Finally much awaited budget 2013 is come out without exciting the investors. This budget is very simple and there is no significant change for the tax payers, finally the budget disappoint the middle class people by not increasing the tax slabs. So, one more year with the same income in the rising inflation environment. This article explores the important changes announced in the budget and revisit of the earlier tax slabs. If you have any thoughts about the budget, please write it in the comments section.

• Top 10 announcements of union budget for 2012-13

1. No Change in Tax Slabs

There is no change in the tax slabs from the previous budget. This is the big disappoint for the tax payers because those who are in the lower income group would have expected at least some relief in the slabs. Now, another year we have to wait for the budget to get more income. The following are the existing tax slabs:

General Tax Slab

• Up to Rs. 2 lacs – No Tax
• Rs 2 lacs to Rs. Rs. 5 lacs – 10% Tax
• Rs 5 lacs to Rs. Rs. 10 lacs – 20% Tax
• Above Rs. 10 lacs – 30% Tax

Senior Citizen Tax Slab (Above 60 Years)

• Up to Rs. 2.5 lacs – No Tax
• Rs 2.5 lacs to Rs. Rs. 5 lacs – 10% Tax
• Rs 5 lacs to Rs. Rs. 10 lacs – 20% Tax
• Above Rs. 10 lacs – 30% Tax

Very Senior Citizen Tax Slab (Above 80 Years)

• Up to Rs. 5 lacs – No Tax
• Rs 5 lacs to Rs. Rs. 10 lacs – 20% Tax
• Above Rs. 10 lacs – 30% Tax

The only extra tax exemption in this category is Rs. 2000 credit for the lower income group of Rs 2-5 lacs.

2. Home loan exemption for new buyers

If you are buying a new house in the year 2013-14, there is additional Rs. 100000 tax exemption on home loans interest for this financial year. Note that this exemption is only for this year and only for the new buyers. Also the home loan amount must be under Rs. 2500000. If you taken a loan of Rs. 2600000, there won’t be any benefits under this announcement.

3. Service tax for AC restaurants

In the existing service tax laws, only the AC restaurants which serve the liquor has to pay the service tax. But, from this financial year onwards any AC restaurants has to charge service tax to the customers. This is a big below to the common man, it is very normal that most of the restaurants are having AC. So, our eating cost will be expensive.

4. 1% TDS on real estate transaction

If you sell any property other than the agriculture land worth more than Rs. 5000000, there is a TDS of 1% has to be paid as the tax. For example, if you sell your flat for Rs. 6000000, then you need to pay Rs. 60000 as the TDS to the income tax office.

5. Change Rajiv Gandhi Equity Saving Scheme (RGESS)

Earlier, RGESS scheme was only available to those investors whose taxable income is below 10 lacs, but now its increased to 12 lacs. Anyways, I feel RGESS is too complicated.

6. Mobiles, High end SUV car’s will be expensive

There is an increase in the excise duty for mobiles costing more than Rs. 2000, set top boxes and SUVs. This would cost more in the coming days.

Overall, the budget is very disappoint for everyone in the country. Every budget, would have satisfied at least any one category of people, but this budget is not bringing smile on any one’s face. There is a huge problem ahead for our country to manage the high fiscal deficit. The is the main reason why there is no great tax breaks in the budget. If you have any thoughts about the budget, please post it in the comments section.

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You should be getting ready for this year’s most awaited budget and last budget for the current UPA government ruling. So, this budget would be considered as the election budget which will focus more on retain the tax slabs not changed or relax to make the working people more happy to harvest the vote banks. To make this clear, our finance minister has confirmed that there won’t be any hike on the taxes. There is lot more reasons for us to expect the good budget, because the inflation and prices are shoot up to the roof which is already making big hole on your monthly spending budget. If the budget is good, you would save some more money.

• Highlights of union budget 2012-13
• Book Review : 51 Income Tax Tips for Investors
• Tax Planning for 2009 – Part 1
• Tax Planning for 2009 – Part 2

Lets wait for the Feb 28 to know the budget details. I will keep update the news and investment chances based on the latest budget. If you want to received the future articles about the budgets, please subscribe here.

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After a long awaiting, the Union Budget of India has been delivered by our finance minister Pranab Mukarji. There is mixed opinion on this budget, but seeing the opinion from the experts, the budget mainly lack of the focus on India’s future growth. Also the expectation was huge for this budget because India’s financial deficit is piling up and our Govt. is under a pressure to reduce the deficit to avoid getting more loans from the World Bank.

We have already more loans in the foreign bank which would start bringing the economy down if we are not reducing with proper plan. It is very clear that budget don’t have the focus for our economy growth. Also it disappointed the salaried segment with just Rs. 20000 increase in the tax exemption which they expected up to Rs. 300000 from the current slag of Rs. 180000. This article lists down the key changes in the budget which would affect the individual’s life.

1. Changes in Tax Slab

Bad news for women, there is no special tax slab for the women working group. They will be fall under the common tax slab which is applicable for the men. The previous tax slab for general group is Rs. 180000. It has been increased to Rs. 200000 for Nil tax. Those who are under the age 60 would fall under the general tax slab. Details of the each tax slab as under:

General Tax Slab

• Up to Rs. 2 lacs – No Tax
• Rs 2 lacs to Rs. Rs. 5 lacs – 10% Tax
• Rs 5 lacs to Rs. Rs. 10 lacs – 20% Tax
• Above Rs. 10 lacs – 30% Tax

Senior Citizen Tax Slab (Above 60 Years)

• Up to Rs. 2.5 lacs – No Tax
• Rs 2.5 lacs to Rs. Rs. 5 lacs – 10% Tax
• Rs 5 lacs to Rs. Rs. 10 lacs – 20% Tax
• Above Rs. 10 lacs – 30% Tax

Very Senior Citizen Tax Slab (Above 80 Years)

• Up to Rs. 5 lacs – No Tax
• Rs 5 lacs to Rs. Rs. 10 lacs – 20% Tax
• Above Rs. 10 lacs – 30% Tax

2. EPF Interest Rates Fetches only 8.25%

• Update: EPF interest rates to get 8.5% for FY 2012-13

The current interest rates for the EPF account is 9.5% p.a. It gives the good return for the salaried employees compared to any other debt instruments like Fixed Deposit or Public Provident Fund (PPF). But, for the year 2011-12, the EPF organization would give you only 8.25%. It is announced by the finance minister in the Budget. This has been due to the lack of fund with the EPF organization. It is big below to the salaried segment, when the inflation is peeking up, reducing the interest rates for common man’s scheme is totally disappointing.

3. Tax exemptions on Saving bank interest upto Rs 10,000

It is not having any magnificent impact on your income. Till now the interest earned on your savings bank account is taxable. In this budget, if you are earning more than Rs. 10000 on your savings bank account then only you need to pay the tax. Note that it is only for the savings bank account, Fixed Deposits are  still taxable.

The savings bank account includes the banks, post office and any other banks offering the savings bank facilities. But, only very few people pay the tax for the savings bank account and also the interest income earned on the savings bank account would be very less. We never keep more money into the savings bank account.

4. Life Insurance Tax Exemption only if 10% on Sum Insured

This is new clause introduced in this budget for the tax exemption for the Life Insurance premium. Till now if you are buying a life insurance, if the premium amount is under 20% of the sum insured, then it is eligible for the tax exemption. But, with the new proposal it is eligible only if the yearly premium is less than 10% of the sub assured. (ie.) If you are buying an insurance with the sum assured value of Rs. 500000, If the yearly premium is under Rs. 50000 (10% of Rs. 5 lacs) then only it is eligible for the tax exemption. Note that, it is for the policies which is bought only after the April 2012. The existing policy holders need not worry.

5. Changes on Service Tax

The important part of the budget, service tax has been increased from the existing 10% to 12%. This would empty your pocket each time you are paying the bills your shopping. (ie.) If you are paying the telephone bill, till now you would pay 10% extra on the bill as the service tax. From next month on wards, your bill will have 2% extra and it will be charged 12% as the service tax. It is another big below to the common man who would suffer most from this change.

Because the service tax is applicable to almost anything we purchase from the shop which is billed. Even we are paying the service tax for the health insurance premiums. You will have to pay more from the next installments. So, this budget is going to be the negative return for the common man.

6. No Tax Benefits for Infrastructure Bonds

In two years back, under section 80c, additional Rs. 20000 exemption for the investment on infrastructure bonds have been introduced. It helps the infra companies to get more investment from the public to boost their operations. This scheme has been removed from this budget.

7. Pay 1% of TDS for the property sale

It is a good move if it is implemented properly. If you are selling your residential plot or house or flat, if the selling price is more than Rs. 50 lacs, you must pay the compulsory 1% TDS on the profit from the sale. It will help the Govt. to gain more income from this tax announcement since India’s real estate is always most loved investment options. But, the issue is that even if you are not liable to pay after the profit (Read Capital Gains Profit and Tax Exemption), the TDS @ 1% is compulsory. If you are not liable to pay the tax, you have to file the IT return and get the refund.

8. Health check-ups upto Rs 5,000 under section 80D

A new deduction is included in the medical insurance , that is “preventive health checkup”. You can claim up to Rs. 5000 under this category. Till now you can claim Rs. 15000 for the health insurance premium paid you, spouse and kid. It is another category in the same section 80D and the amount is included in the Rs. 15000 not the additional one.

9. Rajiv Gandhi Equity Saving Scheme

Another equity related scheme is introduced in this budget for the small investors. As of now, if you are investing directly investing in the equity and sell after one year, it is fully tax exempt. In this scheme, a new investor can claim the 50% of the equity investment subject to the maximum of Rs. 50000 as the tax exemption. The details of the scheme is not released and it would be available to the public very soon. It is very early to tell anything about this scheme, we have to wait and see how it performs in the future. Also, what is the necessity to name this scheme as “Rajiv Gandhi“?. The following are the points on this scheme.

• The lock in period for the investment is 3 years
• The 50% of the investment or maximum of Rs. 50000 is eligible for the tax exemption.
• You are eligible for this scheme, only if your total income is less than Rs. 10 lacs.

10. Changes on Securities Transaction Tax (STT)

If you are making any transaction to buy or sell equities, you have to pay 1.25% as the Securities Transaction Tax (STT). This has been reduced to the 1.0% from this budget. It means when you are doing the equity transactions, it costs you less than the earlier transactions. It is very useful for the regular investor on equities.

Summary

The above lists are the most notable changes in the budget and would impact the individual’s earnings. I have not discussed anything on the corporate changes. In the overall, the feedback of this budget is negative (you can see the poll conducted in our site!!!). It is not focused and missed many of the expectations from the business men and common man. This could be because the general elections far away (year 2014) from now. Finance Minister would have postponed many things for the next year’s budget. But, national interest has to be priority if we need real growth on our country. We have to wait and see how the Gross Domestic Product (GDP) and financial deficit would affect on these changes.

What is your take on this budget? Are you happy with the changes or expected some specific additions?. Please share your thoughts in the comments section.

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It is good time for the common man when the union finance minister announced the new tax slabs for the common man. The new slabs will definitely reduce the burden of common man and it will be some relaxing news for them because already inflation is soaring to new high. The following table shows the revised tax slabs for the individuals:

The government would allow a deduction of up to Rs 20,000 for investments in long-term infrastructure bonds. The deduction would be in addition to Rs 100,000 allowed under Section 80C of India’s Income Tax Act.

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The government has announced a hike in the prices of auto fuels like petrol prices by Rs 2.67 per litre and diesel prices by Rs 2.58 per litre with effect from tonight.

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This budget may bring the smiles in people who are looking to invest their money bank deposits and save the tax. Most likely this budget may amend the existing restrictions on tax saving fixed deposits. Nowadays most people prefer the mutual funds as the tax savings instrument because of their 3 years lock-in period. Tax saving fixed deposit has the 5 years as the lock-in and it reduces the banks to get more depositors. Indian Banks Association(IBA) has requested the finance minister to sweeten the tax saving term deposits to lure the investors. The sources said FM is accepted their proposal and we can expect the change in the budget. The union budget will be announced on Feb 26, 2010. The following are the expected changes in the budget but it may have changes.

• The lock-in period for the tax savings fixed deposit will be reduced to 3 years. At present it is 5 years.
• As of now you can show only Rs.100000 in tax savings fixed deposit. It is expected to be increased to Rs.200000 for the financial year 2010-11.
• If the interest earned on single branch exceeds Rs.10000, it is taxable and TDS is deducted by the banker. This limit will be increased to Rs.25000.

These are all only expected changes in the budget. Part of this may be applied or they may ignore it completely. We have to wait and watch till next week. I will write the follow up mail once the budget is announced. Get free email updates to know the budget news.

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As we know, the timeliness for the next fiscal budget is nearing. It is very crucial for India to balance the budget with all the class people. It is already there is huge deficit in India and it is most widely expected that the new budget will not deliver any good news for the common people. Also it is noted that they would withdraw stimulus given at the time of global recession. I will be writing the all the changes introduced in the budget once it is announced. Get the free email updates.

The Union Budget of India for 2010-11 fiscal year will be held on Feb 26,2010. Every one started predicting the announcements from the budget session. I would say whether it will affect the companies or not, will definitely have major impact for the common man. It will have direct impact on their spending. The previous year budget itself have disappointed us by removing the FBT and it end up paying the huge amount of tax.

What ever it is, finance minister has to think about the common man and draft the budget, but I don’t have any positive feelings in my mind because the current ruling govt. always favorable to the corporate sector and rich people. They just ignore the salaried people.

Already there is high inflation and the price of fuel also expected to be hiked very soon. It is enough to put burden on the people, lets put more taxes companies and reduce the tax burden on middle class. Will wait for the budget session!!! Get free email updates.

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Yesterday Union finance minister announced the Budget for 2009-2010. This blog summarize the important points on the budget.

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THE Finance Minister, in today’s budget speech, announced marginal tax benefits for individual tax payers.

He increased the basic exemption limit for male taxpayers and female taxpayers by Rs 10,000 and that of senior citizens by Rs 15,000. Further, he abolished the surcharge of 10% on income over Rs 10 lakh.

The new tax slabs now stand as follows:

Male taxpayers
0 to 160000   0
160001 to 300000  10%
300001 to 500000 20%
Above 500000  30%

Female taxpayers
0 to 190000   0
190001 to 300000  10%
300001 to 500000 20%
Above 500000  30%

Senior citizens
0 to 240000   0
240001 to 300000  10%
300001 to 500000 20%
Above 500000  30%

In addition to this, an education cess of 3% on the tax amount continues while a 10% surcharge on income over Rs 10 lakh has been abolished.

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Is it a good time for those living in rented apartments? Your location could well be the answer to that. While some pockets in the country are showing an upswing in rentals, other micro-markets are witnessing a reverse downward movement. Leading real estate consultants say that the residential rental market has been moving in tandem with the demand-supply dynamics of a particular area, rather than the property prices. Pankaj Jain, executive director of Realistic Realtors, a North-Indian real estate consulting firm says while rentals in some areas have come down, certain pockets are showing an upswing due to the limited supply. “In the national capital region for instance, lack of supply has led to an increase in rentals in some areas. These include east Delhi, south Delhi and the university campus areas in north Delhi. However other areas in NCR such as Noida, Greater Noida and Gurgaon, have seen the opposite trend.” Agrees Subhash Kumar, a resident of east Delhi whose rent just got higher last month. “I was paying Rs 9,000 per month till last month for a 2BHK apartment. The landlord has recently increased it to Rs 14,000. I tried negotiating but he did not reduce the rent.”

While the upswing in residential rentals have impacted the mid-segment across cities such as Delhi, Mumbai and Bangalore, the high-end segment has seen a downward correction in most of these markets across locations. According to Cushman & Wakefield (C&W), in Delhi NCR all micromarkets witnessed correction up to 4% over the last quarter. In Mumbai too rental values for high-end apartments witnessed a downward movement across most micro markets in Q1 ‘09. Chennai, on the other hand, saw no movement during the quarter as genuine demand continued to exist. However, a new trend in the city saw clients wanting to consider mid-end options in prime locations such as RA Puram and Poes Garden. In contrast to Chennai, Hyderabad witnessed significant quarterly correction between 10-23% in the high-end segment. Reduced hiring by IT/ITeS companies, speculation regarding lay-offs and tenants becoming more selective towards rental commitment led rentals in the top-end segment to further drop in January, with these remaining stable over the last two months.

Like Hyderabad, Bangalore too saw a correction in the range of 17-20% in the high-end segment largely due to declining leasing activity. South Bangalore, in fact, has been most affected in the high-end sectors, with rental depreciation of around 19%, due to the decreasing demand. Jones Lang LaSalle Meghraj (JLLM), too, sees the top-end residential rental market in Delhi slowing down. Transactions are happening, but there are significant time lags between them and volumes have gone down. Expatriate movement is at an all-time low. Landlords are not getting the kind of rentals they did during the peak phase, but there is no likelihood of a further fall. In Mumbai, according to the consultancy, the residential rental markets have shown a decline in overpriced and speculative areas and in most areas that have seen more supply than demand can absorb. However, rentals have displayed a remarkable level of inflexibility in areas where there is no supply and demand is high. Kolkata has not shown much of a decline and continues to look good. In fact, the residential rental market of Kolkata seems to have escaped the worst of the slowdown dynamics, according to JLLM.

Rajiv Sahni, partner, real estate practice, Ernst & Young agrees that while there has been a significant rental correction in the upper end of micro-markets that witnessed unprecedented growth in the last few years, there has been a strong resistance in markets that have healthy demand-supply dynamics and strong fundamentals. But are people more inclined towards renting now or to buy/sell options? Sanjay Dutt, CEO (business), JLLM says the demand for rental homes continues to be high in prime areas with little or no new supply, and in locations that have witnessed a more rational supply rate in the past. “In areas that have witnessed oversupply, the accent is currently more on outright purchase. This is because investors who had bought units in such areas have, to a large extent, failed to respond to the new market dynamics by coming down sufficiently on their rental expectations. There is also an increasing trend among property owners to sell rather than rent out their properties, since there is still scope for correction in many areas.”

While some developers feel that people are opting more for rent at present due to the uncertainty in the job market, others are of the view that end users will derive more benefit if they buy their own flat rather than stay on rent. Ajay Midha, director, SEZ & commercials, Raheja Developers feels that a lot of people are opting more for rent owing to uncertain economic conditions and overall confused market sentiments. Rajeev Rai, V-P, corporate, Assotech, says rental property is currently being preferred by those who are not looking to stay in their city of residence for a longer duration. “Those who have the means and better jobs to back their decision of buying property are going ahead with their plans of buying it. As far as rents are concerned, while the high-end apartments have been affected, the rentals of low and medium-range apartments are moving ahead.” The current situation, many feel, has led landlords to bargain hard with existing tenants to revise the rent in line with the market scenario.

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I will be writing about the Tax Planning for the year 2009. How ever the budget is not yet announced, we have to wait till the election is getting over. But, learning some tips for the tax savings is important before submit your tax declarations. If you have not saved anything before forget it and think that from 2009 onwards utilize your all the tax exemptions and get the maximum tax benefits. Your hard earned money cannot be just given for the tax.

From my experience there are many people unknowingly  paying the huge amount of tax and they could have saved that money by the wise tax declaration and investments. In this series of article I will be writing about the tax planning and tips where yon can invest for the tax savings.There are numerous options like Fixed Deposit (FD), Insurance, Donations,etc. to spend your tax money.

Apart from writing the tax savings tips, I would like to help people if they are interested in contacting me directly for the tax savings tips. I would be more interested in helping them without any fees. Also you can write your questions in the comments section. I will answer your questions.

Home Loans for Tax Savings

Taking the home loans is the good tax savings oppurtunity. Earlier I have written few articles about the home loans and tax benefits on the home loans.  If you read the above article, it will help you to understand the basics of home loans and in what way you can save the money.

Income Tax act 1961, provides two section where you can use home loans for the Tax Savings purpose. These two sections are section 80c and section 24b. One for savings on home loans principal repaid and the another one for interest paid on the loan amount. For more details about the section and benefits please read the article here.

But in the recession time, it is not good idea to invest on the houses. This will be applicable to the people who has enough savings and want to invest money on the real estate. For others, it is not the correct time to invest on buying the new houses. For those who want to save money by not investing on the houses, in the next section I will write about the insurance and Fixed Deposite(FD) schemes.

Fixed Deposit for Tax Savings

Another good source for the tax savings is the Fixed Deposit scheme. from 2006, the government has extended the tax benefits as five-year fixed deposit schemes.  In the existing the provision, you are eligible to claim the tax benefits up to Rs.100000. But, with the tax saver fixed deposit you cannot apply for the loan against fixed deposit. The interest rates on fixed deposit is decreasing rapidly, it may touch the 7% per anum mark with in next few months. It was golden time when the fixed deposit rate is above 10%. I have written a detailed article on how to start the fixed deposit for tax savings.

Summary

Update : Tax Planning for 2009 – Part 2

In this article I have written about the two sources where you can invest for the tax savings. In my next article I will be writing some more investment options like insurance,mutual funds,etc. with details. Hope the 2009 union budget will bring cheers in every one’s face. Till that time I will continue this series of tax savings article. Thank you for reading the article!!. Please post your feedback in the comments section.

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Introduction

In this article I will be writing about the credit counseling. It is a process offering education to consumers about how to avoid incurring debts that cannot be repaid. This process is actually more debt counseling than a function of credit education. Please post your comments after reading this article. You can subscribe to our future articles here.

What is Credit Counseling?

The best credit counseling can help people who are behind on their debts get back on their feet. Credit counseling often involves negotiating with creditors to establish a debt management plan (DMP) for a consumer. A DMP may help the debtor repay his or her debt by working out a repayment plan with the creditor.

Who needs credit counseling?

Typically, counseling services negotiate lower payments with credit-card companies and other lenders, then make the payments using a check or electronic funds transfer sent to them by the consumer each month.

Most of the counseling services’ fees are paid by the lenders themselves, which send back to the services a portion of the payments received. This has led some critics to charge that credit counseling is just a tool of the lending industry.

The payment system, known as “fair share,” has certainly encouraged the growth of credit counseling services. And some agencies, driven by competition, are now openly courting consumers who haven’t fallen behind on their debts by promising lower interest rates. This development has angered credit-card companies and often hurts consumers, who may find out too late that such plans can hurt their credit ratings and are often unnecessary.

Summary

In this article I have written about the credit counseling and who needs the credit counseling. This process is most common in the countries like USA and UK. Please post your comments in the comments section. Thank you for reading this article!!!

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The interim budget to be announced on Monday could bring some cheer to consumers and investors as acting finance minister Pranab Mukherjee may use the opportunity to announce one more stimulus package in the form of targeted tax incentives. Sources in the government told TOI that Mukherjee may announce tax sops aimed at boosting the housing sector, which has been identified as a potential driver for the economy and for job creation during a slowdown.
Normally, propriety would demand that an outgoing government not announce any major policy decisions or changes in the tax structure in an interim budget. But given the global economic crisis and its impact on India, the UPA has the opportunity to argue that it cannot allow things to drift for months until the new government assumes office.
One populist measure being seriously considered to kickstart the realty sector—which could help revive a number of related sectors like steel, cement and electrical appliances—is an increase in the deduction for housing loan payments. As things stand, taxpayers can deduct up to Rs 1.5 lakh on interest on home loans paid from taxable income. This limit could be raised to Rs 2 lakh. If it happens, it will enable those who have bought a house for self-use to save up to Rs 68,000, compared to the present Rs 51,000.
Another possible sop for the housing sector could be reintroduction of Sec 80IA, under which corporates building dwelling units of less than 1,000 sq ft area were exempted from tax on the profits from these units.

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In this article I will be writing about the Employee Provident Fund (EPF) or PF transfer from one employer to another employer and what is the use of Form 13 . Job change is very normal in these days, so it become common for every one to transfer their Provident Fund(PF) to the new employer’s organizations. To do that, there is certain processes to be followed and it can be varied if the employer has their own PF trust for their employees. Any employer can maintain their own PF trust with government’s approval. This blog writes in detail about the PF and how to transfer from one employer from another. Please subscribe to our future articles here.

What is Provident Fund (PF)?

Provident Fund (PF) Management

• The Employee Provident Fund(EPF), or provident fund as it is normally referred to, is a retirement benefit scheme that is available to salaried employees.
• Under this scheme, a stipulated amount (currently 12%) is deducted from the employee’s salary and contributed towards the fund. This amount is decided by the government.
• The employer also contributes an equal amount to the fund.
• However, an employee can contribute more than the stipulated amount if the scheme allows for it. So, let’s say the employee decides 15% must be deducted towards the EPF. In this case, the employer is not obligated to pay any contribution over and above the amount as stipulated, which is 12%.
• If you urgently need the money, you can take a loan on your PF.
• You can also make a premature withdrawal on the condition that you are withdrawing the money for your daughter’s wedding (not son or not even yours) or you are buying a home.
• To find out the details, you will have to talk to your employer and then get in touch with the EPF office (your employer will help you out with this).

Return on Investment

Interest will be calculated for the amount deposited into the PF scheme. The rate of interest is 9.5% (updated) at present (revised rates on PF), this rate will be decided by the govt. on the budget times. The interest payable also will be added into the PF amount. Note that, the interest is monthly cumulative.

Another bad news is that, if the PF account is idle for more than three years, they there will not be any interest paid for that account. That means if you leave a company and leave the PF account. It will earn the interest for first three years.

Tax Exemption on PF

• The amount you invest is eligible for deduction under the Rs 1,00,000 limit of Section 80C.
• If you have worked continuously for a period of five years, the withdrawal of PF is not taxed.
• If you have not worked for at least five years, but the PF has been transferred to the new employer, then too it is not taxed. The tenure of employment with the new employer is included in computing the total of five years. If you withdraw it before completion of five years, it is taxed.
• But if your employment is terminated due to ill-health, the PF withdrawal is not taxed.

What is Form 13?

Form 13 is used for transferring your PF account from one employer to the another employer. You can download the form 13 from here. When you need to transfer the provident fund to another company, you have to fill the form 13 and give to the new employer.  The new employer will start the process and send your application to the provident office of the region. This process normally takes few months.

Summary

This blog would have been useful for the readers who are looking for the basic knowledge on the provident fund and looking for the process on transferring to the new employer. You can download the form and read the instructions provided on that to understand it more. If you have any doubts please post it here and I will be answering all the questions.

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In this blog I will be writing about the Section 80g which presents the laws for tax exemptions on donations and fund spent on the NGOs. You will get the tax exemptions benefits when there is a donation for NGO’s. This law would encourage people to donate more fund for NGO’s and most of the companies run NGO’s to avail this benefit. This blog will explain the key points related to the donations and tax exemptions on that. If you have any questions on section 80g please post it in the comments section. Please subscribe to our future articles here.

• Income Tax Exemption and Rules on Gifts
• Tax Exemption for Donation Under Section 80G
• BUY: Income tax guide for the tax payer

Register Under Section 80g

The organization to be registered under the Section 80g.  If  the organization is registered under the Section 80g, the person or company making donations to such organizations are eligible to claim the Tax Exemption on the amount they donated. But, there is certain restrictions on how much can exempted from the whole donations are subject to the Income Tax rules under Section 80g. Please read the following sections to learn more about the details.

Conditions on Section 80g

There is few conditions to be fulfilled under the Section 80g.

• The NGO should not have any income which are not exempted, such as business income. If, the NGO has business income then it should maintain separate books of accounts and should not divert donations received for the purpose of such business.
• The bylaws or objectives of the NGOs should not contain any provision for spending the income or assets of the NGO for purposes other than charitable.
• The NGO is not working for the benefit of particular religious community or caste.
• The NGO maintains regular accounts of its receipts & expenditures.
• The NGO is properly registered under the Societies Registration Act 1860 or under any law corresponding to that act or is registered under section 25 of the Companies Act 1956.

Tax Exemption Limit on Donations

There is a limit on how much money can be exempted from the Income Tax.

• If the amount of deduction to a charitable organization or trust is more than 10% of the Gross Total Income computed under the Act (as reduced by income on which income-tax is not payable under any provision of this Act and by any amount in respect of which the assessee is entitled to a deduction under any other provision of this Chapter), then the amount in excess of 10% of Gross Total Income shall not qualify for deduction under section 80G.
•  The persons or organization who donate under section 80G gets a deduction of 50% from their taxable income. Here at times a confusion creeps in, that the tax advantage under section 80G is 50%, but actually it is not so. 50% of the donation made is allowed to be deducted from the taxable income and consequently tax is calculated.
• The ultimate benefit will depend on the tax rates applicable to the assessee. Let us take an illustration. Mr. X an individual and M/s. Y Pvt. Ltd., a Company both give donation of Rs. 1,00,000/- to a NGO called Satyakaam. The total income for the year 2003-2004 of both Mr. X and Ms. Y Pvt. Ltd. is Rs. 2,00,000/-. Now assuming that the rates are 30% for the individuals and 40% for the Companies without any minimum exemption limit.

Summary

• Income Tax Exemption and Rules on Gifts
• Tax Exemption for Donation Under Section 80G
• BUY: Income tax guide for the tax payer

Thank you for reading this article. I hope now you have good understanding on how to calculate the Tax Exemption on the donations. Don’t stop just reading the article. Please donate to such organizations and help the needies. If you need any help on finding the NGO’s in, please comment me, I can help out. Happy reading!!!!

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Employers, while assessing the conveyance and leave & travel allowance (LTA) claims of their staff, are under no statutory obligation to collect supporting evidence and furnish them to tax authorities, the Supreme Court said on Wednesday.
A bench comprising Justice SH Kapadia and Justice Aftab Alam said that assessee employers are under no statutory obligation to collect bills and details to prove that the employees had utilised the amounts obtained against these claims on travel and related expenses.
According to prevailing rules, if claims on LTA and conveyance are not supported by journey bills, they would be taxed. For instance, on an LTA allowance of Rs 1 lakh, if documentary proof such as air tickets, taxi vouchers and other public transport bills are submitted only for Rs 50,000, then tax is applicable on the rest of the amount.
Regardless of the amount an executive is entitled to as LTA, tax laws allow air tickets only in the domestic sector for the claim.
The apex court order came in a plea by companies including Larsen &Toubro and ITI. In its defence, the revenue department had argued that assessee companies were under statutory obligation under Income Tax Act, 1961, and relevant rules, to collect documentary proof to show that their employee(s) had actually utilised the amount paid towards the leave travel concession and conveyance allowance.

Rejecting the plea, the court in its order said: “The beneficiary of exemption under Section 10(5) (of the Income Tax Act) is an individual employee. There is no circular of Central Board of Direct Taxes (CBDT) requiring the employer under Section 192 to collect and examine the supporting evidence to the declaration to be submitted by an employee(s).”

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