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Showing posts with label Equity Saving Scheme. Show all posts
Showing posts with label Equity Saving Scheme. Show all posts

Impact of LIC Premium Deduction on Income Tax

DEDUCTION IN RESPECT OF LIFE INSURANCE PREMIA, ETC.

The following payments/investments qualify for deduction under this section. The total amount of investments made during the P.Y. under these below mentioned schemes is known as Gross Qualifying Amount (GQA).

  • Life Insurance premium paid on a policy taken on his own life, life of the spouse or any child (child may be dependent/ independent ). In the case of a Hindu undivided family, policy may be taken on the life of any member of the family. The premium paid should be maximum of 20% of sum assured.
  • Any sum deducted from salary payable to a Government employee for the purpose of securing him a deferred annuity (subject to a maximum of 20% of salary).
  • Contribution towards statutory provident fund and recognized provident fund.
  • Contribution towards 15 year public provident fund (maximum of Rs 70,000).
  • Contribution towards an approved superannuation fund.
  • Subscription to National Savings Certificates, VIII Issue.
  • Contribution for participating in the Unit-Linked Insurance Plan (ULIP) of Unit.
  • Contribution for participating in the unit-linked insurance plan (ULIP) of LIC Mutual Fund (i.e. Dhanraksha plan of LIC Mutual Fund).
  • Payment for notified annuity plan of LIC (i.e. Jeevan Dhara, Jeevan Akshay New Jeevan Dhara , etc ) or any other insurer.
  • Subscription towards notified units of Mutual Fund or UTI.
  • Contribution to notified pension fund set up by Mutual Fund or UTI.
  • Any sum paid (including accrued interest) as subscription to Home Loan Account Scheme of the National Housing Bank.
  • Any sum paid as tuition fees to any university/college/educational institution in India for full time education.

2 IDS Declarations rejected by IT Department over 2 Lac Crore.

Government of India
Ministry of Finance
Department of Revenue
Central Board of Direct Taxes
New Delhi, 04 December, 2016.

PRESS RELEASE

Sub : Verification of High Value Suspicious Declarations made under the IDS 2016.

An Income Declaration Scheme (IDS) was announced in the budget under hich declaration of undisclosed income or asset could be made by agreeing to pay forty five percent of the declared amount as tax, surcharge and penalty. The scheme closed on 30th September, 2016.

On 1st Oct, 2016, it was announced that declarations totalling Rs. 65,250 crore were received  from 64,275 declarants,  subject to reconciliation.  After final reconciliation the revised figure of actual declarations received and taken on record was Rs. 67,382 crore which had been made by 71,726 declarants.

Among the declarations received, there were two sets of declarations of high value which were not taken on record in the above figure because they were found to be suspicious in nature being filed by persons of small means. A family of four  declarants namely, Mr. Abdul Razzaque Mohammed Sayed (self), Mr.Mohammed Aarif Abdul Razzaque Sayed (son), Shrimati Rukhsana Abdul Razzaque Sayed (wife) and Ms. Noorjahan Mohammed Sayed (sister) who were shown as residents of Flat no. 4,  Ground Floor, Jubilee Court, 269-B, T.P.S-III, Linking Road, Bandra (W), Mumbai, filed a total declaration of Rs. Two lakh crore. Three out of the four PAN numbers were originally in Ajmer which were migrated to Mumbai in September 2016, where   the declarations were filed.  The other declaration was filed by one Mr. Maheshkumar  Champaklal Shah resident of 206,  Mangal Jyot Tower, Jodhpur Gram Satellite, Ahmedabad for an amount of Rs. 13,860 crore.

These declarations from Mumbai and Ahmedabad were kept pending for investigation about the genuineness of the same and  were not included in the total value of declarations announced on 1st October, 2016 and. After due enquiry it was found  that these declarants were persons of suspicious nature and very small means and the declarations could have been misused. 

Therefore, after due consideration, the Income Tax Department decided by 30th November, 2016, to reject these two sets of  declarations of Rs. Two lakh Crore and Rs. Thirteen thousand eight hundred and sixty Crore respectively. The Department   has commenced enquiries against these declarants to determine the intention behind these false declarations.

(Meenakshi J. Goswami)
Commissioner of Income Tax
(Media and Technical Policy)
Official Spokesperson, CBDT.

Tax Planning for Asstt. Year 2016-17 for Salaried Employee to Save more Tax.

There are no. of ways being within the purview of the Indian income tax act for salaried individual to save taxes.

Lets discuss few of the most popular strategies for FY 2015-16 to save taxes

Tax Planning Strategies
  • Save Tax u/s. 80C, u/s. 80CCC and u/s. 80CCD
  • Save Tax u/s. 80D – Mediclaim Policy
  • Save Tax u/s. 80DD and u/s. 80DDB
  • Tax Planning through Home Loan
  • Tax Planning through RGESS: u/s. 80CCG
U/s. 80 C, U/s. 80CCC and U/s. 80 CCD
  • An individual can invest in an instrument as specified U/s. 80 C, U/s. 80CCC and U/s. 80 CCD
  • Maximum Combined deduction allowed under these section is Rs.150000
  • An additional investment of Rs.50000 over and above this limit is allowed, if an individual invest in NPS
  • In total, an individual can claim Rs.200000 under these 3 section 
  • Most popular investment choices u/s. 80C is Equity Linked Savings Scheme (ELSS)
  • Life Insurance Policies
Public Provident Fund
  • 5 year tax saving Bank FD
  • National Savings Scheme (NSC)
  • u/s 80CCC one can invest in a pension policy of an insurance company
  • u/s 80CCD an individual can invest in National Pension Scheme (NPS)
Sec 80 D – Mediclaim
  • u/s. 80D, An individual is allowed claim deduction on expenditure if a premium is paid towards mediclaim policy for self & family and mediclaim policy for parents.
Sec 80 DD and Sec 80 DDB
  • u/s. 80DD Deduction is available on
  • Expenditure incurred on medical treatment, training and rehabilitation of handicapped dependent relative
  • Payment or deposit to specified scheme for maintenance of dependent handicapped relative.
  • u/s. 80DD medical expenditure can be claimed
  • Where disability is 40% or more but less than 80% - fixed deduction of Rs 75,000
  • Where there is severe disability (disability is 80% or more) – fixed deduction of Rs 1,25,000.
  • u/s. 80DDB Deduction is available on
  •  Expenditure actually incurred by individual on himself or dependent relative for medical treatment of specified disease or ailment
  • u/s. 80DD Amount of deduction will be lower of amount actually paid on medical treatment or
  • Individual <60 age="" li="" of="" rs.40000="">
  • Individual >60  but <80 age="" li="" rs.60000="">
  • Individual >80 Age – Rs.80000
Tax Savings on Home Loan
  • Indian income tax law gives opportunity to individual investor to build wealth in the form of residential house
  • An individual can  leverages tax while building his own home
  • Buying House property on a home loan could cut down your tax bill significantly
  • As per Indian tax law, an individual is allowed to claim maximum deduction of Rs. 2,00,000 p.a. against interest component of your Housing loan 1,50,000 p.a. of principle paid for the housing loan against u/s. 80C
Tax Planning through 80CCG - RGESS
  • Under Rajiv Gandhi Equity Saving Scheme (RGESS) you are allowed to invest in direct equity share or eligible MF scheme.
  • Investors whose gross total income is less than Rs. 12 lakhs p.a. can invest in this scheme
  • For first time investor in the equity market
  • Deduction is lower of 50% of amount invested in equity shares or Rs 25,000

Only Sukanaya Scheme and 5 Year Senior Citizen Saving Scheme Interest rate increased by 0.1% w.e.f. 1st April, 2015.

Recently Government announces Interest Rate for various Small Saving Schemes, the Revised Rate of Interest applicable on Specified Small Savings Scheme with effect from 1st April, 2015.

It was decided by the Government of India that interest rates on Small savings Schemes will be linked to yields on government securities of comparable maturity. In pursuance of that decision, the Government has decided to revise the rates applicable on various small savings schemes as given in the table below. 


Download Press Note (Click Here)

Finance Minister pledges ‘Rational’ Tax Policy.

NEW DELHI: India will pursue an aggressive reforms agenda over the next few months to help get the country back to a high-growth trajectory and on the radar of investors, finance minister Arun Jaitley said, promising a reasonable and rational tax policy that will not be "ultra-aggressive" to help further improve sentiment.

"Government has its plate full with respect to reforms for the next few months," Jaitley said in Delhi on Sunday. "Aggressive reforms will help India to grow faster... Hope India will get back on the investors' radar."

The government is looking to alter the land acquisition law as part of reform efforts and is in the last stages of discussions with states on changes to the constitutional amendment bill required for the long-awaited goods and services tax to become a reality.

The government has already embarked on changes in labour policy, fuel price deregulation and natural resources auctions among others.

Jaitley exuded optimism that the insurance bill, seeking to raise the foreign direct investment cap, will be passed in the upcoming session of Parliament.

Speaking at the India Global Forum organised by the International Institute for Strategic Studies, the minister said the Indian economy faces challenges but expects growth to improve next year.

"Economy was and is in a challenging situation and one of the principal challenges before us is to restore the confidence in the Indian economy, to expand economic activity and move towards increasing the growth rate," he said, adding that growth next year will be a "little better". If the trend continues, India could well be restored to a high-growth path.

Streamlining the tax regime and ending uncertainty is a critical part of making India more attractive to investors."We have seen the challenges before the economy. A reasonable and rational tax policy (is needed), it can't be ultra aggressive with tax payers," the minister said. The tax department now follows the principle that those who have to pay tax should do so and those who don't have to should not be harassed for non-payment, he said. He also spoke of the rationale behind Prime Minister Narendra Modi's Make In India manufacturing initiative.

"We have realised that one of the greatest challenges we have is the manufacturing sector. The economy had touched a new low and therefore the manufacturing sector is itself is delicately poised in India. We have to eventually try and make India a hub of low-cost manufacturing," he added.

He also said the government will amend the tough land acquisition law as it looks to restore confidence in the economy. "Some changes may be necessary. We will first try to reach a consensus and if that is not possible we will go ahead and take the decision." The Land Acquisition Bill has been widely criticised by industry as also state governments and central departments for stalling project development. Jaitley said that "obstacles" to land laws would have to be first removed in order to implement the concept of smart cities in India. Alluding to recent reform measures including the coal ordinance, he said the government is giving finishing touches to a reworked mining law.

He said there is a need to follow the e-auction route for the allocation of natural resources to make the process transparent and eliminate corruption.

Allaying skepticism about disinvestment remaining on track, the finance minister said the programme will "unfold" in the next few days. He added that the government aims to lower its equity in public sector banks to 52%.

Source: www.economictimes.indiatimes.com

Grow your Money with ELSS Mutual Funds & Save Tax.

There are various tax saving option which is suggested by our colleagues, chartered Accountants and Tax Experts, one of option which is investment in ELSS mutual fund. Equity Linked Savings Schemes (ELSS) offers an option to obtain tax benefits and an opportunity to harness the potential growth of investing in the equity market.

ELSS is a diversified equity fund which has lock in period of 3 years. ELSS is equity linked Saving scheme in which one can invest by opting option of systematic investment plan (SIP) i.e. by Investment fixed Amount every Month . This is option is viable person of high risk appetite.

ELSS invests a majority of its corpus in equity and equity related products. It comes with a lock in period of three years and is suitable for investors having a high risk profile. ELSS schemes are open ended, that is, investors can subscribe to the fund anytime.

What are Equity Linked Saving Scheme (ELSS) Mutual funds?
ELSS mutual funds in simple term are mutual fund schemes that invests 65% in equity related instruments that are notified to avail tax benefits. Investment in such ELSS MFs would provide tax benefit to investors u/s 80C, which is capped to a maximum of Rs 1 Lakh.

How do you benefit from ELSS Mutual funds?
There are various ways you would benefit from ELSS mutual funds.

Tax saving benefits

1) ELSS mutual funds help you to grow money: Since ELSS mutual funds invests in equity related instruments, these schemes would help you to grow your money when the stock market grows over a period of time.

2) Save tax u/s 80C up to Rs 1 Lakh: By investment in ELSS mutual funds, you are eligible for tax exemption up to Rs 1 Lakh u/s 80C. If you have not utilized 80C fully, this is a good opportunity to invest in ELSS funds.

3) Lock-in period of 3 years: ELSS mutual funds come with lock-in period of 3 years. Long term Capital gain arises on ELSS is exempt under section 10(38) because ELSS has lock in period of 3 years. Generally, investors would get tempted to take out the money from any investment option as soon as they get some good returns. They would not wait for long term to enjoy long term benefits. Since ELSS MF’s come with a 3 year lock-in period, you are forced to keep your investment for a minimum of 3 years. This would help you to grow your money that considers market fluctuations.

4) ELSS returns are tax free: If you observe, none of the returns from tax saving investment options other than PPF are tax free. NSC, Tax Saving Bank FD, Tax saving Post office TD scheme etc. all these tax saving option returns are taxable based on individual tax slab. However, interest in Public Provident Fund is tax free, but that comes with a 15 year lock-in period (apart from certain exemptions to withdraw in between). The only tax saving investment option that provides tax free returns for short period is ELSS Mutual funds. Since ELSS mutual funds invest in equity related instruments, these are classified under equity funds. Any returns received from equity funds after 1 year is tax free, hence ELSS funds which comes with a 3 year lock-in period, dividends/returns/capital gains from such funds are also tax free.

In nutshell all the Earnings from ELSS fund are not taxable, but at the same time one must take into consideration of market Risk attached   with these funds. 



On analyzing the above we can conclude that from  the point of view tax benefits  ELSS is better option for person who is ready to bear the risk  I e Risk takers . While at the same time combination   of ElSS & any one other tax saving option is also not bad option for person who is conservative on risk. Example by opting 60 percent in PPF, NSC & FD while 40 percent in ELSS one can at least one can secure principal Amount of RS 1 lakh.  

Conclusion:
Returns of ELSS are depend upon the movement of market , so over long term prospect investing in ELSS is definitely good tool to avail tax benefits along the high returns and growth.  if the investor is willing to be risk appetite

Rs. 10 Lakhs G.T. Income Taxpayee can save Income Tax upto Rs. 25000/- or 50% of Saving in RGES Scheme.

From Asstt. Year 2013-14 a new Section added in Income Tax i.e. 80CCG.  This section provide Tax Benefit to Taxpayee Investors upto Rs. 25000/- or Max. 50% of saving amount in Rajiv Gandhi Equity Saving Scheme-2012.  This scheme is applicable for those assessee who is resident individual and his gross Total Income does not exceed upto 10/- per annum.

Amount of deduction 
The amount of deduction is at 50% of amount invested in equity shares/units. However, the amount of deduction under this provision cannot exceed Rs. 25,000.

Withdrawal of deduction
If the assessee, after claiming the aforesaid deduction, fails to satisfy the above conditions, the deduction originally allowed shall be deemed to be the income of the assessee of the year in which default is committed.

Definition of "New Retail Investors":

  1. Any individual who has not opened a demat account and has made not made any transaction in the derivative segment.
  2. Any individual who has opened a demat account but has not made any transaction in the equity or derivative segment.
  3. Any individual who is not the first account holder of existing joint demat account shall be deemed to have not opened a demat account.

Eligible Investments:

  1. Equity Share in BSE-100 or CNX-100
  2. Equity shares of Maharatna, Navratna, Miniratna Compaines
  3. Units of eligible Exchange Traded Funds and Mutual Funds
  4. Follow on public offer on 1 and 2 above
  5. Initial Public Offer of eligible public sector undertaking i.e. PSUs in which government shareholding is at least 51% which is scheduled for getting listed and whose annual turnover is not less than 4000 crore rupees during each of preceding 3 years.

The Salient features of the Scheme are as under:

  • Scheme is open to new retail investors, identified on the basis of their PAN numbers. This includes those who have opened the Demat Account but have not made any transaction in equity and /or in derivatives till the date of notification of this Scheme and all those account holders other than the first account holder who wish to open a fresh account.
  • Those investors whose annual taxable income is up to Rs. 10 Lacs are eligible under the Scheme.
  • The maximum Investment permissible under the Scheme is Rs. 50,000/- and the investor would get a 50% deduction of the amount invested from the taxable income for that year.
  • Under the Scheme, those stocks listed under the BSE 100 or CNX 100, or those of public sector undertakings which are Navratnas, Maharatnas and Miniratnas would be eligible. Follow-on Public Offers (FPOs) of the above companies would also be eligible under the Scheme. IPO’s of PSU’s, which are getting listed in the relevant financial year and whose annual turnover is not less than Rs. 4000 Crore for each of the immediate past three years, would also be eligible.
  • The best part is that, Exchange Traded Funds (ETFs) and Mutual Funds (MFs) that have RGESS eligible securities as their underlying and are listed and traded in the stock exchanges and settled through a depository mechanism have also been brought under RGESS.
  • To benefit the small investors, the investments are allowed to be made in installments in the year in which tax claims are made.
  • The total lock-in period for investments under the Scheme would be three years including an initial blanket lock-in period of one year, commencing from the date of last purchase of securities under RGESS.
  • After the first year, investors would be allowed to trade in the securities in furtherance of the goal of promoting an equity culture and as a provision to protect them from adverse market movements or stock specific risks as well as to give them avenues to realize profits.
  • Investors would, however, be required to maintain their level of investment during these 2 years at the amount for which they have claimed income tax benefit or at the value of the portfolio before initiating a sale transaction, whichever is less, for at least 270 days in a year. The calculation of 270 days includes those days pursuant to the day on which the market value of the residual shares /units has automatically touched the stipulated value after the date of debit.
  • The general principle under which trading is allowed is that whatever is the value of stocks / units sold by the investor from the RGESS portfolio, RGESS compliant securities of at least the same value are credited back into the account subsequently. However, the investor is allowed to take benefits of the appreciation of his RGESS portfolio, provided its value, as on the previous day of trading, remains above the investment for which they have claimed income tax benefit.
  • For the purpose of valuation of shares, the closing price as on the previous day of the date of trading will be considered so that new investors are certain about their debits and credits into the account.
  • In case the investor fails to meet the conditions stipulated, the tax benefit will be withdrawn.

Procedure for investment under the Scheme:A new retail investor shall make  investments under the Scheme in the following manner, namely:-

  • the new retail investor may invest in one or more financial years in a block of three consecutive financial years beginning with the initial year;
  • the new retail investor may make investment in eligible securities in one or more than one transaction during any financial year during the three consecutive financial years beginning with the initial year in which the deduction has to be claimed;
  • the new retail investor may make any amount of investment in the demat account but the amount eligible for deduction under the Scheme shall not exceed fifty thousand rupees in a financial year;
  • the new retail investor shall be eligible for the tax benefit under the Scheme only for three consecutive financial years beginning with the initial year, in respect of the investment made in each financial year;
  • if the new retail investor does not invest in any financial year following the initial year, he may invest in the subsequent financial year, within the three consecutive financial years beginning with the initial year, in accordance with the Scheme;
  • the eligible securities brought into the demat account, as declared or designated by the new retail investor shall be under a lock-in for a period of three years in accordance with the provisions of paragraph 7;
  • the eligible securities brought into the demat account, in respect of which the assessee is eligible for deduction under the Scheme, shall be under a fixed lock-in during the first year, as per the provisions of the paragraph 7, unless the new retail investor specifies otherwise, and for such specification, the new retail investor shall submit a declaration in Form B, either in electronic or physical form, to the depository participant indicating that such securities are not to be included within the above limit of investment;
  • the new retail investor shall be eligible for a deduction under sub-section (1) of section 80CCG of the Act in respect of the actual amount invested in eligible securities and in respect of which a declaration in Form B has not been made, subject to the maximum investment limit of fifty thousand rupees in a financial year;
  • the new retail investor who has claimed a deduction under sub- section (1) of section 80CCG of the Act in any assessment year shall not be allowed any deduction under the Scheme for the same investment for any other assessment year;
  • the new retail investor shall be permitted a grace period of seven trading days from the end of the financial year so that the eligible securities purchased on the last trading day of the financial year also get credited in the demat account and such securities shall be deemed to have been acquired in the financial year itself;
  • the new retail investor can make investments in securities other than the eligible securities covered under the Scheme and such investments shall not be subject to the conditions of the Scheme nor shall they be counted for availing the benefit under the Scheme;
  • the deduction claimed shall be withdrawn if the lock-in period requirements of the investment are not complied with or any other condition of the Scheme is contravened by the new retail investor.

Detailed Procedure to get Tax benefit u/s. 80CCG of Rajiv Gandhi Equity Savings Scheme, 2013.

A new retail investor who has invested in accordance with the Rajiv Gandhi Equity Savings Scheme, 2012 shall continue to be governed by the provisions of that Scheme to the extent it is not in contravention of the provisions of this Scheme and such investor shall also be eligible for the benefit of investment made in accordance with this Scheme for the financial years 2013-14 and 2014-15.

This Scheme shall apply for claiming deduction in the computation of total income of the assessment year relevant to a revious year beginning on or after the 1st day of April, 2013 on account of investment in eligible securities under sub-section (1) of section 80CCG of the Income-tax Act, 1961(43 of 1961).

The deduction under the Scheme shall be available to a new retail investor who complies with the conditions of the Scheme and whose gross total income for the financial year in which the investment is made under the Scheme is less than or equal to twelve lakh rupees.

Procedure for investment under the Scheme:A new retail investor shall make  investments under the Scheme in the following manner, namely:-
  • the new retail investor may invest in one or more financial years in a block of three consecutive financial years beginning with the initial year;
  • the new retail investor may make investment in eligible securities in one or more than one transaction during any financial year during the three consecutive financial years beginning with the initial year in which the deduction has to be claimed;
  • the new retail investor may make any amount of investment in the demat account but the amount eligible for deduction under the Scheme shall not exceed fifty thousand rupees in a financial year;
  • the new retail investor shall be eligible for the tax benefit under the Scheme only for three consecutive financial years beginning with the initial year, in respect of the investment made in each financial year;
  • if the new retail investor does not invest in any financial year following the initial year, he may invest in the subsequent financial year, within the three consecutive financial years beginning with the initial year, in accordance with the Scheme;
  • the eligible securities brought into the demat account, as declared or designated by the new retail investor shall be under a lock-in for a period of three years in accordance with the provisions of paragraph 7;
  • the eligible securities brought into the demat account, in respect of which the assessee is eligible for deduction under the Scheme, shall be under a fixed lock-in during the first year, as per the provisions of the paragraph 7, unless the new retail investor specifies otherwise, and for such specification, the new retail investor shall submit a declaration in Form B, either in electronic or physical form, to the depository participant indicating that such securities are not to be included within the above limit of investment;
  • the new retail investor shall be eligible for a deduction under sub-section (1) of section 80CCG of the Act in respect of the actual amount invested in eligible securities and in respect of which a declaration in Form B has not been made, subject to the maximum investment limit of fifty thousand rupees in a financial year;
  • the new retail investor who has claimed a deduction under sub- section (1) of section 80CCG of the Act in any assessment year shall not be allowed any deduction under the Scheme for the same investment for any other assessment year;
  • the new retail investor shall be permitted a grace period of seven trading days from the end of the financial year so that the eligible securities purchased on the last trading day of the financial year also get credited in the demat account and such securities shall be deemed to have been acquired in the financial year itself;
  • the new retail investor can make investments in securities other than the eligible securities covered under the Scheme and such investments shall not be subject to the conditions of the Scheme nor shall they be counted for availing the benefit under the Scheme;
  • the deduction claimed shall be withdrawn if the lock-in period requirements of the investment are not complied with or any other condition of the Scheme is contravened by the new retail investor.
FREE DOWNLOAD FULL NOTIFICATION

Rajiv Gandhi Equity Savings Scheme - 2013 Notification.

[TO BE PUBLISHED IN PART II, SECTION 3, SUB-SECTION (ii) OF THE  GAZETTE OF INDIA, EXTRAORDINARY, DATED THE 18.12.2013]
Government of India
Ministry of Finance
Department of Revenue
Notification
New Delhi, the 18th December, 2013.
(Income-tax)

S.O. _3693 (E).— In exercise of the powers conferred by sub-section (1) of section 80CCG of the Income-tax Act, 1961 (43 of 1961), the Central Government hereby makes the following Scheme, namely:-
1. Short title, commencement and application. -
  1. This Scheme may be called the Rajiv Gandhi Equity Savings Scheme, 2013.
  2. It shall come into force on the date of its publication in the Official Gazette.
  3. This Scheme shall apply for claiming deduction in the computation of total income of the assessment year relevant to a previous year beginning on or after the 1st day of April, 2013 on account of investment in eligible securities under sub-section (1) of section 80CCG of the Income-tax Act, 1961(43 of 1961).
2. Objective of the Scheme.-The objective of the Scheme is to encourage investment of savings of small investors in the domestic capital market.

3. Definitions. - In this Scheme, unless the context otherwise requires,-
  • “Act” means the Income-tax Act, 1961 (43 of 1961);
  • “demat account” means an account opened with the depository participant in accordance with the guidelines laid down by the Securities and Exchange Board of India established under section 3 of the Securities and Exchange Board of India Act, 1992 (15 of 1992);
  • “depository” means a company as defined in clause (e) of sub-section (1) of section 2 of the Depositories Act, 1996 (22 of 1996);
  • “depository participant” means a participant as defined in clause (g) of subsection (1) of section 2 of the Depositories Act, 1996 (22 of 1996);
  • “eligible securities” means any of the following, namely :-
(a) equity shares, on the day of purchase, falling in the list of equity declared as “BSE-100” or “ CNX-100” by the Bombay Stock Exchange or the National Stock Exchange, as the case may be;
(b) equity shares of public sector enterprises which are categorised as Maharatna, Navratna or Miniratna by the Central Government;
(c) Units of Exchange Traded Funds or Mutual Fund schemes or equity oriented funds, which have eligible securities specified in sub-clause (a) or sub-clause (b) as underlying securities, provided they are listed and traded on a stock exchange and settled through a depository mechanism; To Continue Reading (Click Here)

Deduction u/s. 80TTA on Interest on Deposits in Saving Account for Asstt. Year 2014-15.

Interest on savings account has income tax exemption up to Rs. 10,000 from 01 April 2013. The new Section 80TTA has been introduced from the Financial Year 2012-13 and it allows to an employee from his gross total income if it includes any income by way of interest on deposits (not being time deposits) in a savings account.

Eligibility for 80TTA


Individuals and HUFs who earn interest on their deposit in a savings account can claim tax exemption on such interest. Savings account can be with a bank, post office or co-operative society doing banking business. This deduction is not valid for time deposits like FD and RD. The deduction is available, if such savings account is maintained in a banking company to which the Banking Regulation Act, 1949, applies (including any bank or banking institution referred to in section 51 of that Act); co-operative society engaged in carrying on the business of banking (including a cooperative land mortgage bank or a co-operative land development bank); or Post Office as defined in clause (k) of section 2 of the Indian Post Office Act, 1898.  For this section, "time deposits" means the deposits repayable on expiry of fixed periods.

If the savings account is held on behalf of a firm, association of persons or body of individuals this deduction is not applicable.

Maximum deduction limit under 80TTA

In a case where the amount of such income does not exceed in the aggregate ten Rs. 10,000 as savings deposit interest can be claimed as exemption under section 80TTA. If the interest is lesser then that amount can be claimed.

How to get 80TTA deduction

Tax rebate under section 80TTA is over and above other chapter VI-A deductions like 80C, 80D etc. You can submit certificate from bank to your employer to get this deduction from salary TDS. If you don't do this, you can still claim it by putting the amount in cell for 80TTA under Chapter VI-A deductions in ITR form while filing tax returns.

Invest your money in Right Scheme to Save on Tax.

PUT YOUR MONEY IN RIGHT SCHEMES TO SAVE ON TAX


Prashant Mahesh takes a look at some of the schemes that offer tax benefits for individuals Investors are wary of investing in tax-saving mutual funds (equity-linked savings schemes or ELSS in mutual fund parlance) this tax-planning season, say financial advisors. The abysmal performance of these schemes in the past three years and the current higher level of the market are cited as the reasons for investor disinterest. According to Value Research, a mutual fund tracking entity, ELSS funds, as a category, have given a mere 0.33% returns in the last three years. With the tax planning season beginning in December, most companies ask their employees to submit investment declarations around this time. Investors can avail of a tax deduction of up to. 1 lakh under Section 80C by investing in a host of options like ELSS, tax-saving 5-year bank fixed deposits, the Public Provident Fund (PPF) or National Savings Certificate (NSC), among others. Investors, who invested in ELSS three years ago, are disappointed with lower returns. Clearly, they are not keen to invest in tax-saving mutual funds again and they prefer to invest in either PPF or taxsaving bank deposits, says Abhishek Gupta, certified financial planner, Moat Wealth Advisors. Investors have also become cautious about investing in stocks due to weak economic fundamentals, say experts. Since investors have not made money for three years, they have turned risk averse, and want to protect capital, says Anup Bhaiya, MD and CEO, Money Honey Financial Services. That is the main reason why many investors would flock to PPF or tax-saving bank deposits.

Invest as per asset allocation


However, experts frown upon such random tax-planning exercise. They argue that investors should consider tax planning as part of their overall financial plan and choose products accordingly. They say picking tax planning instruments on the basis of past performance alone wont help one reach the right conclusions. Make a financial plan based on your earnings, liabilities and goals. This financial plan will tell you how much money would go into various assets like equity, debt or gold. Some part of the equity portion of this plan could go into ELSS, says Mukund Seshadri, founder, MSV Financial Planners. Advocates of ELSS also claim that it is the right time to get into stocks due to attractive valuations. The Sensex trades at a P/E of 18 times, making valuations attractive and leaving scope for appreciation over a 3-5-year period, says Rupesh Bhansali, head (distribution ), GEPL Capital. Experts also say that investors should also try to find out the details of the product they are investing. For example, consider the case of these disenchanted investors opting for PPF or 5-year bank deposits. Chances are that most of them havent thought about the different lock-in periods in these options. If you have a time-frame of five years, opt for tax-saving bank deposits. Opt for PPF only if you can wait for 15 years, says Abhishek Gupta. Sure, you can withdraw from PPF after five years, but for some specific purposes only. Also, you have to keep your PPF account alive by investing a minimum of Rs. 500 every year. Currently, a tax-saving deposit in SBI for five years will give you an interest rate of 9%, while PPF gives you 8.7%. However, financial planners suggest you keep tax treatment in mind while making these investments, as interest income is taxed differently. Interest earned from PPF is tax free, whereas interest income from bank FDs and NSCs are taxable. Hence, if you are in the 30% tax bracket, PPF may be a better investment from a tax perspective, says Harshvardhan Roongta, chief financial planner, Roongta Securities.

Source – www.economictimes.indiatimes.com

Deductions u/s. 80CCG (New Equity Saving Scheme) for Asstt. Year 2014-15.

Newly inserted Section 80CCG provides deduction wef assessment year 2013-14 in respect of investment made under notified equity saving scheme. Rajiv Gandhi Equity Savings Scheme 2012 has been notified vide SO No 2777 dated 23.11.2012 as a scheme under this section. The deduction under this section is available if following conditions are satisfied:
  • The assessee is a resident individual
  • His gross total income does not exceed Rs. 12 lakhs;
  • He has acquired listed shares in accordance with a notified scheme or listed units of an equity oriented fund as defined in section 10(38);
  • The assessee is a new retail investor;
  • The investment is locked-in for a period of 3 years from the date of acquisition in accordance with the above scheme;
  • The assessee satisfies any other condition as may be prescribed.
Amount of deduction –The amount of deduction is at 50% of amount invested in equity shares/units. However, the amount of deduction under this provision cannot exceed Rs. 25,000.

Withdrawal of deduction – If the assessee, after claiming the aforesaid deduction, fails to satisfy the above conditions, the deduction originally allowed shall be deemed to be the income of the assessee of the year in which default is committed.

This deduction is now allowed for three consecutive assessment years beginning with the AY in which the listed equity shares or units were first acquired. If any deduction is claimed by a taxpayer under this section in any year, he shall not be entitled to any deduction under this section for any other year.

IDBI Mutual Fund launches IDBI Tax Saving Fund

IDBI Mutual Fund has announced the launch of IDBI Tax Saving Fund, an open ended equity linked savings scheme (ELSS) offering income tax benefits under section 80 C of the IT Act, 1961. The product is designed keeping in mind  investors who are seeking capital appreciation as well as saving income tax through their investment. Investors not desiring tax benefits can also invest in the scheme as a medium to long term equity investment.

The New Fund Offer (NFO) will open for subscription on August 20, 2013 and close on September 03, 2013. The units will be available at par (Rs.10/-) during the NFO and at NAV related prices thereafter. The scheme will re-open for continuous sale from September 17, 2013.

The investment objective of the scheme is to provide investors with an opportunity for capital appreciation and income along with the benefit of income-tax deduction (under section 80C of the IT Act, 1961) on their investments. Investments in this scheme would be subject to a statutory lock-in period of 3 years from the date of allotment to be eligible for income-tax benefits under section section 80C.

Speaking on the occasion, Mr. Debasish Mallick, MD & Chief Executive Officer, IDBI Asset Management Ltd said “We are happy to announce the launch of IDBI Tax Saving Fund. Investments, upto Rs 1 lakh, made in the scheme will be eligible for benefits u/s 80C of the Income Tax Act, with the maximum benefit upto Rs 30,900/- in the highest tax bracket. We are launching the issue in August so as to enable investors to choose for lumpsum investment during NFO, when units will be allotted at par, or alternatively plan their investment by way of SIP, in a phased manner, till March so as to enjoy full tax benefits. Apart from upfront Income Tax benefits, capital gains and dividend returns are also tax free under the IDBI Tax Saving Fund.”

Source: moneycontrol

Nine Options to Save Income Tax except 80C.

It's that time of the year again when one needs to begin calculating their tax liabilities. However, before you do so, remember to analyze the various sections of tax deductions under the Income Tax Act as tax planning does not end with Section 80C. (Calculate your tax liability here)

80D:

Tax deduction under section 80D qualifies for mediclaim policies. The premium, which is paid for medical insurance policy for self and family members to protect them from sudden medical expenses, comes under this section. The maximum amount allowed for exemption annually for self, spouse and dependent parents/children is Rs. 15,000. In case of a senior citizen, the maximum amount extends up to Rs. 20,000. If you are paying the premium for your parents (whether dependent or not), you can claim an additional maximum deduction of Rs. 15,000.

80DD:
According to the Income Tax Act, if you are paying a premium to LIC or any other insurance company (approved by the Income Tax board) for the medical treatment of a dependent physically disabled person, you can avail exemption under the section 80DD. Here, the dependent should be none other than your spouse, children, parents or sibling. If the person is suffering from 40 per cent of any disability, a fixed sum of Rs. 50,000 can be claimed in a year. Similarly, if the disability is 80 per cent, the fixed sum goes up to Rs. 1,00,000 per year. For initiating the process of deduction you need to submit the medical certificate issued by a medical authority along with the return of income.

80DDB:
If you have incurred expenses for the medical treatment of self or your dependents, you can claim a deduction of up to Rs. 40,000 or the actual amount paid, whichever is less, under the section 80DDB. For a senior citizen, the maximum exempted amount is Rs. 60,000, or the amount actually paid for medical expenses. To claim a deduction under this section, you need to submit a medical certificate from a doctor working in a government hospital.

80E:
The interest paid on loan taken for pursuing higher education of self or any dependent is exempted from tax under section 80E. An education loan can be taken for wife, children and minors for whom you are the legal guardian. This deduction is applicable for a period of eight years or till the interest is paid, whichever is earlier. The deduction is only approved for higher studies, which means full-time graduate or postgraduate courses in engineering, management or applied sciences, pure sciences including mathematics or statistics. However, from 2011 onwards, the scope of this exemption has been extended to cover all fields of studies including vocational studies pursued after completing the senior secondary examination or equivalent. No exemption is applicable for part-time courses.

80G:
One often donates on philanthropic grounds to help the destitute. Such an amount can be donated to trusts, charitable institutions and approved educational institutions, and qualifies for deduction under Section 80G. The exemptions can be up to 50 per cent or 100 per cent of the donations made. Funds in which the donations are eligible for tax exemptions include the National Defence Fund, Prime Minister Drought Relief Fund, National Foundation for Communal Harmony, National Children's Fund, Prime Minister's National Relief Fund, etc.

80GG:

If a salaried or self-employed person staying in a rented house does not receive any kind of HRA, they can claim a deduction under this section. However, you cannot avail any such benefit if you, your spouse and/or your child owns any residential accommodation in India or abroad. You can claim the least of the following under Section 80GG: 25 per cent of the total income, or Rs. 2000 per month, or excess of rent paid over 10 per cent of total income.

80GGC:
Any monetary contribution to any political party or electoral trust is eligible for tax exemption. Thus, your contribution, as a matter of appreciation for their work, will serve both the purposes.

80U:
A resident of India suffering from any kind of specified disability is eligible to claim tax deduction under this section. In order to enjoy this opportunity, one should be suffering from not less than 40 per cent of the following diseases: blindness, low vision, mental illness, mental retardation, hearing impairment. The deduction provided is flat Rs. 50,000, irrespective of the expense incurred. If the disability is severe, the deduction can be up to Rs. 1 lakh. One needs to provide a copy of all the certificates issued by a medical authority in order to avail this benefit.

80CCG:
The Finance Act 2012 introduced a new Section 80CCG to offer 50 per cent tax break to new investors who invest up to Rs. 50,000 and whose GTI is less than or equal to Rs. 10 lakh. It has been introduced for budding investors entering the equity markets for the first time and is a once-in-a-lifetime benefit.

Hence, there are several sections apart from 80C that can help an individual benefit from tax exemptions. It is time to start looking beyond 80C for tax savings.

Source: NDTV

Tax Free Mutual Funds, Lock-in Period, Interest Rates & Benefits.

One must understand that Equity mutual funds means stock market by proxy. When you buy a unit of mutual fund, you are buying a small basket consisting of very small portion of different shares that the particular fund has purchased. So a mutual fund investor is in reality an investor in the stock market. In the long run, theoretically speaking, mutual fund should give a return more or less equal to the market return. In the short run, the divergence between stock market return and the mutual fund return is because of selection of different shares in their basket as compared to the shares in the market basket.

Historically over a long period of time stock market has given much higher return than the fixed income instruments. However this may hold true only in the long run, in the short run market idiosyncrasies and noise determines the price. The risk reward ratio in the stock market is high which means that while you take a high risk, the reward potential is also high (high risk means that if the spiral works against you, it may wipe off your capital too).

In comparison, fixed income securities are fairly stable, and their return predictable with mathematical accuracy. But, they do not offer the kind of appreciation that stock market may offer.

Having explained that, it is for an individual to decide which would be a better investment for him. A judicious mix of the two is suggested, so that you can take advantage of capital appreciation from your mutual fund investment, and continue to get a fixed return on your fixed income securities. What is the right mix for you will depend upon your risk appetite, and investment time-frame.

Source: The Hitwada

Nine tax saving options other than the famous Section 80C

It's that time of the year again when one needs to begin calculating their tax liabilities. However, before you do so, remember to analyze the various sections of tax deductions under the Income Tax Act as tax planning does not end with Section 80C. (Calculate your tax liability here)

80D:
Tax deduction under section 80D qualifies for mediclaim policies. The premium, which is paid for medical insurance policy for self and family members to protect them from sudden medical expenses, comes under this section. The maximum amount allowed for exemption annually for self, spouse and dependent parents/children is Rs. 15,000. In case of a senior citizen, the maximum amount extends up to Rs. 20,000. If you are paying the premium for your parents (whether dependent or not), you can claim an additional maximum deduction of Rs. 15,000.

80DD:
According to the Income Tax Act, if you are paying a premium to LIC or any other insurance company (approved by the Income Tax board) for the medical treatment of a dependent physically disabled person, you can avail exemption under the section 80DD. Here, the dependent should be none other than your spouse, children, parents or sibling. If the person is suffering from 40 per cent of any disability, a fixed sum of Rs. 50,000 can be claimed in a year. Similarly, if the disability is 80 per cent, the fixed sum goes up to Rs. 1,00,000 per year. For initiating the process of deduction you need to submit the medical certificate issued by a medical authority along with the return of income.

80DDB:
If you have incurred expenses for the medical treatment of self or your dependents, you can claim a deduction of up to Rs. 40,000 or the actual amount paid, whichever is less, under the section 80DDB. For a senior citizen, the maximum exempted amount is Rs. 60,000, or the amount actually paid for medical expenses. To claim a deduction under this section, you need to submit a medical certificate from a doctor working in a government hospital.

80E:
The interest paid on loan taken for pursuing higher education of self or any dependent is exempted from tax under section 80E. An education loan can be taken for wife, children and minors for whom you are the legal guardian. This deduction is applicable for a period of eight years or till the interest is paid, whichever is earlier. The deduction is only approved for higher studies, which means full-time graduate or postgraduate courses in engineering, management or applied sciences, pure sciences including mathematics or statistics. However, from 2011 onwards, the scope of this exemption has been extended to cover all fields of studies including vocational studies pursued after completing the senior secondary examination or equivalent. No exemption is applicable for part-time courses.

80G:
One often donates on philanthropic grounds to help the destitute. Such an amount can be donated to trusts, charitable institutions and approved educational institutions, and qualifies for deduction under Section 80G. The exemptions can be up to 50 per cent or 100 per cent of the donations made. Funds in which the donations are eligible for tax exemptions include the National Defence Fund, Prime Minister Drought Relief Fund, National Foundation for Communal Harmony, National Children's Fund, Prime Minister's National Relief Fund, etc.

80GG:
If a salaried or self-employed person staying in a rented house does not receive any kind of HRA, they can claim a deduction under this section. However, you cannot avail any such benefit if you, your spouse and/or your child owns any residential accommodation in India or abroad. You can claim the least of the following under Section 80GG: 25 per cent of the total income, or Rs. 2000 per month, or excess of rent paid over 10 per cent of total income.

80GGC:
Any monetary contribution to any political party or electoral trust is eligible for tax exemption. Thus, your contribution, as a matter of appreciation for their work, will serve both the purposes.

80U:
A resident of India suffering from any kind of specified disability is eligible to claim tax deduction under this section. In order to enjoy this opportunity, one should be suffering from not less than 40 per cent of the following diseases: blindness, low vision, mental illness, mental retardation, hearing impairment. The deduction provided is flat Rs. 50,000, irrespective of the expense incurred. If the disability is severe, the deduction can be up to Rs. 1 lakh. One needs to provide a copy of all the certificates issued by a medical authority in order to avail this benefit.

80CCG:
The Finance Act 2012 introduced a new Section 80CCG to offer 50 per cent tax break to new investors who invest up to Rs. 50,000 and whose GTI is less than or equal to Rs. 10 lakh. It has been introduced for budding investors entering the equity markets for the first time and is a once-in-a-lifetime benefit.

Hence, there are several sections apart from 80C that can help an individual benefit from tax exemptions. It is time to start looking beyond 80C for tax savings.

Source: NDTV

A Highlights of Rajiv Gandhi Equity Savings Scheme (RGESS) for Deduction u/s. 80CCG.

A New Tax Saving (Benefit) Scheme introduced by the Ministry of Finance as The Rajiv Gandhi Equity Savings Scheme (RGESS) for equity investment in select stocks, mutual funds and ETFs.

As far as saving is concerned, earlier the start, better the miracle of interest compounding. The importance of saving cannot be overruled at any point of time. Make hay while the sun shines and the money saved is money earned hold true at all the time. The other reason that you should start saving early is that you will need to save less money.

Under this scheme, if you are a first time investor with a gross annual income less than`10 lakh, then up to `50,000 of your investments in the stock market will be eligible for tax deduction under section 80-CCG.

Highlights of Rajiv Gandhi Equity Savings Scheme (RGESS):
  1. The Taxpayee (Only Individuals) can take advantages of this scheme. This scheme not for HUF and other Taxpayee i.e. Firm, Company etc.
  2. This scheme is allowed only New Investors not applicable for equities earlier.
  3. A such Taxpayee can get benefit of this scheme whose Taxable Income is not grater than 10 lacks.
Tax benefits u/s. 80CCG:
The exemtion tax amount is deducted u/s. 80CCG excluding u/s. 80C.  The limit of Deduction amount is 25000/- Per Annuan or 50% on Investment money.

Eligible Securities :
You can pick the below listed stocks from four categories: CNX 100, BSE 100, Maharatna and Navaratna & ETFs 
1.Securities in CNX 100(list can be changed by NSE)
2. Securites in BSE 100
3 MAHARATNA & NAVARATNA COMPANIES
a)MAHARATANA Coal India Limited
    Indian Oil Corporation Limited
    NTPC Limited
    Oil & Natural Gas Corporation Limited
    Steel Authority of India Limited
b)NAVRATNA Bharat Electronics Limited
    Bharat Heavy Electrical Limited
    Bharat Petroleum Corporation Limited
    GAIL (India) Limited
    Hindustan Petroleum Corporation Limited
    Mahanagar Telephone Nigam Limited
    National Aluminium Company Limited
    NMDC Limited
    Neyveli Lignite Corporation Limited
    Oil India Limited
    Power Finance Corporation Limited
    Power Grid Corporation of India Limited
    Rural Electrification Corporation Limited
    Shipping Corporation of India Limited

4..ETF(exchange traded Funds)

Birla Sun Life Nifty ETF* BSLNIFTY
Goldman Sachs Banking Index Exchange Traded Scheme BANKBEES
Goldman Sachs Nifty Exchange Traded Scheme NIFTYBEES
Goldman Sachs Nifty Junior Exchange Traded Scheme JUNIORBEES
Goldman Sachs S&P CNX Nifty Shariah Index Exchange Traded Scheme SHARIABEES
IIFL NIFTY ETF* IIFLNIFTY
Kotak Nifty ETF* KOTAKNIFTY
Motilal Oswal MOSt shares M50 ETF* M50
Quantum Index Fund QNIFTY
R*Shares Banking Exchange Traded Fund* RELBANK
Religare Nifty Exchange Traded Fund RELGRNIFTY

New Tax Saving Scheme - Rajiv Gandhi Equity Saving Scheme (RGESS). (Click Here)

New Tax Saving Scheme - Rajiv Gandhi Equity Saving Scheme (RGESS).

NEW TAX SAVING SCHEME
RAJIV GANDHI EQUITY SAVING SCHEME (RGESS)

To further encourage an 'equity culture' in India & to further widen the retail investor base in the Indian securities markets, Finance Ministry has recently approves the Operational Features of the Rajiv Gandhi Equity Savings Scheme (RGESS) as was announced few months back while presenting the Union Budget-2012.

When compared to other financial products available with the retails investor for reducing their tax bill like LIC, Post Office etc, this tax break in equity is expected to substantially encourage the retail participation in securities market as well as to enhance their participation in the growth of Indian industry. Undoubtedly, the Scheme would not only encourage the flow of savings and improves the depth of domestic capital markets, but would also offer the tax advantage to the people for their risky investment.

Entry of more retail investors are expected to further deepen the securities markets as they bring in long-term stable funds, which can counteract the volatility created by the liquidity providers of the market. The Scheme, thus, also furthers the goal of financial stability and promotes financial inclusion.

This Scheme would give tax benefits to new investors who invest up to Rs. 50,000 and whose annual income is below Rs. 10 Lacs. But, the biggest disadvantage of the scheme is that it is exclusively for the first time retail investors in Securities Market.

The broad provisions of the Scheme and the income tax benefits under it have already been incorporated as a new Section - 80CCG - of the Income Tax Act, 1961, as amended by the Finance Act, 2012. However, Department of Revenue will notify the Scheme and SEBI will issue the relevant circulars to operationalize the Scheme soon.

The Salient features of the Scheme are as under:
  1. Scheme is open to new retail investors, identified on the basis of their PAN numbers. This includes those who have opened the Demat Account but have not made any transaction in equity and /or in derivatives till the date of notification of this Scheme and all those account holders other than the first account holder who wish to open a fresh account.
  2. Those investors whose annual taxable income is up to Rs. 10 Lacs are eligible under the Scheme.
  3. The maximum Investment permissible under the Scheme is Rs. 50,000/- and the investor would get a 50% deduction of the amount invested from the taxable income for that year.
  4. Under the Scheme, those stocks listed under the BSE 100 or CNX 100, or those of public sector undertakings which are Navratnas, Maharatnas and Miniratnas would be eligible. Follow-on Public Offers (FPOs) of the above companies would also be eligible under the Scheme. IPO’s of PSU’s, which are getting listed in the relevant financial year and whose annual turnover is not less than Rs. 4000 Crore for each of the immediate past three years, would also be eligible.
  5. The best part is that, Exchange Traded Funds (ETFs) and Mutual Funds (MFs) that have RGESS eligible securities as their underlying and are listed and traded in the stock exchanges and settled through a depository mechanism have also been brought under RGESS.
  6. To benefit the small investors, the investments are allowed to be made in installments in the year in which tax claims are made.
  7. The total lock-in period for investments under the Scheme would be three years including an initial blanket lock-in period of one year, commencing from the date of last purchase of securities under RGESS.
  8. After the first year, investors would be allowed to trade in the securities in furtherance of the goal of promoting an equity culture and as a provision to protect them from adverse market movements or stock specific risks as well as to give them avenues to realize profits.
  9. Investors would, however, be required to maintain their level of investment during these 2 years at the amount for which they have claimed income tax benefit or at the value of the portfolio before initiating a sale transaction, whichever is less, for at least 270 days in a year. The calculation of 270 days includes those days pursuant to the day on which the market value of the residual shares /units has automatically touched the stipulated value after the date of debit.
  10. The general principle under which trading is allowed is that whatever is the value of stocks / units sold by the investor from the RGESS portfolio, RGESS compliant securities of at least the same value are credited back into the account subsequently. However, the investor is allowed to take benefits of the appreciation of his RGESS portfolio, provided its value, as on the previous day of trading, remains above the investment for which they have claimed income tax benefit.
  11. For the purpose of valuation of shares, the closing price as on the previous day of the date of trading will be considered so that new investors are certain about their debits and credits into the account.
  12. In case the investor fails to meet the conditions stipulated, the tax benefit will be withdrawn.
By - CA Naresh Jakhotia

Save Income Tax u/s 80C, 80CCC by 18 Ways.


Income Tax Department revised Tax Law and Change some Section and combine with another. The IT Section 80C replaced the existing Section 88 with more or less the same investment mix available in Section 88. The new section 80C has become effective w.e.f. 1st April, 2006. Even the section 80CCC on pension scheme contributions was merged with the above 80C.However, this new section has allowed a major change in the method of providing the tax benefit. Section 80C of the Income Tax Act allows certain investments and expenditure to be tax-exempt. One must plan investments well and spread it out across the various instruments specified under this section to avail maximum tax benefit. Unlike Section 88, there are no sub-limits and is irrespective of how much you earn and under which tax bracket you fall. The following are Qualifying Investments.


1. Saving Schemes NSC, PPF etc. : The total limit under this section is Rs 1 lakh. Included under this heading are many small savings schemes like NSC, PPF and other pension plans. Payment of life insurance premiums and investment in specified government infrastructure bonds are also eligible for deduction under Section 80C

2. Children Education Fee : Besides these investments, the payments towards the principal amount of your home loan are also eligible for an income deduction. Education expense of children is increasing by the day. Under this section, there is provision that makes payments towards the education fees for children eligible for an income deduction.

3. Provident Fund (PF) & Voluntary Provident Fund (VPF) : PF is automatically deducted from your salary. Both you and your employer contribute to it. While employer’s contribution is exempt from tax, your contribution (i.e., employee’s contribution) is counted towards section 80C investments. You also have the option to contribute additional amounts through voluntary contributions (VPF). Current rate of interest is 8.5% per annum (p.a.) and is tax-free.

4. Public Provident Fund (PPF) : Among all the assured returns small saving schemes, Public Provident Fund (PPF) is one of the best. Current rate of interest is 8% tax-free and the normal maturity period is 15 years. Minimum amount of contribution is Rs 500 and maximum is Rs 70,000. A point worth noting is that interest rate is assured but not fixed.

5. Life Insurance Premiums : Any amount that you pay towards life insurance premium for yourself, your spouse or your children can also be included in Section 80C deduction. Please note that life insurance premium paid by you for your parents (father / mother / both) or your in-laws is not eligible for deduction under section 80C. If you are paying premium for more than one insurance policy, all the premiums can be included. It is not necessary to have the insurance policy from Life Insurance Corporation (LIC) – even insurance bought from private players can be considered here.

6. Equity Linked Savings Scheme (ELSS) : There are some mutual fund (MF) schemes specially created for offering you tax savings, and these are called Equity Linked Savings Scheme, or ELSS. The investments that you make in ELSS are eligible for deduction under Sec 80C.

7. Home Loan Principal Repayment : The Equated Monthly Installment (EMI) that you pay every month to repay your home loan consists of two components – Principal and Interest.The principal component of the EMI qualifies for deduction under Sec 80C. Even the interest component can save you significant income tax – but that would be under Section 24 of the Income Tax Act. Please read “Income Tax (IT) Benefits of a Home Loan / Housing Loan / Mortgage”, which presents a full analysis of how you can save income tax through a home loan.

8. Stamp Duty and Registration Charges for a home : The amount you pay as stamp duty when you buy a house, and the amount you pay for the registration of the documents of the house can be claimed as deduction under section 80C in the year of purchase of the house.

9. National Savings Certificate (NSC) : National Savings Certificate (NSC) is a 6-Yr small savings instrument eligible for section 80C tax benefit. Rate of interest is eight per cent compounded half-yearly, i.e., the effective annual rate of interest is 8.16%. If you invest Rs 1,000, it becomes Rs 1601 after six years. The interest accrued every year is liable to tax (i.e., to be included in your taxable income) but the interest is also deemed to be reinvested and thus eligible for section 80C deduction.

10. Infrastructure Bonds : These are also popularly called Infra Bonds. These are issued by infrastructure companies, and not the government. The amount that you invest in these bonds can also be included in Sec 80C deductions.

11. Pension Funds – Section 80CCC : This section – Sec 80CCC – stipulates that an investment in pension funds is eligible for deduction from your income. Section 80CCC investment limit is clubbed with the limit of Section 80C – it maeans that the total deduction available for 80CCC and 80C is Rs. 1 Lakh.This also means that your investment in pension funds upto Rs. 1 Lakh can be claimed as deduction u/s 80CCC. However, as mentioned earlier, the total deduction u/s 80C and 80CCC can not exceed Rs. 1 Lakh.

12. 5-Yr bank fixed deposits (FDs) : Tax-saving fixed deposits (FDs) of scheduled banks with tenure of 5 years are also entitled for section 80C deduction.

13. Senior Citizen Savings Scheme 2004 (SCSS) : A recent addition to section 80C list, Senior Citizen Savings Scheme (SCSS) is the most lucrative scheme among all the small savings schemes but is meant only for senior citizens. Current rate of interest is 9% per annum payable quarterly. Please note that the interest is payable quarterly instead of compounded quarterly. Thus, unclaimed interest on these deposits won’t earn any further interest. Interest income is chargeable to tax.

14. 5-Yr post office time deposit (POTD) scheme : POTDs are similar to bank fixed deposits. Although available for varying time duration like one year, two year, three year and five year, only 5-Yr post-office time deposit (POTD) – which currently offers 7.5 per cent rate of interest –qualifies for tax saving under section 80C. Effective rate works out to be 7.71% per annum (p.a.) as the rate of interest is compounded quarterly but paid annually. The Interest is entirely taxable.

15. NABARD rural bonds : There are two types of Bonds issued by NABARD (National Bank for Agriculture and Rural Development): NABARD Rural Bonds and Bhavishya Nirman Bonds (BNB). Out of these two, only NABARD Rural Bonds qualify under section 80C.

16. Unit linked Insurance Plan : ULIP stands for Unit linked Saving Schemes. ULIPs cover Life insurance with benefits of equity investments.They have attracted the attention of investors and tax-savers not only because they help us save tax but they also perform well to give decent returns in the long-term.

17. Provident Fund : This is deducted compulsorily, and there is no running away from it! So, this has to be the first. Also, apart from saving tax now, it builds a long term, tax-free retirement corpus for you.

18. Others : Apart form the major avenues listed above, there are some other things, like children’s education expense (for which you need receipts), that can be claimed as deductions under Sec 80C.

Section 80C of the Income Tax Act is the section that deals with these tax breaks. It states that qualifying investments, up to a maximum of Rs. 1 Lakh, are deductible from your income. This means that your income gets reduced by this investment amount (up to Rs. 1 Lakh), and you end up paying no tax on it at all. This benefit is available to everyone, irrespective of their income levels. Thus, if you are in the highest tax bracket of 30%, and you invest the full Rs. 1 Lakh, you save tax of Rs. 30,000. Isn’t this great? So, let’s understand the qualifying investments first.

Limit for Deductions under Chapter VI-A for Salaried Employee in Assessment Year 2013-14

As per Income Tax Department notification dated 05.10.12, I would like to share important inform for Salaried Employee about Income Tax Deduction sections under Chapter VI-A for the Assessment Year 2013-14 which help us to get exemption from Income Tax and remit your tax liability in the financial year 2012-13.

In computing the taxable income of the employee, the following deductions under Chapter VI-A of the Act are to be allowed from his gross total income:

Deduction U/s. 80C:
Deduction in respect of Life insurance premia, deferred annuity, contributions to provident fund, subscription to certain equity shares or debentures, etc. (section 80C)

Section 80C, entitles an employee to deductions for the whole of amounts paid or deposited in the current financial year in the following schemes, subject to a limit of Rs. 1,00,000/-:
(1)         Payment of insurance premium to effect or to keep in force an insurance on the life of the individual, the spouse or any child of the individual.
(2)         Any payment made to effect or to keep in force a contract for a deferred annuity, not being an annuity plan as is referred to in item (7) herein below on the life of the individual, the spouse or any child of the individual, provided that such contract does not contain a provision for the exercise by the insured of an option to receive a cash payment in lieu of the payment of the annuity;
(3)         Any sum deducted from the salary payable by, or, on behalf of the Government to any individual, being a sum deducted in accordance with the conditions of his service for the purpose of securing to him a deferred annuity or making provision for his spouse or children, in so far as the sum deducted does not exceed 1/5th of the salary;
(4)         Any contribution made :
·               by an individual to any Provident Fund to which the Provident Fund Act, 1925 applies;
·                to any provident fund set up by the Central Government, and notified by it in this behalf in the Official Gazette, where such contribution is to an account standing in the name of an individual, or spouse or children; [The Central Government has since notified Public Provident Fund vide Notification S.O. No. 1559(E), dated 3-11-2005]
·               by an employee to a Recognized Provident Fund;
·               by an employee to an approved superannuation fund; It may be noted that "contribution" to any Fund shall not include any sums in repayment of loan;
(5)         Any subscription :-
·               to any such security of the Central Government or any such deposit scheme as the Central Government may, by notification in the Official Gazette, specify in this behalf;
·               to any such saving certificates as defined under section 2(c) of the Government Saving Certificate Act, 1959 as the Government may, by notification in the Official Gazette, specify in this behalf. [Central Government has since notified National Saving Certificate (VIIIth Issue) vide Notification S.O. No. 1560(E), dated 3-11-2005 and National Saving Certificate (IXth Issue) vide Notification S.O. No. (E), dated 29-11-2011 F. No. l-13/2011-NS-II]
(6)         Any sum paid as contribution in the case of an individual, for himself, spouse or any child,
·               for participation in the Unit Linked Insurance Plan, 1971 of the Unit Trust of India;
·               for participation in any unit-linked insurance plan of the LIC Mutual Fund referred to section 10 (23D) and as notified by the Central Government. [The Central Government has since notified Unit Linked Insurance Plan (formerly known as Dhanraksha, 1989) of LIC Mutual Fund vide Notification S.O. No. 1561(E), dated 3-11-2005.]
(7)         Any subscription made to effect or keep in force a contract for such annuity plan of the Life Insurance Corporation or any other insurer as the Central Government may, by notification in the Official Gazette, specify; [The Central Government has since notified New Jeevan Dhara, New Jeevan Dhara-I New Jeevan Akshay, New Jeevan, Akshay-I and New Jeevan Akshay-II vide Notification S.O. No. 1562(E), dated 3-11-2005 and Jeevan Akshay-III vide Notification S.O. No. 847(E), dated 1-6-2006]
(8)         Any subscription made to any units of any Mutual Fund, of section 10(23D), or from the Administrator or the specified company referred to in Unit Trust of India (Transfer of Undertaking & Repeal) Act, 2002 under any plan formulated in accordance with any scheme as the Central Government, may, by notification in the Official Gazette, specify in this behalf; [The Central Government has since notified the Equity Linked Saving Scheme, 2005 for this purpose vide Notification S.O. No. 1563(E), dated 3-11-2005]
The investments made after 1-4-2006 in plans formulated in accordance with Equity Linked Saving Scheme, 1992 or Equity Linked Saving Scheme, 1998 shall also qualify for deduction under section 80C.
(9)         Any contribution made by an individual to any pension fund set up by any Mutual Fund referred to in section 10(23D), or, by the Administrator or the specified company referred to in Unit Trust of India (Transfer of Undertaking & Repeal) Act, 2002, as the Central Government may, by notification in the Official Gazette, specify in this behalf;
[The Central Government has since notified UTI-Retirement Benefit Pension Fund vide Notification S.O. No. 1564(E) dated 3-11-2005.]
(10)     Any subscription made to any such deposit scheme of, or, any contribution made to any such pension fund set up by, the National Housing Bank, as the Central Government may, by notification in the Official Gazette, specify in this behalf;
(11)     Any subscription made to any such deposit scheme, as the Central Government may, by notification in the Official Gazette, specify for the purpose of being floated by (a) public sector companies engaged in providing long-term finance for construction or purchase of houses in India for residential purposes, or, (b) any authority constituted in India by, or, under any law, enacted either for the purpose of dealing with and satisfying the need for housing accommodation or for the purpose of planning, development or improvement of cities, towns and villages, or for both.
[The Central Government has since notified the Public Deposit Scheme of HUDCO vide Notification S.O. No. 37(E), dated 11-1-2007, for the purposes of Section 80C(2)(xvi)(a)].
(12)           Any sums paid by an assessee for the purpose of purchase or construction of a res dential house property, the income from which is chargeable to tax under the head "Income from house property" (or which would, if it has not been used for assessee's own residence, have been chargeable to tax under that head) where such payments are made towards or by way of any instalment or part payment of the amount due under any self-financing or other scheme of any Development Authority, Housing Board etc.
The deduction will also be allowable in respect of re-payment of loans borrowed by an assessee from the Government, or any bank or Life Insurance Corporation, or National Housing Bank, or certain other categories of institutions engaged in the business of providing long term finance for construction or purchase of houses in India. Any repayment of loan borrowed from the employer will also be covered, if the employer happens to be a public company, or a public sector company, or a university established by law, or a college affiliated to such university, or a local authority, or a cooperative society, or an authority, or a board, or a corporation, or any other body established under a Central or State Act.

The stamp duty, registration fee and other expenses incurred for the purpose of transfer shall also be covered. Payment towards the cost of house property, however, will not include, admission fee or cost of share or initial deposit or the cost of any addition or alteration to, or, renovation or repair of the house property which is carried out after the issue of the completion certificate by competent authority, or after the occupation of the house by the assessee or after it has been let out. Payments towards any expenditure in respect of which the deduction is allowable under the provisions of section 24 of the Act will also not be included in payments towards the cost of purchase or construction of a house property.

Where the house property in respect of which deduction has been allowed under these provisions is transferred by the tax-payer at any time before the expiry of five years from the end of the financial year in which possession of such property is obtained by him or he receives back, by way of refund or otherwise, any sum specified in section 80C(2)(xviii), no deduction under these provisions shall be allowed in respect of such sums paid in such previous year in which the transfer is made and the aggregate amount of deductions of income so allowed in the earlier years shall be added to the total income of the assessee of such previous year and shall be liable to tax accordingly.
(13)           Tuition fees, whether at the time of admission or thereafter, paid to any university, college, school or other educational institution situated in India, for the purpose of full-time education of any two children of the employee.

Full-time education includes any educational course offered by any university, college, school or other educational institution to a student who is enrolled full-time for the said course. It is also clarified that full-time education includes play-school activities, pre-nursery and nursery classes.

It is clarified that the amount allowable as tuition fees shall include any payment of fee to any university, college, school or other educational institution in India except the amount representing payment in the nature of development fees or donation or capitation fees or payment of similar nature.
(14)           Subscription to equity shares or debentures forming part of any eligible issue of capital made by a public company, which is approved by the Board or by any public finance institution.
(15)           Subscription to any units of any mutual fund referred to in clause (23D) of Section 10 and approved by the Board, if the amount of subscription to such units is subscribed only in eligible issue of capital of any company.
(16)           Investment as a term deposit for a fixed period of not less than five years with a scheduled bank, which is in accordance with a scheme framed and notified by the Central Government, in the Official Gazette for these purposes.
[The Central Government has since notified the Bank Term Deposit Scheme, 2006 for this purpose vide Notification S.O. No. 1220(E) dated 28-7-2006]
(17)           Subscription to such bonds issued by the National Bank for Agriculture and Rural Development, as the Central Government may, by such notification in the Official Gazette, specify in this behalf.
(18)           Any investment in an account under the Senior Citizens Savings Scheme Rules, 2004.
(19)           Any investment as five year time deposit in an account under the Post Office Time Deposit Rules, 1981.
Section 80C(3) & 80C(3A) states that in case of Insurance Policy other than contract for a deferred annuity the amount of any premium or other payment made is restricted to:
Policy issued before 1st April 2012
20% of the actual capital sum assured
Policy issued on or after 1st April 2012
10% of the actual capital sum assured
From 1-4-2013 actual capital sum assured in relation to a life insurance policy means the minimum amount assured under the policy on happening of the insured event at any time during the term of the policy, not taking into account -
i.                    the value of any premiums agreed to be returned, or
ii.                  any benefit by way of bonus or otherwise over and above the sum actually assured which may be received under the policy by any person.

Deduction U/s. 80CCC:

Section 80CCC allows an employee deduction of an amount paid or deposited out of his income chargeable to tax to effect or keep in force a contract for any annuity plan of Life Insurance Corporation of India or any other insurer for receiving pension from the Fund referred to in section 10(23AAB). However, the deduction shall exclude interest or bonus accrued or credited to the employee's account, if any and shall not exceed Rs. 1 lakh.

However, if any amount is standing to the credit of the employee in the fund referred above and deduction has been allowed as stated above and the employee or his nominee receives this amount together with the interest or bonus accrued or credited to this account due to the reason of :
·         Due to surrender annuity plan whether in whole or part
·         Pension received from the annuity plan
then the amount so received during the Financial Years shall be the income to the employee or his nominee for that Financial Year and accordingly will be charged to tax.
Where any amount paid or deposited by the employee has been taken into account for the purposes of this section, a deduction with reference to such amount shall not be allowed under section 80C.

Deduction U/s. 80CCD :

Section 80CCD allows an employee, being an individual employed by the Central Government or any other employer, on or after the 1-1-2004, a deduction of an amount paid or deposited out of his income chargeable to tax under a pension scheme as notified or as may be notifed by the Central Government, vide Notification F. N. 5/7/2003- ECB&PR, dated 22-12-2003. However, the deduction shall not exceed an amount equal to 10% of his salary (includes Dearness Allowance but excludes all other allowance and perquisites).

Further where in the case of an employee receives any contribution in the said pension scheme from the Central Government or any other employer then the employee shall be allowed a deduction from his total income of the whole amount contributed by the Central Government or any other employer subject to limit of 10% of his salary of the previous year.

However, if any amount is standing to the credit of the employee in the pension scheme referred above and deduction has been allowed as stated above and the employee or his nominee receives this amount together with the amount accrued thereon, due to the reason of
·         Closure or opting out of the pension scheme or
·         Pension received from the annuity plan purchased and taken on such closure or opting out
then the amount so received during the FYs shall be the income of the employee or his nominee for that Financial Year and accordingly will be charged to tax.

Where any amount paid or deposited by the employee has been taken into account for the purposes of this section, a deduction with reference to such amount shall not be allowed under section 80C.

Further it has been specified that w.r.e.f 1-4-2009 any amount received by the employee from the new pension scheme shall be deemed not to have received in the previous year if such amount is used for purchasing an annuity plan in the previous year.

It is emphasized that as per the section 80CCE the aggregate amount of deduction under sections 80C, 80CCC and Section 80CCD(1) shall not exceed Rs. 1,00,000/-. However the contribution made by the Central Government or any other employee to a pension scheme u/s 80CCD(2) shall be excluded from the limit of Rs.1,00,000/- provided under this Section.

Deduction U/s. 80CCF :
Section 80CCF has been withdrawn from FY 2012-13. Hence no deduction is allowable under this section for the current FY onwards.

Deduction U/s. 80 CCG:

Newly inserted Section 80CCG provides deduction w.e.f. assessment year 2013-14 in respect of investment made under notified equity saving scheme. The deduction under this section is available if following conditions are satisfied:
(a)    The assessee is a resident individual (may be ordinarily resident or not ordinarily resident)
(b)    His gross total income does not exceed Rs. 10 lakhs;
(c)     He has acquired listed shares in accordance with a notified scheme;
(d)    The assessee is a new retail investor as specified in the above notified scheme;
(e)     The investment is locked-in for a period of 3 years from the date of acquisition in accordance with the above scheme;
(f)      The assessee satisfies any other condition as may be prescribed.
Amount of deduction -The amount of deduction is at 50% of amount invested in equity shares. However, the amount of deduction under this provision cannot exceed Rs. 25,000. If any deduction is claimed by a taxpayer under this section in any year, he shall not be entitled to any deduction under this section for any subsequent year.

Withdrawal of deduction - If the assessee, after claiming the aforesaid deduction, fails to satisfy the above conditions, the deduction originally allowed shall be deemed to be the income of the assessee of the year in which default is committed.

A scheme named "Rajiv Gandhi Equity Savings Scheme (RGESS)" is being notified for the purpose of this deduction.

Deduction U/s. 80D :
Section 80D provides for deduction available for health insurance premia paid, etc. which is calculated as under:
Sl. No.
Persons for whom payment made
Nature of payment
Mode of payment
Allowable Deduction (in Rs.)
1
 Employee or his family
  ♦  the whole of the amount paid to effect or to keep in force an insurance on the health of the employee or his family or
 ♦  any contribution made to the CGHS or
 ♦  any payment on account of preventive health check-up of the employee or family, [restricted to Rs. 5000/-; cash payment allowed here]
any mode other than cash
Aggregate allowable is Rs. 15,000/{For Senior Citizens it is Rs. 20000/-}.
2
 Parent or Parents of employee
  ♦  the whole of the amount paid to effect or keep in force an insurance on the health of the parent or parents of the employee or
  ♦  any payment made on account of preventive health check-up of the parent or parents of the employee [restricted to Rs. 5000/-; cash payment allowed here]
any mode other than cash
 Aggregate allowable is Rs. 15,000/ than {For Senior cash Citizens it is Rs. 20000/-}
Here
(i)                 "family" means the spouse and dependent children of the employee.
(ii)               Senior citizen" means an individual resident in India who is of the age of sixty years {For AY 2013-14 onwards] or more at any time during the relevant previous year.
The DDO must ensure that the medical insurance referred to above shall be in accordance with a scheme made in this behalf by-
(a)   the General Insurance Corporation of India formed under section 9 of the General Insurance Business (Nationalization) Act, 1972 (57 of 1972) and approved by the Central Government in this behalf; or
(b)   any other insurer and approved by the Insurance Regulatory and Development Authority established under sub-section (1) of section 3 of the Insurance Regulatory and Development Authority Act, 1999(41 of 1999).
Deductions in respect of expenditure on persons or dependants with disability
Deduction U/s. 80DD :
Under section 80DD, where an employee, who is a resident in India, has, during the previous year-
(a)   incurred any expenditure for the medical treatment (including nursing), training and rehabilitation of a dependant, being a person with disability; or
(b)    paid or deposited any amount under a scheme framed in this behalf by the Life Insurance Corporation or any other insurer or the Administrator or the specified company subject to the conditions specified in this regard and approved by the Board in this behalf for the maintenance of a dependant, being a person with disability, the employee shall be allowed a deduction of a sum of fifty thousand rupees from his gross total income of that year.
However, where such dependant is a person with severe disability, an amount of one hundred thousand rupees shall be allowed as deduction subject to the specified conditions.
The deduction under (b) above shall be allowed only if the following conditions are fulfilled:-
(i)                 the scheme referred to in (b) above provides for payment of annuity or lump sum amount for the benefit of a dependant, being a person with disability, in the event of the death of the individual in whose name subscription to the scheme has been made;
(ii)               the employee nominates either the dependant, being a person with disability, or any other person or a trust to receive the payment on his behalf, for the benefit of the dependant, being a person with disability.
However, if the dependant, being a person with disability, predeceases the employee, an amount equal to the amount paid or deposited under sub-para (b) above shall be deemed to be the income of the employee of the previous year in which such amount is received by the employee and shall accordingly be chargeable to tax as the income of that previous year.

Deduction U/s. 80U :
Under section 80U, in computing the total income of an individual, being a resident, who, at any time during the previous year, is certified by the medical authority to be a person with disability, there shall be allowed a deduction of a sum of fifty thousand rupees. However, where such individual is a person with severe disability, a higher deduction of one lakh rupees shall be allowable.

DDOs should note that section 80DD deduction is in case of the dependent of the employee whereas section 80U deduction is in case of the employee himself. However under both the Sections the employee shall furnish to the DDO following:
1.      A copy of the certificate issued by the medical authority as defined in Rule 11A(1) in the prescribed form as per Rule 11A(2) of the Rules. The DDO has to allow deduction only after seeing that the Certificate furnished is from the Medical Authority defined in this Rule and the same is in the form as mentioned therein.
2.      Further In cases where the condition of disability is temporary and requires reassessment of its extent after a period stipulated in the aforesaid certificate, no deduction under this section shall be allowed for any subsequent period unless a new certificate is obtained from the medical authority as in 1 above and furnished before the DDO.
3.      For the purposes of section 80DD and 80 U some of the terms defined are as under:-
(a)   "Administrator" means the Administrator as referred to in clause (a) of section 2 of the Unit Trust of India (Transfer of Undertaking and Repeal) Act, 2002 (58 of 2002) ;
(b)   "dependant" means—
(i)                 in the case of an individual, the spouse, children, parents, brothers and sisters of the individual or any of them;
(ii)               in the case of a Hindu undivided family, a member of the Hindu undivided family, dependant wholly or mainly on such individual or Hindu undivided family for his support and maintenance, and who has not claimed any deduction under section 80U in computing his total income for the assessment year relating to the previous year;
(c)    "disability" shall have the meaning assigned to it in clause (i) of section 2 of the Persons with Disabilities (Equal Opportunities, Protection of Rights and Full Participation) Act, 1995 (1 of 1996) and includes "autism", "cerebral palsy" and "multiple disability" referred to in clauses (a), (c) and (h) of section 2 of the National Trust for Welfare of Persons with Autism, Cerebral Palsy, Mental Retardation and Multiple Disabilities Act, 1999 (44 of 1999);
(d)   "Life Insurance Corporation" shall have the same meaning as in clause (iii) of sub-section (8) of section 88;
(e)    "medical authority" means the medical authority as referred to in clause (p) of section 2 of the Persons with Disabilities (Equal Opportunities, Protection of Rights and Full Participation) Act, 1995 (1 of 1996) or such other medical authority as may, by notification, be specified by the Central Government for certifying "autism", "cerebral palsy", "multiple disabilities", "person with disability" and "severe disability" referred to in clauses (a), (c), (h), (j) and (o) of section 2 of the National Trust for Welfare of Persons with Autism, Cerebral Palsy, Mental Retardation and Multiple Disabilities Act, 1999 (44 of 1999);
(f)     "person with disability" means a person as referred to in clause (t) of section 2 of the Persons with Disabilities (Equal Opportunities, Protection of Rights and Full Participation) Act, 1995 (1 of 1996) or clause (j) of section 2 of the National Trust for Welfare of Persons with Autism, Cerebral Palsy, Mental Retardation and Multiple Disabilities Act, 1999 (44 of 1999);
                        "person with severe disability" means—
(i)                 a person with eighty per cent or more of one or more disabilities, as referred to in sub-section (4) of section 56 of the Persons with Disabilities (Equal Opportunities, Protection of Rights and Full Participation) Act, 1995 (1 of 1996); or
(ii)               a person with severe disability referred to in clause (o) of section 2 of the National Trust for Welfare of Persons with Autism, Cerebral Palsy, Mental Retardation and Multiple Disabilities Act, 1999 (44 of 1999);
(iii)             "specified company" means a company as referred to in clause (h) of section 2 of the Unit Trust of India (Transfer of Undertaking and Repeal) Act, 2002 (58 of 2002).
Deduction U/s. 80DDB :
Section 80DDB allows a deduction in case of employee, who is resident in India, during the previous year, actually paid any amount for the medical treatment of such disease or ailment as may be specified in the rules HDD (1) (see Annexure) for himself or a dependant. The deduction allowed is equal to the amount actually paid or Rs. 40,000 whichever is less. Further the amount paid should also be reduced by the amount received if any under insurance from an insurerer or reimbursed by an employer. In case of a senior citizen (an individual resident in India who is of the age of sixty years or more at any time during the relevant previous year) the amount of deduction allowed is Rs. 60,000/-.

DDO must ensure that the employee furnishes a certificate in Form 10-I from a neurologist, an oncologist, a urologist, nephrologist, a haematologist, an immunologist or such other specialist, as mentioned in proviso rule 11(2) of the Rules.
For the purpose of this section in the case of an employee "dependant" means individual, the spouse, children, parents, brothers and sisters of the individual or any of them,

Deduction U/s. 80E :
Section 80E allows deduction in respect of repayment of interest on loan taken from any financial institution or any approved charitable institution for higher education for the purpose of pursuing his higher education or for the purpose of higher education of his spouse or his children or the student for whom he is the legal guardian.

The deduction shall be allowed in computing the total income for the Financial year in which the employee starts repaying the interest on the loan was taken and immediately succeeding seven Financial years or until the Financial year the interest is paid in full by the taxpayer, whichever is earlier.

For the purpose of this section -
(a)                  "approved charitable institution" means an institution established for charitable purposes and approved by the prescribed authority section 10(23C), or an institution referred to in Section 80G(2)(a);
(b)                  "financial institution" means a banking company to which the Banking Regulation Act, 1949 (10 of 1949) applies (including any bank or banking institution referred to in section 51 of that Act); or any other financial institution which the Central Government may, by notification in the Official Gazette, specify in this behalf;
(c)                   "higher education" means any course of study pursued after passing the Senior Secondary Examination or its equivalent from any school, board or university recognized by the Central Government or State Government or local authority or by any other authority authorized by the Central Government or State Government or local authority to do so;
Deduction U/s. 80G :
Section 80G provides for deductions on account of donation made to various funds , charitable organizations etc. In cases where employees make donations to the Prime Minister's National Relief Fund, the Chief Minister's Relief Fund or the Lieutenant Governor's Relief Fund through their respective employers, it is not possible for such funds to issue separate certificate to every such employee in respect of donations made to such funds as contributions made to these funds are in the form of a consolidated cheque. An employee who makes donations towards these funds is eligible to claim deduction under section 80G. It is, hereby, clarified that the claim in respect of such donations as indicated above will be admissible under section 80G on the basis of the certificate issued by the Drawing and Disbursing Officer (DDO)/Employer in this behalf- Circular No. 2/2005, dated 12-1-2005.

No deduction under this section is allowable in case of amount of donation if exceeds Rs. 10000/- unless the amount is paid by any mode other than cash.

Deductions U/s. 80GG :
Section 80GG allows the employee to a deduction in respect of house rent paid by him for his own residence. Such deduction is permissible subject to the following conditions :-
(a)               the employee has not been in receipt of any House Rent Allowance specifically granted to him which qualifies for exemption under section 10(13A) of the Act;
(b)               the employee files the declaration in Form No. 10BA. (Annexure VIII)
(c)                He will be entitled to a deduction in respect of house rent paid by him in excess of 10% of his total income, subject to a ceiling of 25% thereof or Rs. 2,000/- per month, whichever is less. The total income for working out these percentages will be computed before making any deduction under section 80GG.
(d)               The employee does not own:
(i)     any residential accommodation himself or by his spouse or minor child or where such employee is a member of a Hindu Undivided Family, by such family, at the place where he ordinarily resides or performs duties of his office or carries on his business or profession; or
(ii)   at any other place, any residential accommodation being accommodation in the occupation of the employee, the value of which is to be determined under Section 23(2)(a) or Section 23(4)(a) as the case may be.
The Drawing and Disbursing Authorities should satisfy themselves that all the conditions mentioned above are satisfied before such deduction is allowed by them to the employee. They should also satisfy themselves in this regard by insisting on production of evidence of actual payment of rent.

Deductions U/s. 80 GGA :
Section 80GGA allows deduction from total income of employee in respect of donations of any sum as given in the Table below:
Sl. No.
Donations made to persons
Approval /Notification under Section
Authority granting approval/ Notification
1
To a research association which has as its object the undertaking of scientific research or to a University, college or other institution to be used for scientific research
u/s 35(l)(ii)
Central Government
2
To a research association which has as its object the undertaking of research in social science or statistical research or to a University, college or other institution to be used for research in social science or statistical research
u/s35(l)(iii)
Central Government
3
To an association or institution, which has as its object the undertaking of any programme of rural development, to be used for carrying out any programme of rural development approved for the purposes of section 35CCA
furnishes the certificate u/s 35CCA (2)
Prescribed Authority under Rule 6AAA
4
an association or institution which has as its object the training of persons for implementing programmes of rural development.
furnishes the certificate u/s 35CCA (2)
Prescribed Authority under Rule 6AAA
5
To a public sector company or a local authority or to an association or institution approved by the National Committee, for carrying out any eligible project or scheme.
furnishes the certificate u/s 35AC(2)(a)
National Committee for Promotion of Social & Economic Welfare
7
To a rural development fund
notified u/s 35CCA (1)(c)
set up and notified by the Central Government
8
To National Urban Poverty Eradication Fund
notified u/s 35CCA(l)(d)
set up and notified by the Central Government
No deduction under this section is allowable in case:
(i)                 The employee has gross total income which includes income which is chargeable under the head "Profits and gains of business or profession".
(ii)               The amount of donation exceeds Rs. 10000 and is paid in cash.
The Drawing and Disbursing Authorities should satisfy themselves that all the conditions mentioned above are satisfied before such deduction is allowed by them to the employee. They should also satisfy themselves in this regard by insisting on production of evidence of actual payment of donation and a receipt from the person to whom donation has been made and ensure that the approval/notification has been issued by the right authority. DDO must ensure a self-declaration from the employee that he has no income from "Profits and gains of business or profession".

Deduction U/s. 80TTA :
Section 80TTA has been introduced from this Financial Year [2012-13] and it allows to an employee from his gross total income if it includes any income by way of interest on deposits (not being time deposits) in a savings account a deduction amounting to :
(i)                 in a case where the amount of such income does not exceed in the aggregate ten thousand rupees, the whole of such amount; and
(ii)                in any other case, ten thousand rupees.
If such savings account is maintained in a
(a)   banking company to which the Banking Regulation Act, 1949 (10 of 1949), applies (including any bank or banking institution referred to in section 51 of that Act);
(b)   co-operative society engaged in carrying on the business of banking (including a cooperative land mortgage bank or a co-operative land development bank); or
(c)    Post Office as defined in clause (k) of section 2 of the Indian Post Office Act, 1898 (6 of 1898),
For this section, "time deposits" means the deposits repayable on expiry of fixed periods.