Identify the form in which you have to file your tax returns for the assessment year 2007-2008. There are eight new tax return forms this year.
- ITR 1 -- Taxpayers with salary, pension and interest income have to file
- ITR 2 -- For those with salary, individual/ HUF and income from other sources except from business income
- ITR 3 -- Individual/ HUF with income from partnership firms
- ITR 4 -- Proprietor concern with business income
- ITR 5 -- AOP/ Body of individuals filing FBT returns
- ITR 6 -- Private and public limited companies filing FBT returns
- ITR 7 -- Political parties/charitable trusts and educational institutions
- ITR 8 -- For filing of FBT alone
I have taken a home loan. Can I claim tax deduction when the house is not on rent, and neither do I live there? I live in another city.
Nishant, Pune
Yes, you can claim tax deduction for the interest you are paying for the home loan. You are eligible for tax deduction to the tune of Rs 1.5 lakh for the interest and Rs 1 lakh for the repayment of the loan within the overall limit of Rs 1 lakh available under 80CC of the IT Act.
Can I show dividend in the tax return form? Company files tax return on the dividend it gives on mutual fund but will the company give us its proof?
Dividend income is exempted from tax. Dividend whether it is from the company or mutual fund, it is totally exempted from tax. You can't get tax benefit for the dividend distribution tax that a company pays. The company doesn't give you any proof either.
I have income from four sources - salary, bank interest, post office interest and income from clubbing of minor daughter's income.
Hemant, Kurikshetra
You have to file your tax returns on form no 2. Interest on post office income is completely exempted from tax
I have not filed tax returns for the assessment year 2006-2007. Which return form should I file?
Saroj, Delhi
You can't file last year return on the new form. You will have to file last year's 2D form.
I am a government servant. Last year I got some arrears. As there was a recovery also, the arrears got compensated in that. So I didn't get the arrears in cash. Can I claim deduction for it?
Amit Rai, Jam Nagar
No, you wouldn't get tax deduction on the recoverable amount. Arrears are overdue payments that you are getting from the government. The government had to recover from you certain amount which it adjusted against the arrears. Even though you didn't get any money, you give income tax on the money you got as arrears.
I trade in shares through futures and options and invest profit in mutual funds. Is income from futures and options treated as business income or capital gains? If it is a business income which income form should I file?
Himanshu, Mumbai
Income from futures, options and derivatives is called income from business and profession. People having this income will have to file returns in form no 4.
I work for a private limited company. My income includes salary and savings interest. I am also paying interest for my home loan. Which is the income tax return form for me?
Sudhir Gandhi, Ahmedabad
Form no 1 is for only those who have income from salary or interest. You are repaying home loan and since the housing loan is taken as income from house property, you can't file tax returns in form no.1 if you want to claim tax deduction for the home loan. Therefore you file tax returns in form no 2.
I am a retired person. My income is from pension, bank interest, tax-exempt RBI bonds and dividends. Which tax form should I fill?
RK Bhatia, Delhi
You should file your tax returns in form no 2. Fill in the column for salary income the details of salary and perquisites to get the total salary.
Interest amount of more than Rs 10,000 per annum is taxed. But do the banks inform you?
Krishan Kumar, Nagpur
Yes. The banks mention the net amount in the statement and issue a TDS certificate at the end of the year. In the tax return form you can show the details of the tax deducted by the bank to take benefit. But one practical tip. To calculate the tax payable, get the details of the tax deducted by the bank before the bank issues you the statement.
What are zero coupon bonds and what are their tax benefits?
Dheeraj Pal, Noida
The government launched zero coupon bonds last year. One bond is priced at Rs 8,250. You get Rs 20,000 at the end of ten years. It can be a good investment for those you want to invest small amounts particularly keeping in mind long-term term goals such as child's higher education, marriage etc. Income from zero coupon bonds is known as long-term capital gains. You give tax at the time of sale. So investment in tax bonds is good tax planning.
I give turnover tax for commodity trading on MCX. Can I avail of tax benefits?
Jiten Shah, Vadodra
There are no special tax benefits for paying turnover tax. You have to give tax on the net amount arrived at after deducting expenses.
I have raised a loan to buy a flat, currently under construction. I will get its possession in June 2008? I have already started paying EMI of the loan. Will I get tax deduction for these payments? Also, I have borrowed a loan from my father and brother. Will I get tax deduction for the interest I paying on the loan?
Jiten Kumar Sahu, Noida
No. You can't get tax benefits until you get the possession of the flat. If you take a loan from your relatives and give interest, you can claim tax deduction for the interest paid on the loan.
You can take a loan from anyone and get tax benefit on the payment of interest on the loan. But benefit of repayment of the housing loan is possible in case of select people. As far as interest paid on the loan this year is concerned, you wouldn't get tax deduction this year but you can claim it in five equal instalments over next five years, starting next year.
Whenever you take loan from a friend or a relative, receive it through account payee cheques. You can't take cash loan of more than Rs 20,000. If you do that you don't get the tax benefit.
I am a student doing day trading in the share market. I have a PAN card but I haven't filed my tax returns. How is tax calculated on income earned from day trading? Do I have to file tax returns?
Vineet Sharma, Delhi
First calculate income from day trading earned in one financial year. You will have to file tax returns if your income exceeds the exemption limit of Rs 1 lakh for the assessment year 2007-2008. While you have missed the dates for filing advance tax for the last year, you can still pay advance tax for the current year on September 15, December 15 and March 15.
How is capital gain tax calculated on bonus and split shares?
Pankaj, Vadodra
Value of the bonus shares is taken as zero. If you sell them after one year, you incur long-term capital gains which are tax-free. If you sell these shares in less than one year, you incur short-term capital gains. You pay 10 per cent tax for short-term capital gains.
Split shares: Suppose a share is priced at Rs 100, the company splits it into parts -- four or five parts. There is no tax on split shares.
If I give my employer details of my investments at the end of the year, will it be considered for tax deduction?
Sachin Vaishnav, Mumbai
If you give your investment details in March, it is the duty of the employer to deduct the tax from your March salary keeping in mind the investment. But it is better if you give details of the proposed investment in the beginning of the year and revise them in March. This way, you will avoid losing big sums in tax with each month's salary and then wait for refund.
How is tax audit done for derivatives and day trading?
T N Kumar
As per IT section 44 (ab), you have to get tax audit done if your turnover is more than Rs 40 lakh. In such cases, the last date for filing of tax returns is not July 31; it is much later. Transactions related to stock market be it derivatives, futures and options or day trading are transactions where we enter the transaction but there is no delivery. There is settlement of account. However, the bill you get has details of the amount.
The guidelines of Institute of Chartered Accountants of India state that the turnover in futures and options, and derivatives and share transactions that are speculative in nature, is the net amount of difference -- which can be positive or negative.
This is of significance for those who transact in stock market. Tax audit will not be necessary for a lot of them because turn over will not be taken as the bill amount. You sum up, profit and loss figure for tax audit and bill amount will not be considered for the purpose of tax audit.
