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Every taxpayer is entitled to receive refund within one year from the end of the financial year in which his return is filed!

      As per Section 244A of the Income-tax Act, a taxpayer is entitled to interest @ 0.5% for every month or part of the month, (6% per annum) from the first day of April of the assessment year to the date on which the refund is granted, where the refund arises on account of TDS or advance-tax payment. It needs to be borne in mind that as per the proviso to Section 244A, no interest is payable if the amount of refund is less than 10% of the tax payable by the taxpayer.



Holds continuing education and training programmes of Ahmedabad Management Association entitled to exemption!

Should the term ‘education,’ in the context of the definition of ‘charitable purpose’ under Section 2(15) of the Income-tax Act, be given such a narrow and restricted meaning, so as to include only formal school or college education? Can a public charitable trust pursuing the objects of continuing education, training and research on various facets of management and related areas be denied the benefit of exemption under Section 11 of the Income-tax Act, on the ground that its activities do not fall within the scope of education?

            These two very interesting and important questions recently came up for consideration before the Income-tax Appellate Tribunal (ITAT), Ahmedabad, in the case of Ahmedabad Management Association (AMA). 



Public Provident Fund (PPF) is a hot favourite amongst tax saving investments with an effective return upto 18.22%!

PPF enjoys the pride position of being a wonderfully attractive investment scheme offering total safety, a high degree of flexibility, reasonable tax free return and useful tax saving through the shelter of income-tax rebate. Let us take a bird’s eye view of these special attractive features of PPF:

 Total Safety: Enjoying highest security in terms of investment, PPF is perhaps the only asset which is free from any civil claim or attachment, even by a Court of Law. No wonder, there are people who have practically lost everything in the debt claims against them, except their investment in PPF!

 High Flexibility: Although the maturity period of investment in PPF is 15 years from the opening of the Account, the minimum annual investment required is only Rs.500 per annum, giving the investor freedom to invest as per his choice and available resources.  The maximum limit of investment is Rs.1,00,000 per annum.  The other attractive feature of PPF is that even after 15 years, the account can be renewed for a fresh term every 5 years.  This facility of extending the 5 year block period from 15 to 20 to 25 to 30 years and so on can be availed continuously as per the choice of the investor.  The privilege of one annual withdrawal from PPF after the initial 6 years period and even during the extended block period after 15 years as available to the investor can come extremely handy in times of need.



With 31st March around, just ensure that you are not missing out on securing any tax saving & filing of your tax return! 

As the fiscal year 2012-13 ends on 31st March, it’s time for all income-tax taxpayers to take a quick look whether they have fully availed of the opportunities for tax saving via saving of specified investments and allocations. 


            ‘Be happy and gay, saving tax the 80C way!’  This should be the ‘magic mantra’ of all taxpayers. “My liquidity constraints do not permit me to invest,” some may retort.  But let this not be your excuse.  Infact, you should be prepared to even beg or borrow or secure a loan or gift or even draw out of your exempt income or accumulation, to make up for your investment limit of Rs.1,00,000 and thus plan to lawfully avoid your tax sorrow.  This is so, because Section 80C of the Income-tax Act does not require you to invest out of your ‘income chargeable to tax’.  This point can be better appreciated by the illustration hereunder:



Tax refund must be claimed within the specified time limit, but there is a remedy for belated & additional claims! 

There may be situations where considering the amount of tax deducted at source from the income of the taxpayer or the advance-tax paid by the taxpayer on his estimated income, the taxpayer becomes entitled to claim refund of income-tax, if such tax deducted or paid exceeds the actual income tax liability for the relevant assessment year. A taxpayer may also become entitled to refund of income-tax as a result of any order passed in appeal, rectification or revision, when the assessed taxable income has been reduced and he had paid excess tax earlier.

             Section 237 of the Income-tax Act provides for granting of Refund of excess tax paid or deducted in the case of a taxpayer, where such tax exceeds the actual tax payable by him.



FM thrusts onerous obligation of deducting TDS on all purchasers of immovable property over Rs.50 lakhs 

The taxing proposal, which came to be announced by Pranab Mukherjee in his Budget proposals in February, 2012, but soon came to be rolled back, when he realized its harsh implications, has quite astonishingly been sneaked in once again by P. Chidambaram in the Finance Bill, 2013.


Attempting to justify the reintroduction, the FM tried to explain in his Budget speech, “Transactions in immovable properties are usually undervalued and underreported.  One-half of the transactions do not carry the PAN of the parties concerned.  With a view to improve the reporting of such transactions and the taxation of capital gains, I propose to apply TDS at the rate of one percent on the value of the transfer of immovable property where the consideration exceeds Rs.50 lakhs.  However, agricultural land will be exempt.”



Tricky & Illusive Tax Reliefs Coupled With Mischievous Tax Provisions Disappoint Tax Payers!

           The FM announced the setting up of 839 new FM radio stations in 294 Indian cities in his Budget speech 2013. However, quite ironically, the FM’s Budget did not play any sweet music for taxpayers of India.

           P Chidambaram, the FM who in 1997, endeared himself to India’s taxpayers with his dream budget has only  flattered to deceive in 2013! Opening his budget speech, he quipped that, “I intend to keep my speech simple, straight forward and reasonably short.” However, only when one goes through the details of the 50 clauses, as contained in the Finance Bill, 2013, does one discover the number of tax googlies astutely thrown in by PC, almost in the style of his name sake, the great magician P C Sarkar!



SCSS gets thumbs up on counts of security, return, tax saving & liquidity! 

            The Senior Citizens Savings Scheme (SCSS) has opened up a good investment opportunity for Senior Citizens desirous of making a secured investment of upto Rs.15,00,000 earning a reasonable return of 9.30% per annum (9% per annum till 31st March, 2012). With effect from F.Y. 2007-08, SCSS also having been notified as an eligible deduction for purposes of Section 80C, investment under this scheme has become even more attractive. 


            The Senior Citizens Savings Scheme permits investment for all individuals who have attained the age of 60 years or above.  Moreover, as a special case, individuals in the age group 55 to 60 years, who have retired under a Voluntary Retirement Scheme (VRS), have also been permitted to invest in the Scheme, subject to the condition that the Deposit Account is opened by them within three months of the date of their retirement and a Certificate from their employer is attached in this regard.



Stipends, awards, fellowships & grants for education have been held as scholarships exempt from tax!

Under Section 10(16) of the Income-tax Act, any scholarship granted to a person to meet the cost of education is exempt from tax. The term ‘scholarship’ has been interpreted liberally to also include within its scope and ambit, amounts of fellowships, stipends, grants for travel and incidental expenses, etc. awarded for acquiring education.


In the case of ‘A. Ratnakar Rao vs. Addl. CIT’ 128 ITR 527, the Karnataka High Court had occasion to consider whether the trainee’s stipend granted to a physician to further his education and training was exempt under Section 10(16). The Income-tax Department took the view that the amount received by the taxpayer was not in the nature of scholarship, but it was salary for the services rendered.

The High Court held that the amount paid to the taxpayer was for the benefit of securing training and pursuing study and research in medicine and the entire amount received from the hospital was in the nature of scholarship and not for services rendered and services, if any, rendered by the taxpayer were only incidental to the course of practical training. (more…)


Filing of Forms 15G or 15H, subject to relevant conditions, can help you enjoy the benefit of no TDS!
  Although the net of tax deduction at source (TDS) has been considerably widened in the past few years, there are provisions to enable you to avail of no deduction of TDS from your income.

    Section 194A of the Income-tax Act provides for tax deduction at source (TDS) at 10% out of interest payments exceeding Rs.10,000 in a financial year.  However, with a view to grant relief to persons who are not under liability to pay any income-tax, special provisions have been made under Section 197A, which permit the benefit of no tax deduction even on interest payments exceeding Rs.10,000.   (more…)

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