Professional Updates

There are certain tax benefits on payment of EMIs on home loan. EMI on home loan consists of 2 components namely, PRINCIPAL and INTEREST . Assessee can avail tax benefits in the following ways. SECTION 24(b)- Assessee can claim INTEREST component of EMI under Section 24(b). The maximum deduction allowed under Section 24(b) will be  Type of house property  Maximum deduction allowed  Self-Occupied Rs. 2,00,000   Let-Out  No limit (with restrictions on set-off) WHAT IS A SELF-OCCUPIED PROPERTY? A house property which is used for own residential purpose is considered as SELF-OCCUPIED property. The property may be occupied by self / spouse / children / parents to be eligible for claiming as self-occupied property. From Financial Year 2019-20, an assessee can claim maximum 2 houses as self occupied property for the purpose of taxation. Even a vacant house shall be treated as self occupied property. If an assessee owns more than 2 house properties, only 2 of th...

Often we get confused between Assessment Year ( AY ) and Financial Year ( FY ). This article helps you in understanding the difference between the two terms. FINANCIAL YEAR Financial year is the year in which an assessee earns income. Financial year starts from April 1st and ends on March 31st of the following year. ASSESSMENT YEAR Assessment year is the year in which the income earned during a financial year is ASSESSED to tax and INCOME TAX RETURN IS FILED . Assessment year is the year FOLLOWING a financial year . Assessment year starts from April 1st and ends on March 31st. Examples :  Period Financial Year (FY)   Assessment Year(AY)  01.04.2017 to 31.03.2018   2017-18  2018-19  01.04.2018 to 31.03.2019   2018-19  2019-20  01.04.2019 to 31.03.2020   2019-20                      2020-21 Income tax department uses Assessment year (AY) in their communications becaus...

Most of the employees know that FORM 16 is required to file their income tax return. Let us understand about form 16 and its components. TAX vs TDS: TAX :  After the completion of financial year, the assessee shall compute the tax liability based on the income earned during the year less eligible deductions under Chapter VI-A. It is the responsibility of the assessee to compute the tax based on the tax slabs mentioned in the Finance Act. The assessee can pay the taxes in various forms like -TDS (TAX DEDUCTED AT SOURCE) -Advance Tax -Self Assessment Tax -TCS (TAX COLLECTED AT SOURCE) TDS: Income Tax Act,1961 mandated certain persons to deduct tax at the time of making payments. Government wants to earn taxes in advance rather than waiting for the assessee to file his return and pay the tax. TDS ensures early and guaranteed revenue generation to the Government. Also, it minimises the chances of tax evasion. There are different TDS rates specified by the Government for different types...

With growth in economy ,rampant changes occurring in the psychological behavior regarding education, changes in spending patterns and increased cost of higher studies, many people are availing loan for educational purpose. Banking sector has been witnessing growth in education loan vertical. Education in abroad costs higher when compared to India. So parents tend to avail an education loan to bear the expenses related to higher studies. Government has introduced section 80E to encourage the citizens to study further and thus save their taxes.  What is Section 80E?   DEDUCTION IN RESPECT OF LOAN TAKEN FOR HIGHER EDUCATION.   Who can claim deduction? INDIVIDUALS only. The deduction can be claimed by the individual who has taken the loan and who is responsible for repayment of such loan from his income. What is the eligible amount? INTEREST repayment of education loan. From where should the loan be taken? Loan should have been taken from a FINANCIAL INSTITUTION (or) app...

Most of us know that we can claim a MAXIMUM deduction of Rs.1,50,000 under Section 80C of Income Tax Act,1961 to save taxes. I have compiled the various components of Section 80C in this article. What is Section 80C? This section is part of Chapter VI-A which enables the assessee to claim certain expenditure from the gross taxable income earned during the year. Claiming the expenditure under Section 80C reduces our tax liability. It aims at encouraging the assessee to save money in the form of eligible investments and thus can help in saving the taxes too. Who can claim Section 80C? Individuals, HUF(the contributions made by HUF in the name of its members only). Maximum limit that can be claimed as deduction? Rs.1,50,000 . Under this section, a maximum deduction of Rs.1,50,000 can be claimed irrespective of the higher amount of actual investments made during a financial year. Components of Section 80C LIFE INSURANCE POLICY - Any amount paid to keep the insurance policies in force in th...

ALL ABOUT NPS WHAT IS NPS? NATIONAL PENSION SCHEME (NPS) is a voluntary contribution by an individual to get retirement benefits. This scheme is aimed at providing retirement benefits in the form of pension to OTHERTHAN government employees.  WHY NPS? This scheme can be opted by employees or self-employed for 2 reasons: 1) To save taxes by claiming expemption under Section 80C & 80CCD(1B) upto a maximum limt of Rs.1,50,000 under Section 80C and Rs.50,000 under Section 80CCD(1B) .  2) To get retirement benefits and save the money for future as the money invested in NPS is manged by fund managers who take care of  investing the money in best way. There are 2 types of NPS, 1) Corporate 2) Individual Under Corporate plan, employee can get tax exemption upto 10% of salary. Individuals can get additional benefit of Rs.50,000 under 80CCD(1B). TYPES OF NPS ACCOUNTS TIER-I and TIER II accounts. TIER I ACCOUNT: Investment in Tier I account is eligible for tax deduction. The f...