Tax Deductions

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TAX DEDUCTIONS

Section 80C of the Income Tax Act
Allows certain investments and expenditure to be tax-exempt Total limit ² Rs. 1 Lakh Income Tax payee try to save tax by saving under this section Benefit is available to everyone, irrespective of their income levels

Qualifying Investments

Provident Fund (PF) & Voluntary Provident Fund (VPF)
While employer·s contribution is exempt from tax, employee·s contribution is counted towards section 80C investments Excess of employer·s fund over 12% of salary is taxable Excess of interest over 9.5% is taxable

Public Provident Fund (PPF)
Amount deposited by an individual in his own account or in the account of his/her spouse or in the account of any child is eligible for deduction Maximum amount is Rs. 70,000

Tuition/school fees paid for education of children
Available to Individual Assessee For tuition fees paid on two children·s education Deductions available up to Rs.1,00,000 Deduction under this section is available on payment basis

Life Insurance Premiums
Any amount that you pay towards life insurance premium for yourself, your spouse or your children Life insurance premium paid by you for your parents (father / mother / both) or your in-laws is not eligible for deduction If you are paying premium for more than one insurance policy, all the premiums can be included

Other deductions u/s 80C
Subscription to National Savings Certificate; accrued interest also deductible Contribution for participating in the ULIP of UTI, LIC Mutual Fund Payment for notified pension fund set up by Mutual Fund or UTI Any payment towards the cost of purchase/construction of a residential property Principal component of the EMI that you pay every month to repay your home loan

Amount invested in approved debentures of and equity shares in a public company engaged in infrastructure including power sector or units of a mutual fund proceeds of which is utilised for the developing maintaining etc. Amount invested in Equity-Linked Savings Scheme (ELSS) Amount deposited as term deposit for a period of 5 years or more in accordance with a scheme framed by the Government Amount deposited in the 5-year time deposit scheme in post office

Pension Funds
Section 80CCC
† For

individuals † Investment in pension funds upto Rs. 1 Lakh can be claimed as deduction

Section 80CCD
† For

individuals † Employee·s contribution to the notified pension scheme tax deductible † Contribution in excess of 10% of the salary is taxable † Employer·s contribution is taxable

Infrastructure Bonds
Section 80CCF Introduced in the budget 2010-11 Applied to individuals and HUF Deduction of a whole of the amount deposited as subscription to the notified long term infrastructure bonds Deduction upto Rs. 20,000 , over and above the Rs. 1 lakh limit

Deduction for Medi-claim Insurance
Section 80D Additional deduction available which do not include deduction u/s 80C, 80CCC and 80CCD for which overall limit is Rs. 1,00,000 Available for an individual and HUF For Self, Spouse or dependant children, maximum deduction Rs 15,000 (20,000 in case of senior citizen) Additional deduction of Rs 15,000 for medical insurance of parents (20,000 in case of senior citizen)

Section 80DD - Deduction in respect of maintenance including medical treatment of a person with disability
† Rs

50,000 (100,000 for person with severe disability)

Section 80DDB - Deduction in respect of medical treatment of specified disease or ailments
† Rs

40,000 (60,000 in case of senior citizen) or actual sum paid whichever is less

Interest on Educational Loan
Deduction under section 80E is available to an individual The amount of interest paid is eligible for deduction No cap on the amount to be deducted Tax benefits on education loan are only valid once you start the repayment and they are only available up to eight years

Deductions in respect of donations
Section 80G - available to corporate and non-corporate assessee
‡

Deduction available in respect of donations made to specified institutions as listed out in section 80G(2) or to any other fund/institution fulfilling the conditions prescribed under section 80G (5) Donation made in kind not eligible for deduction Ceiling limit on donation made to certain funds/institution ie any amount in excess of 10% of the Gross Total Income would be ignored for the purpose of computing the aggregate of the sums in respect of which the deduction is available- section 80G (4) Once the deduction in respect of donation is claimed under section 80G, the same would not be eligible for deduction under any other provision of the Act for the same or any other assessment year

‡ ‡

‡

Section 80U-Deduction to a person with disability
Deduction available to a resident individual being a person with disability Amount of deduction ² Rs 50,000 (Rs 75,000 for a person with severe disability) Individual to file tax return before the due date

Conclusion
Proper planning of investments can help to evade tax under section 80C Start investing right from the beginning of the financial year ² from April

Thank You!!!

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