Taxexcel: New Income Tax Section as per the new Finance Budget 2014-15

Click to download All in One TDS on Salary for Private Employees for the Financial Year 2014-15 as per Finance Budget 2014.[ This Excel Utility can prepare at a time Tax Compute Sheet + Automated HRA Exemption Calculation + Automated Form 16 Part A&B and Part B ]

As you are aware, the Union Budget for FY 2014-15 was tabled in the Parliament by the Finance Minister of India on 10-Jul-2014. There are some changes to the computation of tax on salary which payroll managers need to consider for FY 2014-15.

1. Changes in tax rates

The revised tax rates for salaried employees (aged 60 years and below) for FY 2014-15 are as follows.

Total Income for the Year in Rs.	Tax Rate in %
Up to 2,50,000	Nil
2,50,001 to 5,00,000	10
5,00,001 to 10,00,000	20
Above 10,00,000	30

The revised tax rates for salaried employees (aged above 60 years but below 80 years) for FY 2014-15 are as follows.

Total Income for the Year in Rs.	Tax Rate in %
Up to 3,00,000	Nil
3,00,001 to 5,00,000	10
5,00,001 to 10,00,000	20
Above 10,00,000	30

2. Increase in deduction under Section 80C

The deduction under 80C (Life insurance premium, PPF, investment in National Savings Certificate, interest from notified bank deposits, principal repayment on housing loan, etc.) was restricted to Rs.1 lakh in 2013-14. The same has been increased to Rs. 1.5 lakh for 2014-15.

Consequent to the change in section 80C, section 80CCE has been amended so as to raise the

limit of aggregate deduction under sections 80C, 80CCC and 80CCD from Rs. 1 lakh to Rs.1.5 lakh.

3. Increase in deduction under Section 24 – Interest on housing loan

The tax deduction on housing loan interest payment (for a self occupied property) was restricted to Rs. 1.5 lakh per annum in FY 2013-14. For the year 2014-15, the limit has been increased to Rs. 2 lakh.

There is no reference to Section 80EE in the Finance Bill for FY 2014-15. Hence, the carry forward of unutilized tax deduction for first time owners of residential property, if applicable, is available for FY 2014-15.

Note:
1. The Education Cess stays at 3%.
2. In case the total taxable income goes beyond Rs. 1 crore in the year, a surcharge of 10% (subject to marginal relief) is to be deducted – as it was in FY 2013-14.

What about the tax credit of up to Rs. 2,000?

We have received queries from payroll managers regarding the availability of Rs. 2,000 tax credit in FY 2014-15. The Financial Bill tabled in the Parliament does not provide for the removal of tax credit under Section 87A. Hence, the tax credit of Rs. 2,000 is available for FY 2014-15 as long as the total income does not exceed Rs. 5 lakh for the year.

How about some reforms?

Now that the new government has presented the first budget of its term, it is probably time that the government turned its attention to simplifying the administration of tax on salary. The current procedures are needlessly complex and procedurally cumbersome for employers. Here are some suggestions:

a. Make TDS on salary similar to TDS on other payments. Employers could be asked to deduct a standard rate (say, 10%) and the primary responsibility of payment of tax on salary could be placed on employees.

b. Stop asking employers to verify the proof of investment while providing tax benefits to employees. Employers expend significant efforts each year in scrutinizing the documents submitted by employees. Surely, organizations are better off focussing on their business transactions rather than working as an extension of the Income Tax Department.

c. Do away with or simplify calculation of some of the tax exemptions. We have talked about the complexity related to calculation of exemptions such as those on Leave Travel Allowance in earlier posts.

d. Do away with quarterly return (Form 24Q) and instead ask employers to submit the break-up of TDS on salary along with the PAN of individual employees at the time of monthly TDS remittance (similar to providing employee-wise breakup of Provident Fund amounts in the PF challan).

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Click here to download the All in One TDS on Salary for Govt & Non-Govt Employees for the Financial Year 2014-15 & Assess Year 2015-16 ( This Utility Can use both of Govt and Non-Govt Employee and this utility can prepare at a time your Tax Compute Sheet + Auto Arrears Relief Calculation + Form 10E + HRA Exemption Calculation + Form 16 Part B + Form 16 Part A&B) as per the new Finance Budget Tax Slab for the Financial Year 2014-15)

Most of the Income Tax Payees are known to save the Income Tax from the Income Tax Section 80 C, but in the Income Tax Act, several Section which can reduce your Tax Liability by this Section. All the Details are given below:-

Before you calculate your tax liabilities, 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.

Click here to download the All in One TDS on Salary for Govt & Non-Govt Employees for the Financial Year 2014-15 & Assess Year 2015-16

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.

80EE :

The Interest paid after 1/4/2013 this section can get extra benefits or relief from House Building Loan Interest up to Rs. 1 Lakh, this Section has already introduce from the Financial Year 2013-14 and subsequent Financial year also. This Section is separate from the Income Tax Section 24B

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 Defense 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.

80 TTA :-

By this section you can get Income Tax relief from your Savings Bank Interest Max Rs. 10 Thousand, who’s Taxable Income not more than 5 Lakhs or above.

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.