Tax Related changes of 2010

New Income Tax Slab:
Income up to Rs 1.6 lakh - nil
Income above Rs 1.6 lakh and up to Rs 5 lakh - 10 per cent
Income above Rs 5 lakh and up to Rs 8 lakh - 20 per cent
Income above Rs 8 lakh - 30 per cent.

Additional deduction of Rs 20,000 allowed on long term infrastructure bonds for income tax payers; this is above Rs one lakh on saving instruments allowed already.

To Check how much Tax you are actually going to save with this new Slab, head to:
Indian's Investor Page.

NSC - National Savings Certificate

This is the fifth and final post of the series and covers NSC.

1. What is NSC?

NSC stands for National Savings Certificate.

NSC can be bought from any of the Post Offices.

It is available in denominations of Rs 100, Rs 500, Rs 1000, Rs 5000 and Rs 10000.

They cannot be en-cashed prematurely.

2. What is interest rate of NSC?
8% is the current rate of interest though it can vary with time.

3. What is the lock in Period?
Lock in period is 6 years.

4. How to get the money back?
After lock in period money can be refunded back to main account.

5. Is interest accrued on savings is Taxed?
Interest earned through NSC is taxable.

ELSS - Equity Linked Savings Scheme

This is the fourth post of the series and covers ELSS.

1. What is ELSS?

ELSS stands for Equity Linked Savings Scheme.

Unlike PF, PPF and FDs, ELSS invests money in equity market.

ELSS are almost same as Mutual Funds.

Dividend reinvestment option should be avoided as every time dividend is reinvested, dividend's lock in period starts from there.

Dividend payout option can be useful because dividend paid out is actually tax free.

SIP can be done for ELSS.

2. What is interest rate of ELSS?
As ELSS invests in Equity market, there is no guaranteed return. Return varies depending on Fund's performance and investment has risk.

3. What is the lock in Period?
Lock in period is 3 years.

4. How to get the money back?
After lock in period money can be refunded back to main account.

5. Is interest accrued on savings is Taxed?
Dividend paid out is tax free but other gains are taxed.

Further Reading:
List of ELSS Funds

FD - Fixed Deposit

This is the third post of the series and covers FD.

1. What is FD?

FD stands for Fixed Deposits.

Any FD of 5 years or more can be used as Tax Saving instrument.

It can be open in any Scheduled Bank. List of scheduled banks can be found at: ThankPlainInvest

If FD is in joint name, only primary holder of the policy can avail the tax exemption.

2. What is interest rate of FD?
Interest rate for FD varies from bank to bank.

3. What is the lock in Period?
Lock in period is 5 years.

4. How to get the money back?
After lock in period money can be refunded back to main account. Interest can be taken either quarterly or reinvested.

5. Is interest accrued on savings is Taxed?
Yes, interest accrued is Taxable.

Further Reading:
ThankPlainInvest
RaagVamdatt

Know your Tax Refund Status

I have my Income Tax Refund pending from 2005-2006.
I was procarsinating on same and today gathered some energy to check my status online since I took an off due to sickness.

Well, I couldn't find my refund status, but found two great sources.

If you forgot your PAN number, fill in first name, surname and DOB on Get Your PAN and know it in seconds.

Also, one can check Tax Refund Status here, by providing PAN number.

Very useful links.

PPF - Public Provident Fund

This is the second post of the series and covers PPF.

1. What is PPF?

PPF stands for Public Provident Fund.

It is a voluntary form of saving. Any individual, even non-earning ones, can open PPF account in their name.

It can be open in any National Bank or some selected Post Offices.

There can be only one PPF account in name of any individual. Joint PPF accounts are not allowed.

The minimum amount that has to be deposited is Rs 500 and maximum can be Rs 70000.

Up to 12 transactions are permitted per financial year.

If deposits are not made in a PPF account in any financial year, the account will be treated as discontinued. The discontinued account can be activated by payment of the minimum deposit of Rs.500/- with default fee of Rs.50/- for each defaulted year.

2. What is interest rate of PPF?
Interest rate for PPF accounts is fixed by Central Government every year in March / April.

3. What is the lock in Period?
Lock in period is 15 years from the time first time this account has been opened.

4. How to get the money back?
Full amount can be withdrawn after the lock in period.
After lock in period, it can be operated for another 5 years.

5. Is interest accrued on savings is Taxed?
No income tax will be applicable on money withdrawn after completion of lock in period. So, in a way interest is not taxed.

Further Readings:
Rediff
TaxGuru

EPF - Employee Provident Fund

Starting from Today, there will be a series of post that will cover different Tax Saving Instruments covered under Sec 80C.

This is the first post of the series and covers EPF.

1. What is EPF?
EPF stands for Employees Provident Fund. It is a mandatory form of saving. Employee and the employer, both have to contribute to this fund. 12% is the minimum that needs to be added to it and employer has to match till this amount. It is of two types:

Provident Fund (PF) - This is the mandatory part of EPF. It is applicable to all the companies that have more then 20 employees. If you work in any of such companies, 12% of your basic pay will get automatically added to PF and employer has to match this amount.

Voluntary Provident Fund (VPF) - Any other contribution to PF over and above 12% mandated amount is considered as VPF. Company is not liable to match this amount. Maximum contribution allowed towards VPF is 100% of Basic + DA (Dearness Allowance).

2. What is interest rate of EPF?
Interest rate for PF accounts is fixed by Central Government every year in March / April.

3. What is the lock in Period?
Lock in period is till you get retired. In general, till you turn 55, your money will be locked in PF.

4. How to get the money back?
Full amount can be withdrawn in case of:

Retiring after attaining the age of 55.

Retiring on account of disability (permanent and total).

Migration from India.

In case of downsizing.

90% of it can be availed after attaining age of 54 or within one year before actual retirement, whichever is later.

Various loans can also be availed against PF.

When shifting the jobs, PF balance can be transferred.

5. Is interest accrued on savings is Taxed?
No income tax will be applicable on money withdrawn at the time of retirement. So, in a way interest is not taxed.

Further Readings:
BPOPioneers
RaagVamdatt

List of Tax Saving Instruments

This is tax saving time. Time to use different instruments to save Tax Liabilities. Quick sheet to see various instruments available to save tax:

HRA

Staying on Rent - Claim HRA exemption

Deductions from Total Income

Medical Insurance Premium - Individual, Spouse and Children (Sec 80D)

Medical Treatment/Handicapped Dependent (Sec 80DD)

Interest on Educational Loan (Sec 80E)

Donation (Sec 80G)

Savings

Pension Fund

EPF

LIC Policy Premium

PPF (Public Provident Fund)

NSC (National Savings Certificate)

ELSS (Equity Linked Savings Scheme)

ULIP (Unit Linked Insurance Policy)

Fixed Deposit Schemes (5years or above)

NSC Interest

In case of housing loans

Loss from house property