Penalties under the Income Tax Act

There are different penalties leviable under the Indian Income Tax Act for defaults under the various provisions of the act committed by an assessee. There are many provisions under which the penalties are leviable under the act. There are some penalties that are mandatory in nature while in most of the cases penalty is leviable at the discretion of the Assessing Officer (AO). The major penalties that are imposed under the act along with their nature of defaults are given as under:

1.  Default: Concealment of Income or furnishing inaccurate particulars of income.

     Minimum Penalty: 100% of tax sought to be evaded.

     Maximum Penalty: 300% of tax sought to be evaded.

 2. Default: Failure to keep or maintain books as required u/s 44AA.

      Minimum Penalty: Rs. 25,000/-

 3. Default: Failure to get accounts audited or furnish report u/s 44AB.

      Minimum Penalty: ½% of the total sales, turnover or gross receipts.

      Maximum Penalty: Rs. 100,000/-

 4.  Default: Taking/Repaying or accepting any loan or deposit in contravention of the provisions of section  269SS /269T  (Loan taken or repaid above Rs. 20,000 in cash).

      Minimum Penalty: Amount of loan/deposit so taken or accepted or repaid. 

5. Default: Failure to furnish Return of Income.

     Minimum Penalty: Rs. 5000/-

 

How to pay taxes online?

E-payment of taxes (Income Tax and TDS) is mandatory for the following types of assesses: All Companies and firms All persons other than companies or firm who are liable to get their accounts audited u/s 44AB of the Income Tax Act. Income tax can be paid easily from your workplace or from any place online by taking the following steps: Open the website www.tin-nsdl.com and select “Pay taxes online” . OR                Click on the following link:                  https://onlineservices.tin.nsdl.com/etaxnew/Index.html Select the relevant challan from the NSDL site and enter your PAN/TAN as applicable. Enter the challan details, and select your relevant bank and “Submit”. Select whether you are a Retail Internet Banking user or Corporate Internet Banking user. Log in to your Bank Internet Banking portal with your user ID and password. Enter the details of the tax amount and authorize the payment. Download the acknowledgement of your tax payment. For more information on e-payment of taxes click on the following link: http://www.incometaxindia.gov.in/ePayment.asp?abc=1

Wealth Tax

Wealth tax is charged for every assessment year in respect of net wealth. Wealth tax is also a direct tax just like income tax computed on net wealth of an assessee. But it is charged on the amount of net wealth exceeding Rs. 15 Lacs.

Rate of wealth tax is 1%.

Wealth tax is charged on the net wealth of an assessee valued as on valuation date. The valuation date for chargeability of wealth tax is 31st March of the financial year.

Net wealth means taxable wealth. Broadly speaking it represents the excess of assets over debts.
The term assets means ;
(i) Guest house, residential house or commercial building.
(ii) Motor Cars.
(iii) Jewellery, bullion, utensils of gold silver, etc.
(iv) Yachts , boats and aircraft.
(v) Urban land, and
(vi) Cash in hand

Public Provident Fund Account

Public Provident Fund account is a tax saving instrument . Many people use this account to save their taxes. There are many benefits of this account other than it is used as a tax saving instrument. Any person whether he be man or women, married or bachelor salaried or self employed must have a PPF account. A PPF A/c is opened for a term of 15 years and is used for investing for a long term. This term of 15 year does not include the year in which it is opened. During a financial year a maximum of Rs. 70,000/- can be invested into the account.

A PPF a/c has many of its advantages:
(i) A PPF a/c is opened for period of 15 years.
(ii) Interest received on amount invested is also tax free.
(iii) A PPF a/c can be operated with a minimum investment of Rs. 500/- per year also.
(iv) A loan can also be obtained on PPF A/c.

If a person has defaulted in investing the minimum in his PPF a/c he can reactivate his account by investing the minimum amount required and paying a nominal penalty of Rs. 50/-.

Year Ending Profits

With this another Financial Year coming to an end here are some important steps to be taken in the form of links :

1. List priorities while choosing tax-saving scheme

http://www.cainindia.org/news/3_2009/list_priorities_while_choosing_taxsaving_scheme.html

2.  Personal Tax: 10 things to do before March 31

http://www.cainindia.org/news/3_2009/personal_tax_10_things_to_do_before_march_31.html

3. Be careful while filing your tax return

http://www.cainindia.org/news/2_2009/be_careful_while_filing_your_tax_return.html

Read all the links carefully to make tax returns easier.

Diwali Greetings

WISHING ALL OF YOU A VERY HAPPY AND PROSPEROUS DIWALI. MAY THE GODESS LAXMI EMPOWER YOU AND YOUR FAMILY WITH HER NINE BLESSINGS* NAME* FAME* WEALTH* HAPPINESS* HUMANITY* GYAN* BHAKTI* SHAKTI*

HAPPY DIWALI

Tax saving Instruments

As per the Indian Income Tax Law in computing the total income of an assessee being an individual or HUF benefit of deduction to the aggregate of Rs. One lakh rupees is given.  The deduction is available provided the amount is invested /deposited or paid by the assessee in any of the items listed in section 80C of the Act. The most common type of investments/payments for which deduction is available are:

1.  
   1. Payment of Life Insurance Premium for himself, spouse and children and in case of an HUF payment of Life insurance Premium for any of member thereof.
   2. Contribution to Public Provident Fund. (max. upto Rs. 70,000/-)
   3. Contribution by employee to Recognised Provident Fund.
   4. Contribution by employee to Appproved Superannuation Fund.
   5. Any security specified by Central Government for this purpose.
   6. Contribution to Unit Linked Insurance Plan.
   7. Payment of tution fees for children for full time education in India (available for two children only)
   8. Repayment of Housing Loan taken from Central Govt, State Govt or Bank and other specified institutions.
   9. Term Deposit for not less than 5 yrs from scheduled bank and which is in accordance of scheme.
   10. Five year deposit in Post Office Time Deposit Scheme.
   11. Subscription of Units of Mutual Fund Specified for this purpose.
   12. Subscription for National Saving Certificate VIII issue.

 

 

Full Text of this section on available on the below mentioned link.

http://law.incometaxindia.gov.in/TaxmannDit/Displaypage/dpage1.aspx?md=2&typ=cn&yr=2008&chp=194

Banking Cash Transaction Tax

In order to trap the black money our honorable Finance Minister Mr. P. Chidambaram has levied Banking Cash Transaction Tax in the Finance Act 2005. This tax is levied on cash withdrawls from the bank above the specified limits. This tax is applicable from all cash withdrawls from June 1, 2005.

This tax here in fourth referred as BCTT is levied on cash withdrawl (by whatever mode) on any single day from an account (other than saving bank account) maintained with any bank in India (except the state of Jammu and Kashmir) exceeding the following amount:-

Account (not being saving

Bank a/c) maintained by-                       Amount of withdrawl

Any individual or HUF                                     Rs. 50,000

A person other than any individual or HUF            Rs. 1,00,000

 

 

Term Deposit in the name of                    Amount of withdrawl

Any individual or HUF                                       Rs. 50,000

A person other than any individual or HUF           Rs. 1,00,000

BCTT is levied @ 0.1%  of the value of every such taxable banking transaction.

In the Finance Act 2008 our finance minister has withdrawn this tax from 01 April 2009. This means that on or after 01st April 2009 any sum of cash can be withdrawn from the bank account without paying any tax. As per him the purpose for which this tax was levied has been fulfilled . But no one know that whether the purpose has been fulfilled or the tax has been withdrawn as part of a statregy to capture the vote bank in the forthcoming elections.

Permanent Account Number (PAN)

I think that my readers are very familiar with this term. Under the Income Tax Act

every assessee is liable to get PAN before he files his tax return  in the department.

 PAN is a unique 10 digit number which is issued by the income tax office to the

person applying for it. Every digit in a PAN signifies a meaning in itself.

 

To know about the need of PAN and its importance click on the below link

http://www.incometaxindia.gov.in/PAN/Overview.asp

 

This contains a series of FAQ’s on PAN which is issued by the Income Tax

Department.

 

Hope it will be useful to you.

Computation of Tax

The following is a short performa of computation of tax:

1. Compute Tax on long term Capital Gain @ 10% or 20%                      xx

2. Compute Tax on winning from lotterries, crossword

Puzzles, races ,etc                                                                               xx

 

3.  Compute Tax on other income at normal rates                                      xx

                                                            Total Tax                                    xx

Less: Rebate / Relief                                                                                   x

                                                                                                                xx

Add: Surcharge (If applicable @ 10%)                                          x 

                                                                                                                xx

Add: Education Cess @ 2% + 1%                                                             x 

                                                                                                                xx

Less: 1. TDS                            xx

          2. Advance tax               xx                                                             xx

                                                                        Net Tax Liability              x