Category Archives: Individuals

Interest Rates slashed by Government on Small Savings Scheme

On 18th March 2016,The Government of India sharply reduced interest rates on Small Savings Schemes across the Board. The government has also announced the highest reduction of 130 basis points (1.30%)  on one- year time deposit,  as per  an office order issued by the Finance Ministry.

The move has been made to align rates of these schemes to prevailing market rates.

Recently, the government has started revising interest rates on such schemes every quarter and hence, the new rates will be applicable from April 1, 2016 to June 30, 2016.

The following table will give a bird’s eye view of the changes effected.

 

Instrument

Existing Rate

(April 1 ,2015 to March 31, 2016)

New Rate

(April, , 2016 to June 30, 2016)

     

Savings Deposit

4%

4%

     

1- Year Time Deposit

8.40%

7.10%

     

2- Year Time Deposit

8.40%

7.20%

     

3- Year Time Deposit

8.40%

7.40%

     

5- Year Time Deposit

8.50%

7.90%

     

5- Year Recurring Deposit

8.40%

7.40%

     

5- Year Senior Citizen Savings Scheme

9.30%

8.60%

     

5- Year Monthly Income Account Scheme

8.40%

7.80%

     

5- Year National Savings Certificate

8.50%

8.10%

     

Public Provident Fund Scheme

8.70%

8.10%

     

KisanVikas Patra

8.70%

7.80%

     

SukanyaSamriddhi Account Scheme

9.20%

8.60%

     
     

The Government has termed this move to increase economy growth rate. No doubt, small investors will feel the pinch of reduced savings but looking at the overall economy, the measure will create parity between various loan facilities provided by bank since deposit rates have actually reduced over past 3-4 years. The banks will be able to reduce their lending rates as their cost of raising deposits will be reduced. The government will be able to decrease its interest burden and in effect reduce its revenue deficit.

Please feel free to write to us at [email protected] for any further queries on the above blog

 

 

 

 

 

 

Introduction of Presumptive taxation to professionals

Introduction of Presumptive taxation to professionals

In current scenario, income tax provides for a simplified presumptive taxation scheme for certain eligible persons engaged in certain eligible business only and not for persons earning professional income.

Now, the Finance Minister , Mr Arun Jaitley in his proposed Budget for 2016, has proposed to extend the scheme of presumptive taxation to professionals also. From April 1, 2016 onwards, professionals in the fields of legal, medical, engineering, architecture, accountancy, technical consultancy or interior decoration or any other profession notified by government having receipts of Rs 50 lakhs or less can show profit @ 50% of turnover and discharge taxes on it. A few examples of professions that are getting covered are lawyers, Company secretaries, Chartered Accountants, Cost Accountants, Writers, Actors, Interior designers, architects, etc. Such Small & Medium Enterprise ( SME ) professionals will not be required to maintain books of accounts and go through the tedious process of maintaining accounting records of expenses and for claiming deductions from income. The professionals are required only to maintain documents for revenue shown.

The professionals can take benefit of this provision and reduce their tax compliances in a big way. However, it has to be noted that in case actual profits are less than 50% of the receipts of the professional, he can pay taxes assuming 50% profit or get his accounts audited by a Chartered Accountant and show lower profit and in effect pay tax at lower amount. The professional can exercise any of the above 2 options based on his cost – value analysis.

A simple flow chart will be useful to understand the above concept.FLOW CHART

In case of any discussion required for taxation and audit matters on above matter, feel free to contact me at [email protected]

TRANSACTIONS ABOVE 2 LAKHS…TIME TO DISCLOSE YOUR PAN DETAILS

The Central Government has executed a mandatory rule to quote the permanent account number (PAN) for all transactions exceeding Rs. 2 lakhs  in order to hold the flow of  black money.

This requirement will come into effect from 1st January 2016 and will be applicable on all sale and purchase of goods and services including all modes of payments.

This move will also have a zooming eyeball on the highly expensive household electronics gadgets,foreign holidays via tour packages, expensive jewellery and watches and also will indirectly be of maximum help to audit to catch hold of high value transaction by one particular individual by  cross checking with the IT department whether the individual has declared the income or not.

Valuable tips to businessman and service providers :

It is  advisable to get a copy of PAN (formally on their letterhead) from all the customers on whom they  are likely to raise bills exceeding Rs 2,00,000/- .

 It is also necessary to furnish PAN of buyer/service recipient  on all invoices exceeding Rs. 2,00,000/- subject to verification of the their pan details.

Below list shows some changes in limits for quoting pan details:

  • Sale or purchase of immovable property raised from 5 lakhs to 10 lakhs
  • Restaurant bill raised from Rs.25000 to Rs.50,000 (this refers to one time bill)
  • Purchase or sale of shares of an unlisted company from 50,000 to 1 lakh.

Please remember heavy penalties are prescribed for failure to comply with these requirements.

 This initiative will stiff the swings of black money, not only killing corruption but also  hold the flow of  money laundering.

 

Editor :  Mr.Baban Utekar 

Please feel free to reach me at [email protected] for further queries if any

 

 

INCOME TAX RETURN OF DECEASED TO BE FILED BY THE LEGAL HEIR

Every individuals needs to file their income tax returns year after year. Individuals having income more than exempted income needs to file Income Tax Return every year. But, it’s not only the livings that have to pay their taxes. Unfortunately if one of family members has died during the financial year and he/she was liable to pay tax, you might need to file a return on his or her behalf.

Section 159 of the Income-Tax Act lays down the liabilities of the legal representatives of a deceased person. In most cases, the individual’s spouse or eldest son/daughter assumes the status of legal heir or representative.

“As a legal heir, you have to file the return on behalf of the deceased for income earned till the date of death. Any income earned after the date of death is taxable in the hands of the legal heir or executor of the deceased’s estate,”  The returns have to be filed as if the deceased had not died, in the same manner and extent as the deceased did. Benefit of basic exemption limit of income not chargeable to ax also can be taken.

For filing the income tax returns there are 2 vital things which need to be performed:

  • REGISTERING AS LEGAL HEIR

 

  • FILING INCOME TAX RETURN

 

REGISTERING AS LEGAL HEIR:

User should register as a Legal Heir to do e-Filing on behalf of the deceased. This is a new feature provided for Individual user. A Legal Heir can file Income Tax Return, View Status of Income Tax Return, ITR-V Acknowledgment and other filing status in respect of the Income Tax Return of the deceased person for the e-Filed Assessment Year

Following are the steps for registration of Legal Heir:

Step 1: Go to Income Tax Dept.’s Website –https://incometaxindiaefiling.gov.in

Step 2: Login to e-Filing portal using Legal Heir Credentials

Step 3: My Account – Register as Legal Heir

Step 4: Requesting

Select the Type of Request–New Request

Enter the details of Deceased, Select the files to upload, Attach a Zip File containing PDF of the scanned documents as mentioned below:

  • Copy of death certificate
  • Copy of pan card of the deceased
  • Self Attested pan card copy and
  • Legal Heir Certificate (Please refer below)

The legal heir certificate issued by court of law. The legal heir certificate issued by the Local revenue authorities. The certificate of surviving family members issued by the local revenue authorities. The registered will. The Family pension certificate issued by the State/Central government.

The certificate of surviving family members issued by the local revenue authorities is the most common certificate available. This certificate required to be in English/Hindi language and same needs to be duly notarized.

(maximum size of the Zip file should not exceed more than 26 MB).

Click Submit & You will get Acknowledgement from the Dept. with a Transaction ID

Step 5: Checking the status of request.

My Request List – My Request List

Select the Type of Request – Add Legal Heir Request

Click submit

The status of the request can be seen here. There are 3 types of status that can be seen, Pending, Rejected and Approved.

In case of Rejection, Dept. will provide the ground for such rejection, which can be viewed by clicking on Transaction ID

After completing the whole process and once the requested is approved, you will be able to use all the services for yourself (Legal Heir) and for the Deceased.

  •  FILING INCOME TAX RETURN

Following are the steps for filing income tax return

  • Go to Income Tax Dept.’s Website – https://incometaxindiaefiling.gov.in
  • Login to e-Filing portal using Legal Heir Credentials
  • Go to e-File – Upload Return 
  • Fill the details and select the XML File
  • PAN: Select the PAN of Deceased (Note: Dropdown list will show both PAN, Legal Heir as well as of Deceased)
  • ITR Form Name: Select the ITR Form to upload (i.e. ITR 1, 2, etc….)
  • Select Assessment Year
  • Upload the XML File
  • Legal Heir can digitally sign the ITR of Deceased using his/her DSC
  • Click Submit
  • Select the e-Verify Option, as per your choice ( Note: I have selected “Option4 – I would like to Send ITR-V/ I would like to e-Verify later”)
  • Download ITR-V (if not e-Verified) Verify and send the Signed ITR-V to the CPC center.

Please feel free to get in touch at [email protected] for any further enquiries on the above

Here’s how you can earn interest under “Gold Monetisation Scheme”

This scheme allows customers to deposit their gold and earn interest rates fixed by designated banks subject to checking the gold at the time of collection and purity centers notified by the government.

Entry to this scheme is a minimum deposit of 30 grams having 995 fineness (includes bars, coins, stones,jewellery and other metals) and there is no maximum limit to the deposit. Deposits can also be in the form of joint deposit of two or more.

Principle on maturity and interest will be purely as per the  NAV (rate of gold at that time).The depositor has an redemption option in cash or in gold. This shall be specified at the time of entering this scheme, later on which cannot be amended.

This scheme has 3 deposit which includes Short term(1-3 yrs),Medium term (5-7 yrs) and long term (12-15 yrs) having a minimum lock-in period, however penalty charges will be incurred for pre maturity withdrawals.

The objective of the scheme is to mobilize a part of an estimated 20,000 tonnes of gold held by households and institutions in the country and to reduce India’s reliance on the import of gold. The Cabinet had approved the scheme last month.