e-Book on Income Tax Deductions u/s. 80C to 80U for A.Y. 2017-18

There are so many Income Tax Deductions which are allowed to be claimed by an Salaried Employee, Individual or HUF. Though this a few Income Tax Deductions are very useful, which can be easily claimed and are helpful in reducing the tax burden. 

What do you mean by Tax Deductions ?

Tax deduction helps to reducing your tax-liabilities. It decreases your overall tax liabilities and save tax and grow savings. However, depending on the type of tax deduction you claim, the amount of deduction varies. You can claim tax deduction for amounts spent in tuition fees, medical expenses and charitable contributions. Also, you can invest in various schemes such as life insurance plans, retirement savings schemes, and national savings schemes etc. to get tax deductions. The government of India offers tax exemptions for various expenses incurred in different activities to encourage individuals and commercial institutions take part in activities having social benefits.

A number of day-to-day expenditures qualify for deductions, with information about them being crucial to help us save money. Tax deduction can be claimed on money spent for education, medical expenses, charitable contributions, investments in insurance, retirement schemes, etc. These deductions have been put in place to encourage members of the society to participate in certain useful activities, helping everyone involved in the process.

The following e-Book helps you to know more about Income Tax Deductions u/s. 80C to 80U.

e-Book about Income Tax Deducation u/s. 80C to 80U

Read More

Extend Exemption Limit and New Amendment in respect of u/s. 80C, 80CCC, 80CCD, 80G, 80D, 80DDB, 80U etc.For A.Y. 2016-17

Recently Budget-2015 announced for complete year by Finance Minister with new amendments and extension of Exemption Limit u/s. 80C, 80CCC, 80CCD, 80G, 80D, 80DDB, 80U etc. w.e.f. 1st April, 2015, which are as under:

Sukanya Samriddhi Scheme

Deduction under Section 80C & Tax free interest Sukanya Samriddhi Scheme meaning Girl Child Prosperity Scheme is a special deposit scheme launched by Prime Minister for girl child. Under the scheme, an interest of 9.1 per cent is provided on deposited amount which is tax free. Under this scheme, a bank account can be opened by the parent or legal guardian of a girl child of less than 10 years of age with a minimum deposit of Rs. 1,000/-up to Rs. 1, 50,000/- in any post office or authorised branches of commercial bank in an year. Partial withdrawal up to 50 per cent of the account balance is allowed to meet education expenses of the girl child till she attains 14 years of age. The account will remain operative up to 21 years of age of girl child or till marriage of the girl child. Deduction Under section 80C is also available for the amount contributed every year.

SECTION WISE DEDUCTIONS :

Deduction u/s 80CCC:

Deduction in respect of contribution to notified Pension Schemes under Section 80CCC has been increased to Rs. 150,000/- from Rs. 100,000/-.

Deduction u/s 80CCD:

Additional deduction of Rs. 50,000 for contribution to National Pension Scheme u/s 80CCD shall be allowed to all individuals.

Deduction u/s 80G:

• Donation made to National fund for control of Drug Abuse eligible for 100% deduction(Effective from 1 April, 2016)
• 100% deduction for contributions, other than CSR, to Swachh Bharat Kosh and Clean Ganga Fund(Effective retrospective from 1st April, 2014)

Deduction u/s 80D:- (Health Insurance)

Super Senior Citizens above the age of 80 years who are not covered by Health Insurance, to be allowed deduction of Rs. 30,000 towards actual medical expenditure. (Effective from 1st April, 2016)

Serious Diseases (u/s. 80DDB): 

Deduction limit of Rs. 60,000 to be enhanced to Rs. 80,000 with respect to specified diseases of serious nature for senior citizen u/s 80DDB. (Effective from 1st April, 2016.

Disability Deduction (u/s. 80U): 

Deduction limit of Rs. 50,000 to be enhanced to Rs. 75,000 for disabled person along with enhancement of limit of Rs. 1 Lac to Rs. 1.25 Lacs in case of severe disability u/s 80U of Income Tax Act. (Effective from 1st April, 2015).

New Section 80JJA :

80JJA –Special deduction for employment creation The existing provisions contained in section 80JJAA of the Act, inter alia, provide for a deduction to an Indian company, deriving profits from manufacture of goods in a factory, equal to 30% of additional wages paid to new regular workmen, in excess of 100 workmen employed by the assessee in such factory, in the previous year, for three assessment years including the assessment year relevant to the previous year in which such employment is provided. A further deduction is allowed for every increase beyond 10% of regular workforce for 30% of their salary up to 3 years. With a view to encourage generation of employment, it is proposed to amend the said section so as to extend the benefit to all assesses having manufacturing units (rather than restricting it to corporate assesses only) employing new regular workmen in excess of fifty workmen employed during the previous year. This amendment will take effect from Assessment Year 2016-17.

Read More

Prime Minister's National Relief Fund u/s. 80G.

The Prime Minister's Office has issued notice on 22th August, 2014 regarding collection of huge fund in Prime Minister's National Relief Fund to helps undecided circumstances and get relief u/s. 80G of Income Tax.

Prime Minister's National Relief Fund (PMNRF) was constituted in January, 1948 to assist displaced persons from Pakistan.  The resources of the PMNRF are not utilized primarily to render immediate relief to the affected families of whose killed/injured in natural calamities like floods, cyclones and earthquakes, etc. or in the major accidents/riots.  The fund is also utilized to provide financial assistance for medical treatment like heart surgeries, kidney transplantation, cancer treatment, etc.  The fund consists entirely of voluntary public contributions and does not get any budgetary support.  Prime Minister is the Chairman of the Fund.

The undersigned is desired to convey that arrangements may be made to display a caption

" All donations towards the Prime Minister's National Relief Fund (PMNRF) are notified for 100% deduction from taxable income under Section 80G of the Income Tax Act, 1961." 

by your Department at its home webpage.  Besides, Department may also request the PSUs concerned with the Department to carry out this exercise also.

This issues with the approval of competent authority.

Download Prime Minister's Office Letter (Click Here)

Read More

In Cash Transaction Donation is not eligible exceeding Rs. 10000/- u/s. 80G

Exemption of Donation u/s. 80G provides by Income Tax Law to Taxpayee who will donate in amount by Cash or in Other Transactions in respect to donate Funds to Charitable Trust or Institutions etc. subject to conditions.   The fund donates to Charitable Trust or Institution by Taxpayee.  The charitable Trust or Institution are approved u/s. 80G(5)(vi) of Income Tax Act, 1961.  It may further be noted that, the full amount is not eligible for deduction from Income while submission of Annual Return to Income Tax Department by Taxpayee.  The deduction admissible is @ 100% or 50% of the donation amount depending upon the fund/ institutions to whom the donation is done. The total deduction u/s 80G is restricted to a maximum of 10% of the adjusted gross total income. If the receipt of Donation reveals the fact of approval of the said trust U/s 80G(5)(vi), then you can claim deduction. Recently, by the Finance Act-2012, Section 80G has been amended so as to provide that payment exceeding Rs. 10,000/- will be allowed as deduction u/s 80G only if such is paid by any mode other than cash. You may note that the limit of Rs. 10,000/- is not applicable on aggregate basis but is applicable on individual basis. If one makes a donation of an amount equal to or less than Rs. 10,000/- to one or more than one trust then the deduction would not be denied. But, if the cash donation in an amount exceeding Rs. 10,000/- at a stroke is made to any particular trust then the deduction would not be admissible.

Read More

Taxfree perquisites for Assessment Year 2013-14 for Salaried Employee.

It is general demand of salaried employee (Taxpayee) regarding calculations of Income Tax for the Assessment Year 2013-14 to Deposit Savings, Demand of Tax etc. Thus the taxpayee go through Chaperter-VIA to save tax and project to invest for growing Deposit Savings. In accordance with this  Salaried Employee (Taxpayee) searches Tax free perquisites.  In Fin. year 2012-13 and Assessment Year 2013-14 Taxfree perquisites for Salaried Employee who deducted Tax as TDS monthly from his salary are as follows:

1. Medical Facility or Medical Reimbursement:

• Medical Facility :- The value of any medical treatment provided to an employee or any member of his family in a hospital, dispensary or a nursing home maintained by the employee shall be a tax free perquisite.
• Medical Reimbursement : Any sum paid by the employer in respect of any expenditure incurred by the employee on his medicaltreatment or treatment of any member of his family subject to maximum of Rs. 15,000 in the previous year.

2. Recreational Facilities : Any recreational facility provided to a group of employees (not being restricted to a select few employees) by the employer is not taxable.

3. Training of Employees: Any expenditure incurred by the employer, for providing training to the employees or by way of payment of fees of refresher courses attended by the employees.

4. Use of health club, sports and similar facilities provided uniformly to all employees by the employer.

5. Expenses on Telephone, including a mobile phone, actually incurred on behalf on the employee by the employer.

6. Employer’s Contribution: Employer’s contribution to superannuation fund of the employee or provided such contribution does not exceed Rs. 1,00,000 per employee per year.

7. The premium paid by the employer on an accident policy taken out by it in respect of the employee would not be a perquisite. [CIT v Lala Shri Dhar (1972) 84 ITR 192 (Del) and CIT v Vinay Bharat Ram (1981) 129 ITR 128 (Del)].

8. Motor car provided by the employer to the employee or expenses incurred by the employer in connection with motor car belonging to the employee (for purposes other than exclusively for personal purposes) shall be a tax free perquisite in the hands of the employee.

9. Amount given by the employer of assessee to assessee’s child as scholarship is exempt under section 10(16). [CIT v B.L. Garg (2006) 155 Taxman 189 (All)]

10. Food and Beverages provided to Employees: The following shall be a tax free perquisite in the hands of the employees-

• free food and non-alcoholic beverages provided by the employer to his employees during working hours:

(a) at office or business premises or
(b) through paid vouchers which are not transferable and usable only at eating joints.
Provided the value of such meal is upto Rs. 50 per meal.
(ii) Any tea or snacks provided during working hours.
(iii) Free food and non-alcoholic beverages during working hours provided in a remote area
or offshore installation.
11. Loans to Employees : - In the following cases the value of benefit to the assessee resulting from the provision of interest free or concessional loan shall be nil :
(a) where the amount of loans are petty, no exceeding in the aggregate Rs. 20000;
(b) Loans made available for medical treatment in respect of disceases specified in rule 3A of the Income-tax Rules. However, the exemption so provided shall not apply to so much of the loan as has been reimbursed to the employee under any medical insurance scheme.

12. Perquisites provided outside India : Perquisites provided by the Government to its employees, who are citizens of india for rendering services outside India, are not taxable. [Section 10(7)].

13. Rent Free House/Conveyance Facility: Rent free official residence and conveyance facilities provided to a Judge of the Supreme Court/High Court is not a taxable perquisite.

14. Specified Perquisite allowed to certain Persons:
(a) Specified perquisites allowed to Judges of the Supreme Court, Chief Election Commissioner, Election Commissioner.
(b) Chairman or retired Chairman, member or a retired member of U.P. S.C.
are not taxable perquisites.

15. Residence to officials of Parliament etc. :- The Rent Free furnished residence (including maintenance thereof) provided to an officer of the Parliament a Union Minister or Leader of Opposition in Parliament, is not a taxable perquisite.

16. Accommodation in a Remote Area : - The accommodation provided by the employer shall be a tax free perquisite if the accommodation is provided to an employee working at mining site or an onshore oil exploration site or a project execution site, or a dam site or a power generation site or an offshore site which -
(a) being of a temporary nature and having plinth area not exceeding 800 square feet, is located not less than eight kilometres away from the local limits of any municipality or a cantonment board; or
(b) is located in a remote area.

17. Educational Facility for Children of the Employee: where the educational institution itself is maintained and owned by the employer and free educational facilities are provided to the children of the employee or where such free educational facilities are provided in any institution by reason of his being in employment of that employer, there shall be no perquisite value if the cost of such education or the value of such benefit per child does not exceed Rs. 1,000 p.m.

18. Use by the employee or any member of his household of laptops and computers belonging to the employer or hired by him.

19. Leave Travel Connection will be discussed in detail later.

20. Tax paid by the Employer on Non-Monetary Perquisites : Tax paid by the employer on non-monetary perquisites of the employee shall be exempt in the hands of the employee. [Section 10(10CC)]

Read More

How much Donation amount eligible for deduction from Income Tax?

Income Tax Act and under section 80G provides for a deduction in respect of donations to certain funds, charitable institutions etc subject to the conditions that such funds/ institutions are approved u/s 80G(5)(vi). If the receipt of Donation of Rs. 1 Lacs reveals the fact of approval of the said trust U/s 80G(5)(vi), then you can claim deduction @ 50% of the Donation u/s 80G of the Income Tax Act-1961.

The full amount is not eligible for deduction from Income. The deduction admissible is @ 100% or 50% of the donation amount depending upon the fund/ institutions to whom the donation is done. The total deduction u/s 80G is restricted to a maximum of 10% of the adjusted gross total income.

Read More

Donation Deductions and section 80GGC & 80GGB of Income Tax Act, 1961.

Donation regarding Section 80GGB to Polication parties are exempt from Income Tax, such question are still pending with Assessee.  Thus the some clarification are follows:

If you have contributed any amount to a recognised political party, you are eligible to claim a tax deduction ranging from 50 percent to 100 percent of the amount under Section 80GGC for individuals and Section 80GGB for corporate organisations. One can contribute up to 10 percent of one’s gross total income to a political party.

These deductions, along with the common ones like medical benefits, HRA, home loan EMIs, etc. can help you save a considerable amount of tax every year.

Deduction in respect of contributions given by any person to political parties.
80GGC. In computing the total income of an assessee, being any person, except local authority and every artificial juridical person wholly or partly funded by the Government, there shall be deducted any amount of contribution made by him, in the previous year, to a political party or an electoral trust.

For the purposes of sections 80GGB and 80GGC, “political party” means a political party registered under section 29A of the Representation of the People Act, 1951 (43 of 1951)

Deduction in respect of contributions given by companies to political parties.
80GGB. In computing the total income of an assessee, being an Indian company, there shall be deducted any sum contributed by it, in the previous year to any political party or an electoral trust.

For the removal of doubts, it is hereby declared that for the purposes of this section, the word “contribute”, with its grammatical variation, has the meaning assigned to it under section 293A of the Companies Act, 1956 (1 of 1956).

Read More

Can Applicable section 50C of Income Tax to Builders ?

Section 50C of income tax act is not applicable to a builder as his assets as plots and buildings are his stock in trade and not capital assets.

IT : Section 50C not applicable to sale of plots by a builder since plots are his stock-in-trade and not capital assets

• Section 50C uses the word 'capital asset'; for applicability of section 50C one of the essential requirements is that land or buildings sold should be capital asset; stock in trade has been excluded from the definition of capital asset by sec. 2(14).
• Investment in purchase and sale of plots by a builder who is indulged in selling buildings is ancillary and incidental to his business activity; 'stock-in-trade' includes all such chattels as are required for the purposes of being sold or let to hire on a person's trade; [See also • Addl.CIT v. Puttu Coal (P.) Ltd. (1983) 140 ITR 740 (Bom) where the assessee was money lender, who purchased a ship in satisfaction of his major portion of outstanding loan and the ship was considered as stock in trade of the assessee's money lending business].
• In the present case, assessee has treated plots of land as stock in trade in its balance sheet. - [2012] 20 taxmann.com 381 (Allahabad)
  

Read More

On Cash Payment of more than 10,000 at a time no deduction under section 80G.

On cash payment of more than 10,000 at a time no deduction under section 80G of new sub-clause 5(D) of income tax Act, there will be no deduction in case donation is made in cash more than 10,000. Before this amendment there was no such limitation of cash payment of Rs.10,000 etc. This amendment will be effect from 01st April 2013 and will accordingly apply in relation to assessment year 2013-14 and subsequent assessment years.

Amendment of section 80G vide finance Bill 2012 dated 16.03.2012

27. In section 80G of the Income-tax Act, after sub-section (5C), the following sub-section shall be inserted with effect from the 1st day of April, 2013, namely -

“(5D) No deduction shall be allowed under this section in respect of donation of any sum exceeding ten..

Read More

Effect on Income Tax by Section 80C Deduction and its guidelines.

Section 80C of income tax act:- In order to encourage savings, the government gives tax breaks on certain financial products under Section 80C of the Income Tax Act. Investments made under such schemes are referred to as 80C investments. Under this section, you can invest a maximum of Rs l lakh and if you are in the highest tax bracket of 30%, you save a tax of Rs 30,000. The various investment options under this section include:


Provident Fund & Voluntary Provident Fund
Provident Fund is deducted directly from your salary by your employer. The deducted amount goes into a retirement account along with your employer’s contribution. While employer’s contribution is exempt from tax, your contribution (i.e., employee’s contribution) is counted towards section 80C investments. You can also contribute additional amount through voluntary contributions (VPF). The current rate of interest is 8.5% per annum and interest earned is tax-free.

Public Provident Fund
An account can be opened with a nationalized bank or Post office. The current rate of interest is 8%, which is tax-free and the maturity period is 15 years. The minimum amount of contribution is Rs 500 and the maximum is Rs 70,000.

National Savings Certificate
These are 6-year small-savings instrument, where the rate of interest is 8% and is compounded half-yearly. The interest accrued every year is liable to tax but the interest is also deemed to be reinvested and thus eligible for section 80C deduction.

Equity-Linked Savings Scheme
Mutual funds offer you specially-created tax saving funds called ELSS. These schemes invest your money in equities and hence, return is not guaranteed. Money invested here is locked for a period of three years.

Life Insurance Premiums
Any amount that you pay towards life insurance premium for yourself, your spouse or your children can be included in section 80C deduction. If you are paying premium for more than one insurance policy, all the premiums can be included. Besides this, investments in unit-linked insurance plans (ULIPs) that offer life insurance with benefits of equity investments are also eligible for deduction under Section 80C.

Home Loan Principal Repayment
Your EMI consists of two components, namely principal and interest. The principal component of the EMI qualifies for deduction under Section 80C.

Stamp Duty and Registration Charges For 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. However, this can be done only in the year in the year of purchase of the house.

Five-Year Bank fixed deposits
Tax-saving fixed deposits (FDs) of scheduled banks with a tenure of five years are also entitled for section 80C deduction.

Others
Apart from the above, things like children’s education expenses that can be claimed as deductions under Section 80C. However, you need receipts to claim the same

Read More

Rent paid in respect property occupied for residential use, claim under section 80 GG.

If your are a self employed or a salaried individual who is not in receipt of any House Rent Allowance (HRA), and is paying a rent for an accommodation (irrespective whether furnished or unfurnished) occupied for residential use, then you can claim a deduction under this section 80GG of Income Tax Act.  But as a pre-condition for availing deduction under this section, you or your spouse or your minor child must not own any residential accommodation either in India or Abroad.  And the deduction which will be available to you under this section is the least of:-

• 25% of the total income or,
• 2000 per month or,
• excess of rent paid over 10% of the total income.

Read More

Contribution as Donations u/s. 80G of the Income Tax Act, 1961 upates.

Inspite of all the contributions made to social causes, there is a huge gap between the demand of money from the needy and the amount donated by philanthropists. This probably, is the reason why the Government has given tax benefits on donations. The amount donated towards charity attracts deduction under section 80G of the Income Tax Act, 1961. Section 80G has been in the law book since financial year 1967-68 and it seems it’s here to stay. Several deductions have been swept away but the tax sop for donations appears to have survived the axe. The main features of tax benefit with respect to charity are as follows:

What kind of Assessee Contribute to 80G?
Any person or ‘assessee’ who makes an eligible donation is entitled to get tax deductions subject to conditions. This section does not restrict the deduction to individuals, companies or any specific category of taxpayer.

What type of Donation is eligible?
Donation in kind do not entitle for any tax benefits. For example, during natural disasters such as floods, earthquake, and many organisations start campaigns for collecting clothes, blankets, food etc. Such donations will not fetch you any tax benefits.

Deduction amount U/s. 80G:
Donations paid to specified institutions qualify for tax deduction under section 80G but is subject to certain ceiling limits. Based on limits, we can broadly divide all eligible donations under section 80G into categories:

• 100% deduction without any qualifying limit (e.g., Prime Minister’s National Relief Fund).
• 50% deduction without any qualifying limit (e.g., Indira Gandhi Memorial Trust).
• 100% deduction subject to qualifying limit (e.g., an approved institution for promoting family planning).
• 50% deduction subject to qualifying limit (e.g., an approved institution for charitable purpose other than promoting family planning).
  

What is the Limit?
The qualifying limits u/s 80G is 10% of the adjusted gross total income. The limit is to be applied to the adjusted gross total income. The ‘adjusted gross total income’ for this purpose is the gross total income (i.e. the sub total of income under various heads) reduced by the following:

• Amount deductible under Sections 80CCC to 80U (but not Section 80G).
• Exempt income.
• Long-term capital gains.
• Income referred to in Sections 115A, 115AB, 115AC, 115AD and 115D, relating to non-residents and foreign companies.
  

Read More