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Income tax return

Why is it important to file tax returns?

A tax return is a form that is filed with a tax authority reporting income, expenses, and other tax information. They allow taxpayers to calculate their taxable income, plan their tax payments, and request refunds for overpayments. The income tax return is used to report income and taxes to the Income Tax Department. Individuals and businesses are required to file tax returns by a specific deadline. A taxpayer who fails to meet the deadline must pay the penalty. [B-01] Importance of Filing Tax Returns Your capital losses and gains will be altered If price and supply market speculation were the most crucial factors, having a handy record of the ITR at this point would be extremely beneficial. Furthermore, doing so guarantees that you will have bad luck for the next eight years in a row, depending on whether you recorded earnings for that fiscal year. Your credit card company may check your repayment status The IT department records regular tax returns, serving as standard income proof. This comes in handy when applying for a credit card or a loan (mortgage, education loan, car loan). Banks and other credit agencies will need to assess your financial situation, and the ITR is a reliable document. Loans are simple to obtain if your tax returns have been appropriately filed Income tax returns are important business documents that serve as proof of income because they show all your earnings for the year. In turn, NBFCs and other financial institutions actively require this document when disbursing loans. Assistance in claiming deductions States allow certain deductions to help ease taxpayers and encourage more people to pay their taxes. These deductions and exemptions may be used on certain investments to reduce the amount of tax you ultimately pay. TDS and rebates can also be collected. However, you must file an income tax return to claim these tax benefits. If you do not file a tax return, you cannot claim the deduction. Losses can be transferred Sections 70 and 71 of the Income Tax Act 1961 contain rules for carrying forward losses from one year to the next. This means that the loss can be deferred until the next appraisal year. Useful if you are planning a trip abroad There are a number of procedures that must be followed when traveling abroad. Not submitting an ITR can ruin your plans for international travel. The ITR form is one of the documents required by the country you visit. Important loan application document When you apply for a loan to buy something, the bank requires specific documents to be submitted for a car or a new home for an individual or business. An important document is your income certificate. Banks typically request ITRs for the previous three years. This is done to assess your past and current financial situation and determine if you can repay the loan. ITR can help you get credit cards and bank loans. Filing tax returns is required Even if your income level is not subject to compulsory declaration, we recommend that you file a voluntary declaration. Most states require one to file tax returns for the past three years as evidence for real estate registration. Submitting a declaration will facilitate registration. Different forms of Income Tax Returns ITR-1 FORM Individual taxpayers must complete ITR-1 Form. Individuals who are not authorized to use this form include: Income from more than one residential property. Lottery or racehorse winnings. Profits/losses are reported under the heading “Capital Gains.” Agriculture income/exempt income over INR 5,000. Earnings from a business or profession. ITR-2 FORM This form may be used by an individual or a Hindu Undivided Family (HUF) if their total income does not include income from a proprietary business or profession or a partnership firm. This form is also useful for those who live outside of India. In most cases, an individual or a HUF can use this form to submit their IT Declaration. ITR-3 FORM This applies to natural persons who do not earn a living from the company’s operations. People who earn money from the accompanying sources are eligible to file ITR-3: A component of a business or a particular profession. If they were interested in unlisted value shares at any time during the fiscal year. ITR-4 FORM This ITR form is useful for anyone who owns a business or works for a living. This form applies to all types of businesses, companies, and occupations, and no income restrictions exist. It is available to taxpayers who have chosen the income scheme under Sections 44AD, 44ADA, and 44AE of the Income Tax Act. Form ITR-4 should only be filed if the taxpayer has the following incomes: Income from more than one residential property. Lottery or racehorse winnings Income is classified as “Capital Gains.” Section 115BBDA income is taxable. [B-02] Conclusion Income tax return filing is an important legal obligation for taxpayers. It is important that the taxpayer reports income and assets to his/her ITR and pays all applicable taxes on time. Filing income tax provides many financial and non-financial benefits. It is also the social responsibility of every taxpayer to facilitate access to credit, avoid interest and penalties, claim tax refunds, hassle-free visa processing, and many more. Filing tax returns is a periodic exertion that’s considered a moral and social duty of every responsible citizen of the country. It offers a base for governments to determine the quantum and nature of expenditure by their citizens. Moreover, it forms the base of assessments on which to apply for compensation and other remedies from time to time. You can read more about income tax returns, investment strategy, and other parameters from Piramal Finance’s personal loan page https://www.piramalfinance.com/personal-loan to have deep dive into finances.
08-11-2023
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Tax Savings

Know more about Best Section 80C Tax Saving Investments in India

There are a lot of schemes to reduce taxes. But, tax planning is usually not the priority for many people. Investing in the first quarter of the fiscal year is best. This gives you the time to make wise plans. You also get the advantage of the best returns from most tax-saving investments. Most experts agree that the 80C investment scheme is an ideal way for it. This article will discuss the best income tax saving options under this section. But before we get into that, let’s briefly discuss Section 80C. [B-01] Section 80C Section 80C is a clause in the Income Tax Act of India about various investments and expenditures that are exempted from Income Tax. With these deductions, you can save income tax up to ₹1.5 lakh per year. Section 80C investment exemptions for Fixed Income products are: Public Provident Fund Provident Fund National Saving Certificate NHB deposit scheme Tax Saver Bank Fixed Deposits for 5 years Post Office Time Deposit for 5 years Senior Citizen Saving Scheme Save Income tax on these market-linked products LIC premium New Pension Scheme Atal Pension Yojana Sukanya Samriddhi Yojna Equity Linked Savings Scheme Unit Linked Insurance Plan Pension Plans from Insurance Companies Exempted expenditures are: Tuition fee for 2 children Home Loan Principal Payment Stamp duty and registration cost of the House Understand Some Tax Saving Options Under 80C Public Provident Fund: Every three months, the interest rate on the PPF balance is reset. Despite this, its risk factor is fairly low. You are allowed partial withdrawals after seven financial years. But you can make only one withdrawal per year Interest Rate: It changes every three months. Currently, it’s set at 7.10%. Limit for Investment: You can invest in a range of Rs. 500 to Rs. 1.5 lakh annually. Maturity Period: PPF has a maturity period of 15 years. It can be extended by 5 years. Tax Benefits: The interests and returns are tax-free. Eligibility: Resident Indians, salaried and non-salaried people can open the account. HUFs (Hindu United Families) are not eligible for PPF accounts. Unit Linked Insurance Plans: Besides tax savings, ULIP enables people to earn substantial returns on their capital over long periods. To put it simply, this 80c investment exemption provides insurance as well as tax benefits. The current ULIPs by insurance firms come with no premium allocation or administration fees. This improves returns for investors. Return Rate: It ranges from 12% – 14%. Returns are tax-exempted under Section 10(10D) of the IT Act. Interest Rates: Due to the connection with the market, the interest rates of ULIPs vary a lot. Investment Limits: There are no such defined limits for ULIP investments. Eligibility: You can obtain ULIPs for yourself, your life partner, or your children. Taxes: If you pay an insurance premium of ₹ 2.5 lakh or more in any year, then the maturity amount will be taxable. This also applies if you buy multiple ULIP plans and pay more than ₹ 2.5 lakh. Maturity Period: ULIPs have a 5-year lock-in period. ELSS (Equity – Linked Saving Scheme) Mutual Funds: The ELSS is an excellent 80C investment option. You can benefit from tax advantages on the amount given to the fund. Since the money is put in equity funds, it gives better returns. Remember that equity investments are subject to market dangers. It is advised to choose your investments wisely. This will prevent losses that can’t be recovered. Despite some risks, ELSS is still the most popular tax-saving investment. Maturity Period: ELSSs have the lowest lock-in period of them. It is fixed at a maximum of 3 years. Interest Rate: They don’t have fixed interest rates due to market changes. Tax Deduction and Return Rates: You can avail of tax deductions up to Rs. 1.5 lakh. The return rate for ELSS is the highest among all schemes under 80C. Over a decade, it has provided a return of nearly 12%. Investment Limit: There is no upper limit on ELSS investment. Eligibility: Salaried individuals and HUFs can invest in ELSS. Tax Saving Fixed Deposits (FDs): They provide tax-free income as an investing strategy. This plan is ideal if you prefer low risks and wish to save money over the long term. Individuals who invest in bank FDs receive a guaranteed return on their money. They also get investment security. Their money is locked in for the entire term. Maturity Period: The lock-in period for Tax-Saving FDs is 5 years. Premature withdrawal isn’t allowed in this case. Interest Rate: It usually varies from 6.5- 7.65%. Tax Reduction: Only the interest earned on them is taxable. You can get income tax deductions up to ₹ 1,50,000 annually under Section 80C of the IT Act, 1961. Eligibility: Only resident Indians can avail of them. Sukanya Samriddhi Yojana: The Indian government launched it under the “Beti Bachao Beti Padhao” campaign. Its goal is to give financial support for the well-being of girls. It is focused on their education, employment, and overall betterment. Investment Limit: Maximum limit for investment is ₹ 1.5 lakh per year. The least amount you can pay annually is ₹ 250. Eligibility: The SSY account can be set up by the parents of the girl. It must be done before she turns 10 years old. Maturity Period: The lock-in period for an SSY account is 21 years. Premature withdrawal of up to 50% is allowed. But, it can be done only after the girl becomes an adult. Tax benefits: Under 80C, there is no tax on the annually compounded interest. The same goes for the sum received when the account expires. Interest Rate: The interest rate for the SSY scheme is 7.60% [B-02] Conclusion: The article above has explained the best tax saving schemes under Section 80C. All of them differ from each other in terms of: Reward Risks Cost-effectiveness Liquidity You need to be thorough with the policy terms of these instruments. This way, you can make an informed choice for a tax deduction. It is prudent to seek help from a financial advisor for this. Piramal Finance will provide you with some of the best financial tips and guides. It’ll be our sincere pleasure to help you out.
08-11-2023
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Tax

All you need to know about how mutual funds are taxed?

Nowadays, mutual funds are one of the most popular investment options. They suit all kinds of investors, irrespective of their income. This is due to the benefits they offer, like liquidity and low risk, amongst other advantages. If you are going to invest in them, knowing how they are taxed is very important. You can then make the most of your investment. This article will try to portray the types of tax on mutual funds. [B-01] Types of Mutual Funds Taxation Mutual funds are classified into three types: Equity funds Debt funds Hybrid funds Each of them is different, and the taxation is also different. Knowing what type of tax and how much you must pay on your returns is important. This gives you a clear idea of your gains from mutual fund investments. These are the various types of taxes: Capital Gains Tax The first type of tax on mutual funds is capital gains tax. Capital gain is the amount you earn when you sell your mutual fund assets at a profit. Let’s take an example to make it easier to grasp. Let’s say you buy a few mutual fund units at Rs 500. This is your capital amount. Over time, the investment grows by 10% and is now worth Rs 550. The capital gain is Rs. 50. Capital gain = Total income – Capital invested. The tax applies only to the gain and not the capital. In addition, you only pay the tax when you sell your asset. Tax on equity mutual funds If equity investments are sold within a year, the mutual fund returns come under STCG. This stands for short-term capital gains. They are subjected to a 15% tax. If investments are sold after one year, they are now part of LTCG. This stands for long-term capital gains. The first 1 lakh made is tax-free. However, if your payments exceed Rs 1 lakh, you must pay a 10% tax. One of the best equity schemes is the ELSS. It stands for “Equity Linked Savings Scheme.” It is a scheme that greatly reduces tax on mutual funds. They have a 3-year lock-in period. You are allowed to claim deductions for your investment in ELSS funds. The amount you can claim is up to Rs. 1.5 lakh. Tax on Debt Mutual Funds Mutual fund taxation of debt mutual funds is very different from equity mutual fund taxation. If you sell debt investments before the end of three years, they will be categorised as STCG. This short-term capital gain is added to your income and taxed accordingly. On the other hand, if it is sold after 3 years, you will be subjected to a tax of 20% with indenture benefits. The indentation minimises the tax paid. It does so by adjusting capital gains to the Cost Inflation Index. Indexation only applies to non-equity mutual funds. This is one of the advantages of choosing debt mutual funds. Tax on hybrid mutual funds A hybrid mutual fund invests in both debt and equity asset classes. They are designed to meet your investment goals better than equity or debt mutual funds. The tax on mutual funds, in this case, varies. If the hybrid mutual fund allocates more than 65% in equity, equity mutual funds tax rules apply. Otherwise, debt mutual fund taxation applies to it. Tax on Dividend If you invest in a mutual fund that pays dividends. You will receive payouts on a timely basis. The profit made by the fund is equally distributed among investors. In this case, the tax on mutual funds is also different. Before 2020, mutual funds had to pay DDT. This stands for Dividend Distribution Tax. Fund houses had to pay around 12% on the base rate. However, after 2020, this was scrapped by the government. Now, income received as dividends counts as regular income. So, the amount you make from dividends is added to your income. You are then taxed according to the normal tax slabs. This lowers the burden on small investors. Furthermore, dividends worth more than Rs 5,000 are subject to a 10% TDS. If your PAN is not connected to your Aadhar card, this value becomes 20%. Factors that determine the tax on mutual funds in India 1. Type of mutual fund The type of mutual fund you choose affects the amount of income tax you have to pay. As mentioned above, there are two main types: debt and equity mutual funds. Equity mutual funds invest in equity stocks and shares on the market. They carry high risks due to high market volatility. Also, equity funds are classified as small-cap, mid-cap, and large-cap. This plays a role in the tax on mutual funds you have to pay. On the other hand, debt funds invest in government bonds, corporate bonds, etc. These are safer options. They offer fixed returns and are low-risk. Debt funds are categorised as short-duration funds, liquidity funds, and income funds. 2. Time Frame of Investment The amount of time your investment lasts affects the tax on mutual funds you pay. This can be separated into two parts: short-term and long-term investments. For equity funds, a holding period of fewer than 12 months is categorised as “short-term.” And any investment lasting over a year is considered long-term. When it comes to debt funds, a holding period of fewer than 3 years is considered short-term. Any tenure of more than three years is considered long-term. [B-02] Concluding Remarks Understanding how mutual fund taxation works is very important. It can take time and seem intimidating at first. But you learn more the more you invest. For a faster and more in-depth guide on mutual funds and your finances in general, financial advice helps a lot. This is why financial advisors like Piramal Finance are in high demand.
08-11-2023
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Personal Loan

Compare And Apply For Personal Loan – Low-Interest Rate And EMI

When applying for a personal loan, interest rates begin at 11%. The interest rate on your loan will be determined by several factors, including the loan amount you request, your credit history, and the time you take to pay it back. Keeping a solid standing with the lending institution and a high credit score will help you negotiate a cheaper rate on your loan. [B-01] Reasons to Get a Personal Loan When should one consider applying for a personal loan? There are minimal restrictions on how a personal loan may be used because it is an unsecured loan that does not need collateral. It has many potential applications, including debt consolidation (whether from other loans or credit cards), making large purchases when you don’t have cash and emergency scenarios. Neither trading stocks nor speculation is permitted with this. Personal loans are frequently used to cover unexpected costs in areas such as business or higher education, finance a trip, stock up on luxury electronics and home appliances, cover the cost of a wedding or other special event, pay for unexpected medical bills or home repairs, and so on. It can also be put toward acquiring a car if the personal loan’s interest rate is more attractive than the auto loan. Therefore, personal loans may be useful for various purposes, including covering anticipated and unexpected costs. Things to do After Closing a Personal Loan If you have recently repaid or had your personal loan foreclosed on, you might believe that your legal responsibility for the debt has ended. But alas, that is not the situation. You should do a few things when you pay off your personal loan. No Dues Certificate (NDC) After the debt is paid in full, the lending institution issues a “No Dues Certificate” (NDC). You should get this as soon as possible after paying off your debt, as it is a crucial piece of paperwork. That so, keeping this record for a long time is also a good idea. You may rest certain that your reimbursement is legitimate thanks to this certificate. You can’t show debt satisfaction without this paper. This document serves as proof that your prior loan has been repaid if you want to apply for a personal loan shortly. If you are paying off your loan in full with cash, your lender will likely issue this paperwork immediately. The NDC will be issued by the lender and delivered to your registered address or made available for pickup at the lender’s branch office if you are making a payment by cheque, NEFT, or another method. Statement of Account (SoA) The SoA and NDC provide evidence that all of your bills have been paid in full and on time. Certain lenders supply this paper as a courtesy, but it is not required. This document may be useful and should be obtained if made available by your lender. But you should also check the credit report for any irregularities. Fixing problems can be done through the SoA. Collection of unused cheques: It’s also a good idea to round up any unused cheque leaves after you. Closing a loan concludes with collecting the No Dues Certificate and any unused checks left. After the loan closes, you should check your credit. This is only a suggestion. After the closure procedure is completed, verifying the credit score is optional. The score should be identical, but you should double-check, just in case. The best time to check your credit is immediately after the loan is paid off, but you should do it at the latest within two years. Interest Rates on Personal Loans and How They Are Affected Interest rates are determined by lenders largely based on their cost of funds and the credit risk assessment of loan applicants. Factors like your credit history and the economy’s health can significantly impact the interest rate you pay on a personal loan. Evaluation of Financial Capability Loan interest rates are often determined partly by a borrower’s credit history, as reported by a growing number of lenders. Personal loans with reduced interest rates are available to those with higher credit ratings. Keeping a credit score of 750 or above is thus recommended. Maintaining a good credit score requires responsible financial behaviour, such as paying off debt on time and not applying for new credit or loans frequently. It’s important to remember that inaccuracies can impact credit scores in a report. Applicants should monitor their credit reports regularly to correct any discrepancies before they hurt their credit scores. Income Higher earnings mean a more secure ability to repay the debt. The lender’s exposure to credit risk decreases as a result. Therefore, many personal loan providers provide preferential interest rates to higher-income customers. Employer When determining the interest rate for a personal loan, many banks and credit unions look at the applicant’s job history. Generally, interest rates for salaried workers are lower than those for self-employed individuals because of the greater predictability of a salary. Lower credit rates are typically provided to candidates with government or PSU jobs because of the greater job stability and income predictability they enjoy. Personal loan applicants who work for multinational corporations or other well-regarded private sector firms also tend to fare better during economic downturns. A pre-existing banking or loan connection with the creditor: Existing banking or lending customers sometimes qualify for preferential interest rates on personal loans from a variety of lenders. Therefore, individuals seeking personal loans should first explore options from financial institutions (banks or NBFCs) with which they already have a pre-existing connection. [B-02] Final Words The Personal Loan from Piramal Finance is the easiest method to receive a loan for your use. It deviates from the standard practice of lending. A personal line of credit allows you to access your loan whenever and wherever you need it. The best part is that you only pay interest on the money you spend.
08-11-2023
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Personal Loan

Best Tips to Pay Off Your Car Loan Faster

Car loans have changed the way people in India think about owning vehicles. Many urban Indians don’t think it’s a big deal to buy a car today since banks and other financial institutions make it easy for them to get car loans. It’s easy to pay car loan EMIs each month in addition to other monthly bills. But, it costs more in interest. If you have the money, you should try to pay off the car loan early to save money on interest. [B-01] Should You Pay Back Your Car Loan Early? It might seem like a good idea to pay off your loans early, but there are some things you should keep in mind: Find out your existing balance and any early repayment penalties Focus on all aspects of your car loan before deciding if you want to pay it off faster. Some lenders make it hard to pay car loans as early as possible, as they’ll get less money in interest. If your lender lets you pay off your loan early, ask if there’s a prepayment penalty. Next, ensure that any additional payments are applied to the loan’s principal by checking your balance and your account. Some financial firms will automatically put extra fees toward interest instead of the principal, or they will hold the money as a credit for your next payment. Calculate how much money you will save Once you know how much you owe and if your lender has prepayment penalties, you can use an auto loan calculator to figure out how much you’ll save if you pay off the loan early. Make sure that the money you save is greater than any prepayment fees you may have to pay. Even if you don’t save much by paying off your loan early, there may be other advantages that make it worth it. For example, paying off your loan early could help you improve your credit score and give you more money to spend each month. Tips for Paying Off Your Car Loan Quickly No matter how much your monthly car payment is, there are five different ways that car owners can pay off their car loans quickly: Reduce your loan duration The length of time a borrower has to pay back the amount borrowed from the bank is called the loan duration. Most terms are measured in months, and they can last anywhere from 24 to 84 months. The longer the term, the less you’ll have to pay each month. But smaller monthly payments don’t mean you’ll pay off your car loan faster. Car loans can take up to seven years to pay off in full, which is a big chunk of your main working life. Choose to shorten your loan’s term to a number that best fits your personal financial goals. Be sure to use a financial calculator to figure out your monthly payments. Try a different budget To pay off a car loan faster, you must put your current income toward your most important financial goals. If you don’t already have a spending plan, sit down and write down all the money you expect to make this month. Make categories for your expenses, like your car loan. Find a Side Hustle The best way to produce wealth is to increase your income. Your ability to pay off your car loan more quickly will increase with your ability to earn more money. Utilize your resources to find ways to increase your monthly income. Ideas for increasing your monthly income include the following: Taking on a second job Freelancing Putting in extra hours or weekends at your primary job Hold a garage sale Creating and promoting products Make sure to pick a sustainable option to lessen exhaustion and burnout. Refinance One of the fastest ways to pay off a car loan with a high-interest rate is to refinance your current auto loan. As a person’s credit history gets longer and their credit score goes up, they may be able to get better, lower interest rates. Pay additional amounts Unless you make extra monthly principal payments, the amount owed on your auto loan won’t be paid off any faster. Most people select one of three methods to make additional payments on their car loans: Paying Twice a Month: Making two payments that are greater than your monthly bill will help you pay off the principal more quickly while also lowering the interest that has accumulated. Paying the Principal: Make principal payments, not interest payments, which reduce the total cost of the vehicle. Rounding Up: Add a monthly payment to the rounded amount of your existing car loan. [B-02] Final Thoughts Paying off your car loan early might not always be the best course of action. The savings won’t be worthwhile if you have to pay prepayment fees or risk affecting your credit score. The two best ways to reduce the length of your car loan are refinancing or simply making more payments. Even if it only amounts to a few extra amounts per month, you can lower your debt and reduce your loan tenure. For more information, you can visit the Piramal Finance website and read more on car loans and car loan EMI.
08-11-2023
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Personal Loan

Along With Personal Loan, Different Loans Available For Senior Citizens

Many individuals find it challenging to get a loan. Getting a loan is challenging even for professionals who have a good credit history. Also, for those who provide evidence of their capacity to repay the loan. Still, for the unemployed or senior citizens, the burden is double. Senior citizens are in this latter group. Loans for senior citizens are often not approved due to the lack of a stable source of income. Finally, there’s hope. Banks are starting to relax their policies to benefit senior citizens. In this article, we’ll tell you about all the available loans for senior citizens. [B-01] What are the different Loans for Senior Citizens along with Personal Loans? Personal Loan Anyone can experience a financial emergency or crisis regardless of age or circumstances. Hence, it’s possible to have money issues even if you’re a senior citizen. Anything can cause this, ranging from an unexpected bill to a health crisis. A personal loan for senior citizens can help you climb out of a tight spot. Suppose you are a senior citizen and need urgent money. In that case, you can receive a personal loan and put your pension as collateral. Individuals over 60 are eligible for personal loans tailored to their needs. A personal loan for senior citizens and a normal personal loan don’t differ much. Interest rates and other criteria are the primary differences between the two loans. Having a pension is the single most critical necessity for seniors. Most financial institutions will not provide personal loans to senior citizens. That’s because they cannot establish that they get a stable income. Hence, having a steady income stream is crucial for a personal loan for the elderly. Your monthly income when determining your suitability for a personal loan is crucial. Lenders rarely provide personal loans to anyone over 60. That’s because most elders don’t have a consistent income source. Nonetheless, you can still qualify for the loan if you get a monthly pension. Pensioners in India can apply for a personal loan. The loan amount for senior citizens can be 12-15 times their monthly pension payment. After the loan approval, the lender will draft your monthly pension to cover the loan’s EMI. Yet, you will need proof of your pension to get this loan. Home Loans Getting a home loan is an uphill battle even for youngsters with reliable income streams. In the past, getting a house loan as a senior person was a hassle. But banks have streamlined the process. After all, you can fulfil your dream of homeownership at any age. Senior citizens can ease the procedure by applying for a joint home loan. They can do this if their prospective co-borrower is still employed. Moreover, you can get extra tax advantages if the co-applicant is a shared landowner with you. Having a female co-applicant also qualifies you for preferential interest rates. But don’t apply to many banks at the same time. That’s because doing so may lower your credit score. You can use the internet to determine: Whether you qualify for a loan How much you may expect to pay back each month in instalments? Which banks are most likely to lend to seniors? With a lower loan-to-value (LTV) ratio, you’ll be able to borrow more money and pay off your mortgage faster. LTV indicates the amount of the property’s worth that the lending institution funds. To maximize your financial security, choose a loan-to-value ratio as minimal as possible. Reverse Mortgage Loans Reverse mortgage loans came into India in 2007. But they had existed for at least two decades in the US. RML is the reverse of a home loan that lets the customer use collateral other than their house to secure a loan. Plus, the repayments will be like any other loan repayment. To qualify for RML, a citizen must be at least 60 years old and a legal owner of a primary house. If the borrower wants to apply with someone else, that co-applicant must be at least 55. There is a hard cap on the repayment period, often between 15 and 20 years. After this time, if there is still a balance owed on the loan, the borrower can pay it off. Then, he can regain full possession of the property. Yet, if you’re unable to pay back the loan, the bank will confiscate your house and sell it. Compared to traditional loans, RML doesn’t need income verification or stellar credit history. Access to RML is a great benefit. That’s because it ensures the borrower can afford to cover daily costs and essentials. Lenders thought it would be a huge success in India, but that hasn’t happened. Several factors are at play, but one of the most important is a strong personal connection to the home. Many Indian seniors stay in the same home for decades. They do so intending to leave it to their children and grandchildren as an asset. Greatest Loan Amount of RML As another factor, the greatest loan amount varies from Rs 50 lakhs to Rs 1 crore, based on the lender. But the value of a home in a hot housing market can reach 3 crores. Hence, the RML program is not very appealing to those who create their homes there. Moreover, senior citizens fear not being able to repay the debt after the term and losing their house. Hence, RML has become a less popular choice among senior citizens. These factors depend on the present and future finances of the individuals concerned. Hence, if you’re seeking a helping hand but have some financial stability already, RML could be the way to go. [B-02] Conclusion And there you have it. A complete guide on the different types of available loans for senior citizens. Many loans are available for senior citizens. They are Personal loans, Reverse Mortgage Loans, and Home Loans. Make sure you read all the documents and pick a loan you’ll be comfortable paying back. Are you also in need of a home loan or personal loan? Apply for a home or personal loan with Piramal Finance right now!
08-11-2023
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Income tax return

Everything You Need To Know About Penalties For Late Filing Of Income Tax Returns

Every taxpayer needs to file tax returns with the income tax department every year. The document needed for this is known as an Income tax return in which all the income earned during the previous financial year is declared. It can be fined monthly or quarterly based on whether the taxes had been paid earlier. What if you fail to file the ITR on time? Read on to know more. [B-01] Deadlines for various ITR filing categories: There are different deadlines for various persons and identities for filing ITR. Here are the details of the different categories: For the people or entities for whom tax audit is not applicable, need to file their ITR by July 2022. People or entities who come under tax audit except for the cases where transfer pricing is involved, have to file ITR by October 31, 2022. Those individuals who come under transfer pricing, have the ITR filing deadline as November 31, 2022. December 31, 2022, is the last date for filing a revised ITR or late filing of an ITR. Repercussions of missing the ITR deadline Failing to file the ITR by the given deadline, can lead to penalties along with interest charges. There are also chances of suspension or termination from the job. Here are the common consequences: i. Penalty: Those with an annual income of over Rs. 5 lakh have to pay a penalty of Rs. 5000 but if ITR is filed between December and March 2023, the penalty increases to Rs. 10,000. Those within the income slab below Rs. 5 lakh, who fail to file their ITR before March 31, have to pay a late fee of Rs. 1000, as per Section 234F. This remains unchanged even if the filing is done before December 31, 2022. Those with a total income of more than Rs.5 lakh per annum will have a late fee of Rs. 5000 on filing the ITR between August 1 to December 31, 2022. Senior citizens between 60-80 years having an annual income of more than Rs.3 lakhs, and those above 80 years with annual income exceeding Rs. 5 lakhs, will be penalized for not filing ITR as per section 234F. ii. Interest payment: An interest of 1% is chargeable every month on the unpaid tax amount when ITR is not filed by the due date. This is according to Section 234A. This interest starts accruing after the tax filing due date, i.e July 31 of the financial year. The longer the delay, the higher will be the interest accumulated. If a person has taxable income but failed to file ITR or in case less amount of income is mentioned, he has to pay 50% of the total tax on the income for which the return wasn’t filed. iii. Penalty under Section 271H There will be a penalty of Rs. 10,000 to Rs. 1,00,000 along with the penalty for filing a late ITR under Section 234 E. This is for those who fail to file TCS or TDS before the deadline. Rs. 200 is the penalty for each day as per Section 234E, till the payment of TDS or TCS. iv. Prosecution for tax evasion: If an individual fails to pay tax even after the deadline then under Section 276CC of the Income Tax Act for tax evasion, he could be imprisoned. First IT department will issue him a notice under Section 142(1), 148, or 153A, and then the prosecution will be the last step. When the amount of tax is more than Rs. 25 lakhs, the imprisonment will be for at least 6 months and can extend for up to 7 years. Apart from this, other cases will have a penalty as well as a minimum of 3 months imprisonment, which is extensible up to 2 years. Penalty on people with incomes below the taxable limit on filing ITR late: When the gross income of an individual or organization is below the taxable limit, no penalties are filed for non-filing of ITR. But here are some exceptions to this: Those having over Rs. 1 lakh electricity consumption expenses. Indian residents have income from foreign assets. When total deposits are over Rs. 1 crore in one or multiple current accounts in a bank. Expenses of foreign travel exceed Rs. 2 lakhs. Process of filing late ITR online: If you missed the deadline for filing ITR, you can file it till March 21, 2023, online, by following the steps mentioned below: Login to the e-filing website and go to the ‘services’ tab. Click on ‘condonation request’, choose the option ‘Allow ITR filing after time barred’ and click continue. Choose ‘create condonation request’ on the next page and fill in all the required details. Upload the ITR and click the ‘submit’ button. Select the ‘e-verify’ option so that after the condonation request approval, ITR can be processed. The status of the condonation request can also be tracked online. Another way is to know your assessing offer and send a condonation delay request letter in person before ITT filing online. [B-02] Conclusion The process is done online and through ITR Form 16 which is regularly updated and comes with new features. This is to ensure smoother and more efficient completion of the process in less time. Tax payment cant is completely avoided by reducing to some extent by investing in term insurance plans, Unit Linked Insurance Plans (ULIPs), Guaranteed Savings Plans or Health Insurance. Tax planning is crucial for every individual and filing ITR on time is the only way to avoid heavy penalties. Check out the Piramal Finance website and explore their services to save tax.
08-11-2023
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Tax Savings

Tips to save your LTCG tax in 2022-23

Capital gains are the profit you make when you sell an asset at a price higher than what you bought it for. For this purpose, capital refers to property, jewellery, shares, bonds, securities and vehicles. The profit you earn falls in the income category, and you would have to pay tax on them as per the Income Tax Act 1961. Capital gains are of two types; short-term capital gains (STCG) and long-term capital gains (LTCG); you have to pay tax on STCG and LTCG as per the applicable rates. Want to find ways how to save LTCG tax in 2022-23? Read on. [B-01] Understanding Capital Gains Here is a brief overview of capital gains based on the holding period and asset type. Short Term Capital Gains (STCG) When you hold an asset for 36 months or less, it is a short-term capital asset. From 2017-18 onwards, the holding period for an immovable property like land, house, and building has been reduced to 24 months to be classified as STCG. Long Term Capital Gains (LTCG) When you hold an asset for more than 36 months, it is a long-term capital asset. From 2017-18 onwards, immovable property held for more than 24 months falls under the category of long-term capital asset and will attract LTCG tax if sold after 24 months. Some assets qualify as long-term capital assets if you hold them for more than 12 months; these are: Preference and equity shares of a company listed on recognized stock exchanges in India Securities like bonds, debentures, and government securities listed on a recognized stock exchange in India Units of UTI Units of equity funds Zero coupon bonds Before 2018, long-term capital gains on the sale of equity shares were tax-free in the hands of the investor. Post the Union Budget 2018, the LTCG tax-free limit for equity shares is one lakh in a financial year. If your capital gain is more than Rs one lakh in 2022-23, you would have to pay tax on it. The LTCG tax rate is 10% without the benefit of indexation. Tips to save LTCG tax in 2020-23 Here are a few ways to save long-term capital gains tax in 2020-23. 1. Tax harvesting Tax harvesting is a strategy you can use throughout the year in a planned manner to save tax on your capital gains. You can avail of this exemption on the total long-term gains you make from stocks and equity-oriented funds. To use tax-loss harvesting for saving tax: Sell the stock whose price has been falling consistently. You sell the equity if it has lost a significant part of its value and you do not see any chance of revival. You offset the loss incurred against the capital gains in your portfolio over the period. You can book long-term gains in equities up to Rs 1 lakh and reinvest them. The price at which you reinvest is the new acquisition cost. You can repeat this process each year and save LTCG tax of Rs 10000 yearly. 2. Section 54 Provisions under section 54 can help you save LTCG tax. If you sell a house and buy another one, you can get relief as per Section 54. To benefit from this section, you have to fulfil the following conditions: The benefit is available only to individuals and HUFs. You should buy another residential property within two years after the sale or one year before the sale of the existing property. If you want to construct a home, you should finish it within three years from the date of transfer. 3. Section 54F You can get an exemption on capital gains on the sale of assets other than a house under this section. You do not have to pay LTCG tax if you Use the entire sale proceeds to buy a house property subject to conditions same as Section 54. The new house is in India. At the time of transfer, you should own only one residential home apart from the new one. You cannot purchase or construct a residential house (other than the new one) within two years of that date. 3. Section 54EC As per Section 54EC, profits from the sale of a long-term capital asset, both immovable property and shares and stocks, are exempt from LTCG tax if invested in “long-term specified assets”. The conditions to avail of this exemption are: You should invest the gains within six months of the sale. The investment should be in government-notified bonds from the Rural Electrification Corporation (REC), National Highways Authority of India (NHAI) You cannot invest more than Rs 50 lakhs in these bonds. The lock-in period for the investment in bonds is 5 years. 4. Section 54B This section provides an exemption in case of capital gains from the transfer of agricultural land. You can save LTCG tax if: You use the proceeds to buy another agricultural land within two years of the transfer. You should not sell the land purchased for this purpose for at least three years from its purchase. 5. Capital Gain Account Scheme You can enjoy tax exemption through the capital gain account scheme without buying a residential property. Under this scheme, you can avail of the benefit if: You deposit the capital gains or the net consideration in the bank on or before the due date of filing returns. You can withdraw funds only to purchase a house or land and utilize the money within three years of withdrawal, or you will have to pay tax at the applicable LTCG tax rate. Things to remember You can use more than one section to claim a deduction. If you want, you can claim an exemption under both Section 54 and Section 54EC by combining the investment in new property and specific bonds. Similarly, you can claim simultaneous benefits under Sections 54 and 54F if all conditions are fulfilled. The LTCG tax-free limit is 1 lakh; the sale of assets above a lakh attracts capital gains tax. [B-02] Conclusion The amount of tax you pay depends on the value of the asset you sell and the LTCG tax rate. The above tips can help you reduce capital gains tax effectively. A penny saved is a penny earned, so utilize the above provisions to save tax.
08-11-2023
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Tax Savings

NSC Vs ELSS: Which One is Better For Tax-Saving Investments?

For a secure future, it is very important to plan your finances as soon as you start earning. It helps you choose the right investments based on your wealth creation goals. Under Section 80, numerous tax-planning funds help you save on taxes, but each comes with its risks and rewards. In this article, we will discuss how NSC and ELSS funds differ. This will serve as a full guide to help you evaluate NSC vs the best ELSS funds to find out which one helps you save the most tax. [B-01] What exactly is a National Savings Certificate (NSC)? NSC means “National Savings Certificate.” It is a way to save money at the post office, and the government backs the investments and their returns. The government started this programme to help people get into the habit of saving money and reach their long-term financial goals. The government sets the interest rate on this plan, but it can be changed every three months. The current rate of interest on NSC is 6.8%. You can invest as little as Rs. 100 in this; there is no upper limit. Also, the money invested in NSC cannot be taken out for five years. When the term is up, investors cannot stay invested; they have to get a new certificate at the prevailing interest rates. As per Section 80C of the Income Tax Act, 1961, an investor who invests in NSC can get a tax deduction of up to Rs. 1.5 lakh. Also, the NSC calculator can estimate the return on an NSC investment. The NSC calculator is free to use. What exactly is an Equity Linked Savings Scheme (ELSS)? Equity-Linked Savings Scheme is a type of mutual fund that can be invested in stocks and stock-related instruments in various industries and markets. The money made from this plan is directly tied to the share market. In recent years, the best ELSS funds have become very attractive to investors because, compared to other tax-saving methods, they have the potential to bring in higher returns. This is a good investment for people who want to save money for the long term. Most ELSS funds have a three-year lock-in period for investments. Also, investors can have tax breaks of at least Rs. 1.5 lakh every financial year under Section 80C of the Income Tax Act, 1961. Features of NSC Investment Term & Lock-in Period NSCs have a five-year maturity and lock-in period. Early withdrawals are allowed for only certain situations. Tax Benefits Under Section 80C of the Income Tax Act of 1961, an investor who invests in NSC can get a tax deduction of up to Rs 1.5 lakh per year. Risk Since the Indian government supports NSC, it carries very few or almost no risks. Features of The Best ELSS Funds Long-term investments The lock-in period for most ELSS funds is three years. This means that you must stay in the plan for a minimum of three years before leaving it. After three years, you can choose to exit the scheme or stay in it. To ensure good returns, it’s best to keep your money in the best ELSS funds. Tax Benefits As per section 80C of the Tax Act of 1961, if you invest in the best ELSS funds, you can get a tax deduction of Rs1.5 Lakhs per year. Also, there is no upper limit to the amount you can invest in a year. Long-Term Capital Gains (LTCG) Tax is applied to the returns because the best ELSS fund investments are generally held for longer than a year. This applies to returns taxed at 10% and exceeding Rs 1 lakh in a fiscal year. Risks Due to investments in the equity markets, the best ELSS funds typically have medium to high risk levels (depending on the investment option). Due to their exposure to the equity market, ELSS investments run the risk of Net Asset Value (NAV) instability or volatility. Therefore, you must invest in ELSS funds only if your risk appetite is high. Contrast Between ELSS and NSC There are numerous differences between NSC and ELSS. Here are a few: Nature Equity-Linked Savings Schemes are mutual fund plans that invest in equity funds to give investors returns and tax exemptions under Section 80C. National Savings Certificates (NSCs) are small savings plans given by the post office that offers guaranteed and risk-free investment returns. Lock-in Period The lock-in period for ELSS is three years, making it a short-duration tax-saving investment; in fact, one of the shortest. The lock-in period for an NSC is five years. Taxation By investing in ELSS, you can get tax benefits for Rs. 1.5 lakhs per year. For investments held for more than a year, returns over Rs. 1 lakh are levied at 10% as Long Term Capital Gains (LTCG) Tax. With NSC, you can also get a tax benefit of Rs. 1.5 Lakh per year through Section 80C. But the interest income on investments is taxed based on your tax bracket. Risks associated Due to their investments in the stock market, ELSS funds have medium to high risks. NSC is a government-supported program. and is pretty much risk-free, suitable for risk-averse investors. Returns Long-term investments in ELSS funds yield returns of between 12 to15%. On the other hand, NSC offers an interest rate of 6.8% compounded annually. [B-02] Conclusion Both of these investments are great ways to save on taxes. The way these investments compare in terms of risk and return is very different, catering to different types of investors. Those willing to take on more risk should consider the best ELSS funds to save on taxes because they can provide higher returns. On the other hand, if you don’t like taking risks, you can opt to invest in the NSC for stable and assured returns. For more information, you can visit the Piramal Finance website and explore their products and services.
08-11-2023
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