Archive for May, 2009

How to pay taxes online?

May 11, 2009
E-payment of taxes (Income Tax and TDS) is mandatory for the following types of assesses:

  1. All Companies and firms
  2. 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:

  1. 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

  1. Select the relevant challan from the NSDL site and enter your PAN/TAN as applicable.
  2. Enter the challan details, and select your relevant bank and “Submit”.
  3. Select whether you are a Retail Internet Banking user or Corporate Internet Banking user.
  4. Log in to your Bank Internet Banking portal with your user ID and password.
  5. Enter the details of the tax amount and authorize the payment.
  6. 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

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Agricultural Income

May 8, 2009

Agriculture income is exempt under the Indian Income Tax Act. This means that income earned from agricultural operations is not taxed. The reason for exemption of agriculture income from Central Taxation is that the Constitution gives exclusive power to make laws with respect to taxes on agricultural income to the State Legislature. However while computing tax on non-agricultural income agricultural income is also taken into consideration.

What does the term Agricultural Income mean?

As per Income Tax Act income earned from any of the  under given three sources meant Agricultural Income;

(i)     Any rent received from land which is used for agricultural purpose.

(ii)   Any income derived from such land by agricultural operations including processing of agricultural produce, raised or received as rent in kind so as to render it fit for the market, or sale of such produce.

(iii)   Income attributable to a farm house subject to the condition that building is situated on or in the immediate vicinity of the land and is used as a dwelling house, store house etc.

 

Now income earned from carrying nursery operations is also considered as agricultural income and hence exempt from income tax.

In order to consider an income as agricultural income certain points have to be kept in mind:

(i)  There must me a land.

(ii)  The land is being used for agricultural operations.

(iii)   Agricultural operation means that efforts have been induced for the crop to sprout out of the land .

(iv)  If any rent is being received from the land then in order to assess that rental income as agricultural income there must be agricultural activities on the land.

(v)   In order to assess income of farm house as agricultural income the farm house building must be situated on the land itself only and is used as a store house/dwelling house.

 

Certain income which is treated as Agriculture Income;

(a)    Income from sale of replanted trees.

(b)   Rent received for agricultural land.

(c)    Income from growing flowers and creepers.

(d)   Share of profit of a partner from a firm engaged in agricultural operations.

(e)    Interest on capital received by a partner from a firm engaged in agricultural operations.

(f)    Income derived from sale of seeds.

 

Certain income which is not treated as Agricultural Income;

(a)    Income from poultery farming.

(b)   Income from bee hiving.

(c)    Income from sale of  spontaneously grown trees.

(d)   Income from dairy farming.

(e)    Purchase of standing crop.

(f)    Dividend paid by a company out of its agriculture income.

(g)   Income of salt produced by flooding the land with sea water.

(h)   Royalty income from mines.

(i)     Income from butter and cheese making.

(j)     Receipts from TV serial shooting in farm house is not agriculture income.

 

Certain points to be remembered;

(a)    Agricultural income is considered for rate purpose while computing tax of Individual/HUF/AOP/BOI/Artificial Judicial Person.

(b)   Losses from agricultural operations could be carried forward and set off with agricultural income of next eight assessment years.

(c)    Agriculture income is computed same as business income.

Wealth Tax

May 8, 2009

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

May 8, 2009

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/-.