Indian Income Tax System?

Question

Hi,
According to my understanding we can save only 1 lakh per annum.

So i am totally confused about the article whose link I have given below:
http://www.rediff.com/money/2006/dec/13tax.htm

Do advice

Answer 1

Hi,
Thanks for bringing the interesting artilce to notice. To cut the long story short,
If you have surplus cash after fullly utilising the one lac limit,
If you have in unemployed elders and yougsters,
you can gift your surplus to them and save tax under sec 56.

Regarding the comment that "Now Mr Mehta, like most of us, finds that all the tax saving investments in the world can help him save only Rs 33,600.", if you are employed for a good period, you would have alreday invested in tax saving methods, such as insurance, home loans, PPF etc ( which were enjoying limits of investment,) the present relaxation provides further saving of only Rs.33000.00 to utilise the max of Rs. 1 lac.

for any further clarification please mail me.

Answer 2

Start with the basics.
The entire tax structure of the country can be classified as central tax and state tax depending upon in which the list the subject is included in the constitution, i.e. Union List or the State List in the seventh schedule of the constitution. Almost all taxes of the state are indirect taxes while some of the taxes of the union are direct taxes like income tax and wealth tax and others are indirect taxes.

Answer 3

To provide more employment and thus reduce the unemployment. If individual themselves file returns, what is the use of Income Tax Officers.

Answer 4

hi

Ur correct u can save max 1lakh U/s 80c. This article states that when u earn income u will pay tax, but u can save the subsequent investment income (interest) on ur salary by transfering the income to ur parents and children. therefore u have to pay tax on ur salary but post tax u can gift some money from ur salary to ur relatives and then interest on such gift is taxable in their hands and not urs. As they are below exemption limit (185000) they pay nil tax on that income. This is known as diversion of income. But the authour as forgotten clubbing provision of income tax act which will make such tax planning reduant in many cases.

Answer 5

Tax Facts for Individuals 2006-07
This was prepared by HSBC India.
Hope that helps
http://www.hsbc.co.in/1/PA_1_1_S5/content/website/pdf/taxfacts200607.pdf