Byte on while staying informed about the latest tax updates.
The Tax Appellate Tribunal achieves ‘yet another milestone’ in its transition to digitization. We are soon to witness the launch of an e-filing portal which shall enable seamless filing of appeals and applications by the parties before the Tribunal. The Coronavirus is no longer going to be a barrier.
This proves necessity is the mother of invention.
This Week’s Dose–
- The Idea of Boycotting China
- Beyond 80C
- Tax Update – Know Your ITR
The Idea of Boycotting China
“No to Chinese products” chorus become louder after Sonam Wangchuk appealed to boycott Chinese goods. From goods to software, people are vowing to boycott everything Chinese. Let’s take a look on a few important insights.
Might not help India but can harm China
Indians spend 5.3 lakh crore on Chinese goods every year. And the boycott would be a major blow to China’s most powerful asset, its GDP. This will create a major unrest within the Chinese territory and portray it as a weak dictatorship. China fears ‘internal dissatisfaction.’
Sure, India is a huge market for Chinese goods accounting to 3% of China’s exports. But here’s a thing, India’s exports to China account for a much higher 5.3% of our total exports. Any trade war with China would hurt.
A matter of concern – Trade Deficit
The trade deficit between India and China is the largest among all the major trading partners. India imports seven times more from China than it exports to it. India imports goods worth more than USD 50 billion from China but exports goods worth only USD 2.5 billion. The deficit stood at a massive USD 51.68 billion from Jan-Nov 2019 before the pandemic struck the world. These are devastating numbers.
Another pressing concern is – to avoid import duties, many Chinese firms use trans-shipment routes. They ship the goods to Bhutan and then to India.
Boosting our Exports, a priority
This is the age where global trade is such an intricate mixture of inputs from so many nations. It might be practically impossible to completely boycott China. Such labelling might render critical products out-of-bounds for Indian consumers. Xi’an Aircraft Industrial Corp., a Chinese company is a key supplier of components to Boeing. The Boeing 737 and 747 are part of Indian airlines’ fleet.
So will India boycott Boeing for its choice of sourcing? Instead, India could negotiate with Boeing to open China’s market further to Indian services as well as more finished goods. Thus boosting our exports.
Do you want to be a day late and a dollar short? As we enter the tax filing season with huge uncertainties, it is important that you don’t miss an opportunity to save up on your taxes. There are plenty of options beyond section 80C. Following are a few of them:
Perks of HUF (Hindu Undivided Family)
HUF is a separate entity and has its own PAN card number. Filing return as HUF is useful especially when you have multiple sources of income. For example: you and your spouse earn INR 10 lakh individually. You receive an additional INR 7 lakh as rent from a property. If your wife or you claim this rent individually, tax will be applicable as per the normal rate of 20% to 30%. On the other hand, as a HUF, you can claim the rent on your family’s behalf and only pay 10% tax.
Get what you give- Donations.
Donations to the National Defence Fund, the Prime Minister’s National Relief Fund and National Foundation for Communal Harmony are 100% deductible. The PMCARES fund for assistance and relief during Covid-19 is also fully tax deductible.
If you support the ideals of a particular political party, you can donate 10% of your gross income every month. Deductions can be claimed on the sum you donate.
Showing-off your loses
Losses in shares, mutual funds, real estate can be set off against your current as well as your future profit. Suppose you earn a profit of INR 10 lakh from real estate, you have to pay a tax of INR 2 lakh (20% tax applicable). But you make a loss of INR 4 lakh in stocks you set-off this loss with your profit and pay tax on INR 6 lakh.
Don’t underestimate your old folks.
Get deduction on rent even without HRA. Suppose you do not have a home of your own and are living with your parents. You can claim HRA on your salary by showing that you are paying rent to your parents. You have to be really careful about proofs you are furnishing while claiming such deductions. Any false claims could get in hot water.
In case your parents have a low income, you can steer your income from investments their way. Suppose you earn an interest income of INR 2 lakh. Instead of adding it up to your taxable income, carry out a tax-free transfer of this amount. Gifting money to your parents is completely tax free. You parents could then park this in profitable government schemes and more. This will reduce your tax liability and can be profitable for your parents.
Talk about killing two birds with one stone.
Tax Update- Know Your ITR Form
Income Tax India and CBDT have released PDF of Income Tax Return (ITR) forms for FY 2019-20 (AY 2020-21). The forms released in January 2020 have been rendered null. There are 9 ITR forms. Check which one is applicable to you. Read more over here.
Where does BBC get its funding from – Crazy Tax Story!
The residents of England must pay a license (or, ahem, license) fee for televisions in their homes. The cost is approximately 150 pounds for a color TV and 50 pounds for a black and white TV. The blind pay half as much. Over the past 3 years USD 39 million was paid out in severance to 150 BBC managers.
Byte of the Day
“A fine is a tax for doing wrong. A tax is a fine for doing well.”-Anonymous