4 thing you must know about Rent receipts & claiming HRA

Of all the tax benefits, HRA exemption is the most popular. Here are a few must know things about claiming HRA.

• Submit rent receipts

If you are claiming HRA through your employer, they’ll need a proof of rent payment to allow you exemption. The income tax act has made it the employer’s responsibility to collect rent receipts. On the basis of rent receipts submitted by you, your final tax liability shall be calculated and TDS adjusted accordingly.

• Landlord’s PAN details

If the annual rent paid by you is more than Rs 1,00,000, it is compulsory to get PAN of the landlord and report it to your employer. In case due to some reasons the landlord does not provide you the PAN or does not have one, you can ask for a declaration to this effect from the landlord with name and address of the landlord. And submit to employer and keep a copy safely in your records.

• HRA can be claimed directly in your tax return

If you have not been able to submit rent receipts to your employer, do not worry. HRA exemption can be directly claimed in your tax return. Calculate your HRA exemption and reduce the exempt portion from your total taxable salary. The net amount has to be shown under the head income from salary in your tax return.

• It may be possible to claim both HRA and home loan deduction

Under certain conditions you may be allowed to claim HRA as well as interest on home loan deduction. For example, you work in one city and live on rent but your family resides in another city and you buy a home where your family is. You can’t live in your own house since it’s far from your workplace and you take a house on rent closer to your office. There may be another situation applicable to you. In the above cases you may be allowed to claim HRA for the house on rent and also claim home loan deduction.

This article is by ClearTax (www.cleartax.in), India’s largest tax filing website where Individuals and Businesses can e-File their I-T Returns

Income Tax Return Filing for Beginners in India

For a beginner, income tax return filing may seem like a big deal. If this is your first time at it, here's are some pointers to help you sail.

1. Should I file a Return?
The IT department requires that one must file an income tax return if their total income is more than Rs 2,50,000. This total income is essentially the sum of income earned from all sources - salary, interest income from the bank, any rental income etc. Also the Rs 2,50,000 is your gross income before reducing any Deductions. Non-filing of returns may attract some penalties from the IT department.

2. All my tax is already deducted?
While, TDS may already have been deducted from your salary and other incomes, disclosing all your incomes and filing your return timely is your responsibility. So we go back to the thumb rule of 'file a return where your income exceeds Rs 2,50,000', whether or not TDS is deducted, all taxes may have been paid - the IT department still wants you to submit your IT Return.

3. My employer gave me a Form 16?
Your Form 16 is like a certificate your employer gave you for all the taxes they deducted before paying you salary. In fact, anyone who deducts tax before paying you is required to give you a certificate of it. Your Form 16 has other vital information which will help you file your return easily - so do remember to get hold of this document. If you changed jobs during the year, you'll have as many Form 16s.

4. I don't know what is my total Income?
Your income is the sum total of your income from the following heads - income from salaries, income from house property, income from capital gains, Income from business & profession and Income from other sources.
 

Income from Salary	Salary, HRA, other allowances basically all the money you receive while rendering your job as a result of your employment agreement.
Income from House Property	Income from your house that you have rented. Or if you have taken a loan for a house property that own and live in, the interest payout shall be your loss under this head. This loss can be adjusted against incomes from other heads.
Income from Capital Gains	Income from gain or loss when you sell a capital asset. For example, sale of shares, mutual funds etc.
Income from Business or Profession	Income/loss that arises as a result of carrying on a business or profession.
Income from Other Sources	This is the residual head -includes your income from savings bank accounts, fixed deposits, family pension or gifts received.

You can choose to disclose all your incomes to your employer and they will deduct tax on them. This saves you the hassle of paying taxes yourself. Now while filing your return, make sure you have considered all sources of income including interest on your savings bank account, interest from FDs or any shares you sold during the year. Your tax return should mention all your incomes.

5. What are deductions from income?
Certain deductions are available under section 80C to 80U. These deductions are allowed from your gross income and may help you move down a slab as well as reduce your tax outgo, so make the most of them. Your contributions to EPF, deposits to PPF, life insurance premium payments are all eligible to be deducted under section 80C. The maximum amount you can claim under section 80C is Rs 1,50,000 for financial year 2014-15. That's a lot of reduction from your gross income. If you have taken health insurance, a deduction is allowed under section 80D, for interest payment on education loans deduction can be claimed under section 80E and a lot of other deductions are available too, if you meet the conditions listed therein.

6. How do I go about filing my return?
You can simply upload your Form 16 on ClearTax and populate your return. You can also go head by head and keep adding details of your incomes. Make sure you have mentioned all the deductions you want to claim. Use your Form 26AS to get a sense of all the TDS that has been deducted against your PAN number and take credit of this TDS against your final tax liability. Or if excess TDS has been deducted, you may be in a refund situation. Form 26AS will also help you identify all the incomes you need to report if they've been subjected to TDS. You'll see your interest income from the bank and the TDS deducted on it, so you can add the income under the head 'income from other sources' and take credit for TDS deducted. Of course, your return must include all incomes, whether or not TDS has been deducted on them. Do remember to enter your personal information like PAN, phone number, email address and bank account number accurately. Usually salary returns are not complex and you'll be done in a matter of few minutes.

Hope this helps you succeed at filing your return the first time.

Disclaimer: All information in this article has been provided by Cleartax.in and Ezeeguide.blogspot.com is not responsible for the accuracy and completeness of the same.

How is Your CIBIL Score Calculated?

Today almost no loan or credit card application gets approved without checking the applicant's CIBIL report and CIBIL TransUnion Score. Ever wondered how a person's credit score is calculated? Here's a quick glimpse into what goes into the making of a person's CIBIL TransUnion Score:

What is a CIBIL TransUnion score?
CIBIL calculates an individual's credit score through advanced analytics and assigns a number between 300 and 900 to a borrower, based on his/her credit history. The closer your score to 900, the more confidence the credit institution will have in your ability to repay the loan and hence, the better the chances of your application getting approved. While each bank will have its own credit scoring cut-off based on the credit sanctioning policies, it has been observed that most banks are lending to consumers with a CIBIL TransUnion Score of 750 and above.

How is the score calculated?
While each credit information company has its own proprietary algorithm to calculate an individual's credit score, the most important elements of the score composition are centric around the loan payment behavior of the individual. Your CIBIL TransUnion Score is calculated based on the information in the "Accounts" and "Enquiry" section of your CIBIL Report. The score is calculated based on the following factors:

• Credit Utilization: How much credit is the consumer using?
• Defaulting/Delinquency: How many accounts are past due and by how many days?
• Trade Attributes: How old are this consumer's lines of credit? What type of credit does he have? Does the consumer have a good mix or balance of credit or is it all credit cards?

Here is a breakup of the various factors that impact the CIBIL Transunion Score:

1. Past Performance: Individuals past performance on their debt obligations is the most important criterion and contributes approximately 30 per cent weightage to the score

2. Credit Type & Duration: Type of loan availed whether secured or unsecured loan, and the duration of credit history established contributes an additional 25 per cent to the score.

3. Credit Exposure: The total amount of credit exposure contributes another 25 per cent

4. Other factors: Other factors such as credit utilization, recent credit behavior contribute the remaining 20 per cent to the score.

Your CIBIL Report and CIBIL TransUnion Score not only determine whether or not you qualify for a loan, but it may also have an impact on the terms and conditions on which you can avail the loan. The higher the credit score, the better your chances of availing the loan faster and on favorable terms. It is advisable to check your CIBIL Report and CIBIL TransUnion Score before applying for a loan. Timely payments of loan EMIs is most important for maintaining a good credit history and a healthy credit score.

(Harshala Chandorkar, Senior Vice President - Consumer Services and Communication, CIBIL)

Disclaimer: The opinions expressed within this article are the personal opinions of the author. The facts and opinions appearing in the article do not reflect the views of NDTV and NDTV does not assume any responsibility or liability for the same.

Story first published on: June 21, 2015 17:22 (IST)

Gold Monetization Scheme: Here's How You Can Earn Interest on Your Gold in India

The government on Tuesday released the draft guidelines for its ambitious gold monetization scheme that aims to cut down gold imports in the country. The guidelines have been notified nearly three months after the scheme was announced by Finance Minister Arun Jaitley in the Union Budget.

Here's how the gold mobilization scheme is likely to work according to the draft guidelines:

1) The scheme is meant to mobilize gold held by domestic households and institutions. Gold collected through the scheme will be made available to jewelers for manufacturing of new jewellery and other items.

2) The scheme will initially be launched at a few places because the government will have to first set-up infrastructure for facilitating easy and secure handling of gold.

3) Gold collected from consumers will first be cleaned and measured at test centres; it would then be melted to test for purity. After the tests, consumers can either deposit the gold for a fee or take it back after paying a nominal fee.

4) The minimum quantity of gold that a customer can bring is proposed to be set at 30 grams.

5) Those willing to deposit the gold will be given a certificate mentioning the amount and purity of the deposited gold. Banks will open a 'Gold Savings Account' on the basis of such certificates.

6) Consumers will be paid interest on their gold savings account after 30/60 days of account opening. The amount of interest rate to be given is proposed to be left to the banks to decide.

7) Both principal and interest will be paid to the depositors of gold, will be 'valued' in gold. For example if a customer deposits 100 gms of gold and gets 1 per cent interest, then, on maturity he has a credit of 101 gms.

8) The customer will have the option of redemption either in cash or in gold, which will have to be exercised in the beginning itself (that is, at the time of making the deposit).

9) The tenure of the deposit will be minimum 1 year and in multiples of one year. Like a fixed deposit, breaking of locking period will be allowed.

10) Gold savings account will be exempt from capital gains tax, wealth tax and income tax.

According to the government, gold deposit accounts will utilise the 20,000 tonnes available within the country and help in cutting down the 800-1,000 tonnes of gold the country ships every year. The last day for submitting feedback on draft guidelines with the finance ministry is June 2.

Know the difference between NRE and NRO account

A Non-Resident Indian is often faced with the situation of maintaining a Rupee account in India. Primarily there are two reasons for opening such account: NRI wants to repatriate overseas earned money back to India and/or NRI wants to keep India based earnings in India.  NRI has the option of opening a Non Resident Rupee (NRE) account and/or a Non Resident Ordinary Rupee (NRO) account. An NRO account can also be opened by a Person of Indian Origin (PIO) and an Overseas citizen of India (OCI). 


Similarities between NRE and NRO accounts: 
Both accounts can be opened as Savings as well as current accounts and are Indian Rupee accounts. One needs to maintain an average monthly balance of Rs 75000 in both NRE and NRO accounts. 


The Differences between NRE and NRO accounts: 

1. Repatriation: NRE account is freely repatriable (Principal and interest earned) while the NRO account has restricted repatriability i.e permitted remittance allowed from NRO is up to USD 1 million net of applicable taxes in a financial year after giving undertaking along with a certificate from a chartered accountant. 

2. Tax Treatment: NRE account is Tax free (no Income tax, wealth tax and gift tax) in India. On the other hand the interest earned in NRO account and credit balances are subject to respective income tax bracket and are also subject to applicable wealth and gift tax. 

3. Deposit of Rupee funds generated in India: If an NRI/PIO/OCI  is earning income originating in India (such as salary, rent, dividends etc.) he/she is only allowed to deposit it in NRO account. Deposit of such earnings is not permitted in NRE account. 

4. Joint Holding: NRE account can be iointly held with another NRI but not with resident Indian. On the other hand NRO account can be held with NRI as well as resident Indian (close relative) as defined under Section 6 of the Companies Act 1956. Choose NRE accounts if you: (Primary reason) want to park your overseas earnings remitted to India converted to Indian Rupees; want to maintain savings in Rupee but keep them liquid; want to make a joint account with another NRI; want Rupee savings to be freely repatriable Choose NRO account if you: (Primary reason) want to park India based earnings in Rupees in India; want account to deposit income earned  in India such as rent, dividends etc; want to open account with resident Indian (close relative)


Read more at: http://www.moneycontrol.com/news/fixed-income-bank-deposits/knowdifference-between-nrenro-account-_875207.html?utm_source=ref_article

FCNR fixed or term deposits - Good time to invest for NRI

Should you Invest in FCNR fixed or term deposit?

FCNR (Foreign Currency Non Resident) Deposit is another way NRI can invest money in fixed deposit, Along with popular NRE and NRO Fixed deposit. Since deregulation of interest rate on FCNR deposit earlier this year, In an attempt to arrest Rupee slide against USD and attract more dollars from NRI customers, FCNR deposit has become an attractive alternative for NRI. As I mentioned in my earlier post Good time to invest in NRE fixed deposit that interest rates and exchange rate both are in favor of NRI and its really good time to invest money on NRI fixed deposits. Now like many other NRI first confusion comes on What is this FCNR deposits, Should I invest in FCNR deposit or NRE fixed deposit and several other doubts which prevents many of NRI from investing quickly. In this article we will looks some basics of FCNR deposit and given nature of FCNR deposit we will be able to decide whether investing in FCNR deposit is good option or not ?

What is FCNR Fixed Deposit

FCNR deposit stands for Foreign currency Non Resident deposit where an NRI invest his foreign currency like USD, AUD, GBP with an Indian bank like ICICI, SBI, HDFC or Kotak Mahindra etc. FCNR term deposits are like placing money in local deposit but you are likely to get better interest rates on FCNR term deposit than what your local foreign bank can offer. especially after deregulation of interest rates on FCNR fixed deposit and increased competition between many Indian banks like ICICI, HDFC, SBI and Kotak Mahindra.

Features and Benefits of FCNR Fixed Deposits

Features and Benefits of FCNR fixed deposit varies from Bank to Bank but here are some of the common features :

1)Low deposit Amount

Minimum deposit amount is quite low, you can open FCNR term deposit with ICICI bank with 1000 USD or EURO. for other foreign currency also deposit amount is reasonably low.

2)Tax Benefit

Interest earned on FCNR term deposit or fixed deposit is tax free in India. Though it may be taxable in the country you are living like USA calculate tax on global income of there residents.

3)Flexible tenures

Most of the banks offers FCNR term deposit in various tenures starting from 12 months to 5 years. you can choose the term which is best suited you, Also for lower tenure you may get better interest rates but given the relatively higher interest rates available currently, its better to invest amount for medium period.

Who should invest in FCNR term deposit

FCNR (Foreign currency Non resident) term or fixed deposits are best suited for NRI who wants to keep there money on Foreign currency like Dollars (USD) or Euro etc. Main benefit of FCNR term deposit is that it avoid currency risk. So if you intention to repatriate whole amount back to USD then keep that in FCNR because if Rupee depreciate further which is not unlikely given current volatility in currency market, It may wipe off all the interest earned in Indian rupee when you convert those into USD.

Difference between FCNR and NRE Fixed deposit

Main difference between an FCNR term deposit and NRI term deposit is that, In FCNR money remains in Foreign currency like dollar while in NRE fixed deposit money remain in Indian Rupee, which means there is a currency risk involved if you want to convert Rupee back to dollar. Another difference between FCNR and NRE fixed deposit is that mostly you get lower interest rate on FCNR deposit, similar to what foreign banks offer but you get a better interest rate on NRE fixed deposit because of currency.

FCNR deposits for NRI - Frequently asked question Answers

Here are a list of some frequently asked questions related to FCNR (Foreign currency Non resident) term deposits :

1) Does Interest earned on FCNR fixed or term deposit taxable in India ?

Good news, You don't need to pay tax on Interest earned on FCNR fixed deposit in India.

2) What are common tenures for which NRI can open FCNR term deposit ?

Similar to NRE fixed deposit, you can also open FCNR term deposit from 12 months to 5 years time frame.

3) Can I jointly open FCNR term deposit  ?

Yes you can jointly open FCNR term deposit but other account holder must be a Non Resident

4) Can you break FCNR term deposit prematurely before completing tenure ?

This is something vary bank to bank, most of the banks like ICICI doesn't pay you interest if you break the FCNR deposit before completing one year, other may charge penalty for same. Before investing on FCNR check with bank on there policy of premature withdrawal of money from FCNR term deposits.

That's all about FCNR (Foreign currency Non resident) term deposit, Its great opportunity and if you want to keep your money in there foreign currency to avoid currency risk, consider and explore FCNR term deposits before putting your money on local banks, with Rupee sliding further and high volatility in currency market, FCNR is good bet for hedging currency risk for personal investment.

5 Differences between NRE and NRO Fixed deposit -HDFC ICICI SBI Kotak

Difference between NRE and NRO fixed deposit

NRI has two option to invest in Fixed deposit in India NRE  fixed deposit and NRO fixed deposit but you need to be careful whether you choose NRE or NRO fixed deposit as taxation rules on NRE and NRO Fixed deposit is different. Principle and Interest earned in NRE fixed deposits are completely tax free, while interest earned on NRO fixed deposit are subject to TDS and deduct at maximum rate of 30%. Also you can send rupees back to your overseas account if it is held in NRE fixed deposit, but you can not repatriate money from NRO fixed deposit. In this article we will see some differences between NRE and NRO fixed deposit opened with any Indian banks like ICICI, HDFC, SBI or Kotak Bank and find out whether you should open NRE fixed deposit or choose NRO fixed deposit based upon your requirements. In short, if you are opening fixed deposit from overseas money by converting it into rupees then send it to your NRE saving account and create a NRE fixed deposit right there. On the other hand if money is earned in Indian rupees via different income sources e.g. dividend, or income from rent than you must have a NRO saving account to receive those amount, use this amount to create a NRO fixed deposit. In both the cases its not good to leave money idle, because they will earn less interest rates. Also if you eventually thinking to repatriate or send money back to your overseas account, think of opening an FCNR fixed deposit, this will reduce your exchange conversion risk and you may yield better returns if US dollar become stronger in next few years. 

Difference on NRE and NRO FD

NRI can open both NRE and NRO FD in one bank and online by using his NRE or NRO Savings accounts but before opening NRE or NRO FD, you must know taxation rules related to both of them because that will make difference in your overall interest gain or yield. Here are few notable difference between NRO and NRE fixed deposit :

1) First and major difference between NRE and NRO fixed deposit is that interest earned on NRO fixed deposit is taxable in India. it means you need to pay income tax on all there interest you earned in NRO fixed deposit with a rate of 30.9% which is quite higher, on there other had interest earned on NRE fixed deposit is exempted from tax in India. Which means you don't need to pay any income tax on interest accrued in NRE fixed deposit. This difference alone is significant enough to choose NRE fixed deposit over NRO fixed deposit. By the way if you don’t have lump sum amount to invest, you can take benefit of NRE or NRO Recurring deposit, to lock your money with higher interest rate and soaring exchange rates.

2) Another difference between NRE and NRO fixed deposit is that, In case of NRO fixed deposit you can not repatriate principle back to foreign country, you can only transfer interest earned on NRO fixed deposit to foreign country or abroad where you staying. On the other hand NRE Fixed deposit allows you to transfer both principle and interest to abroad. Everything from principle to interest earned are fully repatriable in NRE fixed deposit. This is another significant difference between NRO and NRE fixed deposit which suggest choose NRE over NRO FD.

3)One more difference between NRE and NRO term deposit is that you can open NRO term deposit jointly with your family member which is not NRI,means parents staying in India or any immediate family member staying in India can hold NRO term deposit along with you. On the other hand NRE term deposit can only be open jointly with another NRI, which is kind of restriction if your family is staying in India. This can be very important difference depending upon personal situation of NRI. IF you are a unmarried software professional working in abroad and want to open joint fixed deposit than you can choose NRO fixed deposit over NRE fixed deposit. If you want to keep your money on foreign currency like USD, GBP, AUD etc, you can also choose to open FCNR fixed deposit with HDFC Bank, ICICI, SBI, RBS and Kotak Mahindra. FCNR deposits are free from exchange rate risk and also provide better interest rates than Fixed deposit with local foreign banks e.g. Citibank or Bank of America in US and Canada

4) Another difference between NRO and NRE term deposit is interest rates. Currently difference on interest rate is not much between NRE and NRO fixed deposit but if you see better interest offered in NRE fixed deposit than you can leverage that because both NRE and NRO fixed deposit holds money in Indian Rupees (INR) but just be cautious and read first few differences between NRE and NRO fixed deposit if you intention is taking money back to abroad because both NRE and NRO term deposit are subject to Currency risk, if Exchange rates will not in your favor once your NRE or NRO FD matures than you might loose instead of gaining for depositing money in Indian Rupees for 3 years in India on the other hand you might get better returns if exchange rates turns into your favor. Anyway I suggest avoiding currency risk and only investing amount which you definitely want to keep as Indian Rupee and don't want to repatriate. There are other option available like FCNR Fixed deposit which allows you to keep money in foreign currency and get better returns than what is offered by foreign banks.

5) Another difference between NRE and NRO fixed deposit is How to transfer or deposit money ? NRE fixed deposit can only be open by sending foreign currency chece, remitting foreign currency directly to your NRE Saving account using money2India, remit2India orclick2Remit or any other remitting services. You can not open NRE fixed deposit by transferring Indian rupees from any other Resident or NRO Saving account. this is a restriction, On the other hand NRO Fixed deposit can be open by transferring money from NRE Saving account or income earned in India, e.g. Rental income, Stock dividends, short term capital gains, long term capital gains etc.

These were some of the important differences between NRE and NRO fixed deposit, which will help you to decide whether you shouldinvest in NRE fixed deposit or open an NRO fixed deposit. Decide based upon your need and priority. My suggestion is that if choose NRE fixed deposit over NRO fixed deposit t to get tax benefits and facility to send principle and interest back to foreign currency in case your required. Chose NRO fixed deposit if you wan to open term deposit account jointly with your Non NRI family members.