Were you prudent with your investments last year? Did they help you save tax? Or did you end up paying more than you could afford?

What investment mistakes did you make last year? Are their ways to rectify them?

What investment options should you go for this year?

What should you do to bring your tax liability to the minimum level? 

Direct tax expert Vikas M Gandhi replied to readers' queries in an hour-long chat on rediff.com. Here is the transcript:

vikasgandhi says, Welcome for this chat session

prasad asked, hi, I am prasad....my question is......I am under tax belt,....I am planning to go for buying car.......can i claim depreciation in the next financial year....if so how much....me planning to invest 1.5 lalk for the old car
Vikas Gandhi answers,  at 2007-08-23 15:58:23The answer to your question depends on your source of income. If you are an employee, earning Salary, then you cannot claim any depreciation on the car purchased. However if you are self-employed, i.e carrying either business or a profession, the you can certainly claim depreciation on the car purchased. The rate of depreciation on Motor Car is 15% as per Income Tax Rules.

santosh asked, Hi Vikas, Please tell me about taxes applicable for gains from Mutual Fund (Equity Fund, Balancer Fund) and from Stocks. Also for tax exemption is it better go for Dividend Fund or Growth Fund. Are please direct me where can I get complete Details. Thank you,
Vikas Gandhi answers, The tax rate applicable are as under a) For quoted shares and Equity oriented Mutual Fund - -- Short Term Capital Gain is taxed at normal rates of tax. However if you have paid SEcurities transaction tax (STT) while selling than such gain will be taxed @ 10%. -- Long Term Capital Gain is taxed at either 10% or 20%. However if you have paid STT then the entire gain is exempt from tax. As far Units of Balanced Funds are concerned, short term capital gain will be taxed at normal rates and long term capital gain will be taxed at 10% or 20%. As regards Dividend Fund v/s Growth Fund it depends upon the capacity of risk you can handle. According to me Dividend fund would be more beneficial from taxation point of view.

mvr asked, Please let me know how to arrive at taxable income in case of joint Fixed Deposit accounts?
Vikas Gandhi answers, In case of joint Fixed Deposit, it is always the first holder who is taxed. Secons holder is kept basically from safety point of view. However if both the holders have kept the deposit amount, then the interest amount should be offered for tax in individual hands in the proportion of investment made in fixed deposit.

abhishek asked, Is every person who obtains PAN, supposed to file his or her return of income even if his or her income does not exceed the minimum amount chargeable to tax, e.g. Rs. 1 lac for A.Y. 2007-08?
Vikas Gandhi answers, If your gross income for the year is below the taxable limit then you need not file your income tax return, even if you are having PAN. However if your gross income is above the taxable limit, but on account of various deductions, has reduced to below taxable limit then you need to file your income tax return.

Hitesh asked, Hi Vikas I was working for a govt. company during 1997-2000. I am getting some arrears now for my work during that period. How the tax will be calculated?
Vikas Gandhi answers, Since you are receiving arrears now the same will be taxed in this year. It will be taxed under the head 'Salaries' and will be taxed at rate applicable to you for the year. However since this amount relates to earlier years, you will be able to claim Relief u/s 89 from the tax calculated. For calculating this relief you will have to approach a tax professional.

Hemant asked, hi, i filed tax return. but now I realised that i had not included stamp duty of new house (first house on my name). can i file revised return?
Vikas Gandhi answers, Yes you can file revised return. While filing revised return you will mention that it is a revised return and also provide details of previous (original) return filed.

talwar asked, are dividends from ELSS funds taxable?
Vikas Gandhi answers, No. Dividend received on shares of Indian company and on units of mutual fund are not taxable.

Sina asked, Hi Vikas i have not filed my tax this yr since my company refused to give me the form 16 saying that since i don't have any deduction this yr. i had filed my tax last yr even though i did not have any deduction. I will face any problem for not doing so. Thanks in advance
Vikas Gandhi answers, Since you have already filed return previously, i will advise you to file return for the current year also. This is just to maintain continuity of filing returns with the Income Tax Dept. As far as non-reciept of Form No.16 is concerned, you know what Salary you have earned and you also know where you have invested. With this information you can prepare your own return and file it. Since there is no deduction from your Salary, I assume that your income is not taxable and if this is the case you won't be pernalised also for late filing. So please go ahead and file your return. Remember Form No.16 is not required to be filed alongwith income tax return. For preparing your return you can use www.taxsmile.com

Mani asked, I have claimed for refund of my tax paid last year, I have not received the refund yet, whom I have to approach for this.
Vikas Gandhi answers, For getting back your refund, you will have to approach your Assessing Officer. The designation of your Assessing Officer will be found on the return copy filed with the Department

tempu asked, Should we invest more in the equities, mutual funds, fixed incomes, bonds or the property? or there should be an ideal mix of all these if we have a modest amount of savings?
Vikas Gandhi answers, According to me there should always be an ideal mix of investment. Never invest in single mode. Select a mix with which you are comfortable and see to it that you are able to absorb the loss if any incurred at any point of time. After all it is our hard earned money.

Subrata asked, Hi Vikas, Are dividends earned on MF investments taxed after 1 year evenif they do not fall in the ELSS category ?? Also is it investor's duty to declare capital gains tax or the Fund manager automatically deducts the same when you withdraw before 1 year ??
Vikas Gandhi answers, Any dividend received on mutual fund, irrespective of time is exempt from tax. As far as declaration of capital gains is concerned, it is your duty. It is your income and you have to report the same in your income tax return. This is true even if Fund manager has deducted any tax from your capital gain.

atul asked, i am liable to deduct tax at source from april-2006 but same are not deducted but at feg end of the year pass journal entry of tax deduction i.e.on31/03/2007 & paid on or before 31/05/2007 is allowable expenditure for the f.y.2006-2007
Vikas Gandhi answers, I am afraid you won't be able to claim these expenses. TDS is deductible either at the time of payment or credit in the books, whichever is earlier. As said the liability of deducting TDS was already in April 2006 and since you have not paid TDS within the same financial year, you won't be able to claim the expenses.

babtry asked, hi, whether PF contributions is also part of 1 lakh investment
Vikas Gandhi answers, Yes. PF contribution is also part of 1 lakh investment u/s 80C.

Ratanlal asked, Any rebate avaialable u/s 80C for current F.Y on educational loan, if yes, pl give details
Vikas Gandhi answers, Interest paid on loan taken for higher education is allowed as deduction u/s 80E and not u/s 80C. However this loan should be from financial or charitable institution only.

Roi asked, Hi, I m Roi...I have purchased 10 shares of Infosys [Get Quote] and wish to sell them at a profit...what are my tax liabilities w.r.t short & long term capital gains?
Vikas Gandhi answers, Assuming that you will sell this shares in open market, short term capital gain will be taxed @10% and long term capital gain will be totally exempt from tax.

Shyam asked, Hi Vikas, I am a Software Engineer.We declare our proposed investments in beginning of year to company and submit proofs at end of year.However this year , I noticed that I made a mistake .... my housing loan repayment amount ( 14000 p.m. ) was accidentally entered as a per annum payment. That means my Form 16 is wrong for past 2 years , and I might need to recover money ( from IT Department )... I was suggested that I need to submit a fresh IT return with copies of Form 16 ( last 2 years - housing loan payment years )and letter from bank on break up of principal and interest. Could you advice me.
Vikas Gandhi answers, Based on the facts narrated, you should file your revised return and claim for the refund.

abid asked, can I claim tax deduction for EMI that i am paying for my 2 wheeler and home appliances.The total EMI amounts to Rs.3933/- my monthly salary is 11000 Gross
Vikas Gandhi answers, NO. EMI payment made for two-wheeler and home appliances do not get any tax benefits.

Sachin asked, Hi Vikas, My query is related to refund.I gave 2 Form -16 to my tax agent. By mistake, he submitted ny return with wrong tax refund figure. So Pls guide me what shld I need to do.
Vikas Gandhi answers, If some wrong information has been filed with the Dept and on account of such mistake there is error in tax calculation, you nedd to file a revised return immediately with correct tax amount.

Rupesh Jain asked, I have taken education loan of 2.5lac now i'll repay it 8000 per month would i get tax benefit on it or its intrest only
Vikas Gandhi answers, Only interest amount paid on education loan (subject to fulfilment of certain conditions)is eligble for deduction u/s 80E

colshri asked, what is the last date of filing IT return by a Consultant with income of 6 lakhs.
Vikas Gandhi answers, If Rs.6 lakhs is your gross income, your last date of filing was 31st July. However if this is your net income, then we need to know your gross income. If it is more than 10 lakhs, then the last date of filing will 31st October, else it is 31st July.

anil asked, I am retiered person. I have income from only FD interset. So How much tax I should pay and What will be my taxable Income and Rebate
Vikas Gandhi answers, There is no special benefit for retired person. Tax will have to be calculated in normal course only.

pradeep asked, one of my friend has PAN card, but jobless for the last one year.. is it nesassary for him to submit return
Vikas Gandhi answers, If your friend is not earning anything, he need not file his return of income.

atig asked, hello I am a freelancing consultant. I have been filing returns without any break. as on date i have not received back any extra taxes already paid to the goverment what am i supposed to do. It is pending for the last six years
Vikas Gandhi answers, File a grievance petition to the concerned Commissioner of Income Tax and also file a copy to the Assessing officer, stating all the facts and enclosing photocopy of the returns filed (where refund is due).

Vikas Gandhi says, Thank-you friends. It was a wonderful tax chat session. But now its time to quit and so Good-bye and have a happy week-end.