Budget 2011 & Income tax

In Union Budget, finance Minister Mr. Mukherjee proposed to raise the income tax exemption limit for general tax payers to Rs 1.80 lakh per annum from Rs 1.60 lakh at present and introduced a high new tax slab for senior citizens of 80 years and above. Also, he proposed to reduce the age limit for consideration as senior citizens from 65 years to 60.

The new exemption for Senior citizens will be for income up to Rs 2.5 lakh, higher from Rs 2.4 lakh now.

Forex tips for IT guys

While moving on a business trip to abraod location, employee gets forex as daily allowance.

Legally its like daily allowance and is not taxable as per India or foreign tax laws UNLESS spent as a whole at business trip itself. But most of time we bring some forex back as our savings. :)

Here the story begins.. Now as you have not spent the amount at your foreign trip, you need to pay taxes on that (Legally). But most of the people don't follow it.

This can bring you under the scrutiny, so here are some tips to play safe -

1. Before travel, keep some money here in india itself after discussion with your other colleugues abroad. Most of the time, total amount is not required. Why to carry more, if less is more than enough.

2. Prefer to spend Travellers cheque (TC) on business trip first and then switch to cash. TCs are more subject to legal catch as you need to necessarily submit your passport & other details to encash them.

3. On return to india, exchange forex as and when required and avoid encashing big amount in one go.

4. Keep withdrawing some amount from your salary account too. Don't depend on forex totally for daily expenses.

5. Don't deposit big amounts in your account at once, divide it in chunks of < 50000 and deposit then.

6. Prefer to exchange money with local vendors and avoid banks for two fold advantage. First, you will get good exchange rate and second you need not to show documents if you have good understanding with vendor.

Filing tax for salaried Employee

Lets learn this in 4 steps for the sake of easiness -
1. Sumbmitting details to company's finance dept. - Here TDS (tax deduction on source) will be calculated based on your income & tax saving intuments used. They calculate your final tax libility (only for the salary earned) & provide FORM 16 which contains details about your earning, exemptions & taxes.
2. Computing final tax libility - You should add your other sources of income in whatever comes out in form 16 (like income from bank interest etc, banks will issue a FORM 16A for that) to compute your final tax to be paid.
3. Filing ITR - Now the final thing is to file ITR[income tax return] using data collected. find my earlier posts to know the process and its components.
4. Collecting ITR ack - most of the time posted to the address you mentioned in your ITR.

Now keep DIN with you for income tax purpose

The government has made it mandatory for taxpayers as well as collectors to quote a unique document identification number (DIN) on every communication with the income tax (I-T) department.


The unique Document identification number (DIN), on the lines of numbers like PAN and TAN, will be quoted on "every" income tax-related communication, including returns to be filed next year for the financial year 2010-11.

I-T department generates DIN (Document Identification Number) which is essentially useful for error filling of income tax returns, for claiming refunds and other communication with the department by the assesses. Assesses will not be put to any trouble, as the numbers will be generated and allotted by the department itself.

According to section 282B of the Income Tax Act that deals with DIN, if the document sent to the tax authority does not bear this unique computer-generated number then "such document, letter or any correspondence shall be treated as invalid and shall be deemed never to have been received."

Direct Tax code from 1April, 2012

The Bill seeks to increase tax exemption on income from Rs. 1.6 lakh to Rs. 2 lakh and fix the corporate tax at a flat 30 per cent. As per the Bill, income from Rs. 2-5 lakh will be taxed at 10 per cent; Rs. 5-10 lakh at 20 per cent and 30 per cent thereafter.

The changes, when they take effect, will help save up to Rs. 41,040 for people earning more than Rs. 10 lakh a year. The exemption on savings and payment of interest up to Rs. 1.5 lakh on housing loan have been retained in the proposed DTC Bill.

Currently, income from Rs. 1.6-5 lakh attracts 10 per cent tax; from Rs. 5-8 lakh, 20 per cent and beyond Rs. 8 lakh, 30 per cent. The proposed tax slabs are much lower than originally suggested in the draft DTC bill -- 10 per cent for Rs. 1.6 lakh to Rs. 10 lakh, 20 per cent from Rs. 10-25 lakh and 30 per cent for income above Rs. 30 lakh.