He should prefer to go for the investment which gives the insurance to cover risk of life vis-à-vis tax savings. But be sure that the premium is fixed and to be paid annually. Some insurance company offers one time premium. Various options to be taken into account. Do not just sign the document what the insurance agent gives to you. Study the various scheme by various companies. Further, do not only think about the income tax, there are many factor other than that. Determine the social liability you will face in near and long term future. Like marriage of your younger brother or sister, Social responsibility to be tackle, Medical emergency of your parent, education of your child. Think all of these; also see the sources of income. Like pension of parent, spouse’s income, other income deriving from the rent / dividend ect. And than finally decide the investment in various schemes.
The income tax rates are changing every year. The basic exemption limit during the 1990 was around 28,000/-, increased to Rs. 35,000/- during the year 1994, Rs. 40,000/- during 1997, today it is Rs. 1,00,000/- and the percentages on excess of the basic exemption is reduced to 10%. And the span of next slab was increases. So, when ever you think of the investment, think that the rates are not final. You might automatically covered in below taxable limit or have very nominal tax to pay.
Person should think for investments in mutual funds, which ultimately gives more returns than just fixed deposits.
Go for pension fund scheme by LIC of other insurance company, in early stage of carrier. And retirement is vary far. By doing that the yearly payment will be lower than the later stage.
If you are near to retirement, go for the inc\vest a scheme which immediately saves the tax and returns on the investments are tax free, like PPF. Please note that the interest on NSC is now taxable, as the section 80L is abolished. So, investing in NSC will not serve the purpose of tax saving, next year the interest portion will be added to your total income.
Invest in such a security, which gives you the return which covers the inflation rate. No financial plans by the companies / Banks / Insurance companies are capable of gives you the return to tackle the future price hike. So, investment in property, where the rent is increases with the inflation. So, in your old age, you will have enough to enjoy. At least your bread and butter. You will reduce the burden on your child.
Also invest little bit in shares, where the prices is increases, dividend by the companies are also increases. The dividend is also tax free.
Last but not least, do not put all your eggs in one basket. The same be with inform of fixed deposit (security ) [30 to 40% of savings.], limited risk like mutual funds, where the return are more than rate of fixed deposits. [25 to 30% of savings.], Remaining [30 to 40% of savings.] invest in high risk area where the return are very high but loosing the savings are also high. The Investment are to be decide on the base that whether you own a house, who many children you have and what will be their liability, Other social factor, that any property you get in inheritance, other co-owner (Brother and sister) will co-operate in distribution of the property. Any dispute with brother / brother of father ect is to be consider to take a wise decision.
Scrutiny guidelines [non corporate] :
Your case may be selected for scrutiny if it falls within following category.
I. If the search or survey carried out at your business place.
II. If your claim under Chapter VI-A and / or refund claim is more than 5 lacs, in stations other than 60 cities on computer network.
(If you are stationed connected with computer, the computer selected your case for scrutiny automatically)
(If you are stationed connected with computer, the computer selected your case for scrutiny automatically)
III. If the CIT(A) or ITAT confirmed the additions more than Rs. 5 lacs.
IV. If the case is pending with CIT(A) or ITAT, for the additions over Rs. 5 lacs.
V. All cases of bank, non-banking financial institutions having deposits more than 5 crores.
VI. If you claim income exemption u/s 11 claimed and the gross receipts (including donations credited to the corpus … . . . ), is more than Rs. 5 crores in Delhi, Mumbai, Chennai, Kolkata, Pune, Hyderabad, Banglore and Ahmedabad, and 1 crores in other cities.
VII. If the total value of the International Transaction exceeds Rs. 15 crores.
VIII. If you are s stock brokers ( or a sub brokers) and you disclosed brokerages received is at Rs. 50 lacs or more and the total income declared is less than 10% of such brokerages. And / or you claimed the bed debt which is more than Rs. 5 lacs.
IX. If you are professionals having gross receipts of Rs. 10 lacs or more in places other than 60 cities on computer network if total income declared is less than 5% of gross receipts.
X. If you are builders following Project Completion method.
XI. If you introduced fresh capital ( / or loan accepted) during the year exceeds Rs. 1 crores in Delhi, Mumbai, Chennai, Kolkata, Pune, Hyderabad, Banglore and Ahmedabad, and Rs. 10 lacs in other cities.
XII. If you claimed deductions under section 10A / and / or 10B Income Tax Act,1961, with export turnover exceeding Rs. 5 crores.
XIII. If you are contractors having gross contractual receipts more than Rs. 1 crores in places other than 60 cities on computer network and income declared is less than 5% of gross contractual receipts.
XIV. If you are claiming the deductions u/s 80IA(4) , 80IB, 80IAB, 80IC,80JJA,80JJAA,80LA,10(21),10(22B) ,10(23A) ,10(23B) ,10(23C) ,10() ,10(23D) ,10(23EA) ,10(23FB) ,10(23G) ,10(37) ,10A ,10AA or 10 BA Income Tax Act,1961 is claimed for the first time.
So, if you fall in above category the scrutiny notice will come soon to your door step.
What to do :-
Never ignore the notice server (of department), just sign it and have a coy of the same. (The department has wide power to serve you the notice.)
Avoiding may lead the department that you are non co-operative person. No minor favor (within law) may be given to you. Avoiding may seen as harassment from your side to department. And your case may be scrutinize taking view that you have something to hide, as you are non co-operative person.
Keep a copy of the notice with you and send the other copy to your authorized representative.
Write down the hearing date, and note it in your schedule. Attend the office on time , either personally or through Authorised Representative (AR).
If your AR is representing your case, do confirm that AR has attended the hearing.
As the first notice is statutory notice, the Assessing Officer does not require much in formations. However to show your willingness, A written submission mentioning AY, Your PAN, All related contact numbers, including mobile number, nature of you business, working hours may be submitted. This would give a good impression upon the Officer. He is assured that you are co-operating in assessment proceedings. The hearing of your case may be fixed considering your busy hours. So, you can attend your normal business and have a time to prepare query raised by him.
The Assessing Officer generally does not hurry in completing you case in this year (for scrutiny cases of the AY 2005-06). So, the time will be granted to you. Normally, the Assessing Officer enters your presence and submission given by you in order sheet. You may get the time for the next date of hearing.
Mean while …. Go through following tips.
Tips to the taxpayers.
What the business man is to do to legally avoid the avoidable tax when his case is in scrutiny (or not); [Within the preview and ambit of the Act]
The Income Tax Department has selected many cases for scrutiny u/s 143(2). The cases are selected by the computer, as well as criteria stated above.
To avoid end-time preparation following is the tip for smooth scrutiny completion.
First and most important do not offer any money / bribe to the Assessing Officer. Either personally or through your authorized representative.
If your authorised representative asks you for money to be given to assessing officer, do not believe it. Because, even the corrupt Assessing Officer never ask for the money on being first notice issued. If so, the issuance of notice is under question. And take necessary steps for the same.
Do not leave your case into hand of middle man; it may be any person or ITP / CA. Do not trust that they would clear your case, just because of he has good relations with the income tax people. These types of people would black mail you later on asking the bribe in name of Assessing Officer, even Assessing Officer is not aware of it.
Always take interest in the development of assessment.
Keep your account updated and complete in all form.
Check once more the all the vouchers, bills all documents and get it tilled with your account.
Keep copy of all your bank accounts. If it is not with you get it from your banker. Verify the bank statement with your cash book. Check the closing balance of cash and what is shown in the Balance sheet submitted with the return of income.
[While in day to day business, never deposit cash into your bank account. Ensure that all entry in your bank accounts are explained {There must be enough cash in your cash book on the day of depositing the cash}. Don’t accept cash or cheques from sources that cannot be explained.] Even do not give money to person who is not capable to explain his other sources. That other man’s scrutiny would trouble you.
Keep collecting the confirmation from each depositors, appearing in your balance sheet as well as deposits taken during the year.
Keep your stack book up to date and verifiable by the Assessing Officer. Prepare statistics of your closing stock as well as monthly data about the stock.
If you are a manufacturer keep all the data available about the manufacturing process. Valuation of raw materials, Work in process, finished goods.
Check your claims under various sections of the income tax act. Verify the various provisions of the ACT before claiming the deductions. Specially when it exceeds rs 1,00,000/-
Even if your income is exempt, even of you declare the true income and each source is valid, it should be satisfactorily explained to the Assessing Officer. Avoiding the procedural part of the income tax, you may face the penalty proceedings. This is very hard and heavy. E.g. there is a penalty for non compliance of hearing which is rs 10,000/- per default. So, avoid non-compliation.
Please remember the following, even the expenses are genuine and from the explained sources, it is not allowable as deductible from the taxable income.
i. If you fail to deduct the tax from the sources, and paid it to the central govt. Account, the entire expenses are not allowable.
ii. If you pays in cash for more than rs 20,000/-, 20% of the same will be added to the total taxable income.
iii. If you re-pay or accept loans or deposits (or both) in excess of rs 20,000/- during the year it will cost you equal amount of penalty. Please avoid the same.
iv. Looking to your life style, withdraw appropriate amount each month from the business to meet family needs. (The CBDT would issues the instruction that those who show the self withdrawals less than rs 50,000/-, his case will be scrutinised.)
Keep in mind that when you earn, run business you can not avoid the tax. Accept the fact, and try to keep your self, your account updated.
So, first of all hire good and reliable accountant. If possible if you have computer, install good accounting software. Learn it how to operate it, even you do not personally work on it, you may have good control over your own data.
Choose a good accountant, the same is not easy job,
Never give your accounts details to relative (accountant), he may abuse his knowledge about your financial status.
Decide the fees for the preparation of the account. Pay it in time.
Never handed over the bills / vouchers / ect to the accountant. If it is required, get it back when work is over. Always have your document with your custody only.
When the return is filed, ask the original acknowledgement slip from the person to whom you give the return of income for filing. And keep the same in safe custody.
A l l t h e B e s t.
XIII. If you are contractors having gross contractual receipts more than Rs. 1 crores in places other than 60 cities on computer network and income declared is less than 5% of gross contractual receipts.
XIV. If you are claiming the deductions u/s 80IA(4) , 80IB, 80IAB, 80IC,80JJA,80JJAA,80LA,10(21),10(22B) ,10(23A) ,10(23B) ,10(23C) ,10() ,10(23D) ,10(23EA) ,10(23FB) ,10(23G) ,10(37) ,10A ,10AA or 10 BA Income Tax Act,1961 is claimed for the first time.
So, if you fall in above category the scrutiny notice will come soon to your door step.
What to do :-
Never ignore the notice server (of department), just sign it and have a coy of the same. (The department has wide power to serve you the notice.)
Avoiding may lead the department that you are non co-operative person. No minor favor (within law) may be given to you. Avoiding may seen as harassment from your side to department. And your case may be scrutinize taking view that you have something to hide, as you are non co-operative person.
Keep a copy of the notice with you and send the other copy to your authorized representative.
Write down the hearing date, and note it in your schedule. Attend the office on time , either personally or through Authorised Representative (AR).
If your AR is representing your case, do confirm that AR has attended the hearing.
As the first notice is statutory notice, the Assessing Officer does not require much in formations. However to show your willingness, A written submission mentioning AY, Your PAN, All related contact numbers, including mobile number, nature of you business, working hours may be submitted. This would give a good impression upon the Officer. He is assured that you are co-operating in assessment proceedings. The hearing of your case may be fixed considering your busy hours. So, you can attend your normal business and have a time to prepare query raised by him.
The Assessing Officer generally does not hurry in completing you case in this year (for scrutiny cases of the AY 2005-06). So, the time will be granted to you. Normally, the Assessing Officer enters your presence and submission given by you in order sheet. You may get the time for the next date of hearing.
Mean while …. Go through following tips.
Tips to the taxpayers.
What the business man is to do to legally avoid the avoidable tax when his case is in scrutiny (or not); [Within the preview and ambit of the Act]
The Income Tax Department has selected many cases for scrutiny u/s 143(2). The cases are selected by the computer, as well as criteria stated above.
To avoid end-time preparation following is the tip for smooth scrutiny completion.
First and most important do not offer any money / bribe to the Assessing Officer. Either personally or through your authorized representative.
If your authorised representative asks you for money to be given to assessing officer, do not believe it. Because, even the corrupt Assessing Officer never ask for the money on being first notice issued. If so, the issuance of notice is under question. And take necessary steps for the same.
Do not leave your case into hand of middle man; it may be any person or ITP / CA. Do not trust that they would clear your case, just because of he has good relations with the income tax people. These types of people would black mail you later on asking the bribe in name of Assessing Officer, even Assessing Officer is not aware of it.
Always take interest in the development of assessment.
Keep your account updated and complete in all form.
Check once more the all the vouchers, bills all documents and get it tilled with your account.
Keep copy of all your bank accounts. If it is not with you get it from your banker. Verify the bank statement with your cash book. Check the closing balance of cash and what is shown in the Balance sheet submitted with the return of income.
[While in day to day business, never deposit cash into your bank account. Ensure that all entry in your bank accounts are explained {There must be enough cash in your cash book on the day of depositing the cash}. Don’t accept cash or cheques from sources that cannot be explained.] Even do not give money to person who is not capable to explain his other sources. That other man’s scrutiny would trouble you.
Keep collecting the confirmation from each depositors, appearing in your balance sheet as well as deposits taken during the year.
Keep your stack book up to date and verifiable by the Assessing Officer. Prepare statistics of your closing stock as well as monthly data about the stock.
If you are a manufacturer keep all the data available about the manufacturing process. Valuation of raw materials, Work in process, finished goods.
Check your claims under various sections of the income tax act. Verify the various provisions of the ACT before claiming the deductions. Specially when it exceeds rs 1,00,000/-
Even if your income is exempt, even of you declare the true income and each source is valid, it should be satisfactorily explained to the Assessing Officer. Avoiding the procedural part of the income tax, you may face the penalty proceedings. This is very hard and heavy. E.g. there is a penalty for non compliance of hearing which is rs 10,000/- per default. So, avoid non-compliation.
Please remember the following, even the expenses are genuine and from the explained sources, it is not allowable as deductible from the taxable income.
i. If you fail to deduct the tax from the sources, and paid it to the central govt. Account, the entire expenses are not allowable.
ii. If you pays in cash for more than rs 20,000/-, 20% of the same will be added to the total taxable income.
iii. If you re-pay or accept loans or deposits (or both) in excess of rs 20,000/- during the year it will cost you equal amount of penalty. Please avoid the same.
iv. Looking to your life style, withdraw appropriate amount each month from the business to meet family needs. (The CBDT would issues the instruction that those who show the self withdrawals less than rs 50,000/-, his case will be scrutinised.)
Keep in mind that when you earn, run business you can not avoid the tax. Accept the fact, and try to keep your self, your account updated.
So, first of all hire good and reliable accountant. If possible if you have computer, install good accounting software. Learn it how to operate it, even you do not personally work on it, you may have good control over your own data.
Choose a good accountant, the same is not easy job,
Never give your accounts details to relative (accountant), he may abuse his knowledge about your financial status.
Decide the fees for the preparation of the account. Pay it in time.
Never handed over the bills / vouchers / ect to the accountant. If it is required, get it back when work is over. Always have your document with your custody only.
When the return is filed, ask the original acknowledgement slip from the person to whom you give the return of income for filing. And keep the same in safe custody.
A l l t h e B e s t.
0 comments:
Post a Comment