Posted: 17 Aug 2016 03:49 AM PDT

WE USUALLY DON'T want to be alarmist but this is one area where taxpayers need to tread with caution. They can no longer afford to be unsure about their foreign income and assets. There is a lot of exchange of information between countries and we will see an exponential rise in the number of notices being sent to taxpayers on this account.

Mis-reporting overseas assets will not be taken lightly by the government. You could be prosecuted under the Black Money Act and the penalty can be as high as `10 lakh for even small errors. Experts say taxpayers who have worked abroad often go wrong when reporting their foreign assets. The employee stock options is often acquired at no cost or be sold out during the year and therefore get missed when you take an account of your assets. Capital assets like jewellery often skips the mind as they do not generate any income. In fact, they may have been bought only as ornaments.

Not just salary and perks, freelancers who receive money from foreign clients need to report this income under the foreign assets schedule. This should also include gifts, which are deemed to be income. Also, all foreign bank accounts -- whether operational or not and even with a tiny balance--need to be reported. You even have to report bank accounts where you are merely a signing authority.

Start collecting details of your foreign assets much before the last date for filing returns.

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Invest Rs 1,50,000 and Save Tax under Section 80C. Get Great Returns by Investing in Best Performing ELSS Mutual Funds
Top 10 Tax Saver Mutual Funds to invest in India for 2016
Best 10 ELSS Mutual Funds in india for 2016

1. BNP Paribas Long Term Equity Fund
2. Axis Tax Saver Fund
3. Franklin India TaxShield
4. ICICI Prudential Long Term Equity Fund
5. IDFC Tax Advantage (ELSS) Fund
6. Birla Sun Life Tax Relief 96
7. DSP BlackRock Tax Saver Fund
8. Reliance Tax Saver (ELSS) Fund
9. Religare Tax Plan
10. Birla Sun Life Tax Plan

Invest in Best Performing 2016 Tax Saver Mutual Funds Online
Invest Online
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For further information contact Prajna Capital on 94 8300 8300 by leaving a missed call
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Home Loan Tax Benefits

Posted: 17 Aug 2016 03:00 AM PDT

Apply Home Loan Online

2016 is looking to be one of the best years for home buyers. More tax benefits, rate cuts on loans, stagnant property prices, new launches in the `affordable' segment with freebies and attractive payment schemes. Many of you will be looking to take advantage of these benefits and buy a house. While hunting for a house at the right price, you'll be haggling with the bank to cut a loan deal too. Even if you get a discount on both, your tax bill can burn a hole unless you know the rules well. Heregoes a list of six lesserknown and often-missed tax benefits on home loans.

You can claim tax benefit on interest paid even if you missed an EMI.

Unlike the deduction on property taxes or principal repayment of home loan, which are available on `paid' basis, the deduction on interest is available on accrual basis. Meaning, even if you have missed a few EMIs during a financial year, you would still be eligible to claim deduction on the interest part of the EMI for the entire year. "Section 24 clearly mentions the words "paid or payable" in respect of interest payment on housing loan.Hence, it can be claimed as a deduction so long as the interest liability is there. However, retain the documents showing the deduction so that you can substantiate if questioned by tax authorities. The principal repayment deduction under Section 80C, however, is available only on actual repayments.

Processing fee is tax deductible.

Most taxpayers are unaware that charges relaed to their loan qualify for tax deduction. As per law, these charges are considered as interest and therefore deduction on the same can be claimed. Under the Income Tax Act, Section 2(28a) defines the term interest as `interest payable in any manner in respect of any money borrowed or debt incurred (including a deposit, claim or other similar right or obligation)'. This includes any service fee or other charge in respect of the loan amount. Moreover, there is a tribunal judgement which held that processing fee is linked to services rendered by the bank in relation to loan granted and is thus covered under service fee. Therefore, it is eligible for deduction under Section 24 against income from house property .Other charges also come under this category but penal charges do not.

Principal repayment tax benefit is reversed if you sell before 5 years.

You score negative tax points if you sell a house within five years from the date of purchase, or, five years from the date of taking the home loan. As per rules, any deduction claimed under Section 80C in respect to principal repayment of housing loan, would get reversed and added to your annual taxable income in the year in which the property is sold and you will be taxed at current rates. Thankfully , the loan amortisation tables are such that the repayment schedule is interest heavy and the tax-reversal rule only apply to Section 80C.

Loans from relatives and friends is eligible for tax deduction.

You can claim a deduction under Section 24 for interest repayment on loans taken from from anyone provided the purpose of the loan is purchase or construction of a property . You can also claim deduction for money borrowed from individuals for reconstruction and repairs of property . It does not have to be from a bank. For tax purposes, the loan is not relevant, the usage is. The taxpayer should be able to satisfy the assessing officer how the loan has been utilised for constructing or purchasing a house property and completion of construction was within five years and other conditions are met. Remember, the lender must also file an income-tax return reporting the interest income and paying tax on it. The interest charged should be reasonable and a legal certificate of interest should be provided by the lender along with name, address and PAN. This rule, however, is only applicable for interest repayment. You will lose all tax benefits for principal repayment if you do not borrow from a scheduled bank or employer. The additional benefit of `50,000 under Section 80EE is also not available.

You may not be eligible for tax break even if you are just a cobor rower.

You cannot claim a tax break on a home loan even if you may be the one who is paying the EMI. For one, if your parents own a property for which you are paying the EMIs, you can't claim breaks unless you co-own the property . You have to be both an owner and a borrower to claim benefits. If either of the titles are missing you are not eligible. Even if you own a property with your spouse, you can't claim deductions if your name's not on the loan book as a coborrower.

You can claim pre-construction period interest for up to 5 years.

You know you can start claiming your know you can start claiming your home loan benefits once the construction is complete and you receive possession. So, what happens to the installments you made during the construction or before you got the keys to the house? As per rules, you cannot claim principal repayment but interest paid during the period can be accrued and claimed post-possession. The law provides a deferred deduction on the interest payable during pre-construction period. The deduction on such interest is available equally over a period of 5 years starting from the year of possession.

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Index Funds

Posted: 17 Aug 2016 12:34 AM PDT

Invest Index Funds Online

Many investors look at starting their investment journey by investing in an index fund compared to an actively managed equity fund. Investors looking to invest in equity mutual funds but not confident about the abilities of the fund manager typically invest in index funds

1. What is an index fund?

An index fund is a type of mutual fund with a portfolio constructed to match or track the components of a market index, such as the Nifty or the Sensex. As each stock has different weightage in an index, the portfolio of an index fund is allocated in a way to mirror the index. For example, if HDFC Bank has a weightage of 5% in an index, a fund based on the index would also allocate 4% of its portfolio to the stock. An index mutual fund is said to provide broad market expo sure, low operating expenses and low portfolio turnover.

2. What are the types of index funds available in India?

You have index funds based on the Sensex and Nifty in India.

3. What are the advantages of index funds?

Index funds remove fund manager bias. There is always a chance that your fund manager may end up picking up a few underperforming stocks or the style of the fund could change after he quits. These situations could impact actively managed funds. Index funds negate this risk by passively investing only in securities that represent a particular index. Also since they are passively managed, their expense ratio is much lower than actively managed funds.

4. What the disadvantages of index funds? Why are they unpopular in India?

A fund manager brings with him a lot of experience and follows a structured investment approach. He analyses companies, meets managements regularly and based on real-time developments and trend analysis, he can take decisions that help a fund outperform. As per financial planners, actively managed funds have performed better than index funds in the past and they expect that to continue in the near future. A fund manager has the freedom to limit the downside by holding only performing securities, or going into cash if the need warrants. In case of index funds, they fall with the markets, since they have to stay invested in a non performing stock as well.

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Invest Rs 1,50,000 and Save Tax under Section 80C. Get Great Returns by Investing in Best Performing ELSS Mutual Funds
Top 10 Tax Saving Mutual Funds to invest in India for 2016
Best 10 ELSS Mutual Funds in india for 2016

1. BNP Paribas Long Term Equity Fund
2. Axis Tax Saver Fund
3. Franklin India TaxShield
4. ICICI Prudential Long Term Equity Fund
5. IDFC Tax Advantage (ELSS) Fund
6. Birla Sun Life Tax Relief 96
7. DSP BlackRock Tax Saver Fund
8. Reliance Tax Saver (ELSS) Fund
9. Religare Tax Plan
10. Birla Sun Life Tax Plan

Invest in Best Performing 2016 Tax Saver Mutual Funds Online
Invest Online
Download Application Forms
For further information contact Prajna Capital on 94 8300 8300 by leaving a missed call
---------------------------------------------
Leave your comment with mail ID and we will answer them
OR
You can write to us at
PrajnaCapital [at] Gmail [dot] Com
OR
Leave a missed Call on 94 8300 8300

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