When people think of income tax, they first think of filing income tax returns in April. They believe they will be filing income tax returns in April and therefore are required to obtain ETA. That is actually not true! In fact, you can get ETA for any amount that you earned in the year 2016 without having to file income tax return. It is actually possible to get a tax deduction in the year 2016 and it depends on which option you are going to opt for. All you need to do is to obtain ETB from government and that can be done in following ways.As per the government, you can actually claim the tax deduction for travel and study if you are working outside India or are pursuing educational programs outside India. If you are visiting your family members or friends for the first time in 2016, then you can get tax deduction. The list of deductions actually varies with every person because there is no single rule. However, you can always go to IRS to check the form on their website.
Now let us get into detailed analysis on which option is the best way for you to claim the tax deduction.
Option 1: Personal travel expense tax deduction
Personal travel expense is a kind of tax deduction that you can actually get in the year 2016. The purpose of doing personal travel expense is to earn any foreign travel so that the taxpayer can avoid Income tax and service tax.
If you were to purchase the flight tickets yourself, you will get tax deduction if you are purchasing the tickets from Indian airlines as well as international airlines. There is no specific guideline on purchasing the tickets from Indian airlines. You will get the tax deduction only if you are booking and purchasing the ticket directly from the airlines. For purchasing the tickets from international airlines, there is no rule and any individual can get tax deduction for their ticket booking and ticket buying.
You can actually buy the tickets through online travel agencies as well as credit card companies. If you are buying the tickets through credit card companies then it is always good to ask the airline ticket agent to check and validate the details. Then the credit card company will be responsible for the booking charges.
To sum up, if you buy the ticket from any airline then you will get tax deduction for the ticket but if you buy it through credit card companies then the credit card companies are responsible for your tax deduction.
Option 2: Domestic travel expense tax deduction
If you are travelling within India, then the taxpayer can get the tax deduction for the domestic travel.
There are actually many different ways to get the tax deduction for the domestic travel and you can actually choose the best option depending on your purpose for travel.
There are no guidelines or rules set by any government to explain which way is the best way to get tax deduction. In this section, we are going to discuss all the possible ways to get the tax deduction for domestic travel.
The common ways to get the tax deduction for domestic travel
First of all, you should remember that the purpose of getting the tax deduction for domestic travel should be the same whether you are travelling within India or outside India.
If you are travelling within India, then you can get the tax deduction for your domestic travel. The simplest and easiest way to get the tax deduction for domestic travel is to buy the airline ticket from any airline company.
When you buy the ticket for domestic travel from any airline company, they will provide you with the most realistic estimate of the total tax deduction for your flight ticket. The price you pay will be the price of the ticket including the tax deductible amount.
There is no doubt that the ticket price will be cheaper and more convenient if you buy it from the airline. But, for the complete tax deduction and total transparency, you should always check out the total price and value of the ticket before you buy it.
Secondly, you can also consider using an agent who provides tax preparation and income tax deduction services. The agent will prepare the papers, apply for the tax deduction and collect the amount from the airline company. The cost of using such agent is 2 to 3% of the total amount of tax deduction that you get from the airline.
If you are going to travel abroad, then the general rule is that the total tax deduction for the same will be approximately 20-25% less than if you were travelling within India.
The following are some of the points that you should keep in mind while you are travelling abroad.
Apart from the airline ticket, the ticket for the return flight should also be included in the total tax deduction.
You can deduct the additional fuel charges if you are travelling for a longer duration.
If you are travelling to certain countries, you can also get the tax deduction for your round-the-world ticket. The way to get the tax deduction for a round-the-world ticket is by declaring the first international flight as the domestic flight.
As long as you are travelling on business, you can also get the tax deduction for the hotel that you are staying in.
If you are an eligible person then you can deduct your medical expenses on a flight and it will not attract any penalty.
The same rule applies for the airport lounge facility.
You can also get the tax deduction for the rental car if you are travelling by plane.
You can get a tax deduction for the air miles that you are using to get additional benefits from the airline.
If you are interested in more tax deduction/relief suggestions, please call (888)489-4889.