Q 1. Will Car fuel considered as taxable salary?

A reimbursement of car fuel would be treated as non taxable provided that the employer is including the same in its calculation of fringe benefit tax

Q 2. Which illness are considered in critical diseases, which have the exemption in Income tax for the payment towards treatment or medication of the disease.

1)Neurological diseases  where disability level is 40% above - a) Dementia b) Dystonia Musculorum deformans c) Motor neuron  disease d)Ataxia e)Chorea f)Hemiballisums g) Aphasia h)Parkinson’s disease 2) Malignant cancers 3)Full down AIDS 4)Chronic renal failure and 5) Hematological disorders: a)Hemophilia b)Thalassaemia.

Q 3. My current package is 2.7 lacs what is the tax liability that I have to pay and the alternate to reduce the same.

For 2008-09 on Rs.270000 your tax liability will be Rs 9270. Upto an income of Rs. 180,000 women assessee are not required to pay tax. Beyond that, upto an income of Rs.300, 000 you need to pay tax @ 10%. There will be a cess on the tax of 3%   You can save such tax by making investment of upto Rs. 100,000 under 80C  and upto Rs.35,000 under 80D towards medical insurance. You can also claim interest on housing

Q 4. I am showing rent of 40,000/-, LIC of 15000/- ICICI Prudential pension plan of 10000/- and ppf of 5000/-. My total annual package is 2.8K and my medical coverage if 10000/-. How much do I have to still invest to avoid tax deductions

From your taxable income of 280000 you are as of now claiming 30000 under 80C and 10000 under 80D. This leaves a taxable income of 240000. Firstly, you need to check if your pay includes House Rent Allowance, in which case a portion of this allowance may be exempt since you are incurring a cost on rent. Typically upto an Income of Rs.1 50,000 there is no tax. You can invest a further 70,000 under 80C and a further 20000 under 80D for mediclaim for parents. If this was done, there would be a taxable income of Rs.150, 000 and hence no tax

Q 5. What are the set norms for selecting the income tax returns for the Asst Year 2008 -09 for scrutiny by the income tax authorities

The set of norms are decided by the Income Tax Authorities. However typically, if any exemptions or deductions have been claimed in excess of Rs. 10 lakhs the same can be subjected to scrutiny. There is also a CASS system where computerized selection of scrutiny cases is taken up based on investments made and reported by the investee

Q 6. Which allowances are exempted from income tax? Whether special compensatory allowance exempted from income tax? Whether Andaman Special Allowance exempted from income tax?

Notified Allowances exempt from tax are: Special Compensatory allowances for working in hilly areas, borders &remote areas, tribal areas, children's education allowance upto Rs. 100 per month for a maximum of 2 children, hostel expenditure allowance upto Rs. 300 per month for a maximum of 2 children, Field area allowance, and a transport allowance of upto Rs. 800 per month. Special Compensatory allowance, if of the above nature, will be exempt from tax.

Q 7. I am in bhilai steel plant as a chargeman and 2007-08 I have in cash my ltc amount worth Rs 35000/- I want to know whether it is taxable or there is any clause to save my income tax on that ltc amount

If a leave travel concession is given to meet the actual cost of travel for you and your family in India and has been availed twice within a block of 2 years, you can claim the same as exempt.

Q 8. My age is 69 and my total income will aggregate Rs.2,25,000/.as at 31.03.2009. How do I save the tax burden?

As you are Senior citizen your income will be exempt from tax upto Rs.225, 000 for year 2008-09

Q 9. Can deduction u/s 80G be claimed by a salaried employee? I received two month salary for the year 2007-08 in the year 2008-09 as I was on leave for that period and it was decided not to pay me but later on they paid so how do I account for it and what’s my tax liability?

Yes, 80G can be claimed by salaried employee. Salary received for 2007-08 will be taxable in 2008-09 since the decision to pay this salary was taken later.

Q 10. I am working in IT firm. Went to Switzerland for project work. During that period I got ALLOWANCE from the company. I have done some savings and transferred the money online through ICICI into my Indian account. Is this allowance TAXABLE in India? Do I need to declare it as INCOME? Please confirm.

Yes, this allowance will be treated as additional salary and will as such be taxable in India.

Q 11. What is the treatment given to the expenses for son's college fees and the medical expenses of the family fro the income tax purpose?

The college fees of upto 2 children can be claimed under 80C within the maximum limit of Rs.100, 000 along with other investments. Medical Premium paid for the self, children, spouse and dependent parents can be claimed upto limit of rs.35, 000 (Rs.15000 for self and Rs.20000 for parents). A deduction under 80DD is available for medical treatment of a dependant family member who suffers from a disability upto Rs. 50,000 and from a severe disability upto Rs. 75,000.

Q 12. My income is 1200000/an, I have home loan Rs.850000/- & invested more then 100000/yr, have no children & where I will invest for farther tax saving?

As you said you have already invested Rs.100, 000 which we assume is in investments which are eligible under 80C. Further you can claim a deduction for mediclaim paid upto Rs.35, 000 (Rs.15, 000 for self and Rs.20, 000 for parents). Repayment of principal amount of home loan is allowable as a deduction under 80C upto limit of Rs.100, 000 along with various other investments. In case where a loan is taken for acquisition of a property which is self occupied and not rented, Interest can  be claimed upto Rs.150,000 under sec.24 provided loan is taken after 31.3.99. If the loan is for a property which is earning you rental income, you can claim entire amount of interest paid. It is assumed that you are salaried and the income of 12 lakhs per annum is your salaried income

Q 13. Income tax rules came in force from which year in India?

Income tax rules came in force from 1962

Q 14. If I am a proprietor and I donate some amount to a charitable institution, what should be the procedure to get deduction and how should I pay, whether in cash, cheque or kind?

To get a deduction, the trust or association to which you donate should be certified under section 80G - you must receive the receipt and an 80G certificate valid for the year in which the donation is given. Donation can be given by cheque r by cash withdrawn from your regular bank account. There are no tax benefits for donations in kind

Q 15. Are the arrears liable for the tax; if so in which section or if not under which section it is not taxable for the Govt employees.

Arrears of salary are taxable even for government employees, but you may get a rebate under 89 if the receipt of arrears is resulting in you being assessed at a higher tax slab rate than that at which you should otherwise have been assessed.

Q 16. What is the cost inflation index for financial year 08-09?

Cost Inflation Index for 2008-09 is 582

Q 17. What is the cost inflation index for financial year 08-09?

Cost Inflation Index for 2008-09 is 582

Q 18. I am paying Rs 100000 on my wife's LIC policy per annum. But her name is with her old initial. Can I show as an investment by me?

Yes, you can claim a deduction for the same. But it is advisable to change the name.

Q 19. I hold a US passport and have the Overseas Citizen of India (OCI) card. I plan to retire in India. Are the monies that I remit to myself in India taxable? This is money that I earned while in the US.

No, the money remitted to India from your past earnings in the US while you were a resident of the US and not a resident of India and is not considered as taxable income.

Q 20. My gross salary is 7, 20,000. So far no investments. Monthly around 4,000/- will be deducted as PF. tell me how can I save from tax? Before what time I have to invest?

You can save tax by making investment under 80C upto Rs.100, 000 out of which you would have already invested around Rs.48, 000 on PF. The balance needs to be invested before 31st March 2009. You can also claim mediclaim upto Rs.35, 000(Rs. 15,000 for self plus Rs. 20,000 for parents if they are senior citizens). You can claim interest on a housing loan upto a maximum of Rs.150, 000 assuming the property is self occupied and the loan was taken after 1.4.1999.

Q 21. My mother is now NRI. She wants to sell her home in India. Will she has to pay income tax in India?

Yes, even if she is an NRI, gain from sale of a flat in India is taxable.

Q 22. For the year April 2008 to march 2009 what is the last date for filing returns for an individual 2.As seen in the quiz if it is July 31 2009 for the above query is the investment after March 2009 counted for tax exemption benefit.

The last date for filing a tax return for 2008-09 would be 31st July 2009. You can file a belated return for that year by 31st March 2011. If the tax return is filed after 31st March 2010, there would be a penalty for late filing of Rs. 5,000. If the return is filed after 31st July 2009, and there is a tax payable there will be an interest payable under section 234A. Further any losses incurred during the year such as a capital loss will be not carried forward unless the return is filed in time i.e. by 31st July 2009. .2) No, Only investments made till 31st March 2009 can be considered for F Y 2008-09.

Q 23. I am a handicapped person. How much tax benefit can I get as per new tax laws? Kindly clarify

You will get deduction under 80U for Rs.50, 000 in case of a disability and Rs.75, 000 in case of severe disability, but to claim the same you need a certificate from the Chief Medical Officer of a Government Hospital certifying the disability.

Q 24. Upon reading your home page, I understand that you can save upto Rs 1, 35,000/- for Sec 80C & 80D combined. While I know that limit for 80C is Rs.1, 00,000? /- and 80D is Rs.15, 000/-, under which section does the remaining Rs.20, 000/- fall?

You can additionally claim under Rs. 20,000 under 80D towards mediclaim paid for a parent who is a senior citizen.

Q 25. Exemption can be (80C+80D) =1.35 lacs or restrict to 1 lakh.

You can claim maximum deduction under 80C of Rs.100, 000 and under 80D of Rs. 35000.

Q 26. I would request you to brief me about section 80DD as my father (dependant) is handicapped person with total Blindness. Currently I am taking care of all his needs and medical treatments. Currently I have Govt issued handicapped certificate and it is duly signed by Govt doctor. I would like to know what are the documents I need to submit to get benefit of section 80DD. 1. Any general medicine bills to be produced or only handicapped certificate is enough? 2. Is there any specific form to be submitted? If yes, Pls provide me the details.

If you are incurring expenditure for medical treatment of your father who suffers from a severe disability you would be entitled to a deduction of Rs. 75,000 for the year. The existence of a severe disability will need to be certified by the Chief Medical officer of a Government Hospital in Form 10IA. No other documents need to be filed.

Q 27. How to save tax? 2. How to invest money smartly so that it actually grows not just stuck in any plan?

You can save tax by making investments which yield income which is tax free – such as dividends and long term capital gains through transactions executed on the Stock Exchange. You can also save taxes by making tax saving investments under 80C – such as insurance, annuity, pension funds and equity linked saving schemes and by taking medical

Q 28. In one of your reply you had clarified that " certain notified allowances are exempt from tax provided it can be demonstrated that expenditure has been actually incurred" , Could please list those allowances

Notified Allowances are: Special Compensatory allowances for working in hilly areas, borders &remote areas, tribal areas, children's education allowance upto Rs. 100 per month for a maximum of 2 children, hostel expenditure allowance upto Rs. 300 per month for a maximum of 2 children, Field area allowance, and a transport allowance of upto Rs. 800 per month.

Q 29. After all deductions from taxable income I am due of Rs 14709 as tax which is being recovered from my pay. Apart from section 80c and D is there any possibility of setting the tax amount by way of investment in life insurance. My age is 59 yrs with DOB 25/11/1949.

No. All the tax deduction you could avail of have already been covered under 80C and 80D.

Q 30. I have a partnership firm I like to save tax on firm can u help without investing share

The share of profit received from the firm would be tax free in your hands.

Q 31. I got golden handshake from my employer on dec08, Got severances money Rs 9 lacs.

After TDS I got 6 lacs in hand. My salary till November is Rs 3 lacs. I have maximum investment under sec 80c & medical insurance. Is there any way to save some more tax?
Severance money which is a compensation for retirement over and above gratuity would be taxable unless it was paid under a Voluntary Retirement Scheme which was as per prescribed tax guidelines - in which case it could have been exempt subject to a maximum of Rs. 500,000. If the severance pay has been given as a payment of arrears of salary, a benefit under 89(1) can be claimed. There are however no other ways to save more tax.

Q 32. Pl arrange to furnish me tax plus savings schemes?

You can save tax by making investments which yield income which is tax free – such as dividends and long term capital gains through transactions executed on the Stock Exchange. You can also save taxes by making tax saving investments under 80C – such as insurance, annuity, pension funds and equity linked saving schemes and by taking medical insurance.

Q 33. Which agriculture income is tax free for individuals in West Bengal?

All the income which can be considered as agricultural income is exempt from tax. There is no specific provision for West

Q 34. If investment by way of payment of insurance premium is made which is beyond Rs 1, 35,000/- and hence do not qualify for tax benefits at the time of investment, whether the maturity value of such investments (i.e. beyond Rs 1, 35,000/-) also is tax-free?

Yes, maturity value of LIC policy is exempt even if the investment was not claimed as a deduction under 80C

Q 35. What can I do for savings of 8000?

You can save taxes by making tax saving investments under 80C – such as insurance, annuity, pension funds and equity linked saving schemes and by taking medical insurance. Depending on the tax slab which you fall in, you need to invest an appropriate amount into various schemes under 80C so that it translates into a tax saving of Rs. 8,000. If you invest Rs. 80,000 and your tax rate is 10%, you may save Rs. 8,000 of tax.

Q 36. What is Section 10(23c) of Income Tax?

Section 10(23C) grants a tax exemption to the Income earned by charity funds like the Prime Minister's Relief Fund and to hospitals /educational institution which fulfill certain conditions.

Q 37. I am a senior citizen, but now have an appointment in government on a Board and have a monthly salary. My pension and this salary work out to nearly Rs.3 lakhs a year. What are the tax saving options open to me. Please advise

For Financial year 2008-09, as you are senior citizen,  you will get a tax exemption of upto Rs.225,000.You can further save taxes by making tax saving investments under 80C – such as insurance, annuity, pension funds and equity linked saving schemes and under 80 D by taking medical insurance.

Q 38. Purchase of a car or taking a car loan can be shown to save tax

In case you have Business income and you are using car for that business, you can claim car running expenses, depreciation on the car and interest on the car loan against your business income.

Q 39. Saving I can show more than 1lakh or equal to 1lakh

The maximum saving eligible for a deduction under 80C is Rs. 100,000 and a further deduction for medical premium paid under 80D for upto Rs. 35000

Q 40. Is 9%Senior Citizens Saving Scheme 2004 investment exempted from tax under Sec 80(c)?

Yes, 9% Senior Citizens Saving Scheme 2004 investment is now covered for a deduction under Sec 80C

Q 41. Is Senior Citizens Saving Scheme covered under Sec80(c)?

Yes, Investments under the Senior Citizen Saving Scheme, 2004 is now covered u/s 80C

Q 42. Which investments u/s 80[c] are allowed to Non Resident Indian?

Section 80C exemption is available even to Non Residents. However a Public Provided Fund Account cannot be opened by a Non Resident. Similarly it is possible that an investment which is otherwise eligible for an 80C deduction does not permit investment by a Non Resident.