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    Expert Answers - Last Minute Tax Planning for FY 2019-2020

    Expert Answers - Last Minute Tax Planning for FY 2019-2020

    Post any queries that you may have regarding Last Minute Tax Planning for FY 2019-2020. Our expert Dr. A. V. Senthil will answer all your questions within 4 hours. Post your queries on 5th March 2020, between 12:00 PM - 2:00 PM and get all your answers by 6:00 PM on the same day. You may choose to post your questions anonymously too.

    Team
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    • Wed, Mar 04, 2020, 11:48 AM

    Comments

    Bhaskar Mar 5 2020

    Question. : A person owns two houses H1 and H2 and is residing in both these by clubbing these two adjascent flats. There is no housing loan on these flats at present. Deemed income is charged on H2 and the assessee treats H1 as his residence for which the income is nil. Now if the assessee gifts the property through a formal registration to his spouse. 1. Will that deemed income be chargeable for this year until the transfer by way of gift?. 2. After gifting will the deemed income become nil? Later, say after 6 months if the spouse lets out that for rent , will that be clubbed in the hands of the assessee?

    Bhaskar Mar 5 2020

    @Bhaskar Dear Bhaskar Based on the facts shared by you, Im of the opinion that deemed income shall be chargeable till the Date of transfer through a Registered Gift Deed / Settlement Document. Post transfer, the income shall not be nil. Simple reason is that is the assessing officer will state that, during the normal course , the married couple will stay together in the same house. Hence he will assess income for H2 as let out. Assuming your spouse is a Home Maker, she will be falling under lower tax bracket. Also the new tax slabs are much better for her, from next financial year. So suggest evaluating which tax regime is best for her. Finally, not sure about the location of your flats . My suggestion is that you find out the process for merging both the flats into one. This will be more beneficial, but it is time consuming. Few states and union territories allow it. Have a great evening!

    Kasi Mar 5 2020

    Hi 10 to 12 L CTC - can use housing loan for tax exemption or can go for new format ?

    Kasi Mar 5 2020

    @Kasi Dear Kasi Three more data points will help me to answer better - Trust you are buying the first property in your name, you will be taking possession of apartment by March 31 2021 and it is an affordable housing flat which costs less than 45 Lakhs. If the answer is YES for all the above three, then suggest you continue with the old format, because you get additional tax benefits. The effective interest cost of your home loan will be in the range of 4% to 6%, depending upon the tax benefit claimed by you. The maximum benefit you can claim for new housing loan per annum is Rs. 3,50,000 under affordable housing scheme. New format will be beneficial to those, who are already staying in their own apartment (or) their spouse is claiming the income tax benefits pertaining to home loan, may work only for next few years (example may take a break for a doing further studies) etc. Old format is the recommended for those tax payers who save (or) spend about Rs. 2,50,000 or more under various heads of Chapter VIA. Kindly request to look at the latest issue (March 2020) of Parent Circle and Chellamey magazine - Print or Digital Edition. A two page article on this topic has been covered in detail. Happy reading!

    Sunder Mar 5 2020

    Please advise as to how I should go about utilising the maximum amount of deduction u/s 80C. Suggest how I can maximise the return on the locked in capital - should I go for fixed deposits or mutual funds or any other type of investment?

    Sunder Mar 5 2020

    @Sunder Dear Sunder, Good question. The best asset class over a period of 10 plus years is always equity. Having said this, there are exceptions - Example Real Estate and Gold. There are time periods in which these two asset classes has outperformed Equity. So to get the maximum return on locked in capital - please look at Equity Linked Savings Scheme for Section 80C and Equity based schemes under Section 80CCD(1B) - National Pension Scheme. Do a research on the Mutual Fund House, Fund objectives, Fund Performance and Fund Manager - Once you choose the right scheme, start investing on a regular basis through SIPs. The power of compounding will deliver amazing corpus when you retire. Happy investing! If you need assistance with MF Investing, you can visit website www.avsenthil.com and reach out to us via email or WhatsApp.

    Sunder Mar 5 2020

    Apart from sec 80C, 80D & NPS, is there any other section under which I can avail deduction from my taxable income as a salaried assessee?

    Sunder Mar 5 2020

    @Sunder Dear Sunder The other major deductions availed by tax payers include Section 80G (for eligible donations paid during the FY), Section 80 TTA (Bank Interest), Section 80 E (Interest on Educational Loan), Section 80 TTB (Interest income received by Senior Citizens), Section 80 U (Physical Disability), Section 80 GG (when rent is paid by the tax payer but HRA is not received).

    Asha Mar 5 2020

    Sir, thank you for taking up our questions today. With the current FY coming to a close, what are some last-minute tax saving tips that you would suggest for a family of 3.

    Asha Mar 5 2020

    @Asha Hi Asha, Would like to give you 4 tips, based on certain assumptions 1) Taking an Insurance Floater Top-Up Policy before 31st March 2020. This should cost you very less (depends upon the age of the insured) and comes in handy during emergencies. Typically employer provide basic coverage of 3 to 5 Lakhs per family, per annum. Premium paid is eligible for Sec 80D benefits. 2) Taking a term insurance policy - Not sure about the age of the kid. Ensure that you have a term cover for all liabilities and financial responsibilities (Example: kids education). Once again this should cost very less and premium paid is eligible for 80C benefits. 3) Assuming you want a pension, suggest taking NPS (National Pension Scheme) for Rs. 50,000 - Tier 1 Scheme. You will get tax exemption under Section 80CCD(1B). 4) Interest earned in our Savings bank account has to be shown as Income from other sources while filing the income tax returns. We get a rebate of Rs. 10,000 or actual interest credited, whichever is lower as per Section 80 TTA. Suggest reaching out to a Financial Planner or Tax Expert, who can provide holistic advise. You can visit website www.avsenthil.com and reach out to us via email or WhatsApp.

    Jeena Mar 5 2020

    For a first-time tax payer, what are your suggestions for planning it efficiently?

    Jeena Mar 5 2020

    @Jeena Hi Jeena If you are first time tax payer, then suggest the following in the descending order of preference 1. Voluntary Provident Fund 2. Equity Linked Savings Scheme 3. Public Provident Fund 4. National Pension Scheme It would be better if you start with financial plan including financial goals, your risk profile. This will help me to suggest the right investment vehicle. You can visit website www.avsenthil.com and reach out to us via email or WhatsApp.

    Team Mar 5 2020

    I dont have salary income this year. Wanted to sell one of my residential house property within this year so that the tax liability would be lesser. But it looks like the deal would happen only post 31st Mar 2020. Any tips?

    Team Mar 5 2020

    @Team Thanks for asking this question. Happy that you are pro-active in your approach. Sale deed registration date will be considered as Date of Sale, as transfer of title happens on this date. If you have planned to register post 31st March 2020, then the capital gains will be considered as accrued in next financial year. You have another 25 days in this Month (March 2020). Please see whether you could schedule the date of registration on or before 31st March 2020.

    Team Mar 5 2020

    Planning to invest 1.5 in PPF. It is maturing on 31st Mar 2020. Hope they will consider this for 80 C still? If I chose to close it post 31st March, I can get back the full amt. If I extend for 5 yrs, I can withdraw 60 % of it. Am I right?

    Team Mar 5 2020

    @Team Dear ___, Answer is Yes, you will get Section 80C benefits, even if you invest Rs. 1,50,000 on the last day. Suggest investing on or before 30th March 2020. Sometimes the local branch staff will be busy with year end closing activities. If you chose to close the PPF account on 2nd April 2020 or later, you will get the full amount, including the contribution made on 30th March 2020. If you extend the PPF account by another 5 year block, you can withdraw up to 60%. Only one withdrawal per year. So, you are right!