Claim Tax benefit from Home Loan

You can get tax benefit from your home loan this year. The rates of interest being slashed on loans and there are different attractive schemes being offered by many banks and leading institutions, there are so many offers for buying a new home at this time.

Processing Fee: Claim tax deduction on that: There are many miscellaneous expenses before getting a home loan. The processing fee that are you paid for home loan, that fee is eligible for a tax deduction under  section 24 along with the interest paid also on home loan.

Missed the EMI payment: If you are missed or forgotten to pay any EMIs of home loan, you are still be eligible for claim tax deduction on the interest for the whole year.

No tax benefits on selling house and buy new one within 5 years: If you are planned to sell your old house and purchase a new house in next 5 years or from the date of taking the loan, you can forgot your tax benefits. The tax benefit is reversed and ready for the pay extra tax on your annual taxable income.

Source of fund for purchase a house from a relative loan: If you are taken a loan from a friend or relative to construct or purchase a property and are wondering about that if you can claim tax benefits, don’t worry you can claim it. As far as taxes go, the sources of the loan are not important. Its only counts that utilization of money for. Can you convince the tax authorities that the money you got from your friend was used to buy your house?  Before considering this point contact the tax professional or chartered accountant then, you are sorted.

Co-owner of property and borrower of loan: If you own a property and are paying the monthly EMIs for the loan that is in your name, then you can claim tax benefits on the home loan. Remember, you need to be both the owner and the borrower of the loan to enjoy the tax benefits.

Claim tax benefit for interest part in per-constructed property: It is widely known that you can start claiming tax benefits on your home loan only after the construction on house is completed and you take the possession of the property.

You can also claim the tax deductions on the installments that you paid while the property was being constructed and also allowed to claim deductions on the interest paid over a period of 5 years from the year of possession.

Account and Classification of Accounts

What is Account?

Account is a record of general ledger that is used to collect and record the debit and credit the amounts. In single line we can say the statement of an individual or a company where income expenses are shown and profit and loss is shown. For example: transaction related to individual expenses and income in form of cash and banks. 

Classification of Accounts:

An account is the primary building block of the accounting system of a business. A different account is maintained for each asset, liabilities, and owner’s capital revenue and expenses items. It is used to document to increase and decrease in these items those results from financial transactions. The financial transaction can be divided into 3 categories as listed below:-

1 Transaction related to individuals

2 Transaction related to property and assets

3 Transaction related to income and expenses.

These transaction need to be documented to find out whether the amount is credited or debited .A transaction record of an individual or an organization is known as an account. To put it differently, an account is a concise record of significant financial transaction. For each of the assets, liabilities, owner’s capital, revenue and expenses items, a separate account is maintained.

Account is categories in three parts:

Personal account: It indicates the account of an organization or an individual. These accounts document the transaction of a trader with person or organization. Each individual or organization starts a separate account for documenting transaction. This account get debited the individual or organization receives any benefits while it is credited the individual or organization lends some money or with any type of cash outflow. Personal account can be of following types:-

Natural persons account: Natural person means the document transaction connected to a person or individual direcly. For example: Rahul’s account, Kavita’s account etc.

Artificial person accounts: That record transactions that are connected to entities such as companies, institution, bank and firm. For example: State bank of India Account, M/s Ram and Bros. Account, etc.

Representative Account: Indicates account that represents a particular person or a group of persons. For instance, if the salary is due to an employee of an organization, an outstanding salary account would be opened in this example the outstanding salaries account stands for the account of the particular employees to whom the salaries is to be paid.

Real Account: Implies accounts that document transaction that are connected to a property or an assets such as furniture, land house etc. Real accounts are also divided into 2 accounts:

Tangible account: Those have a physical existence that can be touched, seen, measured, bought and sold. For instance Land and Building account, Cash Account.

Intangible Account: That can’t be perceived by sense, but measured in terms of value such as goodwill, patent, trademarks, and copyrights such account like Goodwill account, Patent Account Royalty Account.

Nominal Account: Points to the account that document transaction connected to expenses, losses, profit and revenues. These accounts are closed at the end of accounting period. For Instance, Purchase account, Sales Account salary account, rent account, commission account, and discount account.

Conveyance Allowance is exempt or taxable?

Conveyance Allowance: It’s also called travel allowance. The conveyance / travel allowance is offered to employees of a company to adjust for their travel from residence to and from respective work location. Allowances are generally offered by employer to an employee on of their basic salary component and it may or may not be taxable as per the Income Tax Act 1961.

In simple, we can say conveyance allowance is paid by an employer only if the there is no transportation facility is provided by the employer.  In case an employer is offered to his or her employee office transportation facility, conveyance allowance will not be provided to employees.

Limit for Conveyance Allowance:

For conveyance allowance there is no limit accompany can offered to his/her employees. However, there is a limit on the amount of exemption under the Income Tax Act as the conveyance allowance is given an exemption limit of up to Rs. 19,200/- per annum or Rs. 1,600 per month. The exemption is applicable of conveyance allowance is under section 10(14) (ii) of Income Tax Act and rule 2BB of Income Tax Rule.

Before April 2015, conveyance allowances taxation exemption limit was fixed to Rs. 800/- per month or Rs. 9,600/- per annum. In the budget 2015 the exemption limit is extended to Rs. 1,600/- per month or Rs. 19,200/- per annum for provided the tax benefit to the middle class taxpayers of the country.

You do not need to furnish the related document as a proof for conveyance allowance from your employer, it means that you will claimed the full amount i.e. Rs. 19,200/- per year tax exemption benefit under conveyance/travel allowance.

The calculation is not so much complicated you can simply take Rs. 1,600/- per month or Rs. 19,200/- per year. If the employer is given some allowance like special allowances, the conveyance allowances and other allowance is grouped with all allowances. Suppose your employer is provided some special allowance of Rs. 5,000/- per month which is fully taxable, you can deducted Rs. 1,600/- per month as a conveyance allowances and claimed the tax exemption for the same. You can do this after consulting the tax professional/ consultant.

Track Your Income Tax Refund

How to track Income Tax Refund:

If any individual or company file their ITR if any refund is filed we can check the refund status online from income tax website. If your refund process has been completed by your officer in charge, you will receive a message notify you of same.

There are two steps for claim income tax refund:-

1. Direct refund through transfer:

Excess paid can be refunded to you by credited to your bank account with ECS transfer. RTGS/NEFT are also used to transfer the tax refund directly into your account, by using your ten digit account number and MICR code, through State Bank of India.

You can also track refund status from Income Tax department website or through NSDL-TIN website by click on the option of status of refund. You will then need to enter your PAN number and the assessment year.

2. By Cheque:

You can track this by speed post service that has been task with delivering it, using the reference no. that the IT department will give you.

Interest payable on late in refund:

There are many cases reported that the tax payer do not get their refund in due time. So don’t panic about that because you will received an interest of 0.5% on your refunded amount for every month that the in case of refund amount is delay. The interest calculation commences from 1st April of the assessment year. If found that the reason for any duration of delay is attributed to you, you will not get any interest for that duration.

Outstanding Taxes setting off refunds:

The case may also arise that if you have some outstanding tax liability to pay. The Tax authorities have the power under section 245 intimation adjust against the refund or part of refund against any tax demanded which to set off your refund amount against outstanding taxes. However, this can only happen after intimation in writing is sent to you, proposing that this is the course of action that will be followed.

              Basically the difference of the actual amounts of money you have paid on taxes verses the amount of money have expected (liable to pay) under Income tax refund. You can save a lot of hard earn money by just declaring your investment and rent if any other permissible deductions like insurance, mutual funds, NSC certificates, post office time duration deposited (minimum 1 year)  certificates, Shares and equity investments tuitions fees of your children, home loan them to make sure you hard earned money stays in your pocket.

Income Tax Refund Procedure

What is Income Tax?

Income tax is a direct tax. It’s paid by everyone like individuals, HUF (Hindu Undivided Family), AOP (Associates of Person), BOI (Body of Individuals), corporate firms, Local authorizes, Companies and all other artificial juridical person that generates the income during a financial year.

Income Tax Refund: refund arises in those cases where the amount of tax paid by a person is more than the amount on which he/she is properly charged. This is noted u/s 237 to 245 of the Income Tax Act 1961.

Eligibility for Income Tax Return:

1.  If the tax you have paid in advance on the basis of self assessment is more than the tax payable on the basis of regular assessment. 
2.  If the TDS (Tax deducted at source) from salary, interest on security or debentures, dividend etc., is higher than the tax payable amount on the regular assessment. 
3.  If tax charged on regular assessment, get reduced due to an error in assessment process is resolved.

     4. If same income is taxed in foreign country (Government of India has avoid double taxation) and in India as well.
     5.Some investment which offers tax benefits and deductions are allowed which is not declared. 
     6. After the consideration of taxes you have paid and deduction you are allowed that tax paid amount is in the negative.

Procedure for claim Income Tax Refund:

The easiest way to file for your tax refund is declared your investments in Form 16 (life insurance premiums paid, house rent paid, investment in shares/NSC/mutual funds, bank fixed deposit, tuition fees etc.). When your filing ITR and submitted necessary documents, if your are fail do that have been paid some extra taxes you think you could avoided, you will need to fill Form -30.

Form-30 is basically a request for your case be looked into and your excess tax paid is refunded. Income tax refund claim need to be submitted before the end of the financial year. Your claim need to be accompanied by return in the form (prescribed under section 139).

Sample for Form-30

             I,………………………………………………………(your name), of …………………………………………………(address), do hereby stated that my total income computed in accordance with the provisions of Income Tax Act 1961, during the year ending on ……………(year) begin the previous year of assessment year commencing on the 1st April …………(year), amounted to Rs. …………….(amount); that the total income tax chargeable in respected of such total income is Rs. ………………(amount) and that the total amount of Income Tax paid or treated as paid under:

Section 199, is Rs……………. (amount).

I, therefore, a request for a refund of Rs……………(amount).

 Signature

(                        )

 I hereby declared that I was resident / resident but not ordinarily resident/ non- resident during the previous year relevant to the assessment year to which this claim relates and that what is stated in application is correct.

Dated: …../……/…………

Signature

(                         )

Note:

 1. This claim should contain a document of proof of return of income in a prescribed form, unless you have already made such claim to the Assessing Officer.

2. Non -residents whose income is subject to TDS should make a claim for refund to the “Assessing Officer, Non-resident refund circle, Bombay”.

3. If you have been charged tax under the provision of section 192 to 194, section 194A, and section 195 on your total income consists (dividend etc.) the claim should be accompanied by the necessary certificates recommended under section 203.

 Source  Form 30 : www.webtel.in/Image/30.pdf