If I take a loan other than house renovation loan to renovate my house, what would be the tax implications? Will the interest paid be tax deductible?
Interest paid on loan utilized for the renovation of a house shall be allowable as a deduction under the head “income from house property”. However, the amount of deduction shall not exceed Rs30,000. Note that you shall be entitled for the deduction as long as you are able to substantiate that the loan has been actually utilized for the renovation of the house.
I believe that once direct taxes code (DTC) comes into effect, savings in Public Provident Fund and Employees Provident Fund (EPF) will become taxable at the time of withdrawal. Is that true?
As per the proposed DTC, any payment from an EPF to which the Provident Funds Act, 1925 applies or from any other EPF set up by the Centre and notified by it in this behalf, shall not be included in the total income. Thus, any amount withdrawn from the aforesaid funds shall not be taxable subject to conditions prescribed therein. Though it was proposed under DTC earlier that withdrawal from the aforesaid funds will be taxable, the government has exempted such withdrawals.
I am 30 years old and have changed my job thrice. My annual income is Rs8 lakh. I have never filed returns nor have any investments to save tax. Can I file my returns now and is it essential to make investments?
As per section 139(1) of the Income-tax Act, an individual whose total income exceeds the maximum amount not chargeable to tax (Rs1.80 lakh for FY12) is mandatorily required to file his returns of income on or before the due date of 31 July immediately following the relevant fiscal year. A person who has not furnished the return within the due date may furnish the return before the expiry of two years from the end of the relevant fiscal year. Thus, for FY10, the returns can be filed latest by 31 March 2012.
It is not mandatory to make investments. Under section 80C of the Act, an individual can make investments in certain schemes such as EPF and insurance policies during the relevant fiscal year and claim deduction of the same from the total taxable income up to the extent of Rs1 lakh.
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Nitin Baijal director, BMR Advisors