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    Hello and welcome to the webchat with CA Harsh Roongta on tax-saving options for FY15-16?

  • H


    I would like to know the period for which I could hold on to the ammount recieved from sale of commercial property which is long term capital gains? Can I hold on to the amount till a year before I purchase a residential property from the same?


    I am assuming you are talking about claiming exemption of long term capital gains under section 54F. One of the conditions in that section is that apart from the new residential house that you are buying you should own only one other residential house property on the date of the transfer (of commercial property). so make sure you are eligible for that exemption. secondly you can hold on to the entire sales proceeds for 2 years or the following July 31 (if you are salaried) or 31st October (others with tax audit) of the following yaer which ever is earlier. As an example for any sale of the commercial property in the year begining April 1, 2015 you can hold on to the money without making the investment in resiential property) till July 31, 2016 or October 31, 2016 depnding on the last day of filing your return and on which date you have to depsoit the entire sales proceeds into a capital gain account scheme.

  • A


    Sir, I am earning 40K per month. I want to save my tax without keeping money in for a long lock-in period. What are the options available?


    If least lock in is the requirement and your risk profile is aggressive you can consider equity Linked savings scheme which has the least lock in of 3 years. But generally equity investing is recommended only for long term (8-10 years plus) and if you need the money back after 3 years then ELSS is not recommended. If liquidity is paramount then consider 5 year NSC which is locked in for 5 years but against which you can get a loan upto 80% of the face value immediately at a reasonable rate. Please do consult a Investment adviser and make a proper plan to meet your goals and make investments accordingly rather than ad hoc investments driven just by the need to get tax break. Please remember tax breaks only increase the return from an investment. It still requires that you make a good investment to get the best possible return suiting your risk profile and needs.

  • S


    For people who wish to earn assured fixed income don't you think that tax benefits should be extended for all Fixed Deposits in Banks?


    This can only be answered by the FM. But as i have said earlier tax concessions on fixed income instruments do exist if you are willing to opt for growth schemes of Gilt funds or Debt mutual funds for 3 years or more. Off course returns are not guaranteed there. High income tax is the price you pay for absolute certianity of income.

  • P


    Sir, I have exhausted the 80C limit of Rs 1,50,000/-. I already have a healthcover for my self and family from the company. What is the maximum amount of health insurance premium can I avail for tax deduction as I wish to include my parents who are staying with me?


    Health Insurance limits are different from the 80C limit of Rs. 1,50,000/- . If all parties are not senior citizens you get Rs. 20,000 for yourself,spouse and dependant children and another Rs. 20,000 for your parents. The limit can be higher at Rs. 30,000 for each class if it has a senior citizen

  • A


    I am a salaried individual and have taken a housing loan during the current fiscal. My EMI works out to around Rs 15,000 a month. What is the amount of deduction I can avail of while filing my tax returns for the current fiscal?


    You have not mentioned if the house is self occupied or not. If the house is self occupied then you will get a deduction of the interest payable on the loan upto a maximum of Rs. 2,00,000 (your interest is lower than this as the entire EMI itself is only 1,80,000) . Additionally the principal portion of the EMI will be deductible under section 80C alongwith other items such as Life Insuarnce premium, provident fund, ELSS, etc upto a combined limit of Rs. 1,50,000/-.

  • R


    Sir, I generally invest my surplus amount in five-year bank deposits which qualify for tax deduction. However, is a recurring deposits offered by banks more tax efficient?


    You will not be able to get a tax benefit on recurring deposit scheme that you get on your 5 year tax saving Bank FD. So the recurring deposit cannot be a substitute for a Tax saving bank FD. incodentally in a tax saving bank FD you will be much better off opting for payment of interest - which is taxable anyways - rather than cumulative interest.

  • L


    Sir, this is regards to re-imbursement of Leave Travel Alllowance. This is my first job and I joined in May 2015. My HRD department says that you can claim only twice in block of 4 years. Does it mean that my LTA allowance will be fully taxed for the two years which I don't claim but have travel documents? Which is the last fiscal for the current block?


    Yes It will be taxable in the other 2 years

  • P


    Sir, I am in the highest tax bracket. I have exhausted most of the tax options available for individuals. However, is it prudent to park my extra surplus in tax-free bonds or what other instrument could you suggest for a tax-free income?


    Parvinder - please see the answer provided to Arnab. its reproduced here for your benefit Firstly please remember tax concessions are important to the extent that they improve returns or reduce costs. Tax concessions on investments like PPF improve your returns because effectively the government pays for part of the investment when you make the investment whilst the return comes to you on the full investment value and also the entire amount (including the part that was initially paid by the government as a concession) is returned to you on maturity. The tax conssion on Home loan interest has the effect of reducing the cost of the loan just like a discount sale in a shop. In the case of a sale you will need to evaluate if the item still makes sense on the discounted price. similiarly the cost of 10% home loan is reduced to 7% p.a. for somebody in the 30% tax bracket and assumng that the entire interest is allowed as a deduction. You still need to evaluate whether the investment made by borrowing at a post tax cost of 7% still makes sense. that is the not the end of tax concssions. Other kind of tax concessions ensure that your return is not reduced or is reduced only marginally. for example tax free bonds the return is not reduced any further because of tax and hence it is a tax advantaged instrument. The provision to allow indexation and taxation of long term capital gains at 20% on debt mutual funds as well as the deferment of tax in growth schemes of debt mutual funds is a rarely used though potent tax concession. High tax on FD interest results into below inflation returns and highly rated debt mutual funds (including those that invest only in givernment securities) give you superior post tax returns. Please do consult an investment adviser to get the best possible alternatives that fit your risk and return profile

  • M


    Sir, I have read some in financial journals that fixed maturity plans are more tax efficient than bank deposits and other fixed income instruments. What is your view on this? Some say you can claim tax deduction twice as the maturity period covers two financial years?


    I have personally never liked FMPs because of the lack of liquidity as the same benefits can be taken through a growth debt or GILT mutual fund scheme. A FMP does take away the interest rate risk (which means if interest rates have gone up just at the time when you want to withdraw your money the NAV of an open ended debt mutual fund or Gilt mutsul fund would have gone down) but the compete lack of liquidity to me is too high a price to pay for this small benefit. FMPs were earlier also pushed by distributors as they were assured of the margins (since the money was locked in) but this factor has now reduced because of caps on commissions and hence the FMPs are no longer as popular. Please do consult your inevstment adviser before you take any desicion in this regard

  • A


    What are the top 2 ELSS Tax saving Mutual Funds to invest in 2016?


    I think in equity investment the displine in investment is far more important than just choosing the top performing scheme in a category. if you invest systematically (and not as a lump sum) and the schemes are not terrible you are likely to get a good post tax return. having said that you can look from among Axis Long Term equity fund, Reliance Tax saver - ELSS or IDFC Tax adavantage - ELSS fund or Principal tax saving Fund or ICICI Prudential Long term equity fund