Income tax Provisions and Rules - Residents and NRI's

1. Welcome

2. Types of Taxes
Direct Tax
1. Income Tax
2. Wealth Tax
3. Property Tax
 Indirect Tax
1. Sales Tax- It is charged at the time of
supply / sale of goods
2. Excise Duty – Levied and collected
on goods manufactured in India.
3. Customs Duty- Collected on the
goods imported or exported out of the
boundaries of the country.
4. Service Tax

4. Index
 PAN
 Meaning, Planning and Pre-cautions:
Salary
House Property
Business/Profession
Capital Gain
 Senior Citizens
 NRI
 AIR
 Common Rules.

5. PAN - Compulsory
 Sale or purchase of immovable property of Rs.
Five lakh rupees or more
 Time deposit with Bank, Post office exceeding
Rs.50,000
 Sale or purchase of Securities exceeding Rs.
One lakh
 Opening a bank account
 Application for telephone / cell phone
 Payment to Hotel and restaurants exceeding
Rs.25,000 at any one time
 Deposit in cash aggregating to Rs.50,000 or
more during any one day.
 Cash payment exceeding Rs.25,000 in
connection with foreign travel like ticket,
foreign currency, travelers cheque etc.,
 Deduction of TDS at lower / normal or NIL
rate, before 1st week of April every year.

6. Income from Salary
Salary
 Less than Rs.5 lacs of salary Income not required to file tax returns.
 Interest on housing loan on self occupied / let out property needs to be furnished to Employer.
Tips for Tax Planning:
a. In case of company leased accommodation, if the property is in spouse name of the employee, it would have
additional tax advantage.
b. Tax planning on Company leased accommodation – self lease,
b. Submit Interest on Housing loan and investment u/s 80 C to you employer on time, to avoid excess deduction
of TDS from salary.
C. In case if you are paying insurance premium for your dependent parents avail the addition deduction upto
Rs.20,000 u/s 80D
c. Do not discontinue your tax filing. Though the return filing date is 31st July , the returns can be belatedly filed
upto 31.03.2012, for the current assessment year.
d. In case of an employee who has worked in more than one company during the year, where two Form 16s are
issued, it is recommended to submit the first employers form 16 to the other, to avoid payment of additional tax
liability and interest after the year end.
Precautions:
(i) Check Form 26AS to make sure that, your TDS matches with the amount remitted.
(ii) Avail the workings on ESOP, FRA, other Perquisites, Gratuity etc.,
(iii) In case of worked for more than two companies during the current year, pay advance tax before 15th March.
(iv) Do not divert your salary income to your spouse’s name for investment. Clubbing provision will attract .

7. Income from House Property
House :
 Income from every house property whether self occupied, let out or vacant is
chargeable to tax.
 The annual value of self occupied property is NIL, for let out it is actual rent
received and for vacant either actual rent received for part of the year for which it
was occupied or reasonable rent.
Tips for Tax planning:
 New property can be purchased in the names of different family members.
 Interest on housing loan is allowed even it is borrowed from family members.
 For let out property actual property tax paid during the year relating to previous
years (arrears) allowed for deduction.
Precautions:
 If you have more than one house, then the second house is said to be deemed to be
let out.

8. Income from Profession
Profession:
Any income derived from Business, profession, trade , commerce is chargeable under
“Business Income”
Income from Profession more than Rs.15 lacs, audit of accounts compulsory.
Tips for Tax planning:
 Avail maximum benefit available for all “Deductible Expenses”
 Where certain expenses are allowed only on actual payment bsis ensure that such
payments are made before filing return of income.
 Acquisition of any new asset be planned before 30th September to avail full
depreciation for the year.
Precautions
 Failure to get the accounts audited in time attract penalty upto Rs.1,50,000.
 Non maintenance of books of accounts penalty upto Rs.25,000.
 Non filing of returns within due date, disqualifies for carried forward losses on
business.
 Do not make any cash payment of Rs.20,000 or more in cash, otherwise the payment
will get disallowed.

9. Capital Gains
Capital Gain:
 Any profit or gain arising from the transfer of capital assets
during the previous year is chargeable as LTCG/ STCG
depending on the period of holding the asset.
 More than 36 months (12 months in case of securities)
Tips for Tax Planning:
 Income below Rs.5lacs can plan for STCG since it is taxed
under 10% slab, and above Rs.8 lacs can plan for LTCG @
20%.
 STCG can be planned in the year when there is already a
Short Term capital loss / it is likely to arise.
 Take the maximum benefit of exemptions u/s 54,54B to
54H.
Precautions:
 Exemptions need planning prior to transfer of capital asset.
 Basic exemption limits not available to NRIs on LTCG.

10. Senior citizens
Senior Citizens:
 For AY 2012-13, age limit for the category has been reduced
from 65 years to 60 years. Applicability is not for during the
year.
 Very Senior Citizen – 80 years and above.
Tax Planning Tips:
 Pension is taxed under “Income from Salary” and any family
pension is taxed under “Income from other source” with an
exemption upto Rs.15,000 .
 Plan for Ancestral property and Partition of Assets.
Precautions:
 Inform your PAN to Bank and file Form 15 H.
 Maximum amount upto which income is not taxable is
Rs.2,50,000 p.a.
 Medical insurance premium Rs.20,000 u/s 80D and for
specified deceases upto Rs.60,000.
 Register will or gift deed at appropriate time to plan for
ancestral property.
 Pay no tax upto Rs.5,40,000.

11. NRI
 If a NRI is paid salary outside India for his services rendered in India, this income is
taxable in India.
 For a person leaving India, tax clearance to be obtained from Income Tax
Department, in that case, salary / any income is taxed in the same year of earning.
 The money received from NRI thro’ NRE account is not taxable in the hands of the
recipient.
 Income from House Property and Capital Gains are taxed in the hands of NRI as
Resident Indian.
 Need not file his return if the taxable income is below the maximum amount not
liable to tax ; TDS is done at 20%.
 For LT and ST capital gain basic exemption limit is not allowed.
 Interest earned on NRE account is tax free.
 NRI can buy property but not agriculture land.
 Your global income is not taxable if u r a RNOR. Say for 2 years after that global
income is taxable in India.
 Once u go abroad / become a NRI, need to intimate Banker DP about the status, so
that NRO account is created.
 After a stay of nine years abroad, if a person returns to India, during the current year
Resident and for another 2 years, RNOR , later taxed according to DTAA
 Its illegal to continue normal savings bank for a NRI, instead of NRE
 NRO account is taxable and TDS is at 20 / 30%
Case 1 : Purchase of property from NRI.

12. AIR- Annual Information Report
 There are certain specified persons like Banks,
Credit Card Agencies, Mutual Funds, Sub
Registrar, Companies issuing shares through
public, RBI are required to submit reports on
certain specified high value transactions like
 cash deposit of more than Rs.10 lacs during the
year in savings bank account
 Credit Card payments aggregating to Rs.2 lacs or
more during the year
 Mutual fund purchase of Rs.2 lacs or more
 Payment to purchase of shares of Rs.2 lacs
 Purchase or sale of immovable property of Rs.30
lacs and more
 RBI Bonds of Rs.5 lacs or more

13. Common Tips
 Creation of HUF / Trust.
 Joint Registration of Property.
 Joint Applicant / Co-applicant, on Housing Loan.
 Respond t0 Income Tax notice – personal appearance /
Representation/ Rectification.
 Do not disclose you PAN number unless and until it is asked
by authenticated agencies.
 Avoid cash deposits as much as possible.
 Continuity of filing income tax returns, though there is NIL
income.
 File Income Tax returns on or before due date 31st July or
belated return by 31st March.
 If you are a NRI specify in your income tax return
 Keep explanation of all credits and debits of >Rs.50,000 into
your bank accounts.
Online mechanism
 Filing of Tax returns
 Payment of Taxes
 Refund Status
 Tax credit verification - Form 26AS

15. Thank you
CA. Sujatha Raghuraman
Email : Sujatha.raghuraman.blr@gmail.com
Phone : 99455 98565