Finance Buddy

The last date to file revised or belated income tax return (ITR) for financial year 2021-22 was 31 December 2022. If you have missed this deadline, then the option is to file an updated tax return (ITR U). This option was introduced in Budget 2022 and is available for up to 24 months from the end of the relevant assessment year. ITR U can only be filed if a taxpayer has additional income to declare, irrespective of whether they have filed original ITR or not. “If someone wants to claim TDS refund by filing ITR U, that can’t be done as it cannot be used to file a nil tax return. A loss return too can’t be filed as reporting losses to be set off can reduce tax outgo. One can only pay additional taxes in an updated return," said Sujit Bangar, founder, TaxBuddy . This is what differentiates a revised and an updated return. “A revised return lets you correct errors in the original ITR, which may reduce your net taxable income and final tax liability. But an updated return is filed onl...

The new tax regime (Section 115AC of the Income-tax Act, 1961) provides benefits of a lower tax rate, while offering fewer deductions and exemptions. Nevertheless, if one has a salary structure that provides adequate benefit in the new tax regime, then here’s how one should go about switching to it. So How Does An Individual Taxpayer Switch His Tax Regime? To start with, the employee has to inform his/her employer at the beginning of the  financial year  on his/her decision to choose between the old and the new tax regime. The employee can choose to switch between these two regimes every year. That said, salaried taxpayers, who also have a business or professional income, have to follow an additional process. According to Archit Gupta, founder and CEO, Clear, a tax filing assistance company, such salaried taxpayers who also have a business income have to file form 10-IE. It is a declaration made by the taxpayers for choosing the new tax regime, as well as for opting...

  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 ...