Comment posted on Direct Tax Code (DTC): Highlights and Impact by BhanuMurty.
So, what is the secret?
I should live on Rs.360000 approximately! That means Rs.30000 per month. That means 1000 rupees a day!By the way, for a family of 4, it means Rs250/- per day, which in MSAhluwalia’s calculations is far above the Rs.23 per day mark.
REMARKABLE!
Because, you need not worry about your future, as the government will take care of you with a PENSION SCHEME
BhanuMurty also commented
- Let’s see the reverse engineering approach. the FM wants to live on:
1. Exempted Income of Rs.200000
2. HRA of say Rs.120000(After exemption)
3. Tax saving of Rs.150000
4. Exemption of Rs.10000 on Bank Interests
5. Professional tax of Rs.2400
6. EPF of Rs.9360
7. All other allowances of Rs.35000 approximately
8. Balance salary account after expnses; Say Rs.100000, as surplus
9. Other Annual Expenses, without a home loan: Rs. 23000
In Total, You should have at least Rs.500000.
Come on, he is reasonable in his calculations. You need not pay a single paisa on tax upto 5 Lakhs!
REALLY? - Hi Pankaj,
In the name of simplification , DTC is still quite ambiguous.No doubt, they are making the implementation in a phased manner, but it is becoming very tricky while taking some decisions.Instead of answering queries in bits and pieces, can you give a comprehensive article on the state of affairs:like
1. What an individual need to plan as far as tax from salary point of view:
2. How the investment in home loan will effect during the next 5 years
3. Alternative measures to utilize the limits of the DTC from 2011-12 onwards
4. A comprehensive 5 year/10 year investment policy to be taken for salaried individuals,…..
Hope I am not demanding much.
Recent comments by BhanuMurty
- Income tax calculator for 2012-13 and Budget 2012 update
I need some clarification:
Say A working couple do not wish to BUY a house and stay on rent for the rest of the life!
1. Can both of them claim the HRA Exemption separately?
2. Since there is no “Home Loan”, and they are cash rich, and wanted to deposit all their life time savings in PPF, Bank FDs, Post Office Schemes…..All Debt instruments.
3. The bank deposits accrue interest, which has to be shown under “Income from other sources”, which shall add to the existing income(s).
4. What is the loss of opportunity for the couple for NOT INVESTING in a house? Take the case for a period of 25 years, out of which another 15 years of service is left.
5. The two of them are getting Rs.5L and Rs.10L as on today, and the 25 year average income would be Rs. 10L and 15L respectively.
6.Remember, both of them will have respective Form 16s each year, hence paying enough tax!
Let’s see the reverse engineering approach. the FM wants to live on:
1. Exempted Income of Rs.200000
2. HRA of say Rs.120000(After exemption)
3. Tax saving of Rs.150000
4. Exemption of Rs.10000 on Bank Interests
5. Professional tax of Rs.2400
6. EPF of Rs.9360
7. All other allowances of Rs.35000 approximately
8. Balance salary account after expnses; Say Rs.100000, as surplus
9. Other Annual Expenses, without a home loan: Rs. 23000
In Total, You should have at least Rs.500000.
Come on, he is reasonable in his calculations. You need not pay a single paisa on tax upto 5 Lakhs!
REALLY?
So, what is the secret?
I should live on Rs.360000 approximately! That means Rs.30000 per month. That means 1000 rupees a day!By the way, for a family of 4, it means Rs250/- per day, which in MSAhluwalia’s calculations is far above the Rs.23 per day mark.
REMARKABLE!
Because, you need not worry about your future, as the government will take care of you with a PENSION SCHEME
1. I understand that post DTC premium paid for insurance policies will loose tax benefit if sum assured <20 times premium paid. What happens to the premium paid for the policies where sum assured <20 times premium paid, but are purchased before commencement of DTC?
2. Also, house loan principal repayment will loose tax benefit once DTC is implemented. What happens if loan is taken before DTC? Whether principal repayment will continue to enjoy tax benefits for such loans?
@Vaibhav
1. Most likely, benefit for policies purchased before DTC applicability would continue as it is.
2. Tax benefit for principal repayment would go away most likely even on existing loans.
Having said that, these are just assumptions. What will happen actually, would come out only when DTC bill is enforced by Finance minister.
Hi Pankaj! Now that DTC hasn’t been implemented, what is the status of taxation of Dividend plans Vs Growth plans of Mutual funds? DTC proposed a 5% Dividend distribution tax, is that in force yet?
@Enki
As DTC is not in force yet, all existing rules (which were present in FY 2011-12) would continue.
Dear sir
i want to know about the full detail of all tax if u r taking full knowledge of all tax plz tell which book i have purchase my future thanks
@Deepak
We have not read any book on income tax. The knowledge is only from online articles and daily newspaper.
Hello Pankaj,
Since DTC implementation not yet in force, any investment made in ELSS will get tax benefitive? Can FM enforce it retrospectively (eff 1 apr,2012) declaring it say in the month of oct or nov or dec, 2012
@Prathibha
Tax benefit for tax saving mutual fund would continue this financial year as well.
Its highly unlikely that finance minister would remove this tax benefit in middle of the year. There would be strong mutual fund industry pressure too to keep it going for whole year.
Hi Pankaj
I am now working overseas (NRI) and my salary is transferred to my Indian acct from overseas by my company
I now hear that our company is considering the option of paying for staff in the currency of their home country and payment may be made out of their entity in India.
Will my income then become taxable(I will still work overseas) and also will i still keep my NRI status.
Pl. advise
Regards
Sundar
@Sundar
All income received in normal Indian savings account would be taxable in India.
The IT website notifies that tax-payers having income above Rs. 10 lakhs have to file returns for 2012-2013 electronically. Does this mean that persons having taxable income (after allowing permissible deductions) above Rs. 10 lakhs will have to file the return electronically?
@Swapan
Even if total income is above 10 lakh, e-filing is mandatory.
Read more here: http://www.socialfinance.in/questions/2895/e-filing-of-return-for-annual-income-above-rs-1000000
Do we need to submit bills for LTA..?
@Raj
You need to have bills for LTA. There may not be a need to submit same to employer, but income tax department may ask for same later.
But original bills of LTA/LTC are submitted to employer for claim. How a employee can keep records/bills ?
@Sushil
There is no need to submit original bills to employer. One must only provide a photocopy to employer.
sir am getting month salary 30,000. so how much i have pay income tax? i dont any policies, loans . plz tel me sir
@Naveen
Please download and use income tax calculator to compute your income tax.
It can be downloaded from this page: http://www.pankajbatra.com/india/income-tax-calculator-india-2010-2011-2012/
I am a NRI for past 8 year and senior citizen. I have only interest income in India.
I have a PPF account 25 years old. I have deposited Rs. 1 Lakh in this. Do I get 80C benefit for this as this account was opened while I was a resident.
My LIC policies are almost getting matured and hence Premium has diminished to around 20,000.
I have also contributed Rs. 1 lakh to ICICI Prudential policy debt+equity with life cover.
Now, can I take benefit of 80C full value of Rs. 1 lakh?
@Anilkumar
Deductions towards investment into existing PPF account would be available u/s 80C.
hello mr.pankaj,
if i open a NPS account today, will the withdrawals be tax free after application of DTC?
@Mrs Saraf
Withdarwals from NPS tier1 account would be tax free even after DTC also.
Hi Pankaj,
I’m currently investing a SIP of 2000 each in the following:
DSP Blackrock Eop 100 Equity fund, HDFC Top 200 fund, HDFC Equity fund and IDFC Premier Equity fund.
Now I want to have a new SIP for our newborn baby. Could you please suggest some good options for the same.
I don’t want to invest in any tax saving scheme as I already have the 80C deduction for my home loan principal amount.
Thanks,
Nitin
@Nitin
Your query has already been answered on SocialFinance: http://www.socialfinance.in/questions/4140/query-for-a-new-sip-investment
Hi
The FM said during Budget speech that DTC is with Standing Committee and will be implemented from April 1,2013.
Any idea :
1) If it will be implemented from April 1,2013
and
2) Residency norms for NRI’s
Regards
Sundar
@Sundar
Can’t say when it would be implemented as it would need to be passed in parliament as law first.