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Showing posts with label Maximum limit of U/s 80C. Show all posts
Showing posts with label Maximum limit of U/s 80C. Show all posts

Friday, 9 January 2015

Click here to Download Automatic All in One Income Tax Preparation Excel Based Software for FY 2014-15 (This Excel Based Software  can prepare at a time Income Tax Computed Sheet + Individual Salary Sheet + Individual Salary Structure for Govt and Non Govt employees + Automatic Arrears Relief Calculator + Automatic HRA Exemption + Form 16 Part B and Form 16 Part A&B for Govt and Non Govt Concern's Employees for the Financial Year 2014-15 and Assessment Year 2015-16)

Under Section 80 C ( Max Limit Rs. 1.5 Lakh)
The total limit under section 80C 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

Most of the Income Tax payee try to save tax by saving under Section 80C of the Income Tax Act.  However, it is important to know the Section in toto so that one can make best use of the options available for exemption under income tax Act.   One important point to note here is that one can not only save tax by undertaking the specified investments, but some expenditure which you normally incur can also give you the tax exemptions.
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
Sec 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.
Qualifying Investments
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.
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. Interest on PPF  is proposed to increase to 8.60% and Investment Limit is also expected to increase to Rs. 1,50,000/- 
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.
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.
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.
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.

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.

 
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.
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.
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.
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.
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.

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.
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.
So, where should you invest?
Like most other things in personal finance, the answer varies from person to person. But the following can be the broad principles:

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.

Home Loan Principal: If you are paying the EMI for a home loan, this one is automatic too! So, it comes as a close second.

Life Insurance Premiums: Every earning person having dependents should have adequate life insurance coverage. (For more on this, please read “Life after life – Why you should buy Life Insurance”) Therefore, life insurance premium payments are the next.
Voluntary Provident Fund (VPF) / Public Provident Fund (PPF): If you think that the PF being deducted from your salary is not enough, you should invest some more in VPF, or in PPF.

Equity Linked Savings Scheme (ELSS): After the above, if you have not reached the limit of Rs. 1,50,000, then you should invest the remaining amount in Equity Linked Savings Scheme (ELSS).

Tuesday, 18 November 2014

Click here to download Master of Form 16 Part A&B for the Financial Year 2014-15 ( This Excel Based Utility can prepare at a time 50 employees Form 16 Part A&B). 

Who are not able to download the Form 16 Part A from the TRACES Portal, they can use this Excel Utility. The details of deduction U/s 80 is given below as per the latest amended for the Financial Year 2014-15.


Chart for deduction u/s 80C to 80U  Rebate u/s 87A
Section
Details of deductions
Quantum
Remarks
80C (Individual
& HUF)
A. ULIP of Spouse and Children and any member in case of HUF
B. Deferred annuity, SPF, RPF, PPF, Superannuation Fund, NSC(8TH),5 years   PO Time deposit, Senior citizen Saving Scheme, Term deposit of 5 years, Deposit for 10 or 15 years in Post office saving bank.
C. Bonds of NABARD, Deposit scheme of NHB, Notified deposit scheme,.
D. MF referred u/s 10(23D), Pension fund of MF[10(23D)], Eligible issue of securities.
E. Cost of purchase or construction of residential house including repayment of loan and expenses on transfer of property, tution fees to any educational institutions for full time eduction of 2 childrens.
Maximum Rs 1 ,50,000 is allowed Investment.

No Dedcution Allowed:
Terminates the insurance policy within 2 years, Terminate ULIP within 5 years, transfer house within 5 years
Limit of eligible premium in case of insurance policy on life of disable person has been increased to 15 % instead of 10 % from FY 13-14.
Max. 10% of the minimum amt assured under Life policies
80CCC
(Individual)
Deduction in case of contribution to pension fund. However, it should be noted that surrender value or employer contribution is considered income.
Maximum is Rs 1,00,000
Aggregate of 80C  80CCC  80CCD is Rs 1,00,000
80CCD
(individual)  
Deduction in respect to contribution to new pension scheme. Employees of central and others are eligible.
Maximum is sum of employer’s and employee’s contribution to the scheme limited upto 10 % of salary.
Aggregate of 80C  80CCC  80CCD is Rs 1,00,000
80CCE
It should be noted that employer contribution is allowable as extra u/s 80CCD(2) of the Income Tax Act from Asst Yr 2012-13 and only employee's contribution is within limit of Rs 1 Lakh as stated in 80CCE
It should be noted that as per section 80CCE , the maximum amount of deduction which can be claimed in aggregate of 80C ,80CCC  80CCD(1) is Rs 1,00,0000

80CCG
Individual having gross total income upto Rs 12 Lakh can claim this deduction for inveting in IPOs of share or mututal fund units.
50 % 0f the invested amount . Limit is Rs 25,000 max.
The deduction is allowed for three years only.
80D
(Individual &HUF)
Medical insurance on self, spouse , children or parents. The deuction is also allowable for CGHS contribution to Cenral and State scheme. It is also for conducting health check up to Rs 6000.
Age Below 60 years: Rs 15,000 including Rs. 5000 on preventive checkup for self , spouse  children + Rs 15,000 for insurance on parents.
Age above 60 years: Replace Rs 15,000 with 20,000.
Cash payment not allowed. But for Preventive Checkup it is allowed.
80DD (Individual &HUF)
For maintenance including treatment or insurancing the lives of physical disable dependent relatives
Rs 50,000 . In case disability is severe , the amount is Rs 1,00,000.
dependent relatives includes spouse, child, parents, brother sister
80DDB (Individual &HUF)
For medical treatment of self or relatives suffering from specified disease
Acutal amount paid to the extent of Rs 40,000. In case of patient being Sr Citizen , amount is Rs 60,000.
Deduction reduced by the amount received under insurance from an insurer or reimbursed by an employer.
80E
(Individual)
For interest payment on loan taken for higher studies(after 12)  for self or education of spouse or children
Actual amount paid as interest and start from the financial year in which he /she starts paying interest and upto maximum of 8 years.
loan from any financial institution banking or approved charitable institution
80EE
interest on home loan sanctioned during Fy 2013-14. However, value of the property should be below Rs 50 Lakh and max loan sanctioned should be Rs 25 lakh. Further assessee should not have any other residential house.
RS 1 lakh

80G
(All Assessee)
Donations to charitable institution
(Max. 10,000 if paid in cash from A/Y 13-14)
100% of amount of donation made to 19 entities (National defense fund , Prime minister relief fund etc. ).  50%  (Gandhi/ Drouhgt/ charitable purpose/infrastructural development fund). For Asst Yr 2014-15, Natital Children Fund will also get 100% deduction.
Where the aggregate
of sums exceed 10% of adjusted gross total income, then such excess amount is ignored for computing such aggregate.
80GG
For rent paid
This is only for people not getting any House Rent Allowance. Maximum is Rs 2000 per month. Rule 11B is method of computation.

80GGA
For donation to entities in scientific research or rural development (Max. 10,000 if paid in cash from A/Y 13-14)
Only those tax payers who have no business income can claim this deduction .Maximum is equivalent to 100 % of donation.
Cash payment not allowed
80GGB  80GGC
For contribution to political parties
100 % of donations
Cash payment not allowed
80QQB
Allowed only to resident authors for royalty income for books other than text book
Royalty income or Rs 3,00,000 whichever is less.

80RRB
For income receipt as royalty on patents of resident individuals
Actual royalty or Rs 3,00,000 whichever is less.

80U
Deduction in respect of permanent physical disability including blindness to taxpayer
RS 50,000 which goes to Rs 1,00,000 in case taxpayer is suffering from severe disability.

87A
Rebate to individual having low taxable income
Amount of tax or Rs 2,000 which ever is less
Only resident individual gets this rebate.

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