Finance Buddy

  Tax saving options 2023:  Mutual Fund and stock market investors have big expectations from Union Budget 2023. As the current year is coming to an end, let’s have a look at some tax-saving options available for mutual fund and share market investors and what they can expect from the Budget 2023. What to expect from Budget 2023? Experts suggest that the government can take several steps for the betterment of the mutual fund industry and investors and to deepen the equity market via mutual funds. For instance, Bangar says there are specific schemes for income tax deduction purposes such as ELSS. “Instead of this, we can make it very simple. It would be better and simple to make all equity-based mutual fund investments eligible for a tax deduction. Also, there should not be any lock-in restriction.” Similarly, the Budget should include provisions to create an environment in which ULIPs and Mutual Fund schemes can compete on an equal footing. For this, the tax treatment of capit...

  Leave Travel Allowance/Concession is a tax-free component of salary given to the employees so that their travelling cost is taken care of. Here’s how you can claim this amount in your income tax returns Leave Travel Allowance/Concession (LTA/LTC) is given as part of the salary component by one’s employer to reimburse the actual cost of travel incurred by the employee on travel journeys undertaken by him/her and family during leave. This monetary assistance allows an employee to take privilege or earned leave and go on vacation with family members. Mihir Tanna, associate director, SK Patodia and Associates, a Mumbai-based CA firm, says that the tax benefit of exemption can be availed in respect of two journeys in specified blocks of four calendar years (current block is calendar year 2022-2025). If the bills are not submitted as soon as the travel is done, tax will be deducted on the said portion. The current LTA/LTC block is already running (2022-2025), so if you have been accumu...

You need to pay advance tax if your total tax liability for the respective assessment year is more than Rs 10,000. But it needs to be paid in four quarterly instalments. Should you miss paying one instalment, you will have to pay a penalty along with the due tax on your next instalment December 15 was the deadline for payment of 75 per cent of the total Advance Tax for the financial year 2022-23. Advance tax is merely income tax paid in advance (as per specified instalments) instead of lump sum payment at the year end. The liability to pay advance tax arises if one has a yearly tax liability of more than Rs 10,000. Advance tax is required to be paid in four quarterly instalments, and in specified percentage. But now that the deadline for submitting advance tax is over, one will also have to pay interest under Section 234C of the Income -tax Act, 1961. It specifies that the taxpayer, who is in default, is liable to pay interest at 1 per cent per month or part of the month for the pe...

Income Tax Return (ITR) filing is a must for salaried employees having an annual income above Rs 2.5 lakh. The Income Tax rules have several provisions through which employees can reduce their overall tax outgo. However, it has been observed that many employees fail to make the most of these tax-saving provisions. This article explains five common problems faced by salaried employees and their solutions. Unawareness about available deductions A large number of salaried employees are unaware of the deductions available to them over and above Section 80C of the Income Tax . “Therefore tax planning awareness needs to be created for the following deductions i.e 80CCD(1B)/80D/80E/80EEA/80EEB/80G/80TTA/80TTB/80U to reduce tax liability,” says Sujit Bangar, Founder of Taxbuddy.com . Lesser TDS deducted due to multiple Form 16 Whenever an employee changes his/her job, the employer claims standard deduction and Basic Exemption due to which TDS is less deducted and the employee ends up payi...

  In a bid to ease the process of filing an income tax return (ITR), the Central Board of Direct Taxes (CBDT) has issued a draft proposal to introduce a common ITR form for most taxpayers. The CBDT has proposed to merge all the existing ITR forms except ITR 7. However, the current ITR 1 and ITR 4 will continue. The income taxpayers will get an option to choose which form they want while filing their tax returns — the proposed common ITR form or the existing form (ITR 1 or ITR 4), as per the draft proposal issued by the CBDT on November 1, 2022. At present, taxpayers are required to furnish their income tax returns in form ITR 1 to ITR 7, depending upon the legal classification of the taxpayer and the nature of the income. "The current ITRs are in the form of designated forms wherein the taxpayer is mandatorily required to go through all the schedules, irrespective of the fact whether that particular schedule is applicable or not. This increases the time taken to file the ITRs ...

In a bid to ease the process of filing an income tax return (ITR), the Central Board of Direct Taxes (CBDT) has proposed a common income tax return form that aims to replace six of the seven existing ITR forms — ITR 1 to ITR 6. ITR 7 which is applicable to charitable institutions, business trusts, investment funds, etc. has been kept out of the proposed common ITR form. The taxpayer, however, will have the option to file ITR 1 or ITR 4 (if it applies to him/her) instead of the common ITR form if they want to do so. While CBDT plans to simplify the ITR filing process with the proposed common ITR, frequent changes in the tax return process can be a challenge for thousands of taxpayers. To answer a series of questions that may require detailed knowledge of tax laws lay taxpayers may have to end up paying for a chartered accountant's services. Here are the plus and minus points of the proposed common ITR. Don't have to go through the process of selecting the correct ITR anymo...

  Diwali is a widely celebrated Hindu festival. During the festive season, relatives, friends and neighbours exchange gifts and sweets. However, it is important to note that not all gifts received during the festive season are exempted from income tax. Here are some income tax rules that must be kept in mind while receiving gifts during Diwali: Value of gifts that come under the ambit of income tax The Income-tax Act, 1961, specifies the limit above which gifts recei d during a financial year are taxed. Diwali gifts received by you will be taxed only if they are received from a non-exempted relative or a friend and the value of such gift exceeds Rs 50,000. Sujit Bangar, Ex-IRS officer and founder of Taxbuddy.com , an ITR filing website, says, "To arrive at the taxable value, an individual needs to aggregate the value of the gifts received from non-exempted relatives and friends in a financial year. If the total value exceeds Rs 50,000, then you are required to report the taxable v...