IRS has many alternatives to file the ITR form

The deadline to submit the income tax return form was on April 18th, 2016 and the income tax department extended the date to file the tax return form. For the taxpayers who have not filed the income tax return form even at the extension period need not worry, because the expert has given the resolutions for such delays. If an individual dues refund, he has 3 years to claim the refund after the deadline. Thus the taxpayer can receive the refund as long as the individuals file the tax return until April 18th, 2019. But if the individual fails to file within the April 2019, the United States Treasury keeps his refund income as a donation.

The Internal Revenue Service (IRS) of the US, penalize the taxpayers for if they fail to file the income tax and if they pay after the deadline. The experts said that it would be better if the individual files the tax form even if he makes a late payment. Because if the taxpayer owes refund to the IRS the interest amount keeps changing, and if he fails to file the form, the individual has to pay the penalty. The interest rate for each month is 0.5%, and it may reach up to 25%, and if he fails to file the penalty is higher. If an individual is unable to pay his tax dues, he can request the IRS to pay his dues in installments. The taxpayer can apply for the installment agreement online if the due is less than fifty thousand dollars. And for those who do not qualify can also apply through phone or mail. So the taxpayer has a lot of options to file the tax without any penalty.

Income tax refund may take longer this year

Many people in the city did not receive their income tax refund amount, and they are unable to find the reason.
The income tax administrator said that there are two reasons why the taxpayers did not receive their tax refund. There are many taxpayers who are still working on their income tax return form, the manual filling of the income tax form takes more time than the e-filling. The other reason is, the income tax officers are examining the tax forms that claim more refund amount.

The income tax administrator, John Schaut said that the analysis of the income tax forms for this year takes long time because many taxpayers claimed for higher dollar refunds. And the officers of the income tax department are evaluating the details in depth because they do not have any information from the employer about the employee. And he said that they evaluate the forms as soon as the taxpayer submits it. He said that the taxpayers who are waiting for the refund can enquire the details by sending an email to the income tax department.

The income tax administrator said that they evaluated the tax form that was sent on April 10th, and now they are issuing the refund. And they also issue refunds for the income tax form filed on March 10th that had missing details like the W2s and the withholding details that are different from the database sent by the employer.Income tax administrator of Grand Rapids city, Julie Blok said that they issue refunds for the resident refunds filed on April 18th, and they send the refunds by automatic deposit to those who requested for it on Thursdays. The same way they mail the refunds cheque on Thursday’s of every month for those who want their refunds in the form of a cheque. The income tax administrator said that forty thousand taxpayers are yet to receive their refunds, while forty three percent of them received their funds.

Productive investment saves the annual tax

There some people who wait until the last moment to invest in an asset that would help them from paying extra tax from their income.The financial year ends on March 31st, each year; and the individuals have to assess their annual year taxation. There are some people who wait for the last moment to invest in the required asset to relief from the annual income tax.An individual should invest in an asset in the initial state of the financial year that would be beneficial for annual tax. An individual should invest in an asset that will enable him to save the taxation for a long term. Instead, some people invest in products that are not beneficial for a long run. And fail to save the income tax even when they are eligible for a large sum.

Investing in the tax saving schemes is another black hole which leads to several issues. These tax savings may be expensive for a long term. If an individual invests in an insurance policy with high premium that does not save the taxpayer, he has to pay the premium amount for many years to end the policy.According to Section 80C, individuals can invest Rs. 1.5 lakh to relax the tax, and for many individuals it is inclusive in their EPF. And for people who are paying their house loan EMI, the principle amount is deductible according to the income tax Act.Experts said that, if a person wants to use the tax savings scheme to benefit the financial goal for long term, can invest in the retirement fund, the other options for investment are the PPF and the ELSS.

India’s lower tax rate reduces the tax relief fund

A report stated that India’s Gross Domestic product (GDP) ratio is equal to that of Tanzania and Ghana, while China and USA are in the ratio of 17 and 19 percent.The Finance Ministry reported that the India has the lowest rate of tax compared to the foreign countries. The lowest individual tax (LIT) rate of the United Kingdom has about zero to twenty percent, while the United States of America has zero to three percent and India has zero percent. Brazil’s GDP ratio is about 33.4% and Russia has 34.8% among the BRIC countries. Countries that have higher capital income pay higher taxes. The highest individual tax (HIT) rate in India is 34.6%, for the United Kingdom is 45% and the inheritance tax rate is zero percent in India, where as Austria and Belgium has a higher tax rate. And when you analyze the service tax, VAT and sales tax; India ranges between 5.5% to 14.5%.

The corporation tax is higher compared to that of the personal tax. While comparing the Asian economy, India’s tax rate is 30%, which makes the domestic economy less competitive.The Finance Minister, Arun Jaitley said that the dismissal of incentives for corporate tax and tax exemption for taxpayers and the rationalization may cause tax disputes. The reduction in the corporate tax increases the growth, the level of investments and it increases the number of jobs. Experts say that the government stop the tax exemption limit and work on the tax saving policies like the PPF, some fixed deposit schemes, insurance policies instead of increasing the base rate of the taxpayers.

Calibrated Tax calculator to compute the tax liability

The income tax department launched the new income tax return form on April 1st, 2016. The new version of the income tax form had several modifications.The income tax department introduced the online return form on April 3rd,2016. You can download the ITR form from the web portal www.incometaxindiaefiling DOT gov DOT in This online form focuses on the a particular category of individuals and entities, it has also released an online calculator to get online liability of the tax and to verify the threshold capital.The officials reported that, they have released two forms ITR 1 (SAHAJ) and ITR 4S(Sugam). ITR 4S is for the partnership companies that have many businesses, individuals and HUF, the ITR 1 is for the individuals who get money from their salary and its interest.

The department will release the other ITR forms in the same portal.The tax calculator introduced by the income tax department helps the people to calculate their liability. The filer has to specify the required data according to the notification given by the government for the particular year.The Central Board of Direct Taxes notified the new ITR form on March 30th , 2016 and the time line to furnish the completed form is up to July 31st, 2016. While filing the form, the filer has to enter their personal information, PAN card details and the details of the tax paid. The tax department enhanced the new calculator so that the modifications in the Financial budget’s tax rate. The entities and the individuals can make use of the calculator to assess their tax liability.

The Union Budget of this year may disappoint the Country

The Financial budget of this financial year 2016-17 is on high expectation by a majority of the people in the country. But officials say that the government will not offer any relaxation in the taxation, due to minimal fiscal space.In an interview the government official said that, this year’s budget does not offer any major relief in the personal income tax. He said that due to limitations in the fiscal space could not offer any adjustments in the personal income tax. The government has to face several challenges on the fiscal situation, one of the reasons is the recommendation of the seventh pay commission. The panel recommended a lot of allowances, like the increase in the pension up to 24% for paramilitary officers and central government staffs and an allowance of 23.6%. This will cost about Rs.1 lakh from the financial budget.

And the cost of the crude oil price in the universal market is also a factor that affects the flexibility of the budget. The economy requires investments from the public sector, as the private sector faces certain issues. The reports of the mid-year and half year has improvement in the fiscal status, thus allowing the contribution of the public sector.According to the budget of 2015-16, it benefitted the taxpayers of the middle class like the increase in the deduction limit on health insurance to Rs.25,000 from Rs.15,000 and for senior citizen it is from Rs.20,000 to Rs.30,000.The Finance Minister called for removal of various tax exemptions and rationalizations, reduction in the corporate tax to 25% from 30% within the fiscal year to increase the investment.

Exclusive tax exemptions for residential individuals and HUFs

A.H. Poonawala is a taxpayer who wants to know about the tax liability on the short term capital gain to an NRI when the annual income less than two lakh fifty thousand. The tax department’s software charges fifteen percent short term capital gain foe income below two lakh fifty thousand.Expert said that, since the short term capital gain of certain equity shares spent on mutual funds that depend on equity or stock market, then fifteen percent tax for a non-resident is payable without the benefits from the starting exemption limit of two lakh fifty thousand rupees. The contributions made by the employer are a taxable salary of that year and the deductions in that year will reverse for each year. But the basic exemption is available for HUFs and residential taxpayers. Vijayendra Devadiga is a salaried person; he switched to a new company last year.

He withdrew the Employee provident fund of five lakh forty five thousand at 10% rate before completing five years. He wants to know in which tax form he should fill in the details. And since his TDS deduction has already happened, he wants to know whether he is liable to taxation.The experts said to consider the withdrawn amount as the salary, but according to the income tax Act the calculation is quite complex. Because the extra facts are unknown, yet the employer’s contribution is liable to tax in that year. Contact Uptra for tax consultation works And if the individual claims with regards to the Section 80C, the amount reverses for each year, when he claimed for it. The officer for assessing will calculate the previous year’s assessments that depend on the flat basis.

No changes in income tax slabs in 2016 budget

The 2016 budget saw no changes in individual tax slabs. Citizens below the age of 60 years earning less than 2,50,000 is exempt from payment of tax. 10 percent tax charges for 2,50,001 to 5,00,000 income bracket and 20 percent for 5,00,001 to 10,00,000 and 30 percent for 10,00,000 and above. These figures are the same as that of previous year.Surcharge has been increased from 12 to 15 percent for more citizens with an income of more than 1 crore. First time home buyers will get a reduction of 50,000 on interest for loan up to 35 lakhs.Excise duty on tobacco products rose from 10 to 15 percent. However there were several changes to corporate taxes.

The manufacturing companies set-up on or after March 1st 2016 will have corporate tax at 25 percent given that the company is ready not to claim profit linked exemptions and accelerated depreciation.Accelerated depreciation is restricted to 40 percent. This was not well received by renewable energy sector as accelerated depreciation enables companies to buy more equipment.The corporate tax is reduced from 30 to 29 percent for companies making turnover below 5 crores. The tax deductions for SEZ will be phased out in the future to make-up for reductions in corporate tax.The government is planning to bring down corporate tax to 25 percent in the time period of 4 years.To boost start-up environment the government is offering 100 percent tax exemption for start- ups for the first 3 years.

Tax on interest income

Interest income is the money earned as interest from savings bank account, post office savings, fixed deposits and recurring deposits. This amount is taxable and has to be reported while filing income during tax payment. The interest amount is added to the total income and is taxed based on your slab rate. The interest is added under the header “income from other sources”. It is necessary that the taxpayer reveals interest earned while filing tax payments. When the tax payer fails to do so the bank can easily track the interest inflow of the customer through PAN. The central board of direct taxes has issued circular to mention the interest income in tax returns. Tax deducted at source (TDS) is not applicable for interest on savings bank account.

While for fixed deposits interest obtained from various fixed deposits held in the bank will be summed up and if the amount exceeds 10,000 TDS is applicable. The TDS is charged at 10% if the bank has PAN details of customers and 20% if no PAN details are available. TDS can go up to 20% to 30% based on you income brackets .Form 15G & 15H are submitted for deductions of TDS when the income is below the taxable limit. This will only avoid TDS and not tax on interest. Tax payers can also obtain exemption under the section 80TTA where deductions can be obtained on interest from saving banks account. The deduction is lower off interest earned or INR 10,000. This section is not applicable for income interest obtained through FD or RD.

Budget 2016 balances reduction in corporate tax

The corporate tax has been reduced from 29% to 30% for companies with a turnover under 5 crore. This is the first step by the government in reducing the corporate tax to 25% in a time period of 4 years. The government is reducing the corporate tax such that it will gain the reduced revenue through the incentives given. The reduction is not applicable to big firms as it is a gradual process for the government to gain from the reduced corporate tax.

The new manufacturing companies which are established on or after March 1 will have an option of availing 25% corporate tax if only the company is not going to claim profit-linked deductions on tax and accelerated depreciation.
To compensate for this reduction in taxes the government will start removing or reduce the tax exemptions given to special economic zones, export import benefits and production of natural and mineral oils.

Profit-linked tax deduction for infrastructure facility, such as development of SEZ (claimed under section 80IA) will be removed in the financial year 2017-18. After April 2020 tax exemptions will be removed for SEZ. The accelerated depreciation rate will be restricted to 40%. This is not much in favor for the renewable energy sector. Higher levelsof accelerated depreciation will help an industry to buy more equipment. The government has given an idea on how the exemptions will be scrapped in the future giving industries a road map to plan their taxes.