Tax benefits on home loan that you can avail ahead of ITR filing

 

ITR filing: If you're the owner of an outstanding home loan there are tax advantages which can assist in reducing your tax liability

An unsecured home or loan to purchase an investment property could help taxpayers save money each year. In reality, a lot of taxpayers aren't aware of the benefits of home loans when they file their income tax returns, the deadline for which is July 31st to file ITRs for the fiscal year 2021-2022.

In a variety of sections of the income tax law, a home loan or a housing loan may be used to get the of the following deductions from your total income

Section 24:All homebuyers can take advantage of a deduction amounting up to 2 lakh under the heading of "House property," said Ruchika Bhagat, MD, Neeraj Bhagat & Co. If the property is an unlet-out property i.e. you can waive the cost of interest.

Section 80C: Homebuyers may claim an exemption for principal repaymentand tax deductions for registration and stamp duty costs of a let-out property or self-occupied home under Section 80C. The maximum amount is however 1.5 lakh.

Section 80EE: Additional tax deductions under Section 80EE are granted to buyers of homes to a maximum amount of Rs 50 000. But, this deduction is available only if the total amount of loan is 35 lakh or lesser and the property's worth does not exceed 50 lakh. Additionally, the loan must have been approved from April 1st, 2016 until March 31, 2017.

Section 80EEA: Under the law, new homebuyers , after having exhausted their allowance under Section 24 may take advantage of deductions on home loans for low-cost housing, with a maximum of the amount of 1.50 lakh. The stamp duty on the property must not exceed 45 lakh as per this clause. A homebuyer who is in receipt of Section 80EE benefits cannot be eligible for benefits under Section 80EEA.

A deduction for home loan that is joint

When the loans are taken out jointly and the two co-owners of the home, each holder of the loan is entitled to a deduction of home loan interest of up to Rs . 2 lakh per annum and principal repayment under Section 80C , up to 1.5 lakh in the tax return of their respective taxpayers.

Residential Status of An Individual- Section 6

 

Residence Status for an Individual Section

Sections 5 and Section 6 in Section 5 and 6 of the Income Tax Act, 1961 are the primary sections for taxes on income for any taxpayer who is in India. Section 5 under the Income Tax Act deals with the "Scope of income" while section 6 assists in determining the residence status of any taxpayer living in India. The determination of the status of a resident in Section 5 of the Income Tax Act plays an important part in determining whether an individual's income is tax-deductible within India as well. This article we will review the guidelines for the determination of the residential status of an individual taxpayer. We will also review different changes to the residential status that were that were made by the Finance Act, 2021 & 2022. The purpose of determining the residence status. Determining residence status of an assessee is the most important job for determining the tax-free income of this assessee in India. In accordance with section 6 of the law, the residence status of any taxpayer is divided into two categories: (a) Resident (b) Non-Resident. In the case of an individual being individual assessment, the resident could also be classified under "Resident and ordinarily resident" (ROR) as well as "Resident But non-resident ordinarily" (RNOR). In the case of other individuals there are two kinds of categories, i.e. residents and those who are not. Section 6(1): BASIC CONDITIONS to be categorized as Resident.

A person is considered to have resided in India during any year prior to that in the event that he:

• In that year the duration of his stay in India is 182 or more days (say "C1") or
• In that year the duration of his staying in India is at least 60 days and for the four previous years prior to the prior year, his staying in India is greater than 365 days (say "C2")

In order to achieve this for the above purpose, the period for the purpose of staying in India includes the date on which the person arrives or leaves India.

In another way, an individual is considered to be a resident in India when he meets either two C1. C1 is a fairly simple text. One must determine whether he's been in India in the past calendar year, for greater than 180 days, or not. If he was able to stay in India, then he is a in India. In the event that he is not resident, he will need to go through C2 for the determination of his residential status. C2 lays out two conditions that must be met to declare an individual a resident in the preceding year. First, we must determine if the duration of residence in India is 60 or more days in the course of the entire year. If the first requirement is met then we should verify that the period of time spent in India over the preceding four years was 365 days or more. If both these requirements are true, then he is classified as a resident. If the C1 and C2 conditions are not fulfilled the applicant will be regarded as a non-resident for the previous year. In addition, according to the explanation in section 6, just C1 is applicable, and it is not necessary to look for the requirements as stated on C2 which is described in the following order:

• Citizens of India who has left India in the previous year to join the the crew on one of the Indian Ship, or
• Citizens of India who leave India to seek working outside of India, (However, after the amendments introduced through the Finance Act, 2020; in the case of an individual with a total income that exceeds 15 Lakh Rupees 120 days are considered instead of 182. Citizens of India or a person of Indian origin who is employed in an work or business outside of India and who has visited India in the preceding year.

Furthermore, the Finance Act, 2020 has included provisions that any person is a citizen of India and is not subject to tax in another country is deemed to reside of India. The requirement for deemed resident status only applies when the total amount of income (other that foreign sources) exceeds the threshold of Rs 15 lakh , and there is no tax obligation in any other country or territories due to the place of residence or domicile, or any other criteria that is similar to in nature. This provision was introduced after it was realized that some individuals were taking advantage of this relaxation as a tax-evasion measures and were planning to visits and stays in India in order to not meet the minimum that is 182 calendar days. Section 6(6): ADDITIONAL CONDITIONS For RNOR/ROR If a person is declared a resident, we must verify whether the individual is as ordinarily resident in India (ROR) as well as is not normally living in India (NOR). To be considered to be RNOR further conditions must be fulfilled, which are as follows:

• If you were a non-resident in India during 9 out of 10 previous years prior to the relevant prior period (say C3) or
• Have not in the seven prior years preceding the relevant year spent during the year in India at least 729 or longer days (say C4)

If an individual meets any of the requirements C3 or C4 it is considered to be a 'not ordinarily resident' in the previous year. If not the person will be treated as a normal resident.

To conclude the previous important to know the residence status of an individual has to be evaluated for every prior year. Before determining the tax obligation of an individual it is necessary to first determine his residency status to be able to accurately determine the amount of taxes owed to him from different sources.

Missing ITR verification deadline can cost you Rs 5000 despite filing ITR on time

 It is likely that you will have to pay up to Rs. 5k penalty if you fail to meet the deadline to check the tax returns you file unless you have filed a late ITR and are required to pay penalty for any reason.

The Income Tax department has reduced the period for confirming ITR from 120 days after the date of the filing of ITR before by 30 days. In a notice published on July 29, 2022 the Central Board of Direct Taxes (CBDT) declared that the new rule on ITR verification will take effect beginning on August 1 20 ..

The CBDT announcement also noted that the time limitation of 30 days applies to ITRs that were filed following August 1st, 2022. for those who have submitted ITRs prior to July 31st, 2022, the time frame for confirming is 120 days.

The most recent notice from CBDT further states that if a person verifies the ITR within the period of 30 days (i.e. the new deadline) In such instances, the date of the e-verification/ITR-V submission will be considered as the date of submitting the return of income. ..

Three scenarios are discussed in relation with ITR submission and confirmation.

Condition 1:If you submitted your tax return prior to the deadline of July 31, 2022 , for FY 2021-22, then you are given 120 days in which to confirm the accuracy of your tax return. If you fail to meet this deadline to verify your return, you can submit a request for a condonation of your delay with the department of tax. If the request for condonation (of delay) request is approved you will be able to verify your ITR. If your condonation request is not accepted the ITR is deemed as if it was it was not filed, and you'll need to file it again as an amended ITR. A late fee of up to Rs . 5000 must be paid to file a late ITR for which you will be given 30 days to verify that it was filed after July 31st 2022.

Situation 2. If you did not meet the July 31 , and you are filing an ITR belated for FY2021-22, then late fees will apply to you in all instances. The deadline for the verification of the belated tax return will be 30 days, you don't need to pay the late fee in the event that you fail to meet the deadline to verify. This is due to the fact that you already have paid the fee to file the belated ITR.

3. In case you're in the category of those who's accounts must be audited prior to filing of ITR, then the due date for filing an ITR to cover FY 2021-22 falls on September 30th 2022. If you fail to check the ITR within 30 days, the date of ITR filing is considered to be the date you check the ITR. If the usual date (of the filing of ITR i.e. Sept . 30) applicable to you is over when you check your ITR, you will have to pay for the charges applicable to late ITR .

Chartered accountant Ruchika Bhagat director from Neeraj Bhagat & Co. which is a chartered accountants' business according to her, "In case the deadline for verification of ITR (30 days) is missed , the date for filing the taxes will become the day the tax return is confirmed (E-verified/physical ITR-V submittal). Additionally, if verification of ITR verification falls beyond the deadline for filing ITR (usually the 31st of July) and the penalty is pursuant to the section 234F i.e. penalties for filing late ITR is charged. "The income tax portal can request that the taxpayer first pay the late filing fees (maximum of Rs. $5,000) before giving him/her the option to check his or her ITR, if the deadline to file ITR is not past."

The Dr. Suresh Surana, the founder of RSM India - a tax consulting company says "In the event that a person opts to verify their ITR (i.e. via sending ITR-V directly to CPC, Bengaluru via Post) the date of the dispatch of ordinary or Speed Post of a properly verified ITR-V will be taken into consideration for the purpose of determining the 30 days time period beginning as of the date of sending the income tax return's data electronically."

Can you file a condonation request in the event that the 30 day ITR verification deadline is not met?

In the past, if a person did not meet an ITR time limit of 120 days for verification, they was able to submit a condonation request. In a "Condonation Request" the taxpayer asks for the tax authority to allow them to check the ITR and also explains the reason why they failed to confirm ITR within the stipulated deadline. If the tax department finds it acceptable, the verification of ITR is permitted.

The new amendment is that Tax Department has announced that not confirming ITR in the stipulated 30 days time frame could lead to consequences for late filing. So, can a single taxpayer still file a condonation application?

"Condonation request" can be made anytime online by providing reasonable reasons for the delay in e-verification. If Income Tax Department is satisfied with the reasoning that condoning is accepted. If condonation is approved to the tax department penalties for late filing are waived" According to Bhagat.

If the tax department does not allow you to verify your tax return after the date for verification has come over, then the tax return will be deemed to be invalid. The Chartered accountant Naveen Wadhwa DGM, Taxmann.com says, "When the original uncertified ITR is considered to be an incorrect tax return, taxpayers are able to submit a late return (provided that the deadline for the filing of the original tax return has passed). If a tax return is deemed as inadmissible and the tax consequences for not filing of the tax return could be severe (such as the forfeiture of loss or the interest provided under section 234A/B/C and so on.) regardless of whether the taxpayer has filed late returns. Taxpayers can request the excuse of delayed the filing of a return of income as well as a the waiver in interest."

Buying electric vehicle can help save income tax — here's how

esire to switch to elecVs are no

A car that is electric can aid in reducing income taxHere's how

The rising cost of costs for gasoline and other fuels are a major factor in many customers who want to change into electric motors. Electric vehicles are not just economical and efficient, but they also provide tax advantages. Find out more here.

Electric vehicles, also known as EVs, aren't just affordable, they also provide tax benefits in India. If you're contemplating buying one, be aware of the benefits of EVs and make an informed purchase.

According to the Union Budget 2019, the government offered tax-free incentives to purchase electric vehicles. The government further stated that any registered vehicle are covered within the scheme. In reality Section 80EEB of income tax was also introduced to provide tax incentives for electric vehicles.

 What's this section all about? 

Section 80EEB in the tax code provides a deduction for the interest charged on loans that is used for the purchase of electric vehicles. According to this section when you purchase the electric car, then you may receive tax deductions up to 1.5 lakh for interest for the amount of loan upon the purchase the electric car.

"The deduction can be used for business and personal reasons. The deduction allowed under this section is applicable until the time of payment of the loan," explained CA Ruchika Bhagat, MD, Neeraj Bhagat & Co in an interview with CNBC-TV18.com.

One should be aware that the deduction can be claimed only interest paid, and not the principal loan amount payments.

What are the criteria for eligibility for this?

It is available to people who are.

Therefore, if you're an AOP, HUF or partnership firm, corporation, or other taxpayer, you can't claim any tax benefits under this section.

Looking to invest in gold this festive season? Here are some of the top investment options

 

Do you want to make an investment in the gold market this holiday season? Here are a few of the best investment options

Physical gold purchases come with substantial costs for making and cost and quality issues such as leasing lockers, purchasing insurance, etc. to ensure the security of the gold.

The purchase of gold during the holiday time is a long-standing tradition in India. However, many prefer investing in tangible gold, in form of gold jewelry and gold coins during the festive season.

The purchase of physical gold particularly gold jewelery requires a substantial cost to make and has quality issues and associated costs, such as leasing lockers, purchasing insurance, etc. to secure the gold and safe, today's investors are gradually shifting to paper or digital gold.

In addition to security and convenience Some of the digital gold options come with tax advantages that are beneficial to the investors .

CA Ruchika Bhagat MD, Neeraj Bhagat & Co offers her thoughts about some of the options for digital gold that you might consider investing in during the holiday season:

"Being considered to be auspicious and a sign of prosperity, demand for gold is higher during festive occasions like Dussehra, Dhanteras, and Diwali. The past was when people purchased gold-plated jewelry and coins but in recent years, intelligent investors have also begun buying gold in paper forms , such as Gold exchange-traded fund (Gold ETFs) and Sovereign gold bonds (SGBs) that are issued through the Reserve Bank of India, and Gold Mutual Funds (Gold Mfs)," said Bhagat.

"One of the most profitable investments that people are looking for is investing in Gold. They can yield good returns, but many additional advantages are available to investors in the event we look at the income Tax," she added.

Bhagat provides the advantages of digi gold over traditional gold:

Liquidity

It is possible to buy or sell by pressing the button on your mobile phone, and without the requirement to go to the neighborhood Jewelry Shop. With the quick money transfer to an account is guaranteed that you have the most liquidity.

Little Savings? There's no need to worry...

You might think that investing in gold needs huge savings from your earnings. If so then this is the right opportunity the right opportunity for you. It is possible to begin making investments in Digital gold starting at Re 1.

There is no need to purchase 1 gm of gold, but its price is also quite too high. Digital gold provides the possibility with the smallest savings to make investments in Gold.

Purity

When purchasing digital gold you are assured that it is pure. There is no risk of fraud happening about its purity of which 24 carats are the standard. The total investment is Gold only.

Cost savings

When you purchase gold jewelry, you do not just have to pay the cost of gold, but also pay charges and other taxes.

Jewelers can charge anything from 7 percent to 25 percent based on the design of the jewelry. If the piece of jewelry has gems and precious stones it will cost more and the value of the item is added to the price of gold.

When dealing using gold jewellery, you don't have to keep or repair the value of the jewelry.

Security

Something that should be taken note of is that every grams of gold you put with Digital Gold is secured by physical gold that is owned by these firms. Therefore, security concerns are removed.

There are no storage issues

Are you concerned about losing your gold possessions, due to theft or other reason? You can go to the back for an item and pay annual fees for a locker. You can also put your money into Digital Gold, and the rest is guaranteed. All Digital gold is insured and protected in vaulted vaults that are high-quality.

Bhagat discusses some of the possibilities to invest into Digital Gold:

Sovereign Gold Bonds (SGBs)

They're a replacement for physical gold. Investors must pay for the purchase in cash and receive the entire amount upon expiration. It is considered to be a safe method of investing in gold particularly for those who have an investment plan that lasts for more than five years. There is a Reserve Bank of India (RBI) issues SGBs several times per year and determines an amount for each issue. Investors are able to use markets on the second side to buy the bonds.

The bonds provide investors with an interest rate that is guaranteed at 2.50 percent (fixed rates) per year for the initial investment. The investor is credited with the amount in interest over a semi-annually basis.

However, SGBs have a lock-in period of eight years, and the option to exit only in 5th, 6th and seventh years of the date of interest payments. In the event that investors wish to leave before five years, they have be able to trade the SGB through stock exchanges. Capital gains are not a part of these bonds.

ETFs of Gold

Gold ETFs permit investors to purchase gold shares in a format that is dematerialized that can be purchased and traded on the stock market as shares. Within the Demat ledger you will find an amount of Gold equal to physical amount in Gold in electronic format.

They are all available on the exchanges, and you can receive live updates regarding their prices. ETFs aren't subject to exit charges, meaning that buyers can purchase and sell them anytime during the market hours.

Gold mutual funds

These are typically open-ended funds which permit citizens to invest with no Demat account. Gold fund units are determined through the method the Net Asset Value which is reported at the close of trading hours. The scheme is managed by expert experts oversee your investments to generate wealth and decrease the risk.

The gold units can be exchanged by selling them back to the property according to NAV during the current day.

Gold Fund of Funds (FOFs)

They are funds that invest in a pool of mutual funds. They carry the cost proportion of individual funds with their fees, which can make it a bit costly.

"Buying gold is just a click away. It's easy to purchase the gold. You can easily check the gold online and purchase the gold effortlessly," said Bhagat.

Decoding rule 132 of income tax and how it impacts you

 

Rule 132 of the tax on income What exactly is it and the reason it was added? What benefits will taxpayers get? Find out in this article how you can get answers

The Central Board of Direct Taxes (CBDT) has just introduced rule 132 in the Income Tax Act, that addresses the question of whether surcharges imposed by corporations on tax can be considered deductions. The rule explains that the form 69 may be used to request the re-computation of income total in accordance with Section 155(18 ).

In the words of Sandeep Sehgal, Partner- Tax at AKM Global, rule 132 was added due to the divergent rulings regarding whether cess or surcharge should be considered deductions in calculating the tax-deductible income.

"The Finance Act 2022 clarified the matter, and stated that it cannot be permitted. Rule 132 offers the possibility for taxpayers who already claimed the deduction in the past to make an online application on form 69 to recomputation of income from these years and to pay the tax resulting from it," he said.

This is a retroactive amendment that will take effect from. Relief is now available to taxpayers who claimed the tax deduction for cess or other surcharges in the early years in order to calculate their taxable income minus such cess or surcharges and then pay the tax on this earnings according to Rule 132.

Method for recomputing income in accordance with Rule 132

CA Ruchika Bhagat, MD at Neeraj Bhagat & Co., explains how to go about the recomputing of income from previous years in accordance with Rule 132:

(a) (a) The person who is the assessor has to submit an application on Form No. 69, seeking AO to calculate the all income earned in the preceding year, but not being able to claim the deduction of surcharges or the cess.

(b) Assessee has to submit an electronic application by 31-03-2023 or earlier to either PDGIT (Systems) (Systems) or DGIT(Systems)

(c) The prescribed authorities have the power to set the rules and procedures to provide and verify Form No. 69. If the application is confirmed the application will be sent to the officer who is assessing it.

(d) AO will then compute the total amount and issue a notice pursuant to section 156.

(e)Assessing Officer must specify the deadline within which the tax in order to complete the recompilation of income.

(f)Acknowledgement of tax payment has to be provided by the assessee on Form No. 70 to the AO within 30 days from the date of payment.

(g) (g) No penalty will be due on such payment provided that the application is made by the assessee before March 31, 2023.

The default

If the person who is assessed is not willing to file the form 69 and submits it, the assessee will be responsible for paying taxes on this income as well as penalties and interest for underreporting income.

Missed tax audit report filing deadline — Here are the penalties and consequences you may face

Tax audit reports needs to be filed electronically with the accountant chartered by the Income-tax Department. Here's everything you must be aware of. This is all you must be aware of its filing date

The deadline for filing the tax return for both individuals and corporates that were tax audited pursuant to the Indian tax laws and corporates during FY21-22 was on November 7th 2022. If taxpayers did not submit their tax return, they may still file it, but the late fee will apply.

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In the event of late filing of tax returns tax return, a late tax of Rs. 5,000 is charged according to Yeeshu Sehgal, Head of Tax Market, AKM Global in a conversation with CNBC-TV18.com.

It is crucial to submit your audit reports before the due date or else the penalty will be assessed on the assessment officer in section 271B:

A) 0.5 per cent of the gross sales or the total sales or

B) Rs . 1,50,000.

Whichever is the lower.

Furthermore, in the case the tax return is filed late, return, the loss will not be be carried forward and the interest under 234A will be applicable in addition.

"It is important to remember that taxpayers do not have to be debarred to file the tax return after the due date , and it is possible to file as per the normal requirements, but it's at entirely at the discretion of AO to issue an announcement regarding the penalty. The notice can also be removed in the event that the assessee can provide genuine reasons for delays," said CA Ruchika Bhagat, MD, Neeraj Bhagat & Co.

In the event of filing tax-related income, the deadline (ITR) to be filed for tax year 2022-23 for firms was initially September 30th 2022. In addition extensions were granted to the filing of tax returns. This was initially extended until October 7, and then until October 31, and finally until the 7th of November.

What is an audit for tax purposes?

The idea to conduct a Tax audit was first introduced in 1984 under Indian tax law. It is designed to verify the compliance with the various provisions of the law and is performed through a chartered accountant alone.

The taxpayers that are required to undergo tax audits are required to have the accounts of their business, i.e. the balance sheet and profit and loss account reviewed by a certified chartered accountant.

In addition an properly conducted audit for tax purpose assures that the accounts books as well as other documents are appropriately managed by the tax payer, and that they are accurate in revealing the income of the taxpayer and that deduction claims are filed in a timely manner.

What forms do I need to use the same method?

The chartered accountant performing the tax audit will report hisobservations, findings and observations, etc. In forms of audit reports. Form Nos. 3CA/3CB as well as 3CD.

The format for the audit report as per section 44AB of the law forms Form. 3CB. The prescribed details are required to be recorded on Form 3CB. 3CD.