Income Tax 2

1. What is Salary income?
Income under heads of salary is defined as remuneration received by an individual for services rendered by him to undertake a contract whether it is expressed or implied. According to Income Tax Act there are following conditions where all such remuneration are chargeable to income tax:
• When due from the former employer or present employer in the previous year, whether paid or not
• When paid or allowed in the previous year, by or on behalf of a former employer or present employer, though not due or before it becomes due.
• When arrears of salary is paid in the previous year by or on behalf of a former employer or present employer, if not charged to tax in the period to which it relates.

2. What type of income falls under Salary income?
Under section 17 of the Income Tax Act, 1961 there are following incomes which come under head of salary:

• Salary (including advance salary)
• Wages
• Fees
• Commissions
• Pensions
• Annuity
• Perquisite
• Gratuity
• Annual Bonus
• Income From Provident Fund
• Leave Encashment
• Allowance
• Awards

3. What is Leave Encashment?
Leave encashment is the salary received by an individual for leave period. It is a chargeable income.

4. What is Annuity?
It is an annual income received by the employee from his employer. It may be paid by the employer as voluntarily or on account of contractual agreement. It is not taxable until the right to receive the same arises. Under section 56, Income Tax Act, 1961 other annuities come under a will or granted by a life insurance company or accruing as a result of contract which comes as income under from other sources.

5. What is Gratuity?
It is salary received by an individual paid by the employee at the time of his retirement or by his legal heir in the case of death of the employee.

6. What is Allowance?
It is the amount received by an individual paid by his/her employer in addition to salary. Under section 15 of the Income Tax Act, 1961 these allowance are taxable excluding few conditions where they are entitled of deduction/ exemptions.

Under Income Tax Act following types of allowance are defined:

1. House Rent Allowance:
   Under sections 10(13A) of Income Tax Act, 1961 allowance is defined as an amount received by an employee paid by his/ her employer as a rent of his/her house. It is a taxable income. There is no exemption in tax if he is living in his own house or house for which he is not paying rent. There are following amount which are exempt from tax:
   • Actual house rent paid by that individual
   • Rent paid for the accommodation over 10% of the salary
   • 50% of the salary if house is placed at Delhi, Mumbai, Kolkata, Chennai or 40% of the salary in it is placed in any other city.
2. Entertainment Allowance:
   It is the amount paid by employer for availing entertainment services. Under section 16(ii) of Income Tax Act, 1961 it is entitled to deduction in tax from is salary. But in this case deduction is given to his gross salary which also includes entertainment allowance. Deduction in tax against this allowance can be divided into two parts:
   In case of Government employee entitled to minimum deduction of:
   • Entertainment allowance received
   • 20% of basic salary excluding any other allowance
   • Rs. 5000
   In case of other employee entitled to minimum deduction of
   • Entertainment allowance received
   • 20% of basic salary excluding any other allowance
   • Rs. 7500
   • Entertainment allowance received during 1954-1955
3. Other Special Allowances
   • Children Education Allowance
   • Tribal Area Allowance
   • Hostel Expenditure Allowance
   • Remote Area Allowance
   • Compensatory Field Area Allowance
   • Counter Insurgency Allowance
   • Border Area Allowance
   • Hilly Area Allowance

Following allowances are exempt from income tax:
Allowance given to a citizen of India, who is a government employee, for rendering services outside India

• Allowances given to Judges of High Courts
• Allowance given Judges of Supreme Court
• Allowances received by an employee of UNO

7. What is Perquisite?
Under section 17(2) of Income Tax Act, 1961 perquisite is defined as:

• Amount paid for the rent-free accommodation provided to the assessee by his employer
• Any concession in the matter of rent respecting any accommodation provided to the assessee by his employer
• Any benefit or amenity granted or provided free of cost or at concessional rate in any of the following cases:
  1. By a company to an employee, who is a director thereof
  2. By a company to an employee being a person who has a substantial interest in the company
  3. By any employer to an employee whose income under the head 'Salaries' exceeds Rs.24000 excluding the value of non monetary benefits or amenities
  4. Any sum paid by the employer in respect of any obligation which, but for such payment, would have been payable by the assessee
  5. Any sum payable by the employer whether directly or through a fund, other than a recognised provident fund or EPF, to effect an assurance on the life of the assessee or to effect a contract for an annuity

There are following perquisites which are tax free:

• Medical facility
• Medical reimbursement
• Refreshments
• Subsidized Lunch/ Dinner provided by employer
• Facilities For Recreation
• Telephone Bills
• Products at concessional rate to employee sold by his/ her employer
• Insurance premium paid by employer
• Loans to employees by given by employer
• Transportation
• Training
• House without rent
• Residence Facility to member of Parliament, judges of High Court/ Supreme Court
• Conveyance to member of Parliament, judges of High Court/ Supreme Court
• Contribution of employers to employee's pension, annuity schemes and group insurance

Tax benefits on Housing Loan

Loans are very important for all of us to realize some of our major dreams in time. We all look forward different kinds of benefits from loans we take. Of course it may be less interest rate, low processing fee, easy documentation, time taken to release the loan and finally, the very important thing we expect from a loan is Tax Benefit.

Tax benefits from loans are in different types and even it depends on the nature of loan taken. We take loan for personal use or to fund for our children’s education or construction of our house. We don’t get any tax benefit from the loan taken for our personal use. But of course we can claim tax exemption on the loan taken for education and house construction. As I have posted an article on Tax Benefits on Educational Loan, now I am giving you the complete details of tax benefits which can be availed on Home loan or the loan taken to construct a house.

Nowadays, it is very difficult to fund the entire amount for your house construction, because of skyrocketing real estate prices and construction costs. Therefore, we all take home loans from different banks at different rate of interest. It is again very difficult to repay the loan, but if you do your financial planning and tax planning properly, you can save a huge amount legally by considering the prevailing tax laws.

According to the income tax laws applicable, the interest paid on the capital borrowed for the acquisition or construction of house property is eligible for deduction up to the maximum limit of Rs 150000 per annum. You also get a 20% rebate on repayment of principal of the housing loan per annum. While this was earlier subject to a maximum of Rs 10,000, it is now Rs 1,00,000 and people can avail this benefit under section 80c of the income tax Act.

Points to be considered:
You should be residing in the home for which the loan is taken. If you are residing in a city but buying property in your home town to prepare for retirement, this will not be applicable. The property has to be acquired or constructed before April 1, 2003. The money should have been borrowed to construct or acquire property on or after April 1, 1999. If it was prior to this date, the deduction is only valid up to Rs 30,000.

You may find it more convenient and cheaper to finance the property out of your own resources. But do remember, you would be losing the tax shelter on account of the deduction available as well as the tax rebate. You can claim a rebate for housing loan only on producing the interest certificate from the lending institution. Taking a loan from a family member or a friend, who may get you a loan at cheaper rate of interest, or no interest at all, but will not qualify for such deductions. Only loans taken and interest paid thereon, to specified financial institutions which offer housing loans, qualify for deduction under the Income Tax Act, 1961.

If the loan is jointly taken by you and your spouse, you both are entitled to tax benefits. Since both will be claiming the deductions and rebate, you will have to approach the financial institution and ask for a certificate. This certificate will state how much of the loan is your responsibility and how much you are contributing towards the repayment. Your tax deduction and rebate can be calculated based on this amount.

FAQs on Income Tax II - Payment & Return filing

1. How and where can I pay income tax?
Tax can be paid by way of cash, cheque or draft in any authorised national banks, in the prescribed challan. The challan can be obtained from Income tax Offices.

2. What do you mean by Income Tax Return filing?
Income Tax Return is a statutory return to be filed by assessee with Income Tax Department stating the total income earned & tax paid/payable by him during the previous financial year.

3. Is it compulsory to file a return of income when there is loss?
If a person has sustained a loss in the previous year and wishes to carry forward the loss to the subsequent year he should furnish a return of loss in the prescribed form before the due date.

4. Do I have to pay tax on all the money earned?
No, if you are an individual or HUF, you do not have to pay tax till you reach a specified exemption limit; once you cross that limit tax have to be paid as per following rates, slab wise:

For F.Y. 2008-09

Income	Rate (%)
Up to 150000*	NIL
150000 to 300000	10
300000 to 500000	20
Above 500000	30

* Threshold limit for resident women assessees below 65 years of age and resident individuals of 65 years and above to be further increased to Rs. 1,35,000/- and Rs. 1,95,000/- respectively.
• Plus surcharge @ 10% applicable if total income exceeds Rs. 10,00,000/
• Education Cess @ 2% is payable on tax plus surcharge

However if you are a company or a partnership firm you will have to pay tax on all income earned.

Proposed under Budget 2008, is as follows:

For A.Y. 2009-10 and For F.Y. 2008-09
Income	Rate (%)
Up to 150000	NIL
150001 to 300000	10
300001 to 500000	20
Above 500000	30

Threshold limit for resident women assessees below 65 years of age and resident individuals of 65 years and above to be further increased to Rs. 1,80,000/- and Rs. 2,25,000/- respectively. Surcharge @ 10% applicable if total income exceeds Rs. 10, 00,000/-. Education Cess @ 2% leviable on tax plus surcharge.

5. Do I have to file a return even if my income is lower than the exemption limit? What is 1/7 criterion?
If you are Individual or HUF, then Yes, if you fulfils any one of the following conditions at any time during the previous year:

1. Ownership/lease of a motor vehicle.
2. Occupation of any category or categories of immovable property as may be specified by the board by notification whether by way of ownership or tenancy or otherwise.
3. Incurred expenditure on himself or any other person on travel to a foreign country other than Bangladesh, Bhutan, Maldives, Nepal, Pakistan or Sri Lanka (not being a travel to Saudi Arabia for Hajj or travel to China on pilgrimage to Kailash Mansarovar).
4. Subscription of a cellular telephone (not being a wireless in local loop telephone).
5. Holder of a credit card (not being an add-on card or not being a Kisan credit card, issued by a bank or an institution).
6. Member of a club where entrance fees charged is Rs 25,000 or more.
7. Expenditure of Rs 50,000 or more during the previous year towards consumption of electricity.

However, the government has specified that the above provision is not applicable in the case of a Non-Resident Indian (NRI).

Also if you are at least 65 years of old and not engaged in any business /profession, then you may not file return even when you fulfill conditions 2 or 4 above.

6. There are various returns available on Income Tax Departments site, which one do I need to file?

Class of Assessees	Category	Form
Individuals, HUF, Firms etc. (except companies and charitable assessees)	All cases	Form No. 2D or Saral form
	One by Seven scheme	Form No. 2C
	Business or Profession income	Form No. 2
	Non- business income	Form No.3 or 3D
	Non- business income, No Capital Gain, No agriculture income	3 or 2D or 2E (Naya Saral)
	Non business income and total income less than Rs 2 lakhs	Form No. 2A
Charitable assesses	All cases	Form No 3A
Company except charitable assesses	All cases	Form No 1
Search cases	All cases	Form No 2B

7. What are the due dates for filing returns for various assesses?

Category	Due date
For four categories namely: A. Companies B. All auditable cases C. Working partner of auditable firms, D. Persons covered other than 1/7 scheme,	31st October
In any other case	31st July

8. What is E-filing of return?
The Electronic Furnishing of Return of Income Scheme was introduced in 2004. Under this scheme, eligible assessees can file their returns of income electronically through authorised persons to act as e-return intermediaries on or before the due date.
The intermediaries digitalise the data of such returns and transmit the same electronically to the e-filing server of Income Tax Department under their digital signatures.

9. Who are eligible to file e-return?
Any assessee except an Association of persons or Body of Individual, who has been allotted a permanent account number (PAN) and who is assessed or is assessable to tax in any of the sixty cities, which are presently on Income Tax network is eligible to file his return of income under this scheme.

10. What do you mean by 'belated return'?
If the return is not furnished within the time prescribed or within the time permitted under a notice issued, the person can furnish the return of any previous year at any time before the end of one year from the end of the relevant assessment year, or before the completion of the assessment year.

For e.g. Return is due on October 31, 2008 for the Assessment Year 2008-09. However, for some reason, if the person does not file his return by October 31, 2008, he can file belated return on or before 31st March 2010.

11. What are the consequences of filing belated return?
A penalty of up to Rs 5,000 is required to be paid if the tax man picks up your paper for assessment. In addition, a penal interest @ 1% per month would be charged for default in tax payments.

12. What is the penalty?
WHEN speaking of belated filing of returns, the tax payer is ought to be in either of the following two situations.

• He or she has paid all his taxes but failed to file the returns on the due date for genuine reasons.
• He or she has not only failed to file the returns but also failed to pay his taxes on the due date

In the first case, since the assessee has cleared all his dues to the government, no penalty or interest shall be charged; provided the returns is filed by the end of the assessment year. Thus, in our example, no penalty or interest shall be levied from the assessee if the returns are filed on or before March 31, 2008.

However, if the returns is not filed within this stipulated time period (till March 31, 2008) and the assessee's income is picked up for assessment, the taxman can impose a penal charge of up to Rs 5,000 under Section 271F of the Income-Tax Act in spite of the fact that a belated returns can be filed up to one year from the end of the assessment year or as in our example by March 31, 2009.

However, if the assessee belongs to the second category of people, who have failed to deposit the tax dues with the government before the due date, interest @ 1% per month or part of the month (simple interest) shall be levied on the amount of net tax due from him under section 234A of the Income-Tax Act from the date immediately following the due date till the date of filing of returns. Thus, if the return is filed, say on December 31, 2008, i.e., five months after the due date, the interest shall be levied at the outstanding tax amount @ 1% pm for five months.

Other consequences

• A PERSON filing the returns after the due date, irrespective of the fact whether the tax has been paid or not, will not be allowed to carry forward the losses if any incurred by him during the financial year.
• The losses that cannot be carried forward are the business losses, capital losses and losses arising from the business of owning and maintaining race horses. If the return is filed on the due date, the assessee is allowed to file a revised return if he wants to make any amendments to the original returns so filed.

However, this privilege is not available to a person filing belated returns. In case of refund of tax, the assessee is eligible to receive interest on such refund from the taxman. This interest is paid for the period starting from the date of filing of returns till the date of issue of refund order. Thus, in case of a belated return, the assessee is bound to lose out on interest on refund for the period for which the return is delayed. While tax payers can undoubtedly file belated returns, it is and has always been advisable to file returns within time. So, while you may have missed the bus this time round, make sure you catch up on time from next year.

13. What is Advance Tax?
Advance tax means the advance tax payable in accordance with the provisions of Chapter XVII-C. Tax shall be payable in advance during any financial year in respect of the total income of the assessee which would be chargeable to tax.
Advance tax shall be payable if the tax payable is Rs. 5000 or more.
Advance Tax Obligation (If tax payable exceeds Rs. 5,000)
Due Date of Installment payable on or before Amt. Payable as a % of Tax
For Cos.* For Other Assessees
15th June 15% ¿
15th September 30% 30%
15th December 30% 30%
15th March Balance Balance
*MAT also subject to Advance Tax. Refer Circular No. 13 of 2001, [252 ITR (St) 52]

Advance Tax Obligation (In respect of Fringe Benefit Tax payable)

Advance Tax Obligation (If tax payable exceeds Rs. 5,000)
Due Date of Installment payable on or before	Amt. Payable as a % of Tax
	For Cos.*	For Other Assessees
15th June	15%	¿
15th September	30%	30%
15th December	30%	30%
15th March	Balance	Balance
*MAT also subject to Advance Tax. Refer Circular No. 13 of 2001, [252 ITR (St) 52]

Advance Tax Obligation (In respect of Fringe Benefit Tax payable)
Fringe Benefit Tax payable for quarter ended	Due Date of Installment payable on or before	Amt. Payable as a % of Fringe Benefit Tax payable for the quarter
June	15th July	100%
September	15th October	100%
December	15th January	100%
March	15th March	100%

FAQs on Income Tax I - Basics

1. Who has to pay Income tax?
Any individual, corporate, firm, society or any judicial legal entity having income earned & received in India will be liable to pay Income tax to the Income tax Department of India.

2. Who is an assessee in Income Tax?
Assessee is a person by whom Income tax is payable under Income tax Act, 1961 of India.

3. What is Assessment year in Income Tax?
Let's say your Financial Year is from 1st April-2007 to 31st March-2008, then Assessment year for Income Tax purpose is year ending on 31st March, 2009 (1st April 2008 to 31st March 2009). In this case Financial Year would be called previous year.

4. What is a PAN (permanent account number)?
The permanent account number is allotted by the assessing officer to any person for the purpose of identification. It's a Unique 10 digits number for e.g. KKJMN6994P.

5. Do I have to apply for a permanent account number (PAN)? How do I apply?
If you fall under any of the below mentioned categories, you have to apply for PAN in Form 49A:

• If your total income in the previous year exceeds maximum amount not chargeable to tax.
• If you are carrying on business or profession, whose total sales, turnover or gross receipts, are or is likely to exceed Rs 500,000.
• If you are assessable as charitable trust.

You have to quote your PAN on:

• Income tax return
• Any correspondence with Income Tax Authority
• Challans for payment of direct taxes
• Application for installation of a telephone connection (including a cellular telephone)
• Application for opening a bank account
• Application for opening DMAT account
• Documents pertaining to sale or purchase of a motor vehicle (other than two wheelers) & immovable property valued at Rs 500,000 or more
• Documents pertaining to a time deposit/fixed deposits exceeding Rs 50,000 with a bank
• Documents pertaining to deposits exceeding Rs 50,000 in any account with a Post-Office Savings Bank
• Documents pertaining to a contract of a value exceeding Rs 1 million (Rs 10 lakhs) for sale or purchase of securities (shares, debentures)
• At the time of purchase of Mutual fund units.
• Payment to hotels and restaurants against their bills for an amount exceeding Rs. 25,000 at any one time

However following people may not apply for PAN:

• Who have agricultural income and are not in receipt of any other income chargeable to income tax
• NRIs
• Central Government, State Government and Consular Officers, in transactions where they are the payers.
• Application for allotment of PAN can be submitted in form No. 49A.

6. What are the types of income chargeable to Income tax?
1. Salary Income
2. House Property Income
3. Income from business or profession
4. Income from sale of capital assets
5. Other income

7. What is residential status under Income Tax Act?
In India, as in many other countries, the charge of income tax and the scope of taxable income vary with residential status of the assessee.
There are three categories of taxable entities viz.
(1) Resident and ordinarily resident (ROR)
(2) Resident but not ordinary resident (RNOR)
(3) Non-residents (NR)

The law prescribes two alternative criterions to decide the residential status of an assessee. Both criterions relate to the physical presence of the taxpayer in India in the course of the previous year which would be the twelve months from April 1 to March 31.

A person is said to be "resident" in India in any previous year if he -
(a) Is in India in that year for an aggregate period of 182 days or more; or

(b) having within the four years preceding that year been in India for a period of 365 days or more, is in India in that year for an aggregate period of 60 days or more.

The above provisions are applicable to all individuals irrespective of their nationality. However, as a special concession for Indian citizens and foreign citizens of Indian origin, the period of 60 days referred to in Clause (b) above, will be extended to 182 days in two cases: (i) where an Indian citizen leaves India in any year for employment outside India; and (ii) where an Indian citizen or a foreign citizen of Indian origin (NRI), who is outside India, comes on a visit to India.

In the above context, an individual visiting India several times during the relevant "previous year" should note that judicial authorities in India have held that both the days of entry and exit are counted while calculating the number of days stay in India, irrespective of however short the time spent in India on those two days may be.

A "non-resident" is merely defined as a person who is not a "resident" i.e. one who does not satisfy either of the two prescribed tests of residence.

An individual, who is defined as Resident in a given financial year is said to be "not ordinarily resident" in any previous year if he has been a non-resident in India 9 out of the 10 preceding previous years or he has during the 7 preceding previous years been in India for a period of, or periods amounting in all to, 729 days or less.

Conditions	ROR	RNOR	NR
In India >= 182 days in FY	Yes	Yes	No
NR in India in 9 out of 10 preceding FYs	No	Yes	NA
In India for <=729 days in preceding 7 FYs	No	Yes	NA
In India >= 60 days in FY and >= 365 days in preceding 4 FYs	NA	NA	No
(FY = Current Financial Year)

* Threshold limit for resident women assessees below 65 years of age and resident individuals of 65 years and above to be further increased to Rs. 1,35,000/- and Rs. 1,85,000/- respectively.
• Plus surcharge @ 10% applicable if total income exceeds Rs. 10,00,000/
• Education Cess @ 2% is payable on tax plus surcharge

However if you are a company or a partnership firm you will have to pay tax on all income earned. Till 31st March 2003, "not ordinarily resident" was defined as a person who has not been resident in India in 9 out of 10 preceding previous years or he has not during the 7 preceding previous years been in India for a period of, or periods amounting in all to, 730 days or more.

8. Is it compulsory to maintain books of accounts?
Yes, IF you are carrying on legal, medical, engineering or architectural profession or the profession of accountancy or technical consultancy or interior decoration or any other notified profession. And Yes, IF you are carrying on business or profession (other than professions mentioned earlier) and IF the income from business or profession exceeds Rs.1,20,000/- or the total sales, turnover or gross receipts in the business or profession exceeds Rs. 10 lakhs in any one of the three years immediately preceding the previous year.

9. Is it compulsory to get the books audited?
(i) Every person carrying on business shall get his accounts audited if the total sales, turnover or gross receipts in business exceed Rs. 40 lakhs in the previous year.

(ii) Every person carrying on profession shall get his accounts audited if his gross receipts exceed Rs. 10 lakhs in the previous year

Definition of Section 80C of the Income Tax Act and the benefits available

Section 80C has become effective with effect from 1st April, 2006 as a replacement to the earlier Section 88 with almost same investment mix available in Section 88. Even the section 80CCC on pension scheme contributions was merged with the above 80C. However, this new section has allowed a major change in the method of providing the tax benefit.

Section 80C of the Income Tax Act allows certain investments and expenditure to be tax-exempt. One must plan investments well and spread it out across the various instruments specified under this section to avail maximum tax benefit. Unlike Section 88, there are no sub-limits and is irrespective of how much you earn and under which tax bracket you fall.

The total limit under this section is Rs 1 lakh. Included under this heading are many small savings schemes like NSC, PPF, life insurance, ELSS and other pension plans. Payment of life insurance premiums and investment in specified government infrastructure bonds are also eligible for deduction under Section 80C.

Most of the Income Tax payees try to save tax by saving under Section 80C of the Income Tax Act. However, it is important to know the Section in total so that one can make best use of the options available for exemption under income tax Act. This section provides tax rebate not only for the investments you made but also for the expenditures you incurred to acquire various assets.

The investments that fall under Section 80C can be broadly classified as contributions / investments to:

• Provident Fund
• Public Provident Fund
• Life insurance premium
• Pension plans
• Equity Linked Saving Schemes of mutual funds
• Infrastructure bonds
• National Savings Certificate

Besides these investments, the payments towards the principal amount of your home loan are also eligible for an income deduction. Education expense of children is increasing by the day. Under this section, there is provision that makes payments towards the education fees for children eligible for an income deduction.

In 2008, Senior Citizens Saving Scheme 2004 and the Post Office Five Year Term Deposit Account have been added to the basket of saving instruments under Section 80(C) of the Income Tax Act. An additional deduction of Rs.15, 000 under Section 80D has been allowed to an individual who pays medical insurance premium for his/her parent(s).

As given above, the limit under this section 80C is Rs.100, 000, irrespective of how much you earn and under which tax bracket you fall. Also, there are no sub-limits under this overall Rs 100,000 amount. Therefore, if you like, you can invest the entire amount in ELSS or NSCs. If you are repaying a home loan and the principal repayment amounts to Rs 100,000, then you can claim the entire amount as a deduction and thus no further savings will be needed.

All the above must be made from the current year\'s earnings and not past earnings.

Tips to avail the maximum benefits Under Section 80C:

(1) Explore the possible tax benefits, which can be availed from every Savings/Investments/Expenditures you do:

(A) Savings in Provident Fund:
Salaried income tax payee are usually have a forced saving which are eligible for deduction under section 80C. A fixed percentage of basic salary (ranges from 8.33% 12%) is deducted by your employer towards the Employees Provident Fund (EPF). Some employers allow higher deduction towards EPF. Thus, you should first of all check the total amount that is expected to be deducted towards EPF during the financial year. The total amount deducted from your salary will be eligible for investments under Section 80C.

(B) Interest earned from National Saving Certificates:
In case you have purchased NSCs during some earlier years, then the accrued interest as per the tables released by authorities is eligible for deductions under Section 80C.

(C) Home Loan Principal Repayment:
There is a provision that the payment made for repayment of the principal amount (not interest payment) of the Home Loan is eligible for a deduction under Section 80C if you have taken a home loan and you fulfill certain conditions.

(D) Tuition fee paid for your children education:
Most of the young couples and middle aged income tax payee incur quite high payments towards the education fees of their children. The expenditure incurred on education fees is also eligible for a deduction under Income Tax Act, Thus, if you are incurring expenditure towards education fee of your children, please check whether these are eligible for deduction under the IT Act.

(2) Lock in period in case of Tax saving investment/savings plans:
Tax saving investments; normally have a minimum lock-in period i.e. the period during which withdrawals are usually not allowed. If the same are withdrawn before the lock in period, these will be taxable in the year of withdrawal. For example, National Savings Certificates (NSC) has a lock-in period of six years, Public Provident Fund (PPF) has a lock-in of 15 years, Equity Linked Saving Schemes (ELSS) has a lock-in period of three years. Insurance policies have even greater period of lock in.

(3) Consider your life goals while making every investment to save tax:
You are saving every year and while saving you normally have some goal in mind, e.g. to meet the expenditure on education of children, purchase of a vehicle or house or marriage of your children. Therefore, you should always look at the investments from the angle whether it will meet your specific requirements on maturity. You should also try to diversify your savings in different instruments.

For instance, if you have already invested a fair portion of your money in equity (shares and mutual funds that invest in shares), avoid an ELSS. Opting for an ELSS means a huge portion of your investments will be in equity and that may not be what you want. Small savings schemes are usually preferred by the risk-averse people. Equity-linked savings schemes (ELSS) are a good option to consider for those with appetite for risk. ELSS tax savers are like any other diversified equity fund, but with a three-year lock-in, providing benefits under Section 80C.

The face of software/ electronics in the future

Here I reproduce an article verbatim from the New York Times by Saul Hansell published on January 11, 2009. This deals with the trends in consumer electronics/Software, going ahead.

If there was one overarching theme from the Consumer Electronics Show here last week, it was that absolutely every device in our lives is becoming a computer connected to the Internet. The sleek little Palm Pre phone promises to make it easy to call your friends by looking up their numbers on Facebook.

A new version of the Ford F150 pickup truck will let contractors check service manuals by browsing the Web from an in-dash computer.

New televisions from LG, Samsung and others will let viewers watch movies from Netflix and other Internet sites.

In two years, 90 percent of all Sony products will connect to the Internet, Howard Stringer, the chief executive of Sony, predicted.

These developments can be seen as more of the electronics industry’s constant quest for something new to tantalize gadget lovers.

But there is a darker side, too, for the companies that make the devices. If the most exciting thing about your phone or truck or TV is the Web sites you go to and the software applications you download, then the device itself is less important.

That is what happened to the computer industry, with its relentless price pressure and indistinguishable products. It is hardly an attractive business model, even for consumer electronics companies already accustomed to low profit margins.

“We are commoditizing new technology,” said William Wang, the chief executive of Vizio, which has become the country’s third-largest seller of televisions after Samsung and Sony. Now that flat-screen high-definition televisions have become commonplace, he said, “the technology shifts are not that dramatic.”

Other, more established brands beg to differ, of course. Their screens are thinner and their pictures are brighter, they advertise. So consumers will inevitably be drawn to them, they argue. And they are working on what they hope will be another technology on view at the show, one that makes mere high-definition sets seem passé: Three-dimensional televisions.

But the more established brands know the battleground is shifting. Increasingly what will differentiate one TV from another is the software it runs and the Internet services it connects to.

Even Nokia, which sells more cellphones than its three nearest competitors, says that much of its future success will come from selling services, ranging from music to maps, that operate on the phones.

Another approach is to try to embed computer chips with Internet connections, all of which keep getting cheaper and smaller, into ever more unusual devices. Sony introduced an Internet-connected alarm clock that will wake you up with your favorite music videos and traffic forecasts for your commute.

Asustek, the giant Taiwanese electronics company, has developed a touch-screen computer that hangs on a wall. It also has built a PC into a keyboard that lets users surf the Net on their TVs . In the future, according to Jonney Shih, the chairman of Asustek, everything in your house, even your bedroom mirror, will be a computer display.

So even as electronics makers struggle with the extremely sluggish economy and the relentless competition, they can look forward to finding ever more shapes and sizes in which to embed their gadgets.

Here are some edited excerpts from interviews with top executives who attended the electronics show. More of these interviews, along with other articles about the electronics show, can be found at nytimes.com/personaltech.

Services via Devices

“For a long time, our business was defined as cellphones. Hardware is not enough. We need to have a wider array of services and content. This is a major change for us.”

Olli-Pekka Kallasvuo, chief executive of Nokia

“In the next five years, we are not only going to provide hardware, but content through our devices, in an easy, more convenient way. TV is no longer just TV. TV is interactive TV these days. You will use the same TV and the same remote control, but have completely different functionality.”

Jong Woo Park, the president of Samsung’s digital media business

“You ought to expect that to be more and more unified — three screens: TV, phone, PC — one cloud-based experience. Live, essentially projecting through consistently, and appropriately, to the three screens.”

Steve Ballmer, chief executive of Microsoft

The Evolving Television

“Think of Internet on the TV like the Web browser. One view is that the Web, a browser like Firefox, Chrome or I.E., will be right on the television in the next couple years. Another view is, no, a PC-based Web is just too complex. The second one is the phase that we’re in now.”

Reed Hastings, chief executive of Netflix

“Three-D television. That’s really a major, major revolution coming into consumer electronics. That’s one area where we are placing our bets”.

Woo Hyun Paik, chief technical officer and a president of LG Electronics

“Over five years, the big concept that changes for a consumer is, ‘Gosh, do I have to track whether I have my content on my PC, on my phone, on my TV and how do I move it around?’ ”

Robbie Bach, president of Microsoft’s entertainment and devices business

New Computer Shapes

“A fraction of what we sell, a much bigger percentage of it, will be lower-priced client form factor. It may have all the functionality of a PC, but maybe it’s smaller. Maybe it is just an LCD display with PC functionality in the back, that is sitting on a desk or hanging on a wall.”

Dirk Meyer, the chief executive of Advanced Micro Devices

“To make the whole digital home possible, in the eventual state, every wall becomes a display. The mirror should become a screen. You already watch the mirror.”

Jonney Shih, the chairman of Asustek

Coping With Recession

“Customers are spending less, but they are still buying. They are putting off vacations, so they can buy TVs and stay at home. Last year, customers bought $900 and $1,000 laptops. This year they are buying $500, $600, $700 laptops. They are not buying cars, so they’ve got to buy something.”

Disgusting hackers group of Pakistan

Pakistani hackers are at it again. Some Pakistani individuals, who are on the prowl to hack important websites and misuse them by giving it Islamic or Pakistani colour, have targeted Dr APJ Abdul Kalam’s community group on Orkut, Google’s social networking site.

The community group holds significance for the orkut members, as it is probably the biggest platform for the young fans of former President A.P.J Abdul Kalam. And, the most of the members of this community write in it with deep affection and respect for their ideal in life. There are 207,249 members in this group.

The hackers have renamed the community originally named Dr. APJ Abdul Kalam as Indian and now using it as a platform for malicious and objectionable content.

The main profile page now reads: We, the people of India, apologizes to our Pakistani brothers and ISI for barbaric acts of terrorism like Mumbai and Gujrat and many more which were originated and carried out by few citizens of India and supported by government of India. We condemn such acts to fullest.

The new moderators’ names are very much visible on the site and show registration from Pakistan. The incident has outraged fans of former President APJ Abdul Kalam in Orkut world. They want the authorities to take all measures to prevent such incidents.

“As a regular member of many communities and the owner of India community on Orkut (which is Pakistani hackers’ biggest target since its existence and has nearly 8 lakh members), I have faced this menace not for the first time. The unethical hackers groups usually are a bunch of intelligent guys. But they need to spend their time and energy on some constructive work like helping secure our networks rather than involving in hacking online communities,” said Vishal Trivedi, owner of the India community (796,517 members).

The hacking of Dr Kalam’s community is not only unfortunate but disgusting too, as the hackers group of Pakistan, in reality, have started the whole unethical practice by hacking and defacing many Indian communities like Hinduism and Durga Puja. There has been a non-stop attack at such communities.

“This vicious circle has no beginning or end. In order to counter such unethical activity, there is a need to spread awareness among members on social networking communities about security measures to secure their profiles,” Vishal added.

“Pakistani hackers have increased their activities just after Mumbai attacks. We noticed the attacks when one of the moderators on VHP community was hacked and 3,000 members were banned. We also saw hacking of Dr Kalam’s community. Now, they are using that community to further their anti-India propaganda. They want to spread panic. They do not have to worry about anything, as Pakistani government seems to indirectly support them,” said Vikas Sankrityayan, owner of RSS Rashtriya Swayamsevak Sangh community (42,011 members).

Recent media reports stated intelligence agencies have warned about anti-India elements in Pakistan planning to attack Indian computer networks. It had warned that Pakistani hackers were trying out a dry run by hacking popular websites.

Can you believe these jokers!!!!

Despite it being backed by none other than the US, a recalcitrant Pakistan has rubbished India’s ‘‘so-called’’ evidence linking Mumbai attacks with Pakistan nationals saying it was no more than allegations and propaganda offensive.

In a statement which is likely to further stoke anger here ,if not lead to another flare up, Pakistan foreign secretary Salman Bashir told the foreign relations committee of Pakistan National Assembly on Tuesday that evidence provided by India was not credible enough.

Bashir also said that PM Manmohan Singh’s statement blaming official agencies in Pakistan for the Mumbai attacks would escalate tension and eventually push the two countries towards war. He added in his address to the committee that any military action by India would prove to be its ‘‘biggest mistake’’.

Bashir’s statement authenticated reports in Pakistan media which suggested that Islamabad has already picked enough holes in the Indian dossier linking Mumbai attacks to Pakistan nationals to suggest that the evidence was doctored by New Delhi.

Pakistan’s minister of state for foreign affairs Malik Emaad Khan too asked India to provide evidence which would stand the scrutiny of law. That Pakistan was not going to cower in the face of the diplomatic offensive by India was evident when Khan said that Pakistan would come up with a ‘‘befitting’’ reply for any Indian military adventurism and described the situation as ‘‘very tense’’.

There was no response from the Indian side to this development till late in the evening. Minister of state for foreign affairs Anand Sharma said that, as a first step, Pakistan should acknowledge that Mohammed Ajmal Amir Kasab, the lone terrorist survivor, is a Pakistani. However, going by the reports in Pakistan media, Kasab’s confession has found few takers, if at all, in Pakistan.

Nearer than you think

Lahore is 48 km from Amritsar, closer than Gurgaon is from Ghaziabad. From Lahore, Islamabad is another 260 km and 160 km north-westfrom there is the tiny town of Buner. Beyond that, begins the state of ‘Talibanistan’. Its ever expanding boundary is just 430 km from India’s Wagah border.

The Taliban’s creeping advance in Pakistan now makes it closer than Lucknow is from Delhi (497 km), Goa is from Mumbai (594 km) or Coimbatore from Chennai (491 km). In other words, Talibanistan, where girls can’t study or women work, where the ruling Islamic militia has vowed to kill modern jurisprudence, science, culture and all other faiths, is closer than what most of us think.

The wellsprings of terror that threaten most of the world and, in particular, India, are no longer located in the remote mountains of Pakistan or in the caves of Afghanistan. They are a six-eight hour drive from India’s border in a sedan on reasonably good roads.

And this distance is getting closer every day because the Pakistan government has virtually capitulated before the Taliban’s widening influence and forward march. More and more areas of Pakistan are having to submit to the Taliban’s twisted way of life and its complete intolerance of any other world view.

The widening influence of Taliban was dramatically illustrated recently at Buner, south of Pakistan’s Swat valley. The Tehrik-e-Taliban (TTP) of Baitullah Mehsud — prime accused in Benazir Bhutto’s assassination — sent a car bomber to a polling station and killed 40 people. This was an act of reprisal for the town taking on Taliban militants.

Meanwhile, on the other side of the Pakistan-Afghanistan border, in the province of Wardak, just 48 km from Kabul, Taliban handed out “exemplary”, if by their standards somewhat mild, punishment to a bunch of thieves who had their faces blackened. The Taliban in Wardak have their own governor, set up road blocks, a religious court and routinely capture Afghan soldiers.

Some seven years after US drove out the Taliban and al-Qaida from Afghanistan, the world’s most potent terror group has not only recouped but could be within hitting distance of forming their own state, seriously compromising the integrity of both Pakistan and Afghanistan. This is the undeclared, but very real state of ‘Talibanistan’, a massive maze of mountains and high plateaus where the Taliban plans jihad against the West and India.

Taliban’s expanding sphere of influence is of direct concern to India. The Lashkar-e-Taiba fidayeen who attacked India are very much a part of the global jihad visualised by the Taliban and al-Qaida. As the Taliban moves south into the Pakistani heartland, it is also linking with Punjabi-dominated groups like LeT.

Today, the Taliban holds complete sway over all seven FATA agencies. They have also run through the northwest frontier province (NWFP), helped by an inept government of Islamic religious parties. Quetta, its largest city is a well-known Taliban hideout, home to Mullah Omar and his clique. Peshawar has begun to resemble a Taliban town, with no women on streets. Taliban signboards have even come up in Karachi, more to make a psychological point, but not without significance.

In other words, the Taliban is no longer a distant threat. In areas controlled by the Taliban, all girls’ schools have been shut, women are not seen in public, polio vaccinations are banned as they are seen to be a western plot to make Muslims infertile and beards are mandatory. Modern jurisprudence is shunned and other faiths stamped out.

Talking of people in these areas, The News International, one of Pakistan’s biggest newspapers said, “They will obey orders of the Taliban because the Taliban are more powerful than the government that is supposed to protect and sustain them.”