Not Filing IT Returns May Land You In Prison

As citizens of India, our responsibility towards the country does not end with paying taxes. We have to file income tax returns (ITR) every year for which the government allows us four months from April 1 to July 31. To crackdown on stragglers, the government has introduced penalties on late and failure to file ITR. Let's discuss in details.

Penalties: Sec. 276CC

Wilful failure to furnish ITR during the prescribed time resulting in tax evasion exceeding Rs 1 lakh attracts a fine and imprisonment that can be from 6 months to 7 years. In other cases, it could be a fine and imprisonment of 3 months to 3 years.

However, a penalty cannot be levied unless there is substantial evidence of wilful failure. As the provisions of the Income Tax Act are amended frequently, it is impossible even for tax experts to know all the provisions at any given point of time. Hence, ignorance of law is often cited as an excuse to escape the penalty.

From April 1, 2018, the government introduced a fine of Rs 10,000 for those who fail to file the ITR by July 31. If you file ITR after the due date but before December 31, the penalty will be Rs 5,000. Small taxpayers with income not more than Rs 5 lakh per annum will not be penalised more than Rs 1,000.

Scrutiny Assessment

As a relief to senior citizens, the department has decided not to scrutinise any returns filed by those above the age of 60 years and those whose gross total income is less than Rs 10 lakh.

Annual Information Report

Various authorities (not individuals) are required to send annual information report to the department of all persons, including NRIs, undertaking any one of the following transactions:

1. Banks — (a) Cash payment of Rs 10 lakh for purchase of DDs / POs, RBI Bonds, etc. (b) Cash deposit / withdrawal of Rs 50 lakh from current account. (c) Cash deposit of Rs 10 lakh in any one or more accounts, other than current account and time deposits. (d) Time deposits, (other than those through renewal of another time deposit) of Rs 10 lakh (e) Payment in cash of Rs 1 lakh or Rs 10 lakh by any other mode, against credit card.
2. Company — Receipt of Rs 10 lakh for acquiring bonds, debentures or shares, including share application money.
3. Listed Company — Buyback of shares of Rs 10 lakh.
4. MFs — Receipt of Rs 10 lakh for acquiring units.
5. Forex dealer — Receipt of Rs 10 lakh for sale of forex, including against forex card or expenditure in such currency against debit/credit card or issue of traveller cheque or draft.
6. IG registration or registrar/sub-registrar of property — Purchase or sale of immovable property for Rs  30 lakh or as valued by the stamp valuation authority, whichever is higher.
7. Any person liable to audit u/s 44AB — Receipt of cash payment of Rs 2 lakh by any person for sale of goods and services, other than those specified above.

The aggregation rule is applicable for all transactions except for purchase or sale of immovable property and cash payment for GST.

Take care to remain out of being a reportable person, as much as you can.

Taxpayers can view their consolidated annual tax credits in Form 26AS enabling them to resolve any discrepancies arising due to incorrect quoted PAN, non-filing of TDS returns, non-deposit, lower deposit of TDS by the deductor, etc.

Refunds are made directly to the taxpayers' bank accounts, with intimation through SMS or e-mail.

Tax and PAN related grievances can be redressed online through e-Nirvan, a paperless facility launched by CBDT. Alternatively, one can visit the Aaykar Seva Kendra. However, suggestions or matters related to the Court, RTI, religion, services of government employees or foreign governments cannot be redressed through this mechanism. 

Filing income tax returns is not just an act of responsibility, but it also helps in getting loans, credit cards and gaining benefits of adjustments against losses. Hence, file income tax returns on time

SIPs are Best Investments as Stock Market s are move up and down. Volatile is your best friend in making Money and creating enormous Wealth, If you have patience and long term Investing orientation. Invest in Best SIP Mutual Funds and get good returns over a period of time. Know which are the Top SIP Funds to Invest Save Tax Get Rich - Best ELSS Funds

For more information on Top SIP Mutual Funds contact Save Tax Get Rich on 94 8300 8300

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SWP or Dividends

Mutual Fund SWPs are better option

When your clients are looking to generate regular cash flow from mutual funds, they often find it difficult to decide whether or not they should redeem their investments. Currently, mutual fund investors have two options to generate regular cash flow, systematic withdrawal plan (SWP) or dividends. Let us understand what is best suited for your clients.

Dividends in mutual funds

Choosing the dividend option for a mutual fund scheme entitles an investor to receive dividends declared by the fund scheme periodically. Dividends are tax-free for investors. The fund house though has to pay Dividend Distribution Tax (DDT) on such dividends on behalf of investors. This means investors indirectly bear the tax burden on dividend income.

However, in case of close-ended schemes or schemes with a lock-in period like ELSS, the dividend option is preferable. This is because your clients will receive part of the profits throughout the investment tenure. Even though the investment is locked in, they would still benefit from some liquidity from time to time. 

Systematic Withdrawal Plan (SWP)

Just as systematic investment plans (SIPs) allow investors to make investments in mutual funds periodically, SWPs redeem your investments periodically. SWPs give investors the flexibility to choose the periodicity and amount of redemption.

Why SWPs score over dividends

Here are three reasons why an SWP is a better option than dividends

Consistent cash flow: The dividend option does not guarantee regular cash flow since AMCs declare dividends after realising profits, if any. However, with SWPs, your clients can choose to have regular cash flow by redeeming their investments. There is no ambiguity on cash flow with SWPs.
Control over quantum of cash flow: With SWPs, your clients can decide the amount and timing of cash flow depending on requirement. Simply put, your clients cannot rely on the dividend option to meet regular requirements.
Tax efficient: The government levies DDT on dividends arising out of mutual fund investments. Since the NAV of the fund is reduced to the extent of dividend, investors end up paying the tax from their MF investments. SWPs, on the other hand, are treated as redemption from mutual funds. The tax treatment of such redemption is just like growth options in mutual funds.

Hence, SWP scores over the dividend option. However, if the periodic payouts are considerably higher than the returns generated by the mutual fund, you should consider recommending the dividend option as the investment amount might get exhausted. There is no such fear with the dividend option, as any dividend has to be declared only out of profits realised.

SIPs are Best Investments as Stock Market s are move up and down. Volatile is your best friend in making Money and creating enormous Wealth, If you have patience and long term Investing orientation. Invest in Best SIP Mutual Funds and get good returns over a period of time. Know which are the Top SIP Funds to Invest Save Tax Get Rich - Best ELSS Funds

For more information on Top SIP Mutual Funds contact Save Tax Get Rich on 94 8300 8300

OR

You can write to us at

Invest [at] SaveTaxGetRich [dot] Com

SBI Focused Equity Fund

Top SIP Funds Online 

SBI Focused Equity Fund

How has the SBI Focused Equity Fund performed?
With a 10-year return of 17.82%, the fund has outperformed both the index (12.43%) and the category average (14.31%) by a good margin.
The fund has comfortably beaten the multi-cap category over the past decade.

SBI Focused Equity Fund performance (%)

The fund has outperformed across time periods.

Yearly performance (%)
The fund has mostly delivered healthy outperformance in recent years.

Where does the SBI Focused Equity Fund invest?
The fund has hiked presence in large-caps in recent years.

Top 5 sectors in portfolio (%)

The fund is significantly overweight in auto, engineering and metals.

SBI Focused Equity Fund Top 5 stocks in portfolio (%)
The fund takes outsized positions in its top bets.

How risky is it?

Should you buy SBI Focused Equity Fund?
This fund has been rechristened as a focused fund, but even in its earlier avatar as SBI Emerging Businesses, it maintained a concentrated portfolio. While the fund remains market-cap neutral, it has hiked its presence in large-caps in recent times. But it retains its mid- and small-cap tilt, where its exposure remains higher relative to many peers. The degree of concentration is also comparatively higher with the fund taking outsized positions in

high-conviction bets and several small positions at the tail-end of the portfolio.

It has favoured financials with nearly 40% exposure to this segment. Its performance has been consistent in recent years, delivering healthy alpha relative to peers, making it a worthy bet for those seeking an aggressive, focused strategy.

SIPs are Best Investments as Stock Market s are move up and down. Volatile is your best friend in making Money and creating enormous Wealth, If you have patience and long term Investing orientation. Invest in Best SIP Mutual Funds and get good returns over a period of time. Know which are the Top SIP Funds to Invest Save Tax Get Rich - Best ELSS Funds

For more information on Top SIP Mutual Funds contact Save Tax Get Rich on 94 8300 8300

OR

You can write to us at

Invest [at] SaveTaxGetRich [dot] Com

Critical Illness Plan

Apart from a health insurance policy that pays for hospitalization, critical illness insurance plans are also very popular in the health insurance segment. A critical illness policy compliments a plain vanilla health plan, so ensure you don't substitute your health policy with a critical illness plan.

What are critical illness plan?

There are two types of health plans: indemnity and defined benefit plans. A basic health insurance is an indemnity product that covers hospitalisation expenses, pre- and post-hospitalisation expenses and listed day-care procedures.

Defined benefit policies pay a stipulated sum on an insured event. A critical illness policy is a defined benefit plan that pays the total sum assured on diagnosis of an insured critical illness; it doesn't matter what the hospital bill is. Also, most of the plans terminate after the first claim; few plans cover multiple critical illnesses but mostly cap the number of illnesses they can cover.

A critical illness policy helps cover incidental expenses and supplements your income in case you are unable to work: a plausible fallout of a critical illness.

The caveats

You need to keep in mind some caveats, the most important being the waiting period.

Most health plans come with an initial waiting period. A critical illness plan has that and another specific one: the survival clause.

This kicks in if a policyholder is diagnosed with a critical illness. Most insurance companies have a survival period of 30 days and it's only after the policyholder has survived this period that the claim is settled.

Some plans may waive off this clause.

What you need to do

The most challenging aspect of buying a critical illness policy is understanding what is insured. It's not just looking at the number of critical illnesses covered and going for the one with the maximum number of illnesses covered, but also about understanding the exact definition of the illnesses to avoid unpleasant surprises at the time of making a claim. For instance, a critical illness plan covering cancer may not cover the early stages of cancer.

The second thing to understand and think about is how you buy a critical illness plan. These policies can be bought as a rider—on a base policy like a life insurance policy—or as a standalone policy. But as a rider, the policy exists only till the time the base policy exists. Surrender the policy and you end up forgoing the benefits of a critical illness policy.

Unlike a health insurance policy, a critical illness policy requires minimal paperwork because the insurer concerns itself with the diagnosis of the ailment.

SIPs are Best Investments when Stock Market is high volatile. Invest in Best Mutual Fund SIPs and get good returns over a period of time. Know Top SIP Funds to Invest Save Tax Get Rich - Best ELSS Funds

For more information on Top SIP Mutual Funds contact Save Tax Get Rich on 94 8300 8300

OR

You can write to us at

Invest [at] SaveTaxGetRich [dot] Com

What are FMPs?

What are FMPs?

As Fixed maturity plans or FMPs are closed-end debt mutual fund schemes, they come with a specific tenure. So investors can invest only at the time of a new fund offering (NFO). Similarly, you cannot withdraw before maturity, but you can sell such schemes on the stock exchange. The corpus of FMPs is invested in fixed-income securities that mature just before the scheme itself. For example, if the FMP is for three years, the fund manager will invest in instruments with a maturity of three years or less. This helps FMPs to protect against interest rate risk.

In the current interest rate regime, FMPs offer a good investment opportunity as investors can lock in their money at attractive yield

SIPs are Best Investments as Stock Market s are move up and down. Volatile is your best friend in making Money and creating enormous Wealth, If you have patience and long term Investing orientation. Invest in Best SIP Mutual Funds and get good returns over a period of time. Know which are the Top SIP Funds to Invest Save Tax Get Rich - Best ELSS Funds

For more information on Top SIP Mutual Funds contact Save Tax Get Rich on 94 8300 8300

OR

You can write to us at

Invest [at] SaveTaxGetRich [dot] Com