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PLANNING  YOUR TAXES   
​  FOR FY 20-21                                                    

TAX PLANNING FOR FY 2020-21

 CONTAINS   5 PARTS 

PART I  : HIGHLIGHTS OF  CHANGES IN TAX RULES FOR FY 2020-21    :  READ THIS PART BELOW              

PART 2 : TAX RATES  / SLABS FOR FY 2020-21    CLICK HERE  
 
PART 3 :  TAX  REBATES  FOR FY 20-21        CLICK HERE     

PART 4:   INCOME TAX CALCULATOR FOR FY 2020-21        CLICK HERE 
                                                                                     
​PART 5 : TAX ON RETIREMENT BENEFITS             CLICK HERE       

​FOR LATEST INCOME TAX  NEWS          CLICK HERE 

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BUDGET PROPOSALS FOR FY 2018-19  AFFECTING PERSONAL FINANCE , CLICK HERE

BUDGET HIGHLIGHTS FOR 2020-21  ,CLICK HERE    

IT FORMS  for FY 2019-20 ( AY 2020-21 )  already Released  
For Details CLICK HERE 

LAST MINUTE TAX PLANNING FOR FY 20-21 IN 5 SIMPLE STEPS

    LAST  MINUTE  TAX PLANNING IN 5 SIMPLE  STEPS   : 

Dated 27.03.2021 : As  the financial   year is coming to an end in next  5 days , you  have to   act now  to save maximum on   your  income tax liability  . To help you in this task ,  you may  take these simple steps  to maximise tax savings : 

1. Calculate  your total income  in this year from all the  sources . 
2. Check   what tax rebates   you are already eligible   for . There are tax rebates available without you having done   any investment during the year . For example   standard deduction ,  health insurance payment  ,  bank interest for senior citizens    . For  complete detail  of all  rebates  available ,    CLICK HERE  . You would also have   invested in some tax saving instruments like PPF  , Insurance premium etc . 
3. Now with this information , check    whether   old  tax regime  with  rebates   is beneficial or  the new simplified tax regime is beneficial to you .   Calculate  tax payable  both ways by using Tax calculator here  . 
4.  If new simplified tax regime is beneficial  , no more action is needed 
5. If old  tax regime  is beneficial , think of ways  to   avail further  tax rebates  available to you to maximise rebates and  minimise  your tax liability   by checking  on the  tax saving  instruments available to you .   Buy them 
​  To know the  tax slabs in both methods  , CLICK HERE 

UNION BUDGET 2020-21 AND SENIOR CITIZENS  
In our new blog article , we have explored what the new IT regime means to senior citizens and what extent senior citizens / retirees / pensioners are gaining / losing from the new regime .As the new regime is optional , one can take studied decisions before opting either of the new or old scheme .

  Have you submitted Form 15G / 15 H  if you are eligible  ? 
Go to   Section   " All about TDS  and  Form 15G / 15 H  and find out whether you are eligible to submit the forms to avoid  Tax Deduction at source. If you are eligible Download the forms and submit to your bank  immediately.As year end is approaching , Banks will deduct tax on their interest payment before the year end  if you have not submitted the forms . Act  earliest to avoid TDS . 


KEEP YOUR  FINANCIAL RECORDS PROPERLY 

Keep the records of all your financial transactions .  Money borrowed  from friends , Jewelry inherited / purchased ,Gifts received , wedding expenditures cash remitted to your account etc can be questioned by IT officers  and can be taxed up to 83 % of the value  if IT  Officer is not satisfied about your explanation . As per amended section 115BBE , an assessing officer can invoke  60 % tax , 15 % surcharge , 3 % cess with an added penalty of 10 %  . To avoid such  hefty payment of tax ,  keep  records of  your transactions to enable yourself to explain  sources of funds .

    FOR     LATEST   INCOME TAX NEWS   CLICK HERE

HIGHLIGHTS OF CHANGES IN INCOME TAX RULES FROM FY 2019-20 TO FY 20-21 

TCS ON FOREIGN EXCHANGE REMITTANCE / OVERSEAS TOUR PACKAGE

Dated 01 .010.2020 :     The following provisions   will be applied for the transactions done today onward   towards  Foreign tour  or Foreign Remittance :

If  you buy foreign tour package   , the seller  of the package  will  collect  additional amount  of 5 %  along with  the tour package cost   as an Advance  Income Tax   ( TCS - Tax Collected at Source ) )  from you   . If you remit   more than Rs 7 lakhs  under  Liberalised Remittance Scheme of the Reserve Bank of India    (  the scheme under which many parents remit  funds  to their children studying abroad  )    ,  the Authorized Dealer   through whom you remit will collect   additional amount  of 5 %   for the amount  in excess of  Rs 7 lakhs along with the exchange cost  as Income Tax  .  Further if you do not furnish PAN / Aadhaar number during the transaction ,  the percentage  of such income tax collection will increase to 10 % instead of  5 %  .     But  if you remit    out of education loan taken  for studies abroad   ,   the authorised dealer will collect  only 0.5 %  in excess of seven lakh rupees remitted by you  in a financial year . 

The   TCS collected by you is only  advance  income  tax collected   and you can adjust  the collected amount   at the time of submitting your IT Returns    for the year FY  2020-21  .  If you are not liable for any tax   , you may claim refund  while submitting IT returns .    If  one does not file IT Return , the amount collected under TCS  will lie with the government .  

The above   rules are made following amendment made to Sec 206C of Income tax Act . 

---

1. Simplified optional Individual tax  regime is introduced with lower income tax rates  for the persons  who are ready to  forgo many tax rebates .   

a. REBATES TO BE FORGONE : 

1. Standard Deduction of   Rs 50,000 allowed for salaried persons / pensioners   .

2. Cumulative deduction   of  Rs 1.5 lakhs allowed under Section 80C, 80CCC, and Section 80 CCD for savings/investments, premium for annuity / pension fund   

3. Deductions allowed for Rs 50,000 / 1,50,000  under  Section  80 EE / 80 EEA for the Interest on Housing loans  with certain conditions 

4. Deduction allowed under 80 E  for interest on education loan taken for pursuing Higher Education  . 
 
5. Deductions allowed for Rs 2.00 lakhs under  Section  24   for the Interest on Housing loans 

6.  Deductions allowed for  Rs 1,50,000  under  Section  80 EEB for the Interest on loans  taken for purchase of electric vehicles  . 

7. Interest on savings bank accounts allowed  up to  Rs 10,000   under Section 80TTA    and for senior citizens only if they have not claimed  under section 80TTB

8. Interest  received by a senior citizen on deposits with banks /  co-operative societies / post office     up to Rs 50,000  under section 80 TTB   .  

​9. Deduction allowed  for  Health insurance Policies under 80 D  up to  Rs. 50,000/- for senior citizens and up to Rs. 25,000/-  for   others   . 



b. REBATES THAT CAN  BE USED IN NEW TAX REGIME ALSO 
​
1. CONVEYANCE ALLOWANCE , LFC , TRANSFER    

Dated  29.06.2020 :     Income  Tax department has amended  rules now and permitted conveyance allowance , travel allowance , LFC / LTC   and transfer allowance   etc to be    to be under exemption   category of newly  115BAC   as per Gazette  notification dated  26.06.2020 .  Accordingly following   allowances are  also  exempted   under the new tax regime  :

a) any allowance granted to meet the cost of travel on tour or on transfer;
(b) any allowance, whether, granted on tour or for the period of journey in connection with transfer, to meet the ordinary daily charges incurred by an employee on account of absence from his normal place of duty;
(c) any allowance granted to meet the expenditure incurred on conveyance in performance of duties of an office or employment of profit  

To view Gazette Notification  , CLICK HERE 

C.  TAX STRUCTURE UNDER  NEW  SIMPLIFIED TAX REGIME 

a .   No tax up to Rs 2,50,000
b.    Income tax  at  5 %  from   Rs 2,51,000  to  Rs 5 .00 Lakhs
c.    Income tax  at  10 %  from   Rs 5,00,001 to  Rs 7.5 Lakhs 
d.   Income tax  at  15 %  from   Rs 7,50,001  to RS 10 .00 Lakhs 
e.   Income tax  at   20 %  from   Rs 10,00,001 to  Rs 12 .50 Lakhs 
f.    Income tax  at  25 %  from   Rs 12,50,001 to  Rs 15 .00 Lakhs 
g.   Income tax  at  30 %   above   Rs 15 .00 Lakhs 
 
 
2. EMPLOYEE / PENSIONER  CAN OPT   TCS / TDS  EITHER FOR NEW REGIME OR OLD REGIME 

An employee, having income other  than the income under the head "profit and gains of business or profession" and intending to opt  for the concessional rate under section 115 BAC  of the Act, may intimate  his employer, of such intention for each previous year and upon such intimation, the employer  has to   compute his total income, and make TDS thereon in accordance with the provisions of section  115 BAC of the Act.

2. If such intimation is not made by the employee, the employer shall make
TDS without considering the provision of section 115 BAC of the Act.  

3.  intimation so made  by the employee will  be only for the purposes of TDS during the previous year and cannot be modified during that year.

4. However, the intimation would not amount to exercising option in terms of sub-section (S) of section   115 BAC of the Act .  Thus, option at the time of filing of return of income  could be different from  the intimation made by such  employee to the employer for that previous year. 

5.   However  if you  have  income under the head "profit and gains of business  or profession" also, the option for taxation under section   115 BAC of the Act once exercised for  a previous year at the time of filing of return of income under cannot be changed for subsequent previous years except in certain circumstances. 

​To read Ministry of Finance circular dated 13.04.2020  in this regard , CLICK HERE 

3.  TDS / TCS  RATES SLASHED BY  25 % : 

Dated  15.05.2020 :    Finance Minister  Ms Nirmala Sitharaman  had announced on 13th May   of proposal to reduce the rates of Tax Deduction at Source (TDS) for  non-salaried specified payments made to residents and rates of Tax Collection at Source (TCS) for the specified receipts shall be reduced by 25% of the existing rates. 

Now Ministry of finance has come out with the list   of New TDS  / TCS rates for various   transactions which are valid   from 14th   May, 2020 to 31st March, 2021  . 

Now TDS on interest   & dividends  ,  will be 7.5 % (  existing 10 %) ,   To   go through   the new complete  list of rates ,   ,   CLICK HERE  

4. For those who opt to be in old tax regime , there is no change in Tax rates  .  It will continue as per slabs of FY 2019-20 . 

5. ​Dividend Distribution Tax removed  , but dividends to be added to individual incomes 


 4.  FORM 26AS REVISED , TO CONTAIN PERSONAL FINANCIAL TRANSACTIONS   

Dated  20.07.2020 : The earlier Form 26AS used to give information regarding tax deducted at source ( TDS )   and tax collected at source relating  ( TCS )  to a PAN, besides certain additional information including details of other taxes paid, refunds and TDS defaults. But now, it will have SFTs ( Statement of Financial Transactions  )  to help the taxpayers recall all their major financial transactions so that they have a ready reckoner to enable them while filing the ITR.    Information  received by the Income Tax Department   from the filers of  specified SFTs is now being shown in Part E of Form 26AS 

 But the Income  Tax Department is  receiving  information like cash deposit/withdrawal from saving bank accounts, sale/purchase of immovable property, time deposits, credit card payments, purchase of shares, debentures, foreign currency, mutual funds, buy back of shares, cash payment for goods and services, etc. under Section 285BA of Income-tax Act, 1961 from  banks, mutual funds, institutions issuing bonds and registrars or sub-registrars etc., with regard to individuals having high-value financial transactions since the Financial Year 2015- 2016  onwards  . The information so collected  is not being shown in the form 26AS so far . 

Now, all such information under different SFTs will be shown in the new Form 26AS. IT Department hopes  that  the additional information   would help the honest taxpayers with updated financial  transactions while filing their returns, whereas it will desist those taxpayers who   inadvertently conceal financial transactions in their returns. The new Form 26AS would also have information of transactions which used to be received up to Financial Year  2015-16 in the Annual Information Returns (AIR).   

To read   Press release of it  Department dated 18.07.2020 , CLICK HERE    

5. Income tax department has proposed to  expand  the list of  financial transactions   to include  the following items  ( List includes existing  transaction list also ) under SFT : 

1. Payment of education fee  / Donation above Rs 1.00 lakh 
2. Electricity  consumption above Rs 1.00 lakh per annum 
3. Domestic business class air travel / foreign travel 
4. Payment of hotel bills above  Rs 20,000
5. Purchase of  Jewelry , painting , marble or white goods avove Rs 1.00 lakh
6. Deposits / credit above Rs 50 lakhs in current accounts 
7. Deposits / credit above Rs 25 lakhs in non- current accounts 
8. Payment of Property Tax above Rs 20,000 
9. Payment of Life Insurance premium above Rs 50,000
10 . Payment of  Health  Insurance premium above Rs 20,000
11. Share / Mutual Fund transactions , Demat Aaccounts , hiring of lockers 


We will update the information as and when IT  Department implements  the proposal . 


6. LINKING OF AADHAAR TO PAN :  Time limit for linking of Aadhaar to PAN is also extended up to 31 .03.2021 . 

THE ARTICLES FOR  PREVIOUS YEARS   FOR FY 2019-20  , CLICK HERE 

FOR FY 2018-19   CLICK HERE     FOR FY 2017-18  CLICK HERE     

 FOR FY 2016-17 , CLICK HERE    FOR FY 2015-16  , CLICK HERE          

​FOR FY 2014-15  , CLICK HERE 

If you have earned  from stock market  or  from sale of properties to  know tax liability  Read  the  NEW ARTICLE ON   
                                                         CAPITAL GAIN AND  TAX 
                                         CLICK HERE  TO READ ​

WHAT IS NEW ON PLAN  N PROGRESS  ? 

ALL ABOUT  TDS AND FORMS 15G AND 15H ​

When Banks will deduct TDS for interest paid ?
​The bank will deduct tax at source once the amount of interest to be credited in respect of all the fixed deposits taken together exceeds Rs. 40,000 in a financial year.

WHAT IS A 15G FORM AND FORM 15H ?

 FORM 15G is the declaration that a Bank Deposit holder can submit to  the banker if  he/ she  want exemption from  Tax Deduction at Source ( TDS )  on the interest paid on the   deposits   . 
A resident senior citizen  who is above sixty years of age or completes sixty years during the financial year can submit form No. 15H  , in lieu of FORM 15G   . 

WHO ARE ELIGIBLE TO SUBMIT FORM 15G  / FORM 15H  ? 

Who is eligible to submit  Form 15G
A  resident person or HUF ,  whose tax on the estimated income for the year is nil and  the amount of interest income from all the sources does not exceed the minimum exemption limit  ( presently Rs 2,50,000/-  ), can submit the Form.15G . Please note that  both conditions are to be fulfilled to become eligible to submit  the form 15G. 

Who can submit form No. 15H?
A resident senior citizen  who is above sixty years of age or completes sixty years during the financial year can submit form No. 15H provided his  estimated tax liability is nil for the financial year though the total amount of interest from all sources may exceed Rs. 2.50 lacs, the minimum amount liable for tax.  

Caution : Any wrong or false / wrong  declaration attracts  penalty  under section 277 .  A  person can be prosecuted and can be liable for 3 months to 7 years   of imprisonment  for such false declarations . Hence please check your eligibility before submitting  the forms . 


DOWNLOAD  FORM15H                                                   DOWNLOAD  FORM 15G

Employers  will issue   Form 16 ,( Certificate under section 203 of the Income-tax Act, 1961 for tax deducted at source from income chargeable under the head “Salaries” ) 
for all the tax deducted at  source   while disbursing  salaries .  The certificate can be used for   computing actual income and tax deducted at source . Format of   Form 16  can be downloaded here   DOWNLOAD  FORM 16

 PROOF  TO BE SUBMITTED  FOR AVOIDING TDS  ON SALARY / PENSION 

      14.01.2019 :   On Jan1, 2019 ,  ​Central Board of direct Taxes  ( CBDT )   has   issued an  exhaustive circular  regarding  Tax Deducted at source  ( TDS ) on salaries     explaining various  aspects   and nitty-gritties of TDS  with example cases  .  The circular also asks  pension  paying offices /  banks  to treat Pension  paid by them as   equivalent to salaries and deduct TDS for the financial year 2018-19  as being deducted for the salaries . 

The salaried persons / pensioners  who have   utilized any rebates available to them under various sections  like 80C , 80D   etc  have to submit    a form   12 BB  to their employers / ex-employers  to enable   them take note of  the rebates  availed by them while calculating TDS  and remitting to the government .   The employers / pension payers   are expected to collect proof  of evidence while allowing the rebates  , 

In view of the above circular  , many employers / bankers    are allowing  their employees  / pensioners  to upload the  tax rebate claim details on-line also  . However in such cases also ,   proof of evidence for  claiming rebate is  to be given  by the employees / pensioners   .  

 Each of the person claiming rebate  has to  produce concerned receipt /  statement   . Some of such proofs normally required for claiming   under 80C / 80D  etc are as  follows : 

1. Life Insurance Premium receipt 
2. Health insurance premium receipt  (  In case of group insurance  , show the relevant debit in your account ) 
3.  PPF Passbook entries / receipt 
4. Interest paid certificate  on Housing loans 
5. Interest paid certificate on education loan taken 
6.  Tuition fee receipts from schools / colleges 
7. National Savings Certificates Purchased during the current year 
8. Housing loan statement . 
9 . Investment  Statement in eligible Mutual funds  
​10. Sukanya Samruddhi yojana  Receipt / statement 

Please verify each  of the  claim you make is eligible for rebate  and  enter    in the appropriate  column  showing section under which it is eligible .You may fill form 12BB and submit to the relevant authority along with copies of proof  so that   they will  recognise  the rebates you have availed  . Obtain an acknowledgement  from them on submission of   12BB   To print Form 12BB   , CLICK HERE   

To read the CBDT  CIRCULAR   , click on the link  below : 
  Circular  No 01/2019 dated  01.01.2019    . 
​

   You have gone through PART 1  OF The Article   which  contains    5 PARTS   . Remaining parts  are 

PART 2 : TAX RATES  / SLABS FOR FY 2020-21     CLICK HERE    

PART 3 :   TAX REBATES    FOR FY 2020-21   AND POPULAR TAX SAVING SCHEMES  CLICK HERE     

PART 4 :   INCOME TAX CALCULATOR  FOR FY 2020-21  CLICK HERE                                                                                                                                                                  
​PART 5 : TAX ON RETIREMENT BENEFITS     CLICK HERE       

FOR NEWS ON DEMONETIZATION AND NEW CURRENCY FEATURES  CLICK HERE  
​
  FOR BANKING TIPS , CLICK HERE   FOR INCOME TAX NEWS   , CLICK HERE    FOR SAFE BANKING TIPS  , CLICK HERE 
   FOR INCOME TAX RETURN  FORMS  AND INFORMATION , CLICK HERE ​

​   FOR DETAILS ON AAYKAR SETHU ,  NEW MOBILE APPLICATION FROM INCOME TAX DEPT , CLICK HERE                                                                                  
                                                                       NEW  ARTICLES ON    
                                                                       
SMALL FINANCE BANKS                                                                       PAYMENT  BANKS                                                                         
UNIFIED  PAYMENT INTERFACE                                                         BHARAT BILL PAYMENT SYSTEM   

BHIM APP                                                                                                  AADHAR    

e-INSURANCE   Account ( eIA  )

FOR AUTHENTIC INFORMATION  AND  TIPS ON INCOME TAX  MATTERS

Income tax dept of Govt of India has  a very useful portal  which churns out valuable guidance for tax payers . One can go through and understand the basics  .
Link to the portal is  http://india.gov.in/spotlight/filing-income-tax-returns#itr2

Further there are practical tips for computing tax  which can be read and used . For example  , the link how to compute other income. One can make use of  the portal in understanding law, making payment and also to file returns .  

FOR INFORMATION ON BITCOINS , NEW AGE DIGITAL CURRENCY ,                   CLICK  HERE  

THIS ARTICLE CARRIES INFORMATION ON VARIOUS TAX  PROVISIONS  WHICH ARE GENERALLY  USEFUL .  YET IT DOES NOT CARRY ALL THE PROVISIONS  AND HENCE YOU ARE  ADVISED TO GO THROUGH INCOME TAX DEPARTMENT WEBSITES  FOR AUTHENTIC COMPLETE INFORMATION , ESPECIALLY FOR THOSE WHO HAVE GOT MULTIPLE STREAMS OF INCOME  OR COMPLEX INVESTMENTS . YOU MAY ALSO CONSULT A QUALIFIED TAX CONSULTANT / CHARTERED  ACCOUNTANT  FOR ANY  CLARIFICATION.    READERS ARE ALSO WELCOME TO SEND FEEDBACK  , FORM AVAILABLE BELOW .   WE   ARE OPEN FOR CORRECTION  IF  NEEDED