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Showing posts with label Save Money. Show all posts
Showing posts with label Save Money. Show all posts

Public Provident Fund (PPF) can make you a 7 Digit Person.

Public Provident Fund (PPF) can make you a 7 Digit Person.

PPF Calculator: Hot Money tip! Your Public Provident Fund account can make you a crorepati; here is how

PPF Calculator 2021: A Public Provident Fund (PPF) account is something in which an earning individual invests keeping retirement goal in focus.

Online PPF Calculator 2021: A Public Provident Fund (PPF) account is something in which an earning individual invests keeping retirement goal in focus. As per the income tax act, one's PPF investment, PPF interest rate and PPF maturity is free from income tax outgo. So, one's PPF account not only helps an investor accumulate a retirement fund, it also helps an earning individual to save income tax at the time of income tax return (ITR) filing.

Speaking on the income tax rules applicable on one's PPF account, Manikaran Singhal, Founder at goodmoneying.com said, "PPF investment falls under EEE category as the PPF investment up to Rs 1.5 lakh in a particular financial year is exempted from income tax under Section 80C. Apart from that, PPF interest accrued in one's PPF and PPF maturity amount is free from any kind of income tax liability." However, he said that a PPF account holder can't invest more than Rs 1.5 lakh in one's PPF account and one can't have more than one PPF account.


On PPF interest rate and retirement fund that one can accumulate from PPF account, SEBI registered tax and investment expert Jitendra Solanki said, "PPF account has maturity period of 15 years but one can extend PPF account by submitting Form-16H in the last year of the PPF maturity. This PPF account extension can be done in blocks of 15 years and there is no bar on how many times one can extend one's PPF account."

Assuming a person invests in PPF account for 30 years submitting Form 16-H on three occasions (15h, 20th and 25th year of PPF account opening), and PPF interest rate for the entire period at 7.1 per cent, the PPF calculator suggests that one's PPF maturity amount after 30 years will be Rs 1,11,24,656 or Rs 1.11 crore if he or she invests Rs 9,000 per month of Rs 1,08,000 in one year.

Source: ZeeBusiness

How to save tax without fresh investments

The month of March marks the end of the financial year and is the time when taxpayers needs to evaluate their tax liability taking into account eligible deductions, based on their income for that financial year (FY). Not availing certain eligible deductions can result in higher tax outflow.

It is to be noted that from FY 2020-21, a taxpayer can choose to pay tax under the new, concessional tax regime. In case the taxpayer opts for the new tax regime, he/she will have to forego most tax deductions and exemptions. In some cases, the taxpayer may want to opt for the existing tax regime but due to liquidity issues, especially considering the Covid-19 pandemic situation, may not be able to make further tax-saving investments. Such taxpayers need not get disheartened as certain expenditures are also eligible for tax deduction.

The deductions a tax payer is eligible for are to be claimed from gross total income thereby reducing the taxable income and consequently the tax payable.

Here is a look at expenses/deductions which can be used to reduce tax payable under the old tax regime.

1. Leave Travel Allowance

Section 10(5) of the Income tax Act grants deduction towards the leave travel allowance (LTA) based on provision of proof of travel and related expenditure, which are subject to certain conditions. This deduction can be availed only for a maximum two journeys within India in a block of four calendar years (2018-2021).

However, in FY 2020-21 many taxpayers were not able to undertake actual journeys due to pandemic-related travel restrictions. Taking this into consideration, the government has launched the 'LTC Cash Voucher' scheme.

Under the scheme, an employee can avail exemption for cash allowance received in lieu of LTC subject to certain conditions which are required to be fulfilled by the taxpayer.

Considering that that eligible category of goods and services is vast, the benefit of such scheme can be easily availed by salaried taxpayers. However, it is pertinent to note that employees who have already availed the LTC exemption twice for their current block 2018 -21, are not eligible to avail this scheme. Additionally, in the private sector, only those employees who have LTA as part of their salary structure can avail of the scheme if their company offers the scheme to them.

2. Deduction of interest income

Taxpayers deriving interest income from savings account held in a bank or post office are eligible to claim deduction under section 80TTA of the Income-tax Act. The amount of deduction will be the lower of, interest derived or Rs 10,000. For resident senior citizens, this limit is Rs 50,000 under section 80TTB. Senior citizens can also avail the deduction under section 80TTB on interest income derived from fixed deposits, Senior Citizen Savings Scheme etc.

3. Children's tuition fees, education and hostel allowance and tuition fees

Any allowance (up to specified limits) for education of children as well as hostel expenditure (generally referred to as Children Education Allowance & Hostel Allowance) granted to an employee by his/her employer is allowed as an exemption under section 10(14). The exemption for children's education allowance and hostel expenditure allowance is restricted to Rs 1,200 and Rs 3,600 annually, respectively, up to a maximum of two children.

Also, under section 80C, tuition fees paid to any recognized university, college, school or other educational institution situated in India, for the purpose of full-time education of any two children is eligible for deduction. Any individual taxpayer (salaried and non-salaried) can avail of this deduction, if tuition fee as described above is paid for his/her children. However, the amount allowable as tuition fees would not include payment in the nature of development fees or donation or capitation fees or payment of similar nature. Further, the deduction is not available if payment is made to a foreign educational institution.

It is also pertinent to note that children education allowance is different from tuition fees. Children's education allowance is available as a deduction only if it forms part of the salary component and the taxpayer has actually incurred expenses towards education of his children. The amount of allowances deductible is Rs 1,200 annually per child, up to two children. However, in case of tuition fees, it is allowable on the basis of actual expenditure incurred for education of children to an extent of Rs 1.5 lakh under section 80C, even though the same may not form part of the salary component of taxpayer.

4. Deduction of interest on education loan

Section 80E provides for deduction of interest paid on education loan availed from a financial institution or approved charitable institution. The deduction can be claimed from gross total income of the taxpayer thereby reducing the taxable income. The deduction is available for a period of 8 consecutive years beginning from the year in which the taxpayer starts paying the interest. The loan should have been taken for the purpose of higher education, i.e., any course after passing Senior Secondary Examination or its equivalent, in India or abroad. The education loan can be taken for the education of the taxpayer, spouse, children or student for whom the taxpayer is a legal guardian.

5. Deduction in respect of medical insurance, expenses and preventive health checkup

Section 80D provides for deduction in respect of medical insurance premium paid, preventive health check-up expenses and other medical expenditure subject to conditions. Deduction up to Rs 25,000 can be claimed for medical insurance premium paid for self, spouse or dependent children. An additional deduction up to Rs 25,000 can be claimed for medical insurance premium paid for parents below 60 years of age. The deduction is also available in case of buying Covid-specific health insurance policy like Corona-Kavach.

Further, in cases where the insured is a senior citizen, the above deduction limit is Rs 50,000. For a senior citizen, who does not have medical insurance, medical expenditure can be claimed as a deduction under this section subject to an overall limit of Rs 50,000. The section also allows for deduction towards preventive health check-up expenditure up to Rs 5,000. This expense is included in the overall limit, as applicable. The above expenses have to be incurred by any mode other than cash. However, preventive health check-up expenses can be incurred in cash. The deduction shall be available to Senior Citizens even if medical expenditure is incurred by them in cash.

6. Deduction in respect of interest on loan taken for residential house property

If a residential property is bought by taking a home loan, an individual can claim two types of tax breaks - deduction for repayment of principal of home loan under section 80C and deduction for interest payment made on the home loan u/s 24. The latter deduction would be restricted to a maximum of Rs 2 lakh annually in case of a self-occupied property.

Further, if one has bought a house in the affordable segment, they get a deduction of Rs 1.5 lakh in a financial year under section 80EEA. This deduction is available over and above the Rs 2 lakh deduction available on the interest payment on housing loan. It is available on the home loan taken between April 1, 2019 and March 31, 2021 for acquisition of a residential house whose stamp duty value does not exceed Rs 45 lakh. Thus, the total deduction available to an individual taxpayer on the interest payment of a housing loan for buying an affordable house is Rs 3.5 lakh in a financial year.

7. Deduction under section 80CCD(2): Employer's contribution to NPS

Under Section 80CCD(2), an employee can get deduction in respect of employer's contribution towards the employee's National Pension Scheme (NPS) account. Such deduction will be limited to a maximum of 14% of basic salary plus DA in case of a Central Government employee, and 10% of basic salary in case of any other employee, subject to the combined upper limit of Rs. 7,50,000 which is applicable in respect of employer's contribution in a year to NPS, superannuation fund and recognized provident fund. Further, interest, dividend etc. earned on the excess contribution will be taxable as well.

The deduction under Section 80CCD(2) is in addition to the deduction available under section 80C, where the overall limit is Rs 1.5 lakh and 80CCD(1B) which is Rs 50,000. Also, this deduction can also be availed by a person opting for the new, concessional tax regime.

8. House Rent Allowance or deduction for rent paid

The House Rent Allowance (HRA) is a common component of the salary structure. Employees who stay on rent can avail of the deduction of HRA based on the actual rent paid by them. With respect to HRA, Section 10(13A) provides for an exemption of least of the following amounts:

(i)40 per cent/50 per cent (in case of metropolitan cities) of the salary amount;

(ii)Actual amount received as HRA;

(iii)Amount of rent exceeding 10 per cent of the salary

The employee/taxpayer will have to provide the necessary rent receipts/agreements and other details to the employer in order to enable the employer to compute the exemption amount. Even if rent receipts are not submitted to the employer, the employee can claim the tax benefit at the time of filing ITR.

With respect to taxpayers not receiving HRA, section 80GG provides for deduction in respect of rent paid. It is pertinent to note that the benefit under this section is available subject to the certain conditions. The taxpayer claiming this deduction or his spouse or minor child should not own any residential house property at the place where he ordinarily resides for performing his duty or the taxpayer himself should not own any other house property which he is claiming as self-occupied for the purpose of calculating income from house property. Section 80GG provides for deduction of least of the following amounts:

(i)An amount of Rs 5,000 per month, i.e., Rs 60,000 p.a.;

(ii)Actual rent paid in excess of 10 per cent of total income;

(iii)25 per cent of total income.

In the above computation, the total income shall include the total income arrived at after considering all deductions under Chapter VI A other than under this section. For claiming deduction under section 80GG, the taxpayer is required to file a declaration in Form 10BA.

9. Employees' Provident Fund (EPF)

Employees' contribution towards recognised provident fund, which is deducted from their salary on a monthly basis, shall be allowable as a deduction with an overall limit of Rs 1.5 lakh under section 80C.

10. Standard deduction on salary

A standard deduction up to Rs 50,000 is available to all salaried employees. This deduction is considered by the employer while computing tax liability of each employee and deduction of TDS from salary. The deduction is to be claimed in the ITR form at the time of filing ITR. While planning your taxes for FY 2020-21, one must consider standard deduction as well to compute the total tax liability if one is opting for the old tax regime.

Source: The Economics Times

Link- https://economictimes.indiatimes.com/wealth/tax/how-to-save-tax-without-fresh-investments/articleshow/81323915.cms


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 Impact on Unaccounted Cash Deposit

Recently, Government introduced Demonetization whereby currency notes of Rs. 500 and Rs. 1000/- have been declared as invalid legal tender with effect from 9.11.2016 is most likely to witness huge cash deposits in bank accounts within the window period expiring on 30.12.2016. Media reports have appeared attributed to Government sources that in case substantial amount of cash is deposited in banks declaring it as current year’s unaccounted income and applicable tax @ 30% plus surcharge etc. is paid, still penalty @ 200% of the tax can be imposed as per provisions of section 270A of the Income Tax Act, 1961.

When any person deposits some cash amount in his bank account and it is established that such deposit is an unaccounted money (black money), then the entire deposit shall be charged to tax without providing the benefit of slab rates.  The impart of Tax on unaccounted money are as under :

Unaccounted Money Rs. 10,00,000/-

Tax on Income at 30%        = 3,00,000
Add: Surcharge at 12%       = NIL
Add: Education cess at 3%   =    9,000
Total Tax                   = 3,09,000
Penalty at the rate of 200% = 6,18,000
Total Tax and Penalty       = 9,27,000
Benefit Amount              =   73,000


Interest u/sec. 234B and 234C will also be charged and after that one may end up paying more than the amount deposited in the bank account.

Eight Types of Income on Which You Don't Have to Pay Taxes

There are certain incomes that are exempt from income tax. If you get your income from these sources, your tax liability will be zero.

1) Dividend from shares and equity mutual fund: If you have invested in the shares of an Indian company, any dividend that you receive is not liable to tax under Section 10 (34) of Income Tax Act. The reason being the company has already paid tax from its own profit. Similarly, dividend income from an equity mutual fund is also exempt from tax. However, if you being an Indian resident have received dividend from a foreign company, it will be taxable. In case the dividend is taxed both in the foreign country and in India, you can claim taxation relief either as per the provisions of Double Taxation Avoidance Agreement (if India has such agreement with that country) or can claim relief as per Section 91, if no such agreement exists.

2) Proceeds received on maturity of life insurance policies: Any sum received under a life insurance policy (including bonus if any) is exempt from tax provided the premium paid to actual capital sum assured does not exceed the prescribed thresholds provided by Income Tax Act.

"For policies issued till March 2012, the premium shouldn't be more than 20 per cent of the actual sum assured. For policies issued from April 1, 2012, the percentage was reduced to 10 per cent of actual sum assured," says Ms Neha of Nangia & Co. The tax exemption is applicable for endowment policies only, she adds.

However, if the above conditions are not met, the individual will be liable to pay a tax deducted at source (TDS) at the rate of 2 per cent, if the amount received during the financial year is more than Rs. 1 lakh.

3) Scholarship or grant received: If you have received any scholarship or grant as a student to meet your education cost, it is totally exempted from tax.

4) Interest received from government notified bonds: Interest income that you earn from certain bonds notified by government is exempt from tax. Recently, the government allowed certain public sector companies to issue such tax-free bonds to raise money for infrastructure projects. The interest that you will receive on these bonds will be tax-exempt but if you make any gains by selling these bonds on exchange before maturity, you will have to pay tax on the capital gains.

5) Agriculture income: As per Section 10 (1) of Income Tax Act, agriculture income in terms of rent or from any agriculture produce is exempt from tax. However, the agriculture income will have to be added to one's total income for the determination of the income-tax slab of the individual, says Neha Malhotra, executive director of taxation at Nangia & Co, a tax advisory firm.

6) Share of profit from partnership firm: If you are a partner in a partnership firm, you will not have to pay any tax on your share of profits. "The share of profit is exempt for the individual partner, if received from a partnership firm which has been subjected to tax on the profits at the partnership firm level," says Parizad Sirwalla National Head-Global Mobility Services-Tax, KPMG.

7) Interest on Non Resident External (NRE) account: "Any interest received by an individual is exempt from tax until such time the individual is a person resident outside India (PROI) as per Foreign Exchange Management Act, 1999 (FEMA)," says (USE Mr or Ms) Parizad of KPMG.

8) Leave Travel concession (LTA): If you receive LTA as part of your salary is exempted from income tax unlike house rent allowance (HRA) against which you can claim deduction. You can claim exemption on the cost of domestic travel incurred under Section 10 (5) of Income Tax Act provided you give the proofs. You can claim LTA twice in a block of four years.

Source: www.profit.ndtv.com

Government submits list of foreign bank account holders in Supreme Court

On October 29, 2014 the Central Government has submitted a list of Indians who have got foreign banks accounts in a sealed cover to the Supreme Court. Since 2009, based on a petition filed by senior lawyer, Ram Jethmalani, the Supreme Court has been monitoring the investigations into black money. However, the Supreme Court subsequently questioned the Government why they were providing a protective umbrella to foreign bank account holders and asked the Government to disclose the information of all accounts holders for further probe.

In this regard, the Government named eight people in the top court who are being prosecuted for allegedly hiding undeclared cash in Swiss and other banks.

Both, the previous government and the new BJP government have argued in Court that tax treaties with other countries prohibited the disclosure of names till charges were framed. Critics have accused the Government of using tax treaties as an excuse to shield rich and powerful citizens. India has double tax avoidance treaties with over 80 countries.

Sournce: www.taxmann.com

How to select right investment for tax savings u/s 80C?

An individual / HUF can save taxes up to Rs.30,900/- for taxable income up to Rs 1 crore in FY 2013-14. Tax savings would be Rs.33,990/- in case the taxable income exceeds Rs 1 crore.

Death, taxes and childbirth! There's never any convenient time for any of them. Margaret Mitchell’s dialogue in the movie Gone with the Wind rings true as one sits down to do his tax planning as the year end looms closer. And what better way to save tax than by investing?

Around this time of the year, our investment decisions are more linked to what Section 80C of the Income Tax Act, 1961 (‘Act’) says than by the historical trends of the investment. For the uninitiated, Section 80C lists down certain investments / expenses which can be deducted by an individual (or a Hindu Undivided Family) in computing his taxable income. This deduction, clubbed with investments under sections 80CCA, 80CCB and 80CCD of the Act, is subject to a limit of Rs.1,00,000/- per financial year  (‘FY’). Simply put, if Mr. Nayak earns an income of Rs.10,00,000/- in FY 2013-14 and invests / spends Rs.1,00,000/- in products eligible for Section 80C deduction, he would be liable to pay taxes only on the balance Rs.9,00,000/-.

Thus, an individual / HUF can save taxes up to Rs.30,900/- for taxable income up to Rs.1 crore in FY 2013-14. Tax savings would be Rs.33,990/- in case the taxable income exceeds Rs.1 crore.

Here we have identified the appropriate investments under sections 80C, 80CCA, 80CCB and 80CCD.
Mandatory Investments / Expenses :
  1. Contribution to Employee’s Provident Fund (‘EPF’) – For a salaried person, this is an automatic deduction from the salary. And if you are lucky enough that this amount exceeds Rs.1,00,000/-, fret no more as your investment for 80C is done! EPF deposits yielded tax free interest of 8.75% per annum in FY 2013-14.
  2. Repayment of Home Loan – Repayment of the principal portion of a home loan to any institutions specified u/s 80C is eligible for Section 80C deduction and should be accounted for before deciding on further 80C investments. Such a house cannot be sold for 5 years from the end of the FY in which it was purchased; else the 80C deduction claimed in earlier years will be taxed in the year of sale.  Institutions specified u/s 80C include banks, LIC, National Housing Bank, public companies providing long term finance to construct / purchase residential houses, housing finance companies or your employer, if it is established under any law.  
  3. Children’s Education – Tuition fees to any educational institution in India for full time education of any 2 children is eligible for 80C deduction.
Voluntary (but necessary) Investments / Expenses
If after the above investments, 80C limit still remains, look at the following expenses which are necessary but can be entirely planned by you.
  • Public Provident Fund – PPF is an important retirement planning tool, especially if you are not eligible for EPF. PPF yielded a tax free interest of 8.70% in FY 2013-14 and is subject to a lock in of 15 years but can be partially withdrawn after 5 years or borrowed against. One can annually invest up to Rs.1,00,000/- in PPF. 
  • LIC Premium – You haven’t planned smart if you and your family members aren’t insured. The premium, if it is less than 10% of the actual sum assured, is eligible for 80C deduction. In certain cases, premium up to 15% of the sum assured can be used.
  • Senior Citizens Savings Scheme (‘SCSS’) – For persons above 60 years or those who have taken voluntary retirement and are older than 55 years, this is the safest investment avenue. Deposits in SCSS earned a pre-tax interest of 9.2% in FY 2013-14. Lock in period is 5 years but account can be closed prematurely after 3 years. 
  • Equity Linked Savings Scheme (‘ELSS’) – While SCSS is best suited for senior citizens, ELSS offers to youngsters the potential to earn high returns; albeit with higher risks. Lock in period for 80C purpose is 3 years and dividends and capital gains are tax exempt. CRISIL-AMFI ELSS Fund Performance Index computes a 3-year annualized return of 2.73%  as at 31st December 2013 from ELSS schemes forming its part. 
  • National Savings Certificate (‘NSC’) – NSCs, which earned an annual pre-tax interest of 8.5% and 8.8% on 5 and 10 year certificates respectively, with a lock in of 5 years, are also a good alternative.
Other Voluntary Investments / Expenses
Apart from the above, investment options available are Fixed Deposits, NABARD Bonds, ULIPs, Post Office Time Deposits, etc.
 
The annual inflation rate was 9.13%  as at December 2013. As a thumb rule, an investment which earns post tax return higher than inflation would increase the real value of your money. Also bear in mind that the rate of return on 80C investments will always be higher on account of the taxes saved. For example, on a PPF Deposit of Rs.1,00,000/-, one could save tax of Rs.30,900/- and also earn a tax free interest of Rs.8,700/- in the 1st year. This would mean a return of almost 40% in the 1st year.
 
One needs to look at the return offered, the lock in period vis-à-vis the need for funds and investment objective; and the security of the money invested before zeroing in on any investment.
Wishing all a happy new financial year with loads of tax savings!

Source: www.moneycontrol.com

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

Taxpayee can save tax by 6 ways in Asstt. Year 2013-14.

Income tax filing due date is getting closer. However, quite a lot of tax filers are still not aware of all the deductions that could be availed of. It is always good to be updated on the latest tax deductions. It helps one in maximizing the tax deductions, hence minimizing the tax to be paid. Let us now look at some of the latest sections available for tax deduction from FY 2012-13 onwards.

Section 80CCG
Popularly known as RGESS or Rajiv Gandhi Equity Savings Scheme, this section has been introduced in order to push the in-flows into the Indian capital markets. It is also the first time that an equity investment has been allocated a section in the tax deductions page. Equity investments over 1 year are exempt from tax, though. This investment is only for the first time equity investors with income up to Rs. 12 lakh. Maximum investment allowed is Rs. 50,000 with 50 per cent deduction allowed for the invested amount.

Section 80TTA
Interest on savings bank account will now be exempt up to Rs. 10,000 in a year. However, it does not mean that income below the specified limit should not be declared. Any income generated from the savings bank account should first be declared and then the exemption can be claimed. This section applies to savings deposits in banks, co-operative societies and post office.

Section 80QQB
For authors of certain specified books, royalty income or copyright fees up to Rs. 3 lakh will be available for deduction. The books can be work of art, literature or scientific nature. The author needs to furnish a certificate in prescribed format.

Section 80RRB
Royalty income on patents will also be available for deduction up to Rs. 3 lakh. Patents should have been registered on or after 1st April, 2003 under the Patents Act, 1970 (39 of 1970). The author needs to furnish a certificate in prescribed format.

Section 80CCD (1)
Deduction for contribution to notified pension scheme which was previously under one section by name 80CCD has now been divided into two sections. As per section 80CCD(1), employee contribution under notified pension scheme by Central Government or any other employer, is deductible up to 10 per cent of salary, subject to limit of 1 lakh under Section 80C.

Section 80CCD (2)
As per this section, employer contribution under notified pension scheme by Central Government or any other employer is deductible up to 10 per cent of salary, without any upper limit.

Apart from the above mentioned sections, an additional deduction of Rs. 1 lakh (apart from existing 1.5 lakh) on the interest amount would be available for first time home buyers with home loan up to Rs. 25 lakh. This will be available for FY 2013-14 (AY 2014-15) and is welcome news for a lot of middle class first home buyers.

Please note that Section 80CCF (Investment in Infrastructure Bonds) has been removed from the available deductions for FY 2012-13. The information in this article should be useful for both, filing taxes as well as planning taxes for the next fiscal year (AY 2014-15).

Source: profit.ndtv.com

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

Four life insurance mistakes you must avoid.

Determining the adequate risk coverage and suitable insurance products is an important aspect of financial planning. The various complexities attached with existing life insurance policies in the market make choosing the right one difficult. Listed below are the most common pitfalls one needs to avoid while buying a life insurance policy.

Miscalculating insurance requirement: Determining the ideal amount of insurance cover needed is one of the most common insurance mistakes. One has to objectively address the question of: "How much Insurance cover do I need?" This can help the individuals in buying exactly what they need. Most of the times we end up being over-insured buying unnecessary insurance products or under-insured by failing to get required risk cover. Ideally, the risk coverage provided by the insurance policy should match the committed expenses of the individual for the years to come. One can also consider including the mandatory goals (retirement, child's marriage, etc.) while calculating the insurance requirements.

Mixing insurance with investments: Considering insurance as an investment is another common mistake. It is a common misconception that insurance is a risk-free investment. One has to note that insurance and investments are two completely different financial entities. We buy insurance as a part of risk coverage which can be used in case of any unexpected eventuality of the earning member of the family. We make investments primarily to achieve our goals and build wealth. When we mix both these important financial entities, we fail to do justice to both. One has to pay higher premiums for the insurance policies which return the premium paid along with an interest after a stipulated time. So, the chances of getting adequate insurance cover paying such higher premiums are minimal. Even the returns one can enjoy on such insurance policies are significantly less than the money invested in a well-diversified portfolio.
 
Insurance is the best way to save tax (primary motive of buying insurance): Insurance for long has been the front runner whenever investments regarding tax savings are considered. People often fail to realize that not all insurance payments are tax free. It is subjected to the upper limit of section 80C, which is caped at Rs. 1 lakh. Essentially, the contributions made towards provident fund and principal repayments of a home loan are also considered under section 80C. One should consider insurance just as a risk mitigating financial instrument, tax saving is just an icing on the cake and not the primary motive of buying insurance. Under the common myth that every premium paid is eligible for tax saving, most of us end up buying unnecessary insurance products.
 
Expecting returns from life insurance: For most of us, the whole perception of insurance changes when it has a prefix of life to it. For example, consider auto insurance. We pay a premium for our auto insurance which covers from the damages done to our vehicle in case of any mishap. We pay the premium every year, we enjoy no-claim bonuses if no claims are made and most importantly at the end of it, we do not receive any money back along with interest. The same fundamentals should be applied for life insurance as well. The main motto of a life insurance policy is to protect the family from the risk of mishap to the bread winner of the family. Our behavioral nature of wanting to get back something from the insurance premiums make us opt for insurance policies which are other than term policies. Term insurance can be availed at much lower cost compared to other hybrid insurance policies.

Source: NDTV.Profit.Com

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

10 Important Tips to Save Income Tax.for Salaried Employee.

Check your expenses and adhere to your budget

People tend to forget that good times don’t last forever. If you spend lavishly during good times and continue the trend without adapting to changes in circumstances, very soon you will land in financial trouble. Hence to ensure you lead a consistent lifestyle, always draw out a budget and ensure you stick to it religiously. E.g. if you have allocated Rs 500 per month towards your entertainment expenses, don’t spend a rupee more than Rs. 500. It will not only help you handle your finances better but will develop your willpower by delaying instant gratification.

Don’t rely on future income

Depending on future income in order to spend today, is one of the biggest mistakes we make. This has been evident during a job crisis, where youth racked up a huge credit card debt and took heavy loans. But when the salary cuts and job losses occurred, they were unable to pay off their debt. E.g. if your monthly income is Rs. 20,000 always ensure you spend well within Rs. 20,000 as pay cut or job loss may land you in trouble.

Reduce your debt

Got a bonus? Then pay off any loans that you have taken. If you have multiple loans, first pay off the loans with the highest interest rate, then the one with second highest rate and so on. E.g. if you have a credit card debt, personal loan and home loan, first clear off the credit card debt, then personal loan and finally home loan. For this you will have to plan out your debts and then go on following it systematically and steadily. It will not only save you money but will also give you mental peace.

Opt for strategic asset allocation

Though experts have consistently stated the importance of asset allocation, many investors tend to overlook this fact and invest only in the hottest asset. But remember market conditions do change and what is hot today may be out in the cold later on for a long time. So ensure you divide your portfolio amongst stocks, bonds, gold and real estate to get the maximum returns from your portfolio. Though your portfolio may under perform for some time, it will end up protecting you when the things get rough.

Keep emergency cash

You never know when a crisis can strike your family. Death, disease or job loss can end up upsetting your investments. You might be forced to sell your investments though they have not been given you any profits. Hence it is advisable to keep at least 3-6 months of your household expenses aside as emergency cash.

Sort out Your Finances

Agreed, keeping tabs on and handling your finances closely, may not sound like an interesting job, but it is a necessity. However you can reduce the boredom by putting a system in place. Once it is done, you can spend a few hours a month on this job. E.g. on Sunday, you can spend 1-2 hours to find out how your investments are performing, reading up any news concerning them or talking with your financial planner about the performance of your investments.

Plan in advance

One of the reasons many people land in financial mess is that they don’t plan their finances ahead. So it is imperative to plan your finances properly. Find out your current position, where you intend to go and set up a feasible plan to achieve your objectives. Unforeseeable events may occur and make you stray away from your plan for a short time, but ensure you get back on track at the earliest. Always remain focused and keep a watch on your progress. E.g. you are saving to buy a home and have started investing for the same. But 6 months after you started investing, you lose your job. If that happens, stop your investment, get a new job and again restart your investment.

Invest systematically and gradually

The biggest problem is that most people don’t bother saving till it is quite late. So they don’t have any money to fall back on in case of emergency. Hence it is essential to start small, but regularly and then increase the amounts later on. E.g. you can start a SIP, in which a particular sum is debited from your bank account and invested in a mutual fund. Or you can open a recurring deposit, which acts like a SIP, initiated by the bank. All this will occur automatically, so you have no excuse not to save.

Be in charge of your investments

The markets have crashed, the realty is down in dumps. What do you do? Sell off? Wrong. Unfortunately, this is what most investors do. In this situation, it is advisable to hold on to your portfolio as selling will just end up causing you financial loss. Instead increase your emergency cash reserves and periodically review your asset allocation of your portfolio.

Set a realistic outlook

The days of stocks giving a return of over 40% are over. While it is possible some of them may give you those types of returns, it is setting yourself up for disappointment if you keep your outlook very high. Instead keep a practical outlook of earning 12-15% returns from your investments.

Sourse: bankbazar.com

You have Short period to Save Tax by 18 Ways in Fin. Year 2012-13.

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.

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.