 if you ignore replying notices or orders of ITO
4. Your case may be selected for scrutiny.
In the next part we will discuss about how to file revised return in order to avoid legal consequences.
TAX PLANNING: AN ESSENTIAL ELEMENT OF FINANCIAL PLANNING
Financial planning is considered to be most essential element of life. It has been rightly said that ‘Future is Uncertain’. Financial planning plays an important role in overcoming your financial uncertainties. Tax Planning is considered to be an essential part of Financial Planning.
A survey conducted by Rights Horizon among IT/ITES employees with the age group of 25-30 yrs. in major southern cities of India reveals that these employees are very poor in financial as well as in tax planning. The survey was conducted amongst 1169 salaried individuals in 3 cities viz. Bangalore, Chennai, Hyderabad. It found that nearly 70% of salaried individuals are not utilizing the Chapter VI A deductions (max. deduction available upto (INR) Rs. 1, 00,000/-) of Indian Income Tax Act 1962.
Chapter VI A (commonly known as sec. 80C) is an important sec in Income Tax Act which helps you to save taxes as well as money.
The study has found that many of them pay more income tax which could have been saved through financial & tax planning. In Chennai only 24% IT people completely used the Rs. 1 Lac limit. Nearly 58% people invested in Public Provident Funds/ National Saving Certificate while 35% in Equity Linked Saving Scheme (ELSS) & 12% in home loans. Most of the individuals have a habit of investing at the last moment of financial year when you are running out of your finances.
As no one can predict future we should be prepared for it. Every one should make a habit of saving right from the college days. Your investment portfolio & savings should be diversified so that it will maintain right balance between risks as well as earnings. To have a better and secure life consult your Financial Advisor, Chartered Accountant. For more contact us:
Mr. Vilas V Kulkarni
(Chartered Accountants),
259, IInd Floor, Bajaj Nagar,
Nagpur (India) 440025.
(M) +91 982 358 3667.
Mr. Harshal V Kulkarni
(Financial Consultant)
(M) +91 976 599 9467
…… & NOW CREDIT CARD CRISIS IN AMERICA
Emergence of global financial meltdown was the effect of failure of the sub-prime mortgage and financial securities market. (Sub-prime borrowers were those that had less healthy loan repayment abilities.) The US is in deep financial trouble. The US credit card default rate have reached an all time high of 13% in March-10, and the total outstanding credit card debts per household which holds credit card debt, reached a staggering $16000 in the same month. The survey conducted by Fitch Ratings reveals that 98% of the total revolving debts in the US are made up of credit cards. Another astonishing fact was that 92 million of all US households hold one or more credit cards. Since 1970s fall in real wages of Americans have increased the usage of credit cards in the country. Americans mostly use the credit cards on housing, food, education, and health care. But with unemployment rates still hovering around 10% mark, default rates have increased over the past two years. Thereby catalyzing concerns that a chain reaction could pull the entire system down.
Credit card debt
• Average credit card debt per household with credit card debt: $15,788
• 76 percent of undergraduates have credit cards, and the average undergrad has $2,200 in credit card. Additionally, they will amass almost $20,000 in student debt. (Source: Nellie Mae, “Undergraduate Students and Credit Cards in 2004: An Analysis of Usage Rates and Trends”)
• Total U.S. consumer revolving debt fell to $866 billion at the end of 2009, down from $958 billion at the end of 2008. About 98 percent of that debt was credit card debt. (Source: Federal Reserve’s G.19 report, March 2010)
• The mean, or average, unpaid credit card balance last month was $3,389. The median is $90. (Source: “The Survey of Consumer Payment Choice,” Federal Reserve Bank of Boston, January 2010)
• About 45 percent of consumers said their unpaid credit card balance had gotten “lower” or “much lower” in the past 12 months. Only 26 percent said it had gotten “higher” or “much higher.”
LUNDBORG’S LAW FOR YOUNG ENTREPRENEURS
Its every entrepreneurs wish to become successful businessmen. Here are few tips which will help you to achieve success not only in business but also in your life.
Law 1
Multiply yourself. Don’t try to do it all yourself.
Law 2
Pick winners. Good people are tough to get, tough to manage, and tough to hang on to- but good people cost less because of their greater output.
Law 3
Don’t settle for second best. The greatest enemy is mediocrity and the only alternative is excellence.
Law 4
Let them run. If you have picked winners, you won’t cash in on them unless you let them run.
Law 5
Don’t alibi. When things go wrong, don’t make excuses, and don’t pass the buck- upward, downward, or laterally.
Law 6
Be a clock watcher. Be a good manager of time.
Law 7
Don’t be a deaf mute. Communicate- and do it with your ears as well as your eyes.
Law 8
Keep your motor turned and your oiled changed. Stay healthy.