The month of March will soon be over. We are left with the last week of this financial year. For most companies, February is probably the deadline set for the employees to make their investment and tax saving declarations for the Form-16 document. But, we do see a number of procrastinators, postponing things till the end, don’t we? Nevertheless, you are entitled to the tax benefits for all investments that you make before March 31, 2014. In fact, the last week of March is the pick period of activity in most of the Insurance and Mutual Fund companies and banks, where people rush to open their Tax Saving FDs. Here are some answers to your quarries:
Q- I have missed my company’s deadline (15 February) to declare my investments and save tax. I have made some investments in the month of March. Please advise.
-Bhaskar Dutta, Kohima
A- Don’t worry; the world is not coming to an end. You can do the adjustments yourself when you file your Tax Return forms and then submit it along with your form-16 and the additional documentation. However, this activity is a little complicated and any mistakes in your tax returns could prove costly. So, it is better you consult a competent tax consultant and take their help in filing your tax returns.
Q- Can I avail the maximum amount of my LTA limit?
-Along, Chumukedima
A- Please remember the amount of LTA which you have spent is tax free, but the remaining amount is considered fully taxable income. For example, if your LTA is Rs. 50,000/- this year and you went on a family trip and claimed an LTA of Rs. 35,000/-. The remaining 15,000/- rupees is fully taxable and will be added to your taxable salary
Q-I think my company has deducted excess TDS. What to do now?
-Bikash Jain, Dimapur
A- These days the tax returns process is simplified very much and people are getting their refunds within months of filing their tax returns. Usually people with low refunds get it faster than those that have heavier refunds. Usually the authorities scrutinize tax returns that have heavy refunds to make sure the calculations are right before they pay out the refund. Smaller numbers get processed faster.
Q-Our apartment is in my wife’s name. Can I claim HRA?
-Sumit Sengupta, Guwahati
A- No, you cannot. As you are living as a family, ideally speaking you are not supposed to claim HRA. However, if the other family member is filing tax returns and is willing to include the Rent as an income in his/her tax returns, then you can claim HRA. You need to mention their PAN Card number in your Rent Receipt to establish the connection. Husband and Wife cannot pay rent to one another. Even father/son, brother/sister kind of combinations are not allowed since they are of the same family but they aren’t rejected due to the fact that they may be considered separate families. A husband and wife cannot be part of two separate families and hence this option is not available.
Q- Can I buy insurance in my sister’s name?
-John Lotha, Shillong
A-Never make payment of Life Insurance premium for your parents, for your brother and for your sister. I know you love all of them but the fact remains if you make the payment the tax deduction will not be allowed to you as per section 80C.
Q- I am a regular reader of your column, and have decided to invest in PPF (Public Provident Fund) from April. Please advise.
-Abu Angami, Kohima
A-PPF is the only financial product which has EEE (Exempt Exempt Exempt) tax status. It means the investment gives you tax benefit, interest is tax free and the maturity amount is tax free as well. If you are planning to invest in PPF for tax saving, do it before 5th of the month. PPF interest for the month is calculated only if you contribute to it before 5th of a month. If you invest beyond it, you stand to lose out on the interest for the month. If you are planning to invest in PPF systematically every year, you can do it before the said date.
The writer is the Principal Financial Planner at EconPenny. You can chat-twit-mail him at facebook@dipankar.jakharia | twitter@d_jakharia | dipankar.jakharia@gmail.com
