Tag: Income Tax

Fifteen years of NPS: How to generate ₹1 lakh monthly pension by investing in it

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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The National Pension System (NPS), India’s flagship pension scheme, celebrates its 15th anniversary this month. Initially launched for government employees in 2004, NPS opened its doors to the broader Indian populace in 2009.

NPS provides subscribers with the flexibility to allocate their investments across different asset classes.

There are two primary NPS accounts — Tier 1 and Tier 2.

While Tier 1 is strictly a pension account, Tier 2 is a voluntary savings account associated with the Pension Regulatory Authority of India (PFRDA).

In an earlier conversation with CNBC-TV18.com, Kurian Jose, CEO of Tata Pension Management, stressed the advantages of NPS for long-term retirement planning.

“NPS leverages the power of compounding over the long term. As contributions grow and generate returns, this compounding effect significantly boosts the retirement corpus,” he shared with CNBC-TV18.com.

Generating a monthly pension of ₹1 lakh with NPS

Jose provides a detailed example to illustrate how individuals can secure a substantial monthly pension using NPS.

Consider a 30-year-old who starts investing ₹5,000 per month with a balanced allocation of 50% in equities and 50% in government and corporate bonds.

Assuming a 6% annual increase in contributions and a 10% return on investment, the corpus grows to approximately ₹1.85 crore by the time the investor turns 60.

Opting for a 100% annuity can provide a monthly pension of ₹1,05,292 for life.

In the event of the subscriber’s demise, the pension would continue for the spouse, and the principal corpus would be available to the nominee.

For those looking to secure a monthly pension of ₹50,000, the calculations can be adjusted.

By investing ₹2,500 per month from the age of 30, with similar assumptions, the corpus would grow to about ₹92.5 lakh, providing a monthly pension close to ₹50,000.

NPS offers various calculators, including those from Tata Pension Management, to help investors visualise their retirement corpus and potential pension.

For instance, a 40-year-old starting with ₹5,000 per month and increasing the annual contribution by 20% can achieve a corpus of nearly ₹2 crore, yielding a monthly pension of around ₹1,13,730, assuming a 6.5% annuity rate.

While these examples provide a general guideline, individuals should consider their financial situation and goals before investing.

NPS’s flexibility, tax benefits, and potential for high returns make it a compelling choice for retirement planning.

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KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Vested Finance integrates ClearTax to simplify US investment tax filings

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Investment platform Vested Finance has announced the integration of ClearTax on its platform. With this, over 2.5 lakh investors with Vested accounts can leverage the ClearTax platform to include their US investments in their income tax return (ITR) filings, Vested Finance said.

An investor has to log in to Vested Finance platform, visit the ‘Tax Documents’ section, select ‘File with ClearTax,’ login / sign up on ClearTax, and then all the tax documents generated by Vested, including capital gains, schedule of Foreign Assets, schedule of Foreign Income will be auto captured on the ClearTax portal in INR as per income tax regulations.

The investor has to then provide additional details of their income tax return, such as personal details, other income sources, capital gains from different sources, etc., and then file their ITR within a few clicks.

ClearTax offers DIY and expert-assisted plans that investors can choose from based on their preferences.

Step by step process:

Step 1: On the Vested tax documents screen, the you can click on ‘File with ClearTax’.

Step 2: On the ClearTax window that opens up, sign up or log in if you have an existing ClearTax account.

Step 3: Once you log in or sign up, all your tax information will be auto-imported from Vested, and a summary will be shown. Voila!

Step 4: You can review or edit the tax information imported in the capital gains dashboard on ClearTax

Viram Shah, CEO, Vested, said, “Investing in global stocks, primarily via the US markets, is an increasingly popular diversification option for Indian investors. Our tax documents are one of the most favorite features of our customers. What started as providing simplified tax documents has now evolved into a reporting and filing journey with our ClearTax partnership.”

Vested is featured as one of their partner brokers on the Capital Gains dashboard on the ClearTax platform.

“With this collaboration, Vested’s users are well-positioned to leverage this opportunity as a pmoment in their financial journey and further equip themselves with the tools and resources they need to achieve their financial and compliance goals efficiently.” said Avinash Polepally, Senior Director (Consumer Business Head) at ClearTax.

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How to stay cyber-safe this income tax season? Here’s your checklist for secure ITR filing

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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As the tax filing season for FY23-24 is in full swing, individuals should be vigilant against rising cyber threats. With cybercriminals employing increasingly sophisticated tactics, securing personal and financial information has become paramount.

Here’s a comprehensive checklist of red flags to look out for during tax season:

Understanding cyber threats

Cybercriminals are leveraging digital payment trends to perpetrate scams such as malware attacks, phishing scams, and identity theft.

“With AI-powered cons becoming more convincing, individuals should remain cautious of suspicious communications,” said Vipin Surelia, Vice President and Head of Risk Services at Visa.

Cyber-attacks can result in identity theft, credit score damage, and financial losses for individuals. Businesses are also vulnerable to business email compromise (BEC) scams, leading to lawsuits and investigations.

“Despite expressing confidence in detecting scams, consumers often overlook red flags. Cybersecurity education plays a crucial role in empowering individuals to recognise and avoid potential frauds,” Surelia told CNBC-TV18.com.

Securing personal information

When filing taxes online, individuals should refrain from sharing sensitive details with third parties.

They should use secure e-filing services, avoid public Wi-Fi networks, and activate two-factor authentication for enhanced security.

Public Wi-Fi networks are particularly vulnerable to interception by cybercriminals, making them risky for conducting tax-related activities.

Enhancing password security

One crucial aspect involves enhancing password security.

It’s imperative to create strong, unique passwords for tax filing accounts and regularly update them.

Employing a password manager can aid in securely storing and managing login credentials.

Email safety practices

Maintaining caution regarding email safety is paramount.

With cybercriminals often using phishing tactics, individuals should be wary of unsolicited emails claiming to be from the tax authorities or financial institutions.

Clicking on links or downloading attachments from unknown senders can expose devices to malware or phishing attempts, potentially compromising sensitive information.

Regular software updates

Regular software updates play a vital role in bolstering cybersecurity defences.

Individuals should ensure that all devices used for tax filing have up-to-date antivirus software and security patches installed.

Regularly updating operating systems, web browsers, and other software is essential to patch vulnerabilities and safeguard against cyber threats that exploit outdated software.

Monitoring bank accounts regularly

Regular monitoring and reporting of financial accounts are essential to detect and address any suspicious activity promptly.

Monitoring bank and credit card statements for unauthorised transactions or suspicious activity enables individuals to take immediate action in case of suspected fraud.

Tokenisation for data protection

Leveraging advanced security features like tokenisation anonymises data and protects personal financial information.

This technology replaces sensitive account information with unique digital identifiers, reducing the risk of data breaches.

Data encryption adds an extra layer of protection to sensitive tax documents and financial information.

Encrypting data stored on devices or transmitted over the internet ensures that even if intercepted, the data remains unreadable to unauthorised parties.

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KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

This tax saving mutual fund scheme will give dividends today: Do you own it?

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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DSP Mutual Fund has declared dividends in its ELSS Tax Saver Fund. Investors will receive a dividend of ₹0.580 per unit, with the record date set as May 16, 2024.

The fund house has declared dividends in both its DSP ELSS Tax Saver-IDCW and DSP ELSS Tax Saver Direct-IDCW schemes.

DSP ELSS Tax Saver Fund is mandated to invest at least 80% of its assets in equity stocks.

It offers tax exemption under Section 80C of the Indian income tax laws.

As per this section, investments of up to ₹1.5 lakh in a financial year in eligible securities are exempt from tax.

According to Value Research, the net asset value (NAV) of the DSP ELSS Tax Saver Fund is ₹118.2560 as of May 16.

It is 17 years and 4 months old. It has delivered 15.32% returns since inception.

Understanding mutual fund dividends

Mutual fund dividends are distributions of profits made by mutual funds to their investors.

These distributions can occur regularly or periodically, depending on the fund’s performance and the decision of the fund manager.

Mutual funds typically generate income from various sources such as dividends from stocks, interest from bonds, and capital gains from the sale of securities.

Who can get mutual fund dividends?

Any investor who owns units or shares in a mutual fund on the record date is eligible to receive dividends.

However, it’s essential to note that not all mutual funds pay dividends.

Some funds may choose to reinvest profits back into the fund rather than distributing them to investors.

How do mutual fund dividends work?

When a mutual fund declares a dividend, it specifies the amount to be paid per unit or share.

This amount is usually expressed in terms of rupees or a percentage of the fund’s net asset value (NAV).

The NAV is the per-unit market value of the fund’s assets minus its liabilities, calculated at the end of each trading day.

On the record date, the mutual fund determines which investors are eligible to receive the dividend based on their holdings on that date.

Investors who own units on the record date will receive the dividend payout in their bank accounts or through other specified modes of payment.

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KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Blaze engulfs Delhi income tax office; one dead, 7 rescued, 21 fire engines at scene

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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A fire erupted today (May 14) at the Income Tax office in Delhi, causing alarm and prompting a swift response from firefighting teams. As the flames raged, ten fire tenders were urgently dispatched to the location to tackle the inferno.

The incident unfolded on the third floor of the CR building, located in the ITO area of the national capital. A total of 21 fire engines were deployed to the location. One individual sustained injuries during the fire and was promptly transferred to a nearby hospital for medical attention.

So far, seven individuals — 5 men and 2 women — have been successfully rescued from the premises.

A 46-year-old male, employed as an Office Superintendent, was found unconscious and subsequently pronounced dead at the hospital. Forensic teams are currently processing the scene, according to Delhi Police.

🚨🚨 #Fire breaks out at Income Tax Office in New Delhi; 21 fire tenders rushed to the spot@Daanish_Anand @aspiringmind_ | #incometax @IncomeTaxIndia https://t.co/Wfv5zo1ney pic.twitter.com/pNAXgDVCnF

— CNBC-TV18 (@CNBCTV18News) May 14, 2024

#WATCH | Delhi: Visuals from CR building located at ITO, where a fire broke out. 21 fire engines present at the spot. More details are awaited. pic.twitter.com/x0nWZNmmqS

— ANI (@ANI) May 14, 2024

Also read: IN PICS | Fire breaks out at Delhi Income Tax Office, over 20 fire tenders rushed to spot

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KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

This new income tax feature gives users real time updates on their feedback: How to use

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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The Income Tax Department has unveiled a new functionality in the Annual Information Statement (AIS). This provides taxpayers with real-time updates on the status of feedback provided by them to the respective source or reporting entities.

Termed as the feedback mechanism, this feature enables taxpayers to monitor whether their feedback has been addressed by the source, either partially or fully accepting or rejecting the same. If the feedback is partially or fully accepted, the source is required to correct the information by filing a correction statement.

The following attributes shall be visible to the taxpayer for the status of feedback confirmation from the source.

Whether feedback is shared for confirmation: This will let the taxpayer know if the feedback has been shared with the reporting source for confirmation or not.

Feedback shared on: This will let the taxpayer know the date on which the feedback has been shared with the reporting source for confirmation.

Source responded on: This will let the taxpayer know the date on which the reporting source has responded to the feedback shared with it for confirmation.

Source response: This will let the taxpayer know the response provided by the source on the taxpayer’s feedback (if any correction is required or not).

“This new functionality is expected to increase transparency by displaying such information in AIS to the taxpayer,” stated the Income Tax Department in a statement.

How to use the new feature?

Taxpayers can access the new feature through the compliance portal on the e-filing website (www.incometax.gov.in).

Within the AIS interface, taxpayers can track the progress of their feedback on displayed transactions in real time.

Here’s how to use the feature:

Step 1: Log in to the compliance portal using credentials.

Step 2: Navigate to the AIS section.

Step 3: Look for the feedback feature to monitor the status of feedback.

Upon submission of feedback, an automated confirmation process is initiated with the source, encompassing information provided by tax deductors/collectors and reporting entities.

Understanding AIS

An AIS contains all the data regarding taxpayers’ incomes, financial transactions, income-tax proceedings, tax details, and more.

The same can be used while filing the income tax returns.

In other words, it is a more comprehensive single reference document for taxpayers which can also be modified by the taxpayer if he/she believes the information reported is incorrect.

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KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Income tax department launches utilities for ITR-3 form: Who should use them and how

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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The income tax department has released offline, online and Excel utilities for filing income tax return-3 (ITR-3) for the financial year 2023-24 (assessment year 2024-25).

This means taxpayers who fall under the ambit of ITR-3 for FY 2023-24 (AY 2024-25) now have the flexibility to choose between offline (Java), online, or Excel-based utilities to fulfil their tax obligations.

These utilities are accessible for download on the e-filing ITR portal’s ‘Downloads’ section.

The deadline for filing income tax returns for FY 2023-24 (AY 2024-25) is set for July 31, 2024, excluding those necessitated to conduct an income tax audit.

Which utility to choose?

Online utility: This is ideal for taxpayers seeking a streamlined process, wherein most information is auto-populated upon logging into the e-filing ITR portal.

This option offers convenience and efficiency.

Offline utility (Java): This is tailored for individuals contending with data for filing, such as those mandated to maintain books of accounts or subject to tax audits.

One can save draft ITRs too using this utility.

Excel utility: This is positioned as an alternative for users encountering challenges with the Java-based utility.

While it offers flexibility, users must exercise caution during data manipulation to prevent Excel utility corruption, given its dependency on MACRO-enabled functions.

Eligibility criteria for ITR-3

ITR-3 is designated for individuals or Hindu Undivided Families (HUFs) deriving income from business or profession.

Moreover, individuals liable to tax under the head “Profits and gains of business or profession,” encompassing various income streams like interest, salary, bonus, commission, or remuneration from a partnership firm, are mandated to file ITR-3.

However, it’s imperative to note that ITR-3 is exclusively tailored for individuals or HUFs with business or professional income and cannot be utilised by entities lacking such income streams.

Filing ITR online

The income tax department has established a dedicated portal for e-filing income tax returns.

The taxpayers can log on to https://www.incometax.gov.in/iec/foportal for e-filing the return of income.​

Taxpayers having salary income need Form-16 issued by their employer. If they have earned interest on fixed deposits or savings bank accounts and TDS has been deducted on the same, they need TDS certificates i.e., Form 16A issued by deductors.

They will need Form 26AS to verify TDS on salary as well as TDS other than salary. Form 26AS can be downloaded from the e-filing portal.

Taxpayers living in rented premises need rent-paid receipts for the calculation of HRA (in case they have not submitted the same to their employer).

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KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Multiple Demat accounts can help save more on income tax returns, expert explains

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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The countdown for filing returns has started. By filing an ITR, an individual can save more taxes on his/her income. But did you know that you could save more by having multiple Demat accounts? Yes, that is possible and here we explain how it works.

Speaking with CNBC-Awaaz, tax expert Mukesh Patel said, “Even today, many people have this wrong impression that I can only have one Demat account after my name. As per the laws, you can keep more than one Demat account.”

#TaxGuru | एक से ज्यादा डीमैट अकाउंट से होगी टैक्स की भारी बचत सिर्फ करनी होगी टैक्स सेविंग की सही प्लानिंग, कैसे जानिए टैक्स गुरू Mukesh Patel से@RoyLakshman @MukeshPatelTax #DematAccount #MultipleDematAccounts #TaxExpert #Taxsaving pic.twitter.com/eqkkocAUbk

— CNBC-AWAAZ (@CNBC_Awaaz) May 11, 2024

However, while doing so, a person is required to stay cautious about certain restrictions.

“You just need to take care of one thing: you can’t keep more than one account with your depository participant (DP) or broker. If you wish to keep more than one Demat account with two different DPs or brokers, and there should be no doubt about this,” Patel noted.

What’s the benefit from it?

“You need to do a cost-benefit analysis of whether the benefit you wish to take is worth it in comparison with an extra amount of money you have to spend,” Patel said.

Further. he went on to highlight that the Central Board of Direct Taxes (CBDT) in a circular in 2007 had noted that a taxpayer can keep separate status of a trader as well as the investor.

“If I wish to take benefits of both trader and investor, then I need to have two separate Demat accounts for this — one for trading purposes and the other for investment,” Patel said.

“Secondly, if I don’t wish to be a trader and wish to continue as an investor… there is Section 45 (2A), under which it has been stated that you’ll have to follow the FIFO (First in, first out) method,” he added.

Besides that, Patel also urged people to open more Demat accounts in the names of other members of their families as that, too, helps in saving taxes.

However, people must understand that there are certain disadvantages of opening more than one Demat account as it invites additional changes like annual maintenance among others. As a result, this increases your overall trading expenses. Moreover, keeping track of multiple Demat accounts can be a bit tricky at times.

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This new feature in the income tax portal will help you track notices, letters — here’s how

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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The Income Tax Department has introduced a new feature on its e-filing portal to ease the process for taxpayers to track pending tax proceedings. The new ‘e-Proceedings’ tab within the portal will allows taxpayers to navigate through various notices, letters, and intimations issued by the department.

This will reduce the compliance burden on taxpayers and eliminate the need for physical visits to income tax offices.

Through the ‘e-Proceedings’ tab, registered users will be able to view and respond to a variety of notices and communications issued by assessing officers, the Central Processing Centre (CPC), or any other income tax authority.

These include, defective notices under Section 139(9), intimations under Section 245, prima facie adjustments under Section 143(1)(a), and suo moto rectifications under Section 154, among others.

The process requires users to log in to the e-filing portal with their credentials.

From the dashboard, they can access the ‘Pending Actions’ section and navigate to ‘e-Proceedings.’

Users can then select the appropriate option based on whether they are responding as individuals or authorised representatives.

To utilise this service, users need an active PAN, a valid user ID, and password for the e-filing portal, and the relevant notice, intimation, or letter from the Income Tax Department.

Additionally, authorised representatives may need to be authorised to act on behalf of the taxpayer, and in certain cases, an active TAN may be required.

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KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow