Is it a good idea to file your tax online this year? Or will it be feasible to file your tax forms physically, at least for this year?

Is the software/ system put up by the income tax department working satisfactorily?

In a chat with readers on June 26, Get Ahead tax expert Mahesh Padmanabhan answered this and many more queries related to the deadline for filing tax returns for 2006-07, gift tax and income tax on money earned from your provident fund.

For those of you who missed the chat, here is the transcript.

Part I: Students: Can you claim tax exemption on tuition fees?

Aditya asked, I am a student, 23 years old, having no income other than stock markets. I started trading with Rs 2-3 lakhs, which is given to me by my family in installments. There income too is less then Rs 1 lakh and 35 thousand each year. This is all savings money. I am planning to file my returns from this year but how do I show this Rs 2.4 lakhs as cash at bank? Please suggest a way out.

Mahesh Padmanabhan answers, The best way to deal with this situation is to treat these amounts as gifts received over a period of time. Thereafter, this amount would be yours for use (read investment) and the income arising thereafter would be taxable (if any) in your hands. You would need to prepare a list of such receipts and map the same with deposits in your bank account, so that any future enquiry from the IT department would not catch you unaware and you would have the information to justify your capital.

vikas asked, Good Afternoon Mahesh. I wish to know if my sister residing in UK sends Rs 7 lakhs over a period of 1 year to my mom, through money transfer by a bank, will my mom have to pay tax for the received money. And what happens if she sends me Rs 1 lakh as a gift, do I have to pay tax for the same. Thanks and regards, Vikas.

Mahesh Padmanabhan answers, If the money is coming through regular banking channels and from your sister, the receipt would not have any tax impact on either of you or your mother. Meanwhile, you would do well to reduce this on paper as a gift deed and obtain your sister's signature on such a deed.

uproar asked, Sir, I have seen ITR-1 form with an option of 2 pages and another with 3 pages. Is there any difference between these forms? One of my colleage required PAN but he has no taxable income. Is he required to file return? Pls reply.

Mahesh Padmanabhan answers, There is no difference in the two versions. PAN is used for a multitude of transactions such as opening a bank account, etc, and hence it would be sensible if your friend obtains a PAN despite he not having any taxable income.

Arusha asked, Hi Padmanabhan, I am planning for 2007-2008 investments, my question is if I gift Rs 100,000 to my mother, can I deduct the same amount from my taxable income?

Mahesh Padmanabhan answers, Gifts given, unlike donations made for charity, are not tax deductible and hence you will not be eligible for any deduction for the same.

nani asked, I have 2 Form 16s to be filed this year. What will happen if I ignore my previous company's Form 16 from filing?

Mahesh Padmanabhan answers, You could be tracked through the ETDS returns filed by your employers for discrepancy in the income returned by you. Our strong recommendation is that do not indulge in such acts.

kaladhar asked, Hi Mahesh, I am an NRI living in London [Images], but have a flat in India, which is the only asset I have on my name. I have never filed any IT returns in India, but have been paying taxes in UK on the salary I received. My question is, do I need to file IT returns in India because I own a flat? Am I eligible to apply for a PAN card based on my house, as I never had PAN till now?

Mahesh Padmanabhan answers, In case your flat has been let out on rent, and such rent exceeds the threshold limit of exemption, then you would need to file returns for the same in India. You could apply online for a PAN and the card would be delivered to your London residence. This might be helpful in case you decide to sell your flat later.

ralston asked, Can we file our tax online? The software which the IT department claims to be up has not yet gone live. So please help on this one. Ralson Coelho.

Mahesh Padmanabhan answers, The online filing process though put up by the IT department is not satisfactorily working and we would suggest you to file the returns physically. Probably, next year, we will see a more mature system coming up on the IT department's site.

pankaj_11380 asked, Where can I show the amount received from provident fund of work done with previous year? Either under salaries or other source?

Mahesh Padmanabhan answers, Your query is unclear as to whether such PF is taxable or tax free. In case the receipt is taxable due to the fact that the conditions have not been met, then the interest on employee contribution would be included under income from other sources. The employer's contribution and interest thereon would be included under the head salary. You could avail the relief under section 89(1) for such salary inclusion.

Mahesh Padmanabhan says, Thanks a lot friends for participating in this session on personal tax planning issues. It is time for us to say goodbye for the moment. We aould return back with a fresh round of tax session next fortnight. Regards Team RelaxwithTax

Part I: Students: Can you claim tax exemption on tuition fees?

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