Author: CA Tarannum Khatri

Medical expenses and tax under salary head

In salary head, there are many elements. One is medical expenses’ reimbursement. yes, medical expenses are done by employee and bill is paid by employer. In this case, what will be tax implications? Read it in this post. Tax on Medical expenses when bill is paid by employer: First, understand one thing that medical reimbursement is not medical allowance. Both are different things. Medical allowance is fixed amount the employee gets per year from employer. While medical reimbursement is the one which the employer reimburses the employee which the employee has incurred for his or his relatives’ medical treatment. Tax treatment: (section 17(2))Fixed Medical Allowances: Always taxable. Medical facility: If provided in any hospital maintained by the employer. : fully exempt If any sum paid by employer for medical treatment of employee or his family member in the hospital maintained by the government, local authority, in hospital approved under central government health scheme or state government health scheme. : fully exempt If any sum paid by employer for medical treatment of employee or his family member in the hospital approved by the chief commissioner for prescribed diseases or ailments : fully exempt. To claim above exemption, the employee has to show receipt of payment and certificate from the hospital specifying the disease or ailment for which medical treatment was required. If employer has paid group insurance premium for employees...

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Tax treatment of investment in NSC certificates

National saving certificates are issued by  department of post. It is very safe way of investment. It does not give you safety from inflation but when inflation rate is lower than interest rate, it can give you benefit. It also helps you to save tax .  Who can buy NSC? Only residential individual can buy NSC. Joint account is also available. NSC can be purchased for minimum Rs. 100.The investment can be for denomination  of Rs. 100, Rs. 500, Rs. 1000 and Rs. 5000. Tax treatment: Deduction u/s 80C is available for invested amount.  When interest is accrued to NSC, deduction u/s 80C is available for it also. You should show the interest in NSC in the income tax head – income from other sources and claim deduction u/s 80C. But the total deduction for invested amount and interest accrued should not be more than Rs. 1,00,000 because The maximum deduction allowed u/s 80C is Rs. 1,00,000. So if you have invested Rs. 1,00,000 in NSC, whole interest accrued is taxable. When the term of NSC ends, you will get principal amount with interest. At that time, principal amount is not taxable because it is your capital which is returned to you. But interest amount will be taxable. year NSC purchased Other investment u/s 80C Interest accrued Maturity of NSC with interest Deduction u/s 80C Taxable amount 2011-12 80,000...

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Save tax on sell of house property by sec 54

 Long term capital gain is taxed at 20%.The rate is high and as a taxpayer or professional, you should be aware of saving long term capital gain by using sec 54. Here I have tried to explain main points of section 54 through questions and answers. Who can claim deduction u/s 54? Only individual and HUF can take benefit of section 54.. For which transaction exemption u/s  54 is allowed? Section 54 can help to save the tax when any residential house is transferred and the asset should be long term asset. It means that you have owned the residential house for more than 3 years from the date of transfer. Which asset should be purchased? You have to purchase another residential house within 1 year before the date of transfer or within 2 years after the transfer. The deduction is also available if you construct the residential house within 3 years from the date of transfer.Cost of plot can be included as cost of new residential house. How much exemption is allowed? Exemption is allowed up to the least of following: cost of the new residential house capital gain. What if you purchase or construct two new residential houses? The exemption is available to only one unit. But you can choose for which house you are seeking exemption. Obviously, you will choose the house which has more cost....

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Top 5 Ways of income tax saving

Each tax payer searches way to save his tax and get more net income. In practice, I have meet two kinds of people – one who doesn’t want to spend 1 Rs. on tax and another who asks me to calculate tax payable higher as possible. Here I am talking about first kind of person. So here I will suggest you 5 top ways of tax saving. Way No. 1:  Claim your expenditure of business:  Many taxpayers do not know what to claim in return as expense. If the expenditure is related to business and revenue nature, you can definitely claim it. Maintain all the bills of expenditure in one separate file. You can claim salary of employee, interest paid on loan, rent of office, petrol expenditure, travelling expenditure, mobile bill , bad debt and most important depreciation. Yes , you can claim depreciation on asset as expenditure. It will be varied between 5% to 100%. so don’t forget to claim it. Way no. 2:  Investment in insurance:  Investment in life insurance and medical insurance will not only give you insurance cover and bonus but it is smart way of saving tax. Suppose you have invest Rs. 1,00,000 in LIC policy and your income is Rs. 6,00,000. so you have to pay 20% tax on Rs. 1,00,000 (Rs. 6,00,000-Rs. 5,00,000)  but as you invest in LIC .your income will...

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Income tax rates for A.Y. 2014 -15

Income tax return filling due date is near and you may be searching for income tax slab.Here I have given chart for income tax rates for A.Y. 2014-15 and F.Y. 2013-14  Tax rates for other than senior citizen for a.y. 2014-15 For individuals other than senior citizen (60 years or more age) and super senior citizen (80 years or more age)assessee   Income Tax Slabs Up to Rs 2,00,000 Nil Rs. 2,00,000 to Rs.5,00,000 10% plus rebate-10% of income up to 2000 Rs. 5,00,000 to 10,00,000 20% More than Rs. 10,00,000 30%   Surcharge -10% when income exceeds Rs. 1 crore Education and higher education cess-3% on tax and surcharge   Tax rates for senior citizen (60 years or more age) for a.y. 2014-15:   Income Tax Slabs Up to Rs 2,50,000 Nil Rs. 2,50,000 to Rs.5,00,000 10% Rs. 5,00,000 to 10,00,000 20% More than Rs. 10,00,000 30%   Surcharge -10% when income exceeds 1 crore Education and higher education cess-3% on tax and surcharge   Income tax rates for super senior citizen (80 years or more age) for a.y. 2014-15:   Income Tax Slabs Up  to Rs.5,00,000 Nil Rs. 5,00,000 to 10,00,000 20% More than Rs. 10,00,000 30%   Surcharge -10% when income exceeds 1 crore Education and higher education cess-3% on tax and surcharge.  ...

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