Tax Relief That NRIs Want From Arun Jaitley’s Budget

Experts feel that NRIs should be exempted from filing tax returns on which TDS has been already been deducted.Simplification of income tax processes and relief on tax deducted at source (TDS) are among the top of the Budget wishlist of non-resident Indians (NRIs), say experts.  Finance Minister Arun Jaitley will present the budget on February 29.  Experts believe that one of the long-pending demands of NRIs is tax treatment at par with the resident Indians in case of TDS exemptions.  According to the current income tax law, a resident Indian is required to pay TDS on income only if the amount of income earned is beyond a certain limit in a financial year.  For example, a resident Indian is liable to pay TDS on rental income only if the total amount of rental income exceeds Rs. 1.8 lakh per year. Similarly, in case of a professional, if the income exceeds the limit of Rs. 30,000 per year then only the person is liable to pay TDS on professional income.  No such exemption from TDS is available to the NRIs. In case of NRI, TDS is deducted as per the applicable slab rate of NRI based upon his or her income in India.  “The Budget may introduce a certain exemption for NRIs as well. This will on the other hand, encourage more investment in India by NRIs,” says Amit Maheshwari, managing partner, Ashok Maheshwary & Associates, a chartered accountancy firm.  To avail lower tax rates under tax treaties that India have with the country of residence of NRI, he or she is required to bring tax residency certificate (TRC) from the tax authorities of the country in which he or she is a resident. “It is a very tedious and difficult task. It is expected that NRI should be provided some relaxation in getting TRC,” says Mr Maheshwari.  “The government should consider alleviating this difficulty for non-residents. A lower rate of TDS should be prescribed for non-resident individuals. They should also be exempted from the requirement to produce TRC to claim the lower rate of tax under the treaty,” says Tapati Ghosh, partner at Deloitte Haskins & Sells.  Experts also feel that NRIs should be exempted from filing tax returns on which TDS has been already been deducted.  “Abolish the requirement to file return of income if tax on income of NRI already discharged by way of TDS. Currently, this relaxation applies only if income is relating to assets purchased from convertible foreign exchange,” says Parizad Sirwalla National Head-Global Mobility Services-Tax, KPMG.  NRIs also face difficulty in claiming the tax refunds as they may not have operative bank account in India and this issue needs to be addressed, say experts.  “There are no provisions in the tax laws which provide for direct remittance of refund amount to the foreign bank account of the NRI,” says Parizad of KPMG.


Wrong Tax Deduction on Home Loan Can Result in Tax Penalties

Wrong Tax Deduction on Home Loan Can Result in Tax PenaltiesThe purchase of a house, by taking out a home loan, is considered good by personal finance experts, who generally scoff at long-term liabilities.

A house, unlike other personal goods such as cars, is considered to be an asset. There’s tax benefit too. Home buyers can claim an exemption of up to Rs. 1.50 lakh on principal payments for home loan under Section 80C of the Income Tax Act.

Buyers can avail Rs. 2 lakh deduction paid towards interest component of home loan per year.

The above-mentioned benefits apply for self-occupied properties and not for under construction houses. Further, in case of a delayed possession, the tax benefits get reduced substantially. Many a times, tax payers – unaware of this provision – claim full tax benefits on their home loan and get notices from the tax department.

According to Section 24B of Income Tax Act, a person can claim a tax deduction of up to Rs. 2 lakh on the interest paid on a self-occupied house if the possession of the property is done within three years of taking the loan.

In case the possession is given after three years, then the amount of deduction is reduced to Rs. 30,000 per year.

This means in case of delayed possession (when houses are delivered three years after a home loan has been taken), buyers can claim only Rs. 30,000 (15 per cent of the current allowed deduction of Rs. 2 lakh) as exemption.

Those who unknowingly claim exemption can get into serious trouble and may have to pay huge penalties, experts say.

“If the home buyer in such cases still claims interest of Rs. 2 lakh per annum, the tax office could disallow the deduction of Rs. 1.7 lakh per annum which could result in additional tax and interest payable by the home buyer to the tax office. At their discretion the tax office can also levy penalty for claiming excessive deduction,” says Parizad Sirwalla, National Head-Global Mobility Services-Tax, KPMG.

The penalty in this case may range between 100 per cent and 300 per cent of the extra tax deductions claimed, says Amit Maheshwari, managing partner of Ashok Maheshwary & Associates.

Tax experts say that home buyers are getting tax notices for claiming over Rs. 30,000 deduction, despite delayed possession. “As people are getting the possession of the house which they booked five to seven years back now, tax department are scrutinising the returns and people are getting notices from the tax department for the same,” says Sudhir Kaushik, chief financial officer,

Tax experts believe that Finance Minister Arun Jaitley in the budget should relook at the tax benefits offered on home loans. “It may be worthwhile to consider an amendment in the provision not limiting such deduction to Rs. 30,000 per annum in cases where the delay in completion of construction is caused on account of reasons beyond the control of the home buyer,” says Parizad of KPMG.

Tapati Ghosh, partner at Deloitte Haskins & Sells, said: “One of the measures that could be considered is the extension of time limit to 5 years at least for the under-construction properties.”


Should You Switch Home Loan to Another Lender? 5 Things to Know

Should You Switch Home Loan to Another Lender? 5 Things to KnowBuying your own home, gives such satisfaction and joy, that few things can supersede. Home loans are a blessing for people who dream of buying a house. It turns their dreams to reality.

And with reality comes, the many components of a home loan. Interest rate being the one that attracts maximum attention. The home loan market can be aptly called as the battle of the interest rates! Tenure, EMIs, documentation, etc. follow suit. The consumer obviously is the one who can benefit from the competition. But, as they say, options give rise to confusion. As banks roll out new and attractive offers every other day, it is difficult to be satisfied with the deal on hand. So are you thinking of shifting your home loan for a better deal? Here are a few points you must note:

Loyalty pays

Losing sincere customers who practice financial discipline is a lender’s nightmare! So when you spot the competitors hoarding with a home loan offer which is hard to refuse, make a note and discuss with your lender first. New lenders will welcome you, of course. But we all know the drill – credit checks, evaluations, verification, loan documentation etc will follow. Only when all conditions are met as per the new lender, the loan will be approved. That takes time, money and energy. All of which can be saved if you can negotiate and get a better deal from the existing lender.

In the interest of time

Before switching to better home loan deal offering a lower interest rate, check on the tenure. The remaining tenure of your home loan has to be considered if you are planning to switch. To make the package cost effective, the tenure will contribute along with the interest rate. So the deal will not be as attractive for somebody who is towards the last few years of loan repayment as against that for somebody who has just started servicing EMIs.

The cost of moving

Switching loans can be expensive. Even if the intention before doing so was saving! The costs need to be factored in while calculating the saving potential of a loan switch. Stamp duty, legal expenses, processing fees, and documentation cost add up to a substantial amount. Ensure that this expense does not nullify your saving amount. Some lenders charge a pre-payment penalty if the outstanding is cleared within a decided tenure. So check on that bit and factor in the cost before moving the loan.

Check on the CIBIL score

Consumers having a home loan running with a lender, tend to have a relaxed attitude towards the CIBIL score, unless of course another loan is planned. So when it comes to moving the home loan, this is among the last thing we think about. However, our new lender looks at it differently. CIBIL report and scores are checked thoroughly while evaluating a potential borrower who is planning a loan switch. If moving the loan is on your list, then start tracking your CIBIL score regularly.

Decide for yourself

Switching your home loan lender is a decision which will have a financial impact on your life lasting a decade or more. Hence, it is important that you are comfortable with your lender. A long term association definitely helps. Being associated with a lender who knows your better than the credit score can tell, is a huge positive. A lender who is supportive will stand by you when times get tough. So choose wisely before making the switch.

Disclaimer: All information in this article has been provided by and NDTV Profit is not responsible for the accuracy and completeness of the same.


Taxman Gets More Teeth to Track Non-Filers of I-T Returns

Taxman Gets More Teeth to Track Non-Filers of I-T Returns: ReportNew Delhi: Aimed at further arming the taxman to go after those who do not file their income tax returns (ITRs), a new database of multiple addresses of such erring assessees has been set up by the Income Tax Department.

Under the special drive called ‘Non-Filers Management System’ (NMS), the department, in such cases, used to send intimation letters or notices to the addresses mentioned in the PAN database which many times went undelivered as the information therein was quite old.

A new technology enhancement by the systems wing of the department has added to the NMS electronic database the address used by a person or his/her associate in the income tax return or annual information return (AIR) filed by him/her.

While an ITR is supposed to be filed by any person who has taxable income, an AIR is stipulated to be filed by a specific category of people undertaking high-value transactions.

The NMS database is run by using technology intelligence tools to track erring taxpayers who either forget or just skip filing their returns.

“The department found that the addresses provided in the Permanent Account Number database were no longer valid in many cases as the assessee had changed location. Hence, a new pool of data has been provided to IT sleuths by electronically collating the address which such an assessee uses in his ITR or AIR or may be by the entities connected with such a person.”

“In some cases, the department found people have reported income returns from one head but skipped doing so from other such avenues and hence the NMS notice tells them to do so and comply with norms,” an official said.

The department is particularly enthused by the NMS drive as recently, over 11 lakh taxpayers filed their I-T returns for assessment year 2014-15 after the department tracked them through this programme.