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
INCOME TAX RETURN FILING DUE DATE EXTENDED UPTO 04 AUGUST 2010
The the last date to file your income tax return for A.Y. 2010-11 have been extended up-to 4th August 2010. Previously it was 31st July 2010. All returns paper returns & e – returns filled on or before 04th August 2010 will be considered as filed within due date.
The decision was taken in view of some technical snags in the e-filing computer system, and inclement weather at various locations, due to which taxpayers have reported difficulties in filing or uploading income tax returns. The decision was taken by CBDT.
GO GREEN: FILE YOUR RETURNS ONLINE
Every organization is doing something or other to save our planet. As an individual we can also help in retaining the green carpet on earth by filing your return online.
Facts
• On an average an individual tax return prepared on the paper requires around 20 sheets of paper for photocopies & printouts.
• An individual typically spends 10-20 productive hours to get his or her tax return to be filed.
• Printouts & photocopies typically run into 10-15 pages per employee.
Benefits of E-Return
• All electronically filed returns are processed on priority basis at all the income tax department’s centralized processing center at Bangalore so that the refunds can be issued faster.
• No need to stand in a queue at income tax office.
• E filing process saves 10000 productive man hours.
• More over it saves Lakhs of rims of paper thus saving million trees.
• E return requires just 10-20 minutes to e-file.
How to file e-return?
The following steps will lead you to file your return electronically.
• Log on to www.incometaxindiaefiling.gov.in
• Click on “Download” menu.
• Select appropriate type of return.
• Download the Return Preparation Software for selected return form.
• Fill the Excel Utility return offline and generate XML file.
• New users need to create login account, for that click on “New User”.
• After you have successfully created your account, an activation link will be emailed to the user.
• Log on with your id/password.
• Click on “Submit Return” & select “”.
• Click on relevant form.
• Browse to select XML file & click on “Upload” button.
• On successful upload acknowledgment delayed would be displayed. Click on “Print to generate printout of acknowledgment/ITR-V.
• You can also digitally sign your return. In that case you can just have to keep the Acknowledgment for your record.
• In case you have not digitally signed the return. The ITR-V/ Acknowledgment cum verification form needs to be signed & mailed to Post Bag No.1, Electronic City Post Office, Bengaluru, Karnataka-560100, by ordinary post or speedpost only within 120 days from the date of transmitting the data electronically.
• ITR-V sent by Registered post or courier will not be accepted.
• You can also check your e-filing processing status by log-in with your user id/password & click on My Account.
This completes the E Return filing process. So, why to wait for 31st July. File your return online in just a few minutes & save environment.
INCOME TAX: A LAYMANS OVERVIEW
In today’s world nothing is free. We have to pay taxes even for our basic needs in form of vat, service tax etc. Similarly a tax is levied on income of individual or business is known as Income Tax. The incidence of income tax can be progressive, proportional or regressive. The tax levied on individual is known as personal or individual income tax. Whereas when it is levied on the income of companies is known as Corporate tax or profit tax.
Indian overview: In India income tax is governed by the Indian Income tax Act 1961. The government of India imposes an income tax on individuals, Hindu undivided Family(HUF), Companies, firms, Co-operative Societies & trusts.
Every person whose total income exceeds the maximum amount which is not chargeable to income tax shall be liable to pay tax at the rates prescribed under the finance Act for the relevant assessment year.
An individual has to pay tax on his total income earned during previous year for every assessment year. The chargeability of tax not only depends on the nature of income (viz. revenue or capital) but also on residual status of an individual.
Objective: The objective of Income Tax Act is to tax only income and items which are construed as income chargeable unless specifically exempt.
What is income?
Sec.2 (24) of Indian Income Tax Act 1961 provides definition of income in an illustrative manner.
Tax Rates in India
India follows the progressive tax system for individual income tax. The effective tax rates with effect from April 1, 2010 are as follows.
Note: Surcharge has been abolished for personal income tax from the financial year 2009-10.
All the taxes in India are subject to an education cess of 2% & 1% of Higher secondary Education cess.
Due Dates
