Prasanth's Income tax related blog

Indian IT Calculator and comparator for FY2010-11

2010-02-26T01:53:00.000-08:00

Please click here to go the page with the download option for the income tax calculator for FY 2010-11 as per the Budget presented on February 26, 2010.

Indian IT Caclulator for FY2009-10

2009-11-08T00:26:00.000-08:00

Click here or on the image above to download the Indian income-tax calculator for the financial year 2009-10. This now takes into account the proposals tabed by FM, Mr. Pranab Mukherjee on 06-July-2009.

Please bookmark this site or the target URL to use the latest version.

The default parameters are set for a male, salaried employee working in Bangalore. In case you find any discrepancies and/or if you have any suggestions, please leave a coment on this blog.

Budget and tax implications for salaried class

2009-07-06T20:49:00.000-07:00

In a nut-shell, following are the tax implications for the salaried class based on the Budegt tabled by Pranab Mukherjee on 06-July-2009.

1. Tax exemption limit raised by 15,000 for senior citizens and by 10,000 for all other segments

The new tax slabs are as follows:

Senior Citizens:

0 - 240000 -NIL

240001 - 300000 - 10%

300001 - 500000 - 20%

> 500000 - 30%

Women:

0 - 190000 -NIL

190001 - 300000 - 10%

300001 - 500000 - 20%

> 500000 - 30%

Men:

0 - 160000 -NIL

160001 - 300000 - 10%

300001 - 500000 - 20%

> 500000 - 30%

2. Tax benefit raised to 1,00,000 from 75,000 for care-take of dependants with "severe" disability

3. Surcharge on taxable income greater than 10,00,000 is now NIL.

UTN not needed for now

2009-06-30T20:49:00.000-07:00

As per the CBDT, stated here and in the major newspapers today, the requirement to quote the UTN for all IT filings is lifted. Assessees can now file retrurns and claim refunds (if applicable) with the need to quote UTN.

Online Tax Filing - Mailing cumpulsory

2009-06-22T03:45:00.000-07:00

As per item#10 in CBDT Circular No. 03 / 2009 dated May 21, 2009, ITR-V (for thoe not using a DSC) should henceforth be signed and mailed (preferably in unfolded A4 envelope for bar code safety) to:
Income Tax Department – CPC,
Post Box No - 1,
Electronic City Post Office,
Bangalore - 560100,
Karnataka
and that no other office would receive the ITR-V and in no other manner.

On receipt, the Dept. will send a confirmation e-mail.

In effect, if filing through an Agent / Agency, ensure that they are aware of this. If filing personally, ensure that you submit as stated.

Tax changes unlikely

2009-06-16T20:37:00.000-07:00

Rumours and / or apprehensions of any increase in direct taxes to stem Infrastructure growth seem unnecessary according to this article in the Times of India.

Union Budget on July 6

2009-06-15T00:35:00.000-07:00

As per this artcile by NDTV, our Union Budget is scheduled for a July 6 presentation

New budget in July

2009-05-27T01:17:00.000-07:00

It seems the new Financial Budget will be presented by Pranab Mukherjee in the first week on July. This is reported on all channels today and the article can be read here.

Indian Income Tax Calculator for the FY2009-10

2009-05-14T23:52:00.000-07:00

Please bookmark this site or the target URL to use the latest version.

The default parameters are set for a male, salaried employee working in Bangalore. In case you find any discrepancies and/or if you have any suggestions, please leave a coment on this blog.

Loan Calculator cum Planner

2008-09-13T03:03:00.000-07:00

Click here or on the image above to download the Loan Calculator Cum Planner for the Indian market.

Please bookmark the target page for the latest version of the Calculator as and when it is ready.

This is ideal for Home Loan calculations.

This calculator is meant for monthly rests, taking care of fixed as well as floating interest rates, in addition to changes in rate of interest and even part-payment of Principal.

e-filing... was this useful???

2008-08-02T09:04:00.000-07:00

I started thinking of this only on July 31 when one of my friends was prepared to pay the interest for overshooting the July 31, 2008 timeline of filing the returns. He was relaxed until then and only on July 31 (at about 8 PM) did he realize that he should have filed it by today... His major problem was that he even had to pay Self Assessment Tax.

I could see the beauty of e-filing only now. It took all about 30 minutes to complete the returns through the Skorydov website. Of course NSDL also provides the option to submit Self Assessment Tax online and these together ensured that my friend could complete his returns online by July 31, 2008 although office hours were long completed.

In retrospect, I also filed through the same site and I also finished the same in about 15 minutes flat, which is great considering that I took about 2 hours to fill the returns form two years ago in addition to which I had to endure wrong calculations and finally had to submit a revised form "after" the due date at that time. The Skorydov site greatly helps in this area since it does ask the individual to search as to which ITR he/she needs to fill. It has a set of questions based on which the software gives you easy to fill fields which can be directly extracted from Form-16 etc. In all, I must say that the Skorydov software is excellent and easy to use.

Being a IT professional, e-filing this year has helped me save a lot of time in terms of both having to sit with a CA and file the returns as well as to run behind them to ensure that the returns are filed and done correctly... since at the end of the day, the IT Department does not crucify the CA but me if the returns were not calculated correctly.

All about applying for and tracking PAN

2008-07-29T20:49:00.000-07:00

Application:
Read the instructions at https://tin.tin.nsdl.com/pan/form49A.html. At the bottom of the page, select the proper category and click Select.

AO Code:
You need to mention AO code on your PAN application. For information on AO code, http://tin.nsdl.com/aocode.asp.

Track your PAN/TAN Application and e-Return Registration Status:
You can track the status of your application for new PAN / reprint of PAN card / Changes or Correction in PAN details using the 15 digit unique Acknowledgment Number after three days of application using this facility athttps://tin.tin.nsdl.com/tan/StatusTrack.html.

Know your PAN number:
http://incometaxindiaefiling.gov.in/knowpan/knowpan.jsp.

Online Application for Request for New PAN Card Or/ And Changes Or Correction in PAN Data (PAN Change Request Form):
Read the instructions at https://tin.tin.nsdl.com/pan/correction.html. Then go to the bottom of the page, and in the "Apply for New PAN Card Or / And Changes Or Correction in PAN Data" select "Individual" (or your required choice if not individual) and click "Select". This will open the relevant Form.

Govt extends tax concessions on STPI by a year

2008-04-29T20:05:00.000-07:00

Picked from The Economic Times.

In a much-awaited relief for the IT industry, software companies can now enjoy benefits of the Software Technology Parks of India (STPI) scheme for another year. The government has extended the tax concessions under Section 10A of the Income Tax Act to March 2010. The scheme was to expire in March 2009 under the sunset clause provided in the scheme. On an average, IT companies would get a revenue benefit of at least 5-7% — on the effective tax rate — because of this extension. Normally, companies have about 50% business located in technology parks, export revenue from which is fully tax-exempt. In a letter to the prime minister, Union IT & communications minister A Raja said: “I thank you on behalf of my ministry and the entire IT industry for your far-sighted decision to extend the STPI scheme. This will certainly help the IT industry, especially the small and medium enterprises which have been under tremendous pressure due to the rupee appreciation, wage inflation and several other factors. This would give us the encouragement to build up the momentum to meet our commitment of achieving IT exports of over $60 billion by 2010.” The relief has come after intense lobbying from the communications ministry and the industry. Finance minister P Chidambaram made the announcement in Parliament on Tuesday.
The move will benefit smaller companies more because SEZs have remained off-limits for them. “This is a good move and benefits small- and medium-sized companies who were finding it difficult to move into SEZs due to space crunch and high rentals. Most of the larger companies are already pursuing their SEZ plans aggressively. This move will enable them to enjoy the tax benefits further,” said Infosys Technologies CFO V Balakrishnan However, the biggest of all bonanzas lies in the fact that the small firms will get about two years to chalk out their future. For instance, those like KTwo Technology, an IT services start-up with revenue of $1.58 million in the first year of its operation, stands to benefit immensely. As its CEO Ananth Koppar put it: “At least, the small companies will get a breather for one more year.”

Small IT companies may get tax holiday beyond 2009

2008-04-24T03:57:00.000-07:00

Picked from The Economic Times.

Government may extend income tax holidays to small and marginal IT companies beyond 2009, IT and Communications Minister A Raja said on Thursday.
Exemption from paying income tax for IT companies is to end in 2009.
"I have met Prime Minister (on the issue). PM is inclined to give some relief.... We are of the view that small and marginal enterprises should not suffer. The matter is under consideration," he told the Rajya Sabha during the Question Hour.
Raja said he had also met Finance Minister P Chidambaram on extending tax break for another 10 years but the "Finance Minister had some reservations."
The extended tax breaks should not go to big and flourishing companies who have already utilised the previous tax breaks, he said, but did not specify when a decision would be taken.
The Minister said the slowdown in the US economy has so far not had any overall significant direct impact on the growth of the Indian IT-BPO sector. However, the share depreciation of the US dollar over the past year has added significant margin pressure on the IT industry.
Raja said industry body NASSCOM does not have any information on reduction in salaries in IT industry but there had been indications that the annual increments to employees may be slightly lower.
The National Association of Software and Services Companies (NASSCOM) has indicated that the data on salary cuts if any would be available only after the analysis of the annual results to be announced by the companies.

Employers must quote PAN in TDS returns

2008-04-15T21:21:00.000-07:00

Picked from The Econonic Times.

Employers will have to quote the Permanent Account Number of their employees while submitting TDS (tax deducted at source) returns to the government as tax refund has become difficult without PAN after annexure-less forms were introduced. Income Tax department would not accept these returns if employers fail to quote PAN in at least 95 per cent cases of salaried employees and 85 per cent cases of non-salaried staff. Employers who do not comply with the rules would be treated as non-filers and could face penal consequences, an official release said on Tuesday. Quoting PAN is important because the IT department has prescribed new return forms without attachments from assessment year 2007-08. Tax refunds can only be given to the employees on the basis of information made available by employers through TDS returns, the statement said.

IT Dept asks Microsoft to pay Rs. 700 cr tax

2008-04-03T20:11:00.000-07:00

Picked from The Economic Times.

Software giant Microsoft has to pay about Rs 700 crore as income tax, including interest on royalty income generated from sale of software in India. The Comission of Income Tax Appeals, which is hearing a case filed by the IT department, has held that price charged for use of Microsoft's software in India is royalty and tax is payable on it. It has determined that the royalty income is Rs 2,240 crore for the six years to 2005 (1999-2005) and not Rs 868 crore as originally assessed. Accordingly, official sources said, Microsoft's estimated tax liability on royalty stands at Rs 700 crore, including interest. Reacting to the decision, Microsoft spokesperson in India said, "The case is an old issue relating to financial year 1999 to 2004 and for an overseas Microsoft entity. Microsoft believes that it is in full compliance with Indian tax laws and the income tax treaty agreement between India and the US." Since it is an appellate order, Microsoft is reviewing the order and will determine the course of action accordingly, the spokesperson added. The sources said the CIT(A), handling international taxation cases in Delhi, held that the Gracemac Corporation, a 100 per cent subsidiary of Microsoft is liable to pay income tax on its gross royalty income earned out of licensing of softwares to Indian customers. The total gross royalty income for the six assessment years starting from 1999 to 2005 is computed to be about Rs 2,240 crore. Going by 15 per cent tax on royalty, the total tax liability on the Microsoft subsidiary is calculated to be about Rs 350 crore. With addition of interest, the total liability is likely to be Rs 700 crore, they added.

Gains from stock appreciation rights taxable

2008-03-25T05:33:00.000-07:00

Picked from The Economic Times:

In a recent decision, the special bench of the Mumbai Income-Tax Appellate Tribunal (ITAT) has held that the amount received on redemption of stock appreciation rights (SAR) by an individual is taxable as salary. This is an important ruling, as it distinguishes the benefit arising from Sar vis-à-vis the benefit arising under an employee stock option plan (ESOP). The tax payer was an employee of an Indian company, which is part of the group of companies of a foreign multinational. During the assessment year 1998-99, he received a sum on account of redemption of SAR granted to him earlier by the foreign company, under a SAR scheme. The taxpayer was allotted SAR in respect of a specified number of shares of the foreign company at an agreed price, which normally reflected the market price as on the date of the grant. He could exercise the right to redeem the appreciation of these shares after one year but within a specified time period from the date of the grant. On redemption of SAR, the grantee was entitled to receive the excess of market price over the agreed grant price. It is pertinent to note that no shares were actually allotted to the tax payer and his benefit was confined to appreciation in value of the underlying shares. An issue arose whether the amount received on redemption of SAR was taxable as salary income.

Taxpayer’s contention:
The taxpayer contended that the amount received on the redemption was not taxable for various reasons, which inter alia include: SAR was allotted by the foreign company and not by his employer, i.e. the Indian company. As there was no employer-employee relationship with the foreign company, the grantor of SAR — the amount received on their redemption could not be taxed as ‘income from salaries’. Further, even if taxable, SAR could be taxed at the time of its grant. As SAR was granted at the market value of the shares, no benefit accrued to the taxpayer, and hence, no benefit could be taxed.

Tax authorities’ argument:
Tax authorities contended that the grant of SAR to the taxpayer was on account of his employment and any benefit from SAR, whether granted by employer or a foreign company, would be characterised as ‘income from salaries’. Further, there was no benefit when SAR was granted to the taxpayer and the benefit crystallised only in the year, in which it was actually redeemed.

Tribunal’s decision:
The tribunal held that the redemption of SAR is quite different in scope and its application as compared to an employee stock option. It has held that the redemption of SAR is an employment-related benefit, in the nature of deferred wages or bonus/incentive, received as a fruit of employment, and hence taxable as salary. Further, in case of SAR, the exact quantum of benefit or reward is ascertained at the point of time when SAR is redeemed and not when the same is granted. Current position Currently, the benefit arising under an Esop is taxable as fringe benefit tax (FBT) on the date, on which the options vest with the employee. FBT is payable by the employer at the time of the allotment or transfer of shares to the employee. In case of SAR, ent or transfer of shares, the above decision would have direct bearing on the employers and employees in respect of taxability of the benefit arising from SAR.

Claim LTA this year rather than next

2008-03-12T20:29:00.000-07:00

If you are planning to put off your claim on the tax rebate on leave travel allowance (LTA) for next year or the year after, think again. Claiming the rebate in 2007-08, the current financial year, will be more beneficial. As the tax rate will effectively come down substantially from 2008-09, following the Budget hike in exemption limits and tax slabs, the tax incidence on your LTA will also be lower from next year. That means you save less too. If you don’t claim the tax benefit this year, you will pay 30% as tax on your LTA if your total income, including LTA, is more than Rs 2.5 lakh. Therefore, claiming the tax benefit will mean you save that amount.
However, next year, the tax incidence on your LTA portion will be only 10% if your income, including LTA, is between Rs 1.5 lakh and Rs 3 lakh and 20% if it is between Rs 3 lakh and Rs 5 lakh. It’s only if your income exceeds Rs 5 lakh that the tax rate becomes 30% on the portion of income above Rs 5 lakh. Income tax exemption on LTA can be claimed in any two years out of a block of four years specified by the I-T department. According to a tax expert, at present, the four specified years are 2006, 2007, 2008 and 2009. Out of these four years, you can claim the tax benefit in any two years. Normally, people tend to claim the tax benefit in the later part of the four-year period, assuming that their salary and LTA is likely to be higher in those years. This helps them to save more tax. As the tax rates will come down from 2008-09, the benefit of claiming income tax exemption on leave travel allowance will also be low. For instance, take a person who has an annual salary of Rs 4 lakh per annum (Rs 33,333 per month) and gets LTA of Rs 1 lakh every year. He can claim tax exemption on LTA in any two years out of the block of four years starting from 2006. Even if, he has claimed the income tax exemption on LTA in 2006-07, he can claim it again in 2007-08. But in that case, he cannot claim it for the next two years. If he decides not to claim the income tax exemption this year, he will have to pay tax of Rs 30,900 on the LTA of Rs 1 lakh. But, if he claims the benefit, he can save the amount. Of course, this will mean he can no longer claim the benefit next year, but the tax on his LTA next year would be only Rs 20,600. In effect, therefore, by taking the rebate this year rather than next year, he will make a net tax saving of Rs 10,300 over the two years. In fact, the benefit will be even higher in percentage terms if one’s annual income is lower, say in the range of Rs 2.5 lakh. Take a person with an annual taxable income of Rs 2.5 lakh and LTA benefit of Rs 50,000. The tax incidence on the LTA in 2007-08 would be Rs 15,450, which he can save if he claims the I-T exemption on that. But, in 2008-09, the tax incidence will be only Rs 5,150. Therefore, it is better to claim the tax benefit this year and pay tax next year.

SC rules that leave encashment shoul not be included in wages for PF calculation

2008-03-12T20:12:00.000-07:00

Read the article at the Times of India.

In a significant ruling reducing the deductions on the salary sheet, the Supreme Court has held that the money got by an employee from encashing earned leave could not be taken as wages for calculation of provident fund (PF) contributions. Deciding a bunch of petitions in favour of the employees, a bench comprising Justices Arijit Pasayat and P Sathasivam rejected the stand of regional PF commissioner that the amount received on encashment of earned leave had to be taken into account for the purpose of calculating PF contributions. The bench allowed the appeals — the lead case being the one filed by Manipal Academy of Higher Education — saying "the inevitable conclusion is that basic wage was never intended to include amounts received for leave encashment". It took note of a Mumbai case where an employer was including the amount of leave encashment as emoluments for the purpose of calculating PF dues from the employer as well as employees’ contribution. When the Employees’ Union took up the issue with the commissioner, it was informed that the provision did not provide for deduction of PF on leave encashment. "Where the wage is universally, necessarily and ordinarily paid to all across the board, such emoluments are basic wages. Conversely, any payment by way of a special incentive or work, is not basic wages," the court said. dhananjay.mahapatra@timesgroup.com The judges have, significantly, also held that not just offences under 498-A, but also other offences such as murder, rape, attempt to murder and causing grievous hurt — which are not specifically mentioned in the law as ‘compoundable’ offences — cannot be settled between the complainant and the accused. Section 320 of the CrPC lists offences that can be settled between parties at any stage of the prosecution.

Indian Income Tax Calculator for FY2008-09

2008-03-11T09:38:00.000-07:00

Version 3.0 is released with a minor change in the Gifta tax limit computation.

Please do also note that no change has been announced yet about FY2009-10, which means that until then, the same 2008-09 calculator holds good.

Click here or on the image above to download the Indian income-tax calculator for the financial year 2008-09.

Please bookmark this site to use the latest version.

The default parameters are set for a male, salaried employee working in Bangalore. In case you find any discrepancies and/or if you have any suggestions, please leave a coment on this blog.

And finally new income-tax slabs

2008-02-29T01:27:00.000-08:00

I wish we have elections every year - the slabs have changed and look at the way they did... :-)

Here are the new ones:
General:
Up to Rs.150,000--------------NIL
Rs.150,001 to Rs.300,000-----10 per cent
Rs.300,001 to Rs.500,000-----20 per cent
Rs.500,001 and above---------30 per cent
Women:
Up to Rs.180,000--------------NIL
Rs.180,001 to Rs.300,000-----10 per cent
Rs.300,001 to Rs.500,000-----20 per cent
Rs.500,001 and above---------30 per cent
Senior Citizens:
Up to Rs.225,000--------------NIL
Rs.225,001 to Rs.300,000-----10 per cent
Rs.300,001 to Rs.500,000-----20 per cent
Rs.500,001 and above---------30 per cent

India Income-tax calculator for FY2007-08

2008-01-02T09:30:00.000-08:00

Click here or on the image above to download the Indian income-tax calculator for the financial year 2007-08. Wait for about 10 seconds for the page to change from:

to:

and then click on "Click here to start download..".

The default parameters are set for a male, salaried employee residing in Bangalore. In case you find any discrepancies and/or if you have any suggestions, please leave a coment on this blog.

New income-tax slabs?

2007-12-27T21:31:00.000-08:00

I wish this were true in FY2008-09 itself...

Ref: Economic Times

The government is considering a hike in the income-tax exemption limit and a rejig in slabs. North Block is busy making the first drafts of a possible tax restructuring as far as direct taxes go. Corporate taxpayers, too, may be in for some pleasant surprises, as the government is toying with options like lowering of overall tax rate or doing away with surcharge. The political developments, which signal an early election, could have a large bearing on these decisions. Finance minister P Chidambaram also has the elbow room, with direct taxes showing a buoyant growth of over 40%. The tax exemption limit may be raised from Rs 1,10,000 to Rs 1,50,000. The government had hiked the limit by Rs 10,000 in the last budget. But with the price rise in the backdrop and a possible early election, a further increase in the limit could be on the cards, to give some relief to small taxpayers. A demand to raise the exemption limit has come not only from the Left parties, but also some senior leaders within the Congress. The government has already expanded the basket of products eligible for the exemption in this category by bringing in a senior citizen scheme and a five-year post office time account. There is a likelihood of investments in dedicated infrastructure funds or infrastructure bonds enjoying the same status. A rejig in income slabs is also not ruled out. Sources said with the increase in the income-tax exemption limit, a rejig might be on the cards. At present, an income slab of Rs 1,10,000-1,50,000 attracts a tax rate of 10% while a slab of Rs 1,50,001-2,50,000 attracts a tax rate of 20%. Income above Rs 2,50,001 attracts a tax rate of 30%. These slabs may be pushed upwards, with the income slab of Rs 1,50,001 attracting a 10% tax rate and more than Rs 5,00,000 attracting 30% tax rate.

Income tax slabs for FY2007-08

2007-12-25T19:53:00.000-08:00

According to the Finance Act, 2005 income-tax is required to be deducted under section 192 of the Income-tax Act, 1961, from income chargeable under the head "Salaries" for the financial year 2007-2008 (i.e. assessment year 2008-2009) at the following rates:

I) In case of every individual other than the individual referred to in item II and III below:

Total Income (Rs.) ------ Rate
1,10,000 to 1,50,000 -----10%
1,50,000 to 2,50,000 -----4,000 + 20%
Above 2,50,000 ----------24,000 + 30%

II) In case of women employees below 65 years of age:
Total Income (Rs.) ------Rate
1,45,000 to 1,50,000 ----10%
1,50,000 to 2,50,000 ----500 + 20%
Above 2,50,000 ---------20,500 + 30%

II) In case of senior citizens:
Total Income (Rs.) ------Rate
1,95,000 to 2,50,000 ----20%
Above 2,50,000 ---------11,000 + 30%

A) Surcharge on Income-tax: Surcharge on income tax on all firms and companies with a taxable income of Rs.1 crore or less will get removed.
B) Surcharge on T.D.S. on the payment other than salaries: The amount of income tax deducted in accordance with the provision of Chapter XVII B shall be increased by a surcharge calculated.
In the case of every individual, HUF, association of persons and body of individuals, whether incorporated or not, at the rate of ten per cent of such tax where the income or the aggregate of such income paid or likely to be paid and subject to the deduction, exceeds rupees ten lakh. In the case of every firm, artificial judicial person & domestic company, at the rate of ten percent of such tax.In the case of every company other than domestic company, at the rate of two and half per cent of such tax.
C) Education Cess: An additional surcharge called as ‘Education cess’ shall be levied at the rate of three percent on the amount of tax deducted inclusive of surcharge as stated in paras ‘A’ and ‘B’ above.