In chapter VIA of the income tax act, 1961, the most widely used option to save tax is section 80C. This section allows an individual and HUF to save tax by investing in or spend on certain specified avenues. The maximum limit up to which you can claim tax deduction under section 80C is Rs 1,50,000 for the financial year 2018-19 and 2019-20.
Showing posts with label Income Tax Deduction U/s 80C. Show all posts
Showing posts with label Income Tax Deduction U/s 80C. Show all posts
Sunday 17 May 2020
Monday 24 September 2018
Sunday 3 September 2017
Tuesday 17 January 2017
Some of the Govt and Non-Govt Concerned have few employees who have need some of the Form 16 Part B or Part A&B for F.Y.2016-17. Some of the Concerned have not competent to download From 16 Part A from the TRACES PORTAL. Also, it appears that some of the Concerned have no Internet Facility to download the Form 16 Part A from the TRACES PORTAL as per the Income Tax Notification.
In this concept below given Excel Based Software which can prepare both of Form 16 Part A&B and Form 16 Part B. If you have to need Form 16 Part, you can print the Form 16 Part A or if you have to need Form 16 Part A&B you can print the Part A&B for F.Y.2016-17.
Download Excel Based Software which can prepare at a time Income Tax Form 16 Part A&B and Form 16 Part B ( One by One). from the below link.
A feature of this Excel Utility:-
1) You can prepare both of Form 16 Part A&B and Form 16 Part B for F.Y.2016-17 ( One by One)2) Automatic Calculation of Income Tax liability as per Finance Budget 2016-17
3) You can prepare more than 50 employees Form 16 Part A&B and Form 16 Part B ( One by One)
4) Easy to install in any computer and easy to generate just like as an Excel File
5) All Income Tax amended Section and limit of each section have in this Software
6) Automatic Convert the Amount into the In-Word
Download Automated Form 16 Part A&B and Part B ( One by One) for F.Y.2016-17
Monday 19 December 2016
It’s time of the year when everyone including your employer is worried about your taxes. Most people would have received mail from their Accounts department about “submission of proofs for investments done to claim income tax exemption”. In case you have not, it might be on its way.
This post helps you understand why salaried class needs to submit these proofs to their employers, how it should be done, what documents to be submitted and if there is a deadline?
Download & Prepare at a time 100 employees Income Tax Form 16 Part B for F.Y.2016-17[This Excel Utility can prepare at a time 100 employees Form 16 Part B as per the latest amended tax section as per the Finance Bill 2016-17]
Why Employers Ask for Tax Saving Investment Proofs?
Employers are responsible for deducting income tax (TDS – Tax deduction at source) from the salary paid to its employees and deposit the same to income the tax department. But income tax is complicated and the final tax depends on the tax saving investments a person makes or if the person lives on rent or if he has a house. So to compute your taxes correctly your employer asks for a declaration at the start of the financial year (in April). The TDS is deducted based on this declaration.
As we approach the end of financial year, an employer wants to make sure you did what you declared as it impacts the tax calculation. So it asks you to submit proofs for income tax saving investment that you made, rent receipts along with any other documents. Once the proof is submitted the employer computes tax based on the actual investments made and TDS is adjusted accordingly.
When does Employer ask for Proofs?
There are no guidelines about when any employer should ask for investment proofs. Some companies start asking for the same in December but most of them would ask for it before the end of January. This is asked so early on as the enhanced tax deduction can be done from 2-3 months’ salary. Also, this awakens the lazy ones and they start their tax planning.
What if you do not Submit the Proofs?
In case you do not submit the proofs, an employer would not be able to give you tax benefit on your tax saving investments. This would lead to higher deduction of taxes. You can claim the refund of these taxes only during filing of tax returns.
Documents to be Submitted
Indian income tax laws are complicated and have multiple exemptions and investment options. Below is the list of documents that needs to be submitted to your employer to get relevant tax deductions.
House Rent Allowance (HRA) u/s 10(13A)
Following documents need to be submitted to claim tax benefit on HRA:
§ Rent receipt for starting and the end month and of the intermediate month in case there has been the change in rent or rented accommodation. So you need to submit rent receipt for April and Dec/Jan if there is no rent change.
§ The rent receipt must have One rupee revenue stamp on it (ideally a revenue stamp is required for receipts if the rent is paid by cash and is over Rs.5,000 but most employers still ask for it).
§ No rent receipt is required if the monthly rent paid is below Rs.3,000
§ Some employers may also ask for the copy of rent agreement.
§ If the annual rent paid exceeds Rs 1 lakh you also need to give PAN number of the landlord. In case your landlord does not have PAN card, a declaration needs to be submitted stating so.
Home Loan Interest u/s 24
§ Copy of Provisional Interest certification from Bank/Financial Institution stating the amount of principle and interest separately.
§ The certificate should also have the loan sanction date
§ Copy of Possession Certificate
§ Copy of Sale Deed (In case possession letter in not available)
§ Copy of Lease deed, in case of letting out property
§ In case of Joint Home Loan, self-declaration of the ownership proportion needs to be furnished
§ Form 12C
Medical Insurance Premium u/s 80D
§ Copy of Insurance Premium receipt paid
§ Copy of receipt for Preventive Health Checkup for self, spouse, dependent children or parents
Interest on Repayment of Education Loan u/s 80E
§ Copy of Provisional Interest certification from Bank/Financial Institution showing the interest and principle separately.
Rajiv Gandhi Equity Saving Scheme (RGESS) u/s 80CCG
§ Demat Account Statement
§ Self declaration stating RGESS enabled investments
Handicapped dependent u/s 80DD
§ Amount paid or deposited under any scheme framed in this behalf by the LIC or UTI or any other insurer and approved by the Board for the maintenance of the handicapped dependent
§ Physical disability certificate from a physician, a surgeon, or a psychiatrist, as the case may be, working in a Govt. hospital. The certificate should contain the employee’s name and percentage of Disability clearly.
§ Form 10-IA.
Medical Treatment Expenses u/s 80DDB
§ Medical Bills/expenditure incurred by way of medical treatment for a specified disease along with a certificate from a hospital in the prescribed form.
§ Form 10-I
National Pension Scheme u/s 80CCD(1B)
§ Photo copy of deposit receipt or account statement of Pension Scheme where you invest the amount.
Section 80C Deductions:
S.No.
|
Investment Type
|
Documents as Investment Proof
|
1
|
Life Insurance Premium
|
Copy of Premium Receipt. Late payment fees will not be included as premium paid
For the premium falling due after submission deadline, attach previous year’s receipt with declaration (Download: Declaration for Insurance Premium Payment)
|
2
|
Public Provident Fund (PPF)
|
Copy of passbook/statement along with the cover page showing investor’s name OR
Copy of the deposit challan duly acknowledged by the Bank
|
3
|
Senior Citizens’ Savings Scheme
|
Copy of passbook/statement along with the cover page showing investor’s name OR
Copy of the deposit challan duly acknowledged by the Bank
|
4
|
NSC
|
Copy of the Certificates purchased during the financial year
For accrued Interest on NSC – Copy of Certificates to be enclosed with date of purchase and the amount
|
5
|
ELSS (Tax Saving Mutual Fund)
|
Copy of Account Statement
|
6
|
Children’s Tuition Fees
|
Copy of receipts for Tuition Fees and Exam Fees (excluding Donations & Development fees, Bus / Transportation charges, Text Books, Private Tuitions or Tutorial Fees) paid to any University/College/School or Other Educational Institution in India during the current year for a maximum of 2 children.
|
7
|
Sukanya Samriddhi Yojana
|
Copy of passbook/statement along with the cover page showing investor’s name OR
Copy of the deposit challan duly acknowledged by the Bank
|
8
|
Pension Plan from Insurance Companies
|
Copy of Premium receipt
For premium falling due after Jan ’16. Please attach previous year’s receipt with declaration (Download: Declaration for Insurance Premium Payment)
|
9
|
Post Office Tax Saving Term Deposit
|
Copy of deposit receipt
|
10
|
Tax Saving Bank Fixed Deposits
|
Copy of Deposit Receipt OR Account Statement
|
Wednesday 9 November 2016
Main deduction of Section 80C for the Financial Year 2016-17 as per Finance Bill 2016-17.
Section 80C replaced the old Sec.88 and came into effect from 1st April 2006. The current maximum limit of Deduction under Section 80C is Rs.1,50,000 in a financial year. The earlier limit of Section 80C was Rs.1,00,000 up to FY 2014-15. Later on, it was increased to Rs.1,50,000 and same is continued.
Section 80C constitutes many investment options for tax savers. Hence, it is the top most choice for many. But many believe that only investments can be claimed for Deduction under Section 80C but the reality is some expenses like tuition fee or home loan are also part of such Deduction under Section 80C.
This section is available only for individuals and HUF only.
1) Life Insurance Premium
2) Public Provident Fund
3) Employees’ Provident Fund (EPF) and Voluntary Provident Fund (VPF)
Any contribution you made (employees) made towards EPF and VPF will qualify for deduction under Section 80C. This is the automatic option of investment, which salaried will enjoy. Hence, you can claim this investment without any hassle.
4) Equity Linked Savings Scheme or Tax Saving Mutual Funds (ELSS)
These are actually equity oriented mutual funds. Such Mutual Funds will offer you 3-years lock-in. After three years you are free to withdraw the amount. But keep in mind that If you start SIP in the month of July 2016, then you are eligible to withdraw this invested amount (units) only after July 2019. Next month SIP will be after August 2019. So if you start the SIP of a year, then you will not be eligible to withdraw all amount exactly after the 3 years from first SIP investment. But after 4th-year completion, you can withdraw the whole amount.
One more thing to keep in mind that ELSS mutual funds are equity-oriented products. Hence, do keep in mind that equity investment is meant for long term. Therefore, never enter into ELSS with a belief that after 3 years you can withdraw it. The market may give you negative returns too.
5) Sukanya Samriddhi Account Scheme
Any amount you invested under Sukanya Samriddhi Account Scheme will be eligible for deduction under Section 80C. Note that this the girl child scheme launched by Government. I wrote about this product long back. Please click on below post to read about the same.
6)National Savings Certificate [ N.S.C.]
This is the post office savings scheme. The minimum you can invest Rs.100 and there is no maximum limit. It is a 5-year product. This is the most famous product among all tax savers. But do remember that it is an illiquid product. I wrote about NSC long back. Please refer below posts for the same.
7) 5 Yrs Bank and Post FDs
These are fixed deposit meant for tax saving purpose and lock-in will be 5 years. Any amount you invested under such FDs will qualify for deduction under Section 80C. Please note that there are many variants of FDs like a year, 2 yrs, 3 years or 5 years (in both bank and Post Office). But 5 years FDs will only qualify for tax saving purpose.
8) Home Loan Principal
In your home loan EMI, the total part of principal repayment will qualify for deduction under section 80C. Few points to remember.
- Tax Benefit will be on payment basis but not on due basis. Let us your repayment towards principal was due in March 2016. But you paid it in April 2016 means such principal repayment will be considered for deduction under section 80c for FY 2016-17 but not for FY 2015-16.
- Principal repayment during construction period will not qualify for tax deduction. You can claim the deduction only after the construction is over.
- You will not get any tax benefits for those periods of construction during which you paid principal.
- If you transfer (sold) the property before the expiration period of 5 years from the end of the Financial Year in which he obtains the possession, then aggregate amount of tax deduction already claimed in respect of previous years shall be deemed to be the Income of the Assessee of such year in which the property has been sold and the Assessee shall be liable to pay tax on such income.
Download Automated All in One Income Tax Preparation Excel Based Software for Govt & Non Govt employees for F.Y.2016-17 [This Excel Utility can prepare at a time your tax computed sheet + Automatic H.R.A. Calculation + Individual Salary Sheet + Salary Structure for both of Govt & Non-Govt employees + Automatic Arrears Relief Calculation with Form 10E + Automatic Form 16 Part A&B and Form 16 Part B for F.Y.2016-17]
9) Stamp Duty and Registration Charges of home buying
Any amount you pay towards stamp duty and registration charges while buying a home will be eligible for deduction under Section 80C for the year in which you buy the house.
10) Tuition Fee-
Any amount you paid towards tuition fee of your kids (maximum 2 kids per individual) will eligible for deduction under section 80C. Few points to remember-
- An individual can claim up to the maximum of 2 kids.
- The deduction is available only towards tuition fee.
- Full-time courses are only eligible for deduction.
- Development fees or donations will not be eligible for deduction.
- Education institute must be situated in India.
- The school, college or university in which child studies should have necessary affiliations.
- You can claim the tax benefits for your adopted kid also (but within a limit of 2 kids).
11) Other options to claim deduction under Section 80C of IT Act- newly amended from the F.Y.2015-16 and 2016-17
I discussed the major options available for an individual or HUF to avail the deduction under section 80C. Below are few other options which are also be part of this Section 80C.
Newly amended Section
(1) 80CCD(2) Employer Contribution which is an additional deduction of U/s 80C.
(2) 80CCD(1B):- Contribution to the Pension Scheme Up To Rs. 50,000/- This amount is also additional deduction out of the limit of U/s 80C 1.5 Lakh.
Saturday 9 April 2016
We will cover here the complete detail about deduction under section 80C for A.Y.2016-17 &
A.Y.2017-18 (Announced in Budget 2016/ Finance Bill 2016).
There are lots of deductions comes under Chapter VI-A from section 80C to 80U like
80HH, 80RRB, 80U and more. But this article is exclusively for the deduction
comes under section 80C.
Aggregate amount of
deduction u/s 80C, 80CCC, 80CCD and new section 80CCE is restricted to
Rs.1,50,000.
Download Automated All in One TDS on Salary forGovt & Non-Govt employees for Financial Year 2016-17 & Assessment Year2017-18 [This Excel Utility can prepare at a time Tax Compute Sheet + Individual Salary Structure + Individual Salary Sheet + Automatic H.R.A. Calculation + Automated Arrears Relief Calculator with Form 10E up to FY 2016-17 + Automated Form 16 Part A&B and Part B for F.Y.2016-17 & A.Y.2017-18]
You can avail the benefit of deduction u/s 80C by
investing in the following schemes.
1. Payment for Life
Insurance Premium.
2. Payment for Deferred
Annuity Plan.
3. Deferred Annuity
Payable by Government.
4. Contribution to
Public Provident Fund.
5. Contribution to
Provident Fund set up by Central Government.
6. Contribution to
Recognised Provident Fund.
7. Contribution to
recognized superannuation fund.
8. Subscription to any
security or deposit notified by Government.
9. Subscription to
Saving Certificates.
10. Subscription for Unit Linked Insurance Plan 1971.
11. Contribution for Unit Linked Insurance Plan of LIC Mutual
Fund.
12. Payment for annuity plan of LIC or any other insurer.
13. Subscription to units of notified mutual fund.
14. Contribution to notified pension fund of mutual fund.
15. Pension fund set up National Housing Bank.
16. Subscription to a deposit scheme of public sector company
engaged in providing long term finance for housing.
17. Tuition fees of two children in India
18 Payment of installment for self-financing of a residential
property for repayment of loan.
19 Subscription to equity shares or debentures as approved for
infrastructure.
20. Subscription to any units of mutual fund as approved by the
Central Board of Direct Taxes.
21. As per the Finance Act, 2006 for F.Y. 2006-07, a term-deposit
for a fixed period of not less than five years with a scheduled bank would also
qualify for tax deduction under Section 0 C within the overall limit of Rs. 1
lakh. This deduction to some Rules.
22. Notified bonds of NABARD.
23. Deposit in an account under the Senior Citizens Savings Scheme Rules, 2004.
24. Five-years time deposit in an account under the Post Officer
Time Deposit Rules, 1981.
Some Popular Schemes
Comes Under Deduction Under Section 80C
Life Insurance Premium: You can get deduction by depositing or paying life
insurance premium in previous year. You must note here that premium paid on
behalf of wife/husband/child or any member of the family where assesse in an
HUF. Child includes adult children also, Thus, deduction is available in
respect of premium paid on a policy on the life of a married daughter.
Provident Fund & Public
Provident Fund: You can claim deduction under section 80C for the amount
deposit in provident fund also. The amount deposit in the name of
wife/husband/child or any member of the family where you are as an HUF is also
eligible for deduction u/s 80C. The
annual contribution upto Rs.1,00,000 (A.Y.2014-15) or Rs.1,50,000 (A.Y.2017-18,
A.Y.2016-17 & A.Y.2015-16) is eligible for deduction under section 80C. You
can deposit Rs.1,00,000 (A.Y.2014-15) or Rs. 1,50,000 (A.Y.2015-16) in PPF A/c
even if you have paid the amount in LIC, NSC,
ULIP etc. However, the deduction u/s 80C is available on the total contribution
of PPF, LIC, ULIP, etc. up to maximum of Rs.1,50,000 [Rs.1,00,000 for
A.Y.2014-15]. Interest on PPF is not treated as reinvestment for purpose
of section u/s 80C is available even if the contribution is made in the PPF
account of minor/major children or spouse.
National Saving Certificates (NSC): You can also get
deduction under section 80C for the amount deposit in national saving
certification along with PPF/LIC/ULIP up to maximum of Rs.1,50,000 accrued
during the year. There is no TDS deduction for repayment of NSC.
Interested accrued during the year (except for the last year) shall be deemed
to be reinvested and shall also qualify for deduction u/s 80C.
Bank Term Deposit Schemes: Amount invested in bank term deposits along with
PPF/LIC/NSC/ULIP etc. up to a maximum of Rs.1,50,000 (Rs.1 lakh for
A.Y.2014-15) is also eligible for deduction under section 80C. The maturity
period for bank term deposit schemes is 5 years.
Post Office Time Deposit Schemes: You can also opt for post office time deposit to get deduction
under section 80C up to Rs.1,50,000. You must note that the deduction is
available only to the first holder.
Mutual Fund Schemes: Some of the schemes of mutual funds are
eligible for deduction u/s 80C along with other investments give above. The
income from mutual funds is also fully exempted u/s 10 (35).
Senior Citizens Saving
Scheme, 2004: You can also get
benefit of Senior Citizens Saving Scheme to get deduction u/s 80C of
Rs.1,50,000 [Rs.1,00,000 for A.Y.2014-15]. No TDS deduction is required
if you provide form 15H/15G (as the case may be).
NABARAD Rural Bonds: The deduction is also available under
section 80C for subscription to notified bonds issued by National Bank for
Agriculture and Rural Development.
ULIP: The deduction is also eligibile for the amount deposit
in the name of himself, his/her wife/husband or his child, and an HUF in the
name of its members to any Unit Linked Insurance Plan of UTI.
Tuition Fees: You can claim the deduction of paying the
tuition fee of your two children. Here, you should note that tuition fees
eligible paid to any university, college, school or other educational
institution situated in India
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