A few smart ways to save tax

It's that time of the year again. Time to get ready with your investments and taxes.

Were you prudent with your investments last year? Did they help you save tax? Or did you end up paying more than you could afford?

What investment mistakes did you make last year? Are there ways to rectify them?

What investment options should you go for this year? What should you do to bring your tax liability to the minimum level?

In an hour-long chat on rediff.com on Thursday, direct tax expert Vikas M Gandhi offered some valuable tips. Here is the transcript:

Vikas Gandhi says, Good evening friends and welcome back to the tax chat session

rastogi asked, can i file non taxable return if of no tax,can i get receipt of the same from IT deptt
Vikas Gandhi answers,  at 2009-06-18 15:28:51There is no bar if someone wants to voluntarily file return of income. Go ahead and file your return, you will certainly get an aknowledgement from the I.T.Department.

dayasagar asked, Respected Vikas ji, Kindly let me know whether Mutual funds are better or Insurance schemes, for saving Tax. NSC and other old schemes seems to be null nowadays for tax saving purpose. Kindly advise. Regards/Dayasagar
Vikas Gandhi answers, The answer totally depends on your risk bearing capacity. If you are ready to take high risk, go for Mutual funds. However of you want to play safe, NSC is the best bet.

rahul asked, please advise how to calculate my short term capital gain on stock market.when i buy or sell there are mainly three charges that i pay.so to calculate short term capital gain,do i have to consider the total buy and sell price including other charges or only the actual price at which the trade happens. actual buy price+brokerage+stt=total buy price actual sell price+brokerage+stt=total sell price
Vikas Gandhi answers, You can claim all the expenses that were legitimately incuured for the sale or purchase transaction. However STT should not be considered as expenses, while calculating capital gain.

vishalgangavatikar asked, Hi, I have purchased my house using a personal loan from my employeer. Can I calim tax exemption on the same.
Vikas Gandhi answers, Since you have taken a loan for the purpose of purchasing a house, any interest paid will be eligible for deduction. However since the loan is taken from a private party, principal repayment of loan will not be eligible for deduction.

GIRI asked, Hi Vikas, What are the good investment options available this year?Either Mutual funds or Sharesor which 1 is the best option?
Vikas Gandhi answers, Between shares & mutual fund, I would advise for investing in mutual fund. Trace the track record of mutual fund and invest accordingly.

aksharma asked, my dear vikasji,i am bsnl employee andmy monthly gross is rs60k.i contribute rs10k/m to gpf,rs13.3k/m to emi of housing loan,rs1k/m for cglic etc&rs2k/m for education loan intrest of my son.now i am planning to purchase a car.plz suugest me whether intrest paid on car loan/depriciation are allowed in case of salaried employees or not
Vikas Gandhi answers, Neither interest paid on car nor depreciation on car is allowed as deduction in case of salaried employees.

Vishok asked, Please Advise I Am new to the shares Business, If I do some Intraday Trading how much tax I need Pay on capital gain. Regard Vishok
Vikas Gandhi answers, Intraday trading will amount to Speculation profit and not capital gain. There is no concessional rate of tax for speculation profit. It will be taxed at normal rates.

Anurag asked, Hi Vikas, Is there any way to take a benefit of Home Loan and HRA, if you bought a flat in the same city but not residing in the same flat?
Vikas Gandhi answers, No. In the given situation, you cannot claim both the benefits together.

srikanth asked, I got a home loan of Rs.8,00,000/-five years before.After two years the bank staff called and said that i can get more loan for the same house since i am paying correctly as well as the market rate of the house has gone up. I got Rs 2,00,000/- and paying the revised EMI now.The bank closed the pre. loan by themselves and gave a new loan no. for the total amount. My query is whether i can avail tax benefits for both principal and interest for the emi i am paying for the lod due and new loan.Pl. answer.thank you.
Vikas Gandhi answers, In my view there is only loan and hence you will be able to claim the necessary tax benefits for repayment of loan and interest payment.

ddlmpk@rediffmail.com asked, Hi Vikas, I was in US on H1B visa for approx.45 days in last financial year (Nov/Dec 08). I was not given Indian salary for that period. The other company which paid me in UDS deducted US tax. Do I need to pay tax in India as well for the USD which I earned in US? Is the income chargable?
Vikas Gandhi answers, Since you were outside India only for 45 days, your status remains as Resident Indian. As a result your entire income is taxable in India, irrespective of the fact that the same has been earned outside India and paid tax in that country. You will have to pay tax in India. However you will be able to claim relief u/s 90 / 91 for taxes paid outside India, as per Double Tax Avoidance Agreement signed with the foreign country.

manish asked, sir i have taken education loan now i min job is there tax reduction?
Vikas Gandhi answers, If you have taken education loan for higher education and from a financial institution, you can claim deduction for the amount of interest paid u/s 80E.

Ajit asked, Hello Vikas, I am a freelancer (web designer), For what income is tax exempted for the current period (for males)? Also, when and how to pay the tax? (sorry about my ignorance, only started to earn since last year)
Vikas Gandhi answers, The basic exemption limit for male is Rs.1,50,000/-. Any net income (after deducting expenses) is exempt from tax. For payment of tax you can visit www.incometaxindia.gov.in for detailed information.

srikanth asked, Hi vikas, I got a loan for my house and gave it for rent for last 2 years. I stayed in a rented house 6 kms away.Now i am planning to move to my house.what changes will happen to avail tax beneits in my HRA , interest ,principal paid to the bank?
Vikas Gandhi answers, As a result of this change, you will now lose the tax benefit of HRA. Till date you were able to claim both the benefit as the house you owned was rented out. But now since you yourself will be occupying the house, you can claim only interest paid benefit.

Niranjan asked, Can I get tax exemption on stamp duty and registration of purchase of flat?
Vikas Gandhi answers, Yes, you can claim deduction u/s 80C for the amount of stamp duty and registration fees paid for purchase of flat.

sharad asked, Rs. 10 LAKH WAS GIFTED TO WIFE BY HAVING A FD IN HER NAME. PLEASE TELL WHETHER INTEREST EARNED ON FD ON MATURITY IS TAXABLE. IF YES THEN WHO IS LIABLE TO PAY THE TAX. SHARAD
Vikas Gandhi answers, The interest is taxable and this will be taxed in your hands and not in the hands of your wife.

pgnath63 asked, Whether SIPs redemption are liable to TDS?which SIP is best one to invest
Vikas Gandhi answers, SIP redemption is not liable for any TDS. You have to pay tax on the profit earned.

Vikas Gandhi says, Good-bye friends.