- Investments Qualifying for deduction under section 80C Max Rs. 1.5 Lakh
Showing posts with label Section 80C. Show all posts
Showing posts with label Section 80C. Show all posts
Thursday 9 January 2020
Saturday 21 December 2019
As per the latest Central Finance Budget 2019
have some changed along with the Income Tax Slab for the Financial Year
2017-18.The Tax benefits who have already get the House Building Loan, they
have also good news in this Central Financial Budget 2019. Now look how to get
tax benefits on paying Rent & taking home loan interest:-
Wednesday 11 December 2019
As per the latest Central Finance Budget 2019
have some changed along with the Income Tax Slab for the Financial Year
2017-18.The Tax benefits who have already get the House Building Loan, they
have also good news in this Central Financial Budget 2019. Now look how to get
tax benefits on paying Rent & taking home loan interest :-
Monday 9 December 2019
As per the latest Central Finance Budget 2019
have some changed along with the Income Tax Slab for the Financial Year
2017-18. The Tax benefits who have already get the House Building Loan, they
have also good news in this Central Financial Budget 2019. Now look how to get
tax benefits on paying Rent & taking home loan interest:-
Monday 7 January 2019
Monday 31 December 2018
Thursday 20 December 2018
Sunday 21 October 2018
Thursday 23 November 2017
Download All in One TDS on Salary for Non-Govt (Private) employeesfor the Financial Year 2017-18.
[ This Excel Based Software can prepare at a time Tax Compute sheet +Automatic HRA Calculation + Form 12 BA + Form 16 Part A&B and Part B for F.Y. 2017-18]
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Automated Form 12 BA
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Automated Form 16 Part B
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Wednesday 27 September 2017
Generally all of us think that taking a loan to buy a residential property is not a good idea and so, they start saving some amount from their monthly income into recurring investment or a Systematic Investment Plan (SIP) offered by mutual funds. But the financial planners recommend that for acquiring a house for self use, one should go for a housing loan and pay EMIs in place of going for recurring investment or SIP in other investment product.
Wednesday 5 July 2017
Wednesday 1 June 2016
Download All in One TDS on Salary for Govt & Non-Govt Employees for F.Y.2016-17 & AssessmentYear 2017-18 [This Excel Utility can prepare at a time Tax Computed Sheet + Individual Salary Structure + Automated H.R.A. Exemption Calculation U/s 10(13A) + Automated Arrears Relief Calculation U/s 89(1) with Form 10E + Automated Form 16 Part A&B + Automated Form 16 Part B for F.Y.2016-17 with all amended as per Budget 2016]
Many of us take a home loan to buy the dream
home. However, we hardly know the tax benefits associated with Home loan. In
this post, I will throw light on Home loan tax benefits. I will also cover 10
less known facts which are not known to a majority of people.
Home Loan Tax Benefits
Home
Loan EMI payment has two components (1) Principal (2) Interest (Section 24).
You can avail tax benefit on both these components.
·
Principal – You can claim tax deduction on the Home loan principal
paid by you. The limit for this deduction is 1.5 Lac (Section 80C). You can get
details about principal amount paid by you from your lender.
·
Interest – You can also avail tax benefit on the interest
component of the home loan. The total deduction allowed on interest component
is up to 2 Lac. The condition of availing this tax benefit is owner should live
in the house for which home loan is taken or house should be vacant.
Total
Tax Benefit = 1.5 Lac Principal (80 C) + 2 Lac Interest (Section 24) = 3.5 Lac
Now
let’s take a look at 10 less known facts about home loan tax benefit section
24.
10 Less Known facts about Home
Loan Tax Benefits
First time home buyers can
claim additional tax deduction of Rs 50,000 on Home Loan Interest
In
budget 2016 new section 80EE is introduced for the first time home buyers. As
per the new section 80EE, first time home buyers can claim an additional tax
deduction of Rs 50,000 on home loan interest. This deduction is over and above
tax deduction of 2 Lac under section 24 and 1.5 Lac under section 80C.
So, maximum tax benefit shall be
4 Lac per year. This new benefit is applicable under following conditions.
·
You are first time home owner.
·
No other house is owned by you.
·
The value of the loan is less than 35 lacs and property value is
less than 50 lacs.
·
The loan should be sanction between 1st April 2016 and 31st March
2017.
This
benefit shall be extended till the time repayment of home loan continues.
Deduction
is allowed to the borrower and co-borrower
Home loan deduction on principal
and interest is extended to the borrow
and co-borrower both. This means if you have taken a home loan on your and your
wife’s name you and your wife both can claim these tax deductions. So,
effectively you and your wife both can enjoy tax benefit applicable on a home
loan.
No
benefit on principal payment during construction on property
As
per income tax law, you can not avail any tax benefit on principal payment
during the construction of the property. You are eligible for this benefit only
after the project is completed and property possession is given to you.
Preconstruction period interest is also deductible in 5 equal
proportion in 5 years.
You
can claim home loan benefit only on the possession of the property. Any
preconstruction payment towards principal cannot be claimed. However, you can
claim preconstruction period interest payment once you received possession of
the property. The tax deduction benefit on such interest is available equally
over a period of 5 years starting from the year of possession.
Tax benefit on Home Protection Insurance
premium payment
Many
banks offer home protection insurance scheme. If you opt to take home
protection scheme, an insurance premium paid towards this scheme can be claimed
for tax deduction under section 80C. For home protection scheme sum assured and
premium changes with the time.
Principal and repayment tax benefit shall be reversed if you to
sell the property before 5 years.
You
cannot sell the property before 5 years. If you sell the property before 5
years, all principal paid by you in last five years shall be reversed and added
to your income. In addition to this, you may need to pay capital gain tax.
Loan from relative and friends
is also eligible for tax benefits
You
can take home loan from your friends and relatives and avail tax benefits.
However, you will not get any tax benefit on the principal amount.
Let
me explain, if you take home loan from your friend you can claim a tax
deduction on interest paid to your friend (Under section 24). The following
condition should be fulfilled in order to avail this tax benefits.
·
You need to submit proof that you have paid interest to your
friend. This may be in the form of a certificate.
·
Your friend needs to show this interest income and he/she need to
pay income tax on this income.
You
can not avail tax benefit on principal payment under such case.
Benefit
of section 80 C, section 24 and HRA
You
can not avail the benefit of HRA if you are living in your own house and
getting tax benefit towards section 80 c and section 24. However, if you are
living in rented house despite owning your own house you can avail the benefit
of section 80 C, section 24 and HRA also.
Buying multiple homes using
home loan
You
can purchase multiple home and avail tax benefits. The benefit under section 80
C for the principal payment shall be capped at 1.5 Lacs for all loans. The
benefit under section 24 for the interest payment for the self-occupied property
shall be 2 Lacs. For the house which is given on rent, there is no limit
on interest payment claim.
Stamp
Duty, Registration fee, Processing Fee and Tax Deduction
In
addition to principal and interest component other expenses can also be claimed
for the tax benefit. These expenses include stamp duty, registration fee
expenses etc. All these expenses can be claimed as tax benefit under section
80C. Any processing fees for getting home loan sanction can also be claimed for
tax benefit.
Monday 10 August 2015
Download All in One TDS on Salary for Govt and Non Govt Employees for F.Y.2015-16 [This Excel Utility can prepare at a time Tax Calculation Sheet + Salary Structure + Automatic HRA Exemption Calculation + Form 16 Part A&B and Part B for A.Y.2016-17 ]
1. No Hike in basic exemption Tax limit
The first disappointment comes in the form of no increase in the basic exemption limit. This means the tax slab will remain same for the financial year 2015-16 i.e. assessment year 2106-17 but the surcharge rate of 10% is increased to 12% for the tax payers having income above Rs.1 crore. This increment in the surcharge rate is made to compensate the income from the abolished wealth tax.
2. Section 80C ceiling limit remains Rs.1.50 lakhs per annum
With the inclusion of Sukanya Samriddhi Account Max limit Rs.1.5 Lakh and equity oriented pension funds Max Rs.1.5 Lakh, there was an inevitable need of expanding the threshold limit of section 80C but that did not happen. Section 80C remains intact in budget 2015.
3. Rise in the Health Insurance Premium paid u/s 80D
To spread the health care awareness among individual tax payers, section 80D has been amended by increasing the deduction limit for the premium paid for health insurance to Rs.25,000 for non-senior individuals (earlier Rs.15,000) and Rs.30,000 for senior citizens (earlier Rs.20,000). For super senior citizens (80 years or more) who are not eligible for health insurance get some relief in terms of deduction towards their medical expenses up to Rs.30,000 per year.
4. Additional Tax-Savings under Section 80DD, Section 80DDB and Section 80U
In view of the steep rise in the cost of the medical care, Government has increased deduction limit under section 80U and section 80DD by Rs.25,000 i.e. medical expense of disabled individual and dependent on Individual, from existing Rs.50,000 to Rs.75,000 and in case of severe disability the addition amounts to Rs.50,000 i.e. from existing Rs.1,00,000 to Rs.1,50,000.
Further, Government has also given additional tax sop of Rs.20,000 (from Rs.60,000 to Rs.80,000) on the medical treatment of some specific diseases such as cancer, AIDS etc. for very senior citizens (aged 80 years or more) under section 80DDB.
5. Transport Allowance Doubled
The transport allowance cost has witnessed some sharp increase and to cope up with that Government has doubled the transport allowance from existing Rs.800 per month to Rs.1,600 per month which totaled to Rs.19,200 per year.
6. Home Loan Interest Deductions remains Intact
The limit of home loan interest deduction u/s 24 was hiked in the interim budget last year to Rs.2 lakhs. But with the rising cost of property, there was a need of increasing this deduction limit to Rs.3 lakhs which was not met. So the ceiling limit of home loan interest for the self-occupied property remains intact at Rs.2 lakhs per year under section 24(b).
7. National Pension Scheme u/s 80CCD increased by Rs.50,000
Investments towards National Pension Scheme has got some additional tax sops of Rs.50,000 over and above the Section 80C ceiling limit of Rs.1.50 lakhs.
Deduction limit of investment towards pension plans, annuity plans and new pension scheme is hiked to Rs.1.50 lakhs from earlier threshold limit of Rs.1 lakhs. In the previous budget, the limit of section 80C was hiked but the deduction limit for pension plans capped to Rs.1 lakh only; now, budget 2015 has removed that anomaly.
Summary of all Deductions
8. Service tax rate increased to 14%
A major hit to the common men comes in the guise of service tax. Budget 2015-16 has hiked the service tax rate from existing 12.36 to 14%. This means now every service such as eating food outside, paying your mobile or gymnasium bills etc. would attract extra tax.
Saturday 1 August 2015
Click here to download the Automatic Master of Form 16 Part B ( This Excel Utility can prepare at a time 100 employees Form 16 Part B for the Financial Year 2014-15)
Updated list of deductions available Chapter VI-A while calculating Income Tax for Individual & also helpful for tax planning. Section 80C:
Under this section deduction from total income in respect of various investments/ expenditures/payments in respect of which tax rebate u/s 88 was earlier available. The total deduction under this section (alongwith section 80CCC and 80CCD) is limited to Rs. 1.5 lakh only.( As per the Finance Budget 2014-15 the Max Limit of U/s 80 C HAS RAISED UP TO RS. 1.5 LAKH)
1. Life Insurance Premium For individual, policy must be in self or spouse's or any child's name. For HUF, it may be on life of any member of HUF.
2. Sum paid under contract for deferred annuity For individual, on life of self, spouse or any child .
3. Sum deducted from salary payable to Govt. Servant for securing deferred annuity for self-spouse or child Payment limited to 20% of salary.
4. Contribution made under Employee's Provident Fund Scheme.
5. Contribution to PPF For individual, can be in the name of self/spouse, any child & for HUF, it can be in the name of any member of the family.
6. Contribution by employee to a Recognised Provident Fund.
7. Sum deposited in 10 year/15 year account of Post Office Saving Bank
8. Subscription to any notified securities/notified deposits scheme. e.g. NSS
9. Subscription to any notified savings certificate, e.g. NSC VIII issue.
10. Unit Linked Savings certificates.
11. Contribution to notified deposit scheme/Pension fund set up by the National Housing Scheme.
12. Certain payment made by way of installment or part payment of loan taken for purchase/construction of residential house property. Condition has been laid that in case the property is transferred before the expiry of 5 years from the end of the financial year in which possession of such property is obtained by him, the aggregate amount of deduction of income so allowed for various years shall be liable to tax in that year.
13. Contribution to notified annuity Plan of LIC(e.g. Jeevan Dhara) or Units of UTI/notified Mutual Fund. If in respect of such contribution, deduction u/s 80CCC has been availed of rebate u/s 88 would not be allowable.
14. Subscription to units of a Mutual Fund notified u/s 10 (23D).
15. Subscription to deposit scheme of a public sector, company engaged in providing housing finance.
16. Subscription to equity shares/ debentures forming part of any approved eligible issue of capital made by a public company or public financial institutions.
17. Tuition fees paid at the time of admission or otherwise to any school, college, university or other educational institution situated within India for the purpose of full time education of any two children. Available in respect of any two children Section 80CCC: Deduction in respect of Premium Paid for Annuity Plan of LIC or Other Insurer Payment of premium for annuity plan of LIC or any other insurer Deduction is available upto a maximum of Rs. 150,000/-.
The premium must be deposited to keep in force a contract for an annuity plan of the LIC or any other insurer for receiving pension from the fund.
Section 80CCD: Deduction in respect of Contribution to Pension Account Deposit made by a Central government servant in his pension account to the extent of 10% of his salary. Where the Central Government makes any contribution to the pension account, deduction of such contribution to the extent of 10% of salary shall be allowed. Further, in any year where any amount is received from the pension account such amount shall be charged to tax as income of that previous year.
18. Section 80CCG: Rajiv Gandhi Equity Saving Scheme As per the Budget 2012 anouncements, a new scheme Rajiv Gandhi Equity Saving Scheme (RGESS) will be launched. Those investors whose annual income is less than Rs. 10 lakh can invest in this scheme up to Rs. 50,000 and get a deduction of 50% of the investment. So if you invest Rs. 50,000 (maximum amount eligible for income tax rebate is Rs. 50,000), you can claim a tax deduction of Rs. 25,000 (50% of Rs. 50,000).
19. Section 80D: Deduction in respect of Medical Insurance Deduction is available upto Rs. 20,000/- for senior citizens and upto Rs. 15,000/ in other cases for insurance of self, spouse and dependent children. Additionally, a deduction for insurance of parents (father or mother or both) is available to the extent of Rs. 20,000/- if parents are senior Citizen and Rs. 15,000/- in other cases. Therefore, the maximum deduction available under this section is to the extent of Rs. 40,000/-. From AY 2013-14, within the existing limit a deduction of upto Rs. 5,000 for preventive health check-up is available.
Note:- By the Finance Budget 2015 has Raised the Limit up to Rs. 25,000/- for General below 60 years and Rs. 30,000/- for Sr.Citizen, apply since 1/4/2015 for the Financial Year 2015-16
20. Section 80DD: Deduction in respect of Rehabilitation of Handicapped Dependent Relative Deduction of Rs. 50,000/- w.e.f. 01.04.2004 in respect of ü Expenditure incurred on medical treatment, (including nursing), training and rehabilitation of handicapped dependent relative. ü Payment or deposit to specified scheme for maintenance of dependent handicapped relative. Further, if the defendant is a person with severe disability a deduction of Rs. 100,000/- shall be available under this section. The handicapped dependent should be a dependent relative suffering from a permanent disability (including blindness) or mentally retarded, as certified by a specified physician or psychiatrist. Note: A person with 'severe disability' means a person with 80% or more of one or more disabilities as outlined in section 56(4) of the 'Persons with disabilities (Equal opportunities, protection of rights and full participation)' Act.
21. Section 80DDB: Deduction in respect of Medical Expenditure on Self or Dependent Relative A deduction to the extent of Rs. 40,000/- or the amount actually paid, whichever is less is available for expenditure actually incurred by resident assessee on himself or dependent relative for medical treatment of specified disease or ailment. The diseases have been specified in Rule 11DD. A certificate in form 10 I is to be furnished by the assessee from any Registered Doctor.
Section 80E: Deduction in respect of Interest on Loan for Higher Studies Deduction in respect of interest on loan taken for pursuing higher education. The deduction is also available for the purpose of higher education of a relative w.e.f. A.Y. 2008-09.
Section 80G: Deduction in respect of Various Donations The various donations specified in Sec. 80G are eligible for deduction upto either 100% or 50% with or without restriction as provided in Sec. 80G, Section 80GG: Deduction in respect of House Rent Paid Deduction available is the least of
1. Rent paid less 10% of total income
2. Rs. 2000/- per month
3. 25% of total income, provided of Assessee or his spouse or minor child should not own residential accommodation at the place of employment. of He should not be in receipt of house rent allowance. of He should not have self occupied residential premises in any other place.
22. Section 80U: Deduction in respect of Person suffering from Physical Disability Deduction of Rs. 50,000/- to an individual who suffers from a physical disability(including blindness) or mental retardation. Further, if the individual is a person with severe disability, deduction of Rs. 100,000/- shall be available u/s 80U. Certificate should be obtained from a Govt. Doctor. The relevant rule is Rule 11D. Section 80RRB: Deduction in respect of any Income by way of Royalty of a Patent Deduction in respect of any income by way of royalty is respect of a patent registered on or after 01.04.2003 under the Patents Act 1970 shall be available upto Rs. 3 lacs or the income received, whichever is less. The assessee must be an individual resident of India who is a patentee. The assessee must furnish a certificate in the prescribed form duly signed by the prescribed authority. NOTE THAT BY THE FINANCE BUDGET 2015 THIS LIMIT HAS RAISED UP TO Rs.75,000/- FROM 50,000/- SINCE 1/4/2015 FINANCIAL YEAR.
23. 80 TTA: Deduction from gross total income in respect of any Income by way of Interest on Savings account Deduction from gross total income of an individual or HUF, upto a maximum of Rs. 10,000/-, in respect of interest on deposits in savings account ( not time deposits ) with a bank, co-operative society or post office, is allowable w.e.f. 01.04.2012 (Assessment Year 2013-14).
24. 80 EE. Additional House Building Loan Interest up to Rs. 1,00,000/- will be admissible who have paid the HBL Interest w.e.f. 1/4/2013 (Excluding the Section 24 B)
Saturday 25 April 2015
Download All in One TDS on Salary for Govt and Non Govt Employees for the Financial Year 2015-16 & Ass Yr 2016-17 [ This Excel Utility can prepare at a time your Tax Compute Sheet + Salary Structure +Automatic HRA Calculation + Automatic Arrears Relief Calculation with Form 10E + Form 16 Part A&B and Part B ]
A payee can get tax benefits through home loan under two different Sections of Income Tax Act.
- Under Section 24- Deduction on interest on home loan for self-occupied property up to Rs 2 lakh.
- Under Section 80C- Deduction on repayment of principal amount on home loan up to Rs 1.5 lakh.
- U/s 80EE :- Deduction on interest on home loan up to Rs. 1 lakh ,the deduction can be availed who are get the HBL Int after 01/04/2013 on or after.
Tax benefits under Section 24 and Section 80C and U/s 80EE: Mr.
X is eligible to claim tax benefits under Section 80C for the principal
repayment of the home loan and under Section 24 for interest
components. He can claim deduction up toRs 1.5 lakh along with all other permissible instruments like, life insurance premium, PPF, ELSS, NSC etc under Section 80 C and up to Rs 2 lakh under Section 24.
Another Rs. 1 Lakh U/s 80EE as HBL Interest w.e.f. 01/04/2013.
Tax Benefits on Joint Home Loan: One can avail tax benefit on home loan up to Rs 1.5 lakh under
Section 80C and 2 lakh under Section 24. But if you go for a joint home
loan along with your spouse in the ratio of 50: 50, then both of you
can claim these benefits separately. So the combined limit will beRs 3 lakh under Section 80C and 4 lakh under Section 24. This can reduce your overall cost of loan for the family considerably.
Total deduction will be Rs 7 lakh and if both spouses are in the highest tax slab, they will get a tax benefit of Rs 210000/- which is just double compared to an individual home loan, although this provision may vary from person to person.
Before
going for a joint home loan, you should mutually work out your
ownership share if you wish to optimize the tax benefit. That is, if you
and your spouse own the house jointly in the ratio of 50:50, both can
claim deductions in equal proportion. Therefore, if your tax slabs are
different, you need to work out your ownership share in a manner that
the spouse in the higher tax bracket owns a bigger share.
Please
note that it is essential to be co-owners to be eligible for tax
benefits. The co-ownership share also plays a role in determining your
deductions.
Sunday 21 December 2014
1) Download Master of Form 16 Part B for the Financial Year 2014-15 and Assessment Year 2015-16 [Prepare at a time 50 employees Form 16 Part B]
2) Download Master of Form 16 Part B for the Financial Year 2014-15 [This Excel Utility can prepare at a time 100 employees Form 16 Part B]
Modified Income deduction Under Chapter VIA & 80C as per new Finance Budget 2014
HRA exemption = Least of (40% (50% for metros) of Basic+DA or HRA or rent paid - 10% of Basic+DA)
Transport allowance is exempt up to Rs.800/- per month during the month. (Expenditure incurred for covering journey between office and residence.) For people having permanent physical disability, the exemption is 1,600/- per month.
Reimbursement of Medical bills are exempt for self and dependent family, up to Rs.15,000/- per annum u/s(5) LTA is exempt to the tune of economy class Train/ Air /Recognised public Transport fare for the family to any destination in India, by the shortest route.
LTA can be claimed twice in a block of 4 calendar years. The current block is from 01.01.2010 to 31.12.2013. For claim, it is must to provide originals tickets etc.
U/s 24 There is an Exemption for interest on housing loan. Exemption is limited to Rs. 2,00,000/- per year if the house is self-occupied; There is no limit if the house is rented out.
U/s 80C- Maximum Exemption up to Rs. 150000/- Investments up to Rs. 1.5 lac in PF, VPF, PPF, Employee contribution in NPS,Insurance Premium, Housing loan principal repayment, NSC, ELSS, long term bank Fixed Deposit, Post Office Term Deposit, etc. are deductible from the taxable income. Item wise 80C deduction is given below as per the latest amended by the Finance Budget 2014.
- Provident Fund (PF) & Voluntary Provident Fund (VPF) PF is automatically deducted from your salary. your contribution [12% of Basic] (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.
- Life Insurance Premiums: Any amount that you pay towards life insurance premium in Life Insurance Corporation (LIC) or any other Insurance CO.for yourself, your spouse or your children can also be included in Section 80C deduction. If you are paying premium for more than one insurance policy, all the premiums will be included. also premium paid for ULIP will also be treated as Premium paid for Life Insurance Policies.
- 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.
- 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. 1,50,000.(New Change) from Budget 2014
- National Savings Certificate (NSC): National Savings Certificate (NSC) is a 5-Yr small savings instrument eligible for section 80C tax benefit. Rate of interest is 8.58% compounded half-yearly, i.e. If you invest Rs.100, it becomes Rs.150.90 after five 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.
- Home Loan Principal Repayment & Stamp Duty and Registration Charges for a home Loan 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. 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.
- Tuition fees for 2 children Apart form the above major investments expenses for children’s education (Only Tution Fee (for which you need receipts)), can be claimed as deductions under Sec 80C.
- 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.
- 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.
- 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.
- Pension Funds or Pension Policies – 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 means that the total deduction available for 80CCC and 80C is Rs 1.5 Lakh.This also means that your investment in pension funds upto Rs.1.5 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.1.5 Lakh.
- 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.
- 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.
- 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.
U/s 80CCD -The Finance Act, 2011 provides that contribution made by the Central Government or any other employer to NPS (up to 10 per cent of the salary of the employee in the previous year)shall be excluded while computing the limit of Rs. 1,50,000.The contribution by the employee to the NPS will be subject to the limit of Rs. 1,00,000.
U/s 80CCG - Rajiv Gandhi Equity Savings Scheme is a new exemption available for investment in stock markets (direct equity). Avaialble only for those with gross income less than 12 lacs and only for first time investors in stock market. Exemption available at 50% of investment subject to maximum of Rs.50,000/- invested. Investments are locked-in for three years
U/s 80D Medical Insurance Premium (such as Mediclaim & Critical illness Cover)& Health Check up Upto Rs. 5000, premium is exempt up to Rs. 30,000/ per year (Rs.15,000/- for self,spouse and children ) (Rs. 15000/- for Parents. If the premium includes for a dependent who is (Senior Citizen) above 60 years of age, an extra Rs. 5,000//- can be claimed.
U/s 80DD Deduction in respect of medical treatment of handicapped dependents is limited to Rs. 50,000/- per year if the disability is less than 80% and Rs. 1,00,000/- per year if the disability is more than 80%
U/s 80DDB Deduction in respect of medical treatment for specified ailments or diseases for the assesse or dependent can be claimed up to Rs. 40,000/- per year. If the person being treated is a senior citizen, the exemption can go up to Rs. 60,000/-. but any amount received under Medical Insurance Policy will be reduced from the amount of deduction allowed. The Diseases and ailments specified under rule 11DD are.
- neurological diseases being demetia, dystonia musculorum deformans, motor neuron disease, ataxia, chorea, hemiballismus, aphasia and parkisons disease,
- cancer,
- AIDS,
- Chronic renal failure,
- hemophilia, and
- thalassaemia.
U/s 80E Interest repayment on education loan (taken for higher education from a university of self & dependents) is completely tax exempt
U/s 80G Donations given for certain charities are tax exempt. Some(NGO,Trust etc.) are exempt to the tune of 50%, whereas Govt funds are 100%.
U/s 80GG If you are not getting HRA, but living in rented house, an exemption is available. This will be calculated as minimum of (25% of total income or rent paid - 10% of total income or Rs. 24,000/- per year)
U/s 80U who suffers from not less than 40 per cent of any disability is eligible for deduction to the extent of Rs. 50,000/- and in case of severe disability to the extent of Rs. 100,000/-
U/s 80TTA introduced through Finance Act, 2012. Section 80TTA provides a deduction of up to Rs. 10,000 on your income from interest on saving bank accounts.
U/s 87A Tax Rebate Rs.2,000/- who's taxable income less than 5 Lakh.
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