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Showing posts with label Tax Section 80C. Show all posts
Showing posts with label Tax Section 80C. Show all posts

Friday, 7 September 2018

Budget 2018: Changes in Income Tax Rules

1. Standard Deduction of Rs 40,000 for Salaried and Pensioners
2. Transport Allowance & Medical Reimbursement No more tax exempt for salaried
3. Cess hiked from 3% to 4% (renamed as Health & Education Cess)
4. Rs 50,000 interest income for senior citizens tax exempted under newly introduced Section 80TTB

5. Health Insurance Premium Tax exemption limit increased to Rs 50,000 u/s 80D for senior citizens
6. Increased deduction for medical treatment u/s 80DDB for senior citizens up to Rs 1,25,000/-

Thursday, 6 September 2018

Budget 2018: Changes in Income Tax Rules

1. Standard Deduction of Rs 40,000 for Salaried and Pensioners
2. Transport Allowance & Medical Reimbursement No more tax exempt for salaried
3. Cess hiked from 3% to 4% (renamed as Health & Education Cess)
4. Rs 50,000 interest income for senior citizens tax exempted under newly introduced Section 80TTB

5. Health Insurance Premium Tax exemption limit increased to Rs 50,000 u/s 80D for senior citizens
6. Increased deduction for medical treatment u/s 80DDB for senior citizens up to Rs 1,25,000/-

Wednesday, 28 June 2017


Tuesday, 10 November 2015


Salaried Employees are a relieved lot now after fulfilling all the formalities for Income Tax 2014-15. But, by that time six months in the new financial year 2015-16 is already over.
So, preparation of statement for salary income, deductions and saving under various clauses of Income Tax Act in respect of Financial year 2015-16 is already due for submission to the employer.
Tax Planning and submission of statement to that effect to the employer would be mainly useful to avoid additional deduction of Income Tax by the employer over and above income tax estimated by an individual on the basis of his / her savings or deductions.
As per the Finance Budget 2015-16 the Income Tax Structure for the year 2015-16 (Assessment Year 2016-17) and also the Tax exemptions available to salaried class employees in the form of Exempt Income, Deductions and Savings.

Download All in One TDS on Salary for Govt & Non-Govt employees for Financial Year 2015-16 [ This Excel Based Utility can prepare at a time Govt and Non-Govt employees Tax Compute Sheet + Individual Salary Structure + Individual Salary Sheet + Automated Arrears Relief Calculator with Form 10E + Automated HRA Exemption Calculation + Automated Form 16 Part A&B and Form 16 Part B ]

Tax exemptions in the form of Exempt Income, Deductions and Savings

 1. Exempt Income and Allowances under Section 10 of Income Tax Act
Income given below are exempt income and hence these need not included while calculating Total Income of a Salaried Employee
  • Amount of LTC or LTA actually incurred. [Section 10(5)]
  • Any special allowance or benefit, such as Travelling Allowance, Uniform Allowance etc which are incurred for the performance of the duties of an office or employment . [Section 10(13A)]
  • The transport allowance granted  to  an  employee to meet his expenditure  for  the purpose of commuting between the place of his residence and the place  of  duty is exempt to the extent of  Rs. 1,600/- per month or Rs. 3200 per month (for a visually challenged person) [Section 10 (14)]
  • Children Education allowance:
    Rs. 100/- per month per child up to a maximum of 2 children.
  • Hostel Subsidy: Rs. 300/- per month per child upto a maximum of two children.
  • Other Allowances exempted under Section 10 of IT Act are Tour TA, Tour Daily Allowance, Academic, research or training allowance, uniform Allowance, Special Compensatory Allowance, High Altitude Allowance, Climate Allowance, allowances applicable to North East, Hilly areas of U.P., H.P. and J & K, border area allowance, Compensatory Field Area Allowance, Counter Insurgency Allowance, High Active Field Area Allowance, island duty allowance, tribal allowance etc.
Exemption under Section 10 (13A) in respect of HRA – Calculation Method:
Least of the following amount is to be treated as exempt from Income Tax.
  • Actual House Rent Allowance Received, or
  • Rent paid in excess of 10% of Pay in Pay band and Grade Pay or
  • 50% of Pay in Pay band and Grade Pay  if the employee is in Chennai/Mumbai/Kolkatta/Delhi and 40% of Pay in Pay Band and Grade Pay for the employees is in other places.
  • If the employees resides in his/her own house or in a house for which he/she does not pay any rent, no HRA exemption is available.
Download Automatic HRA Exemption Calculator U/s 10(13A) in Excel.

2. Savings which are eligible for Tax Exemption Section 80C, Section 80CCC and Section 80CCD

Section 80C, CCC and CCD(1) allow deduction from total income. The total deduction under this section (alongwith section 80CCC and 80CCD(1) is limited to Rs. 1.50 lakh only.
Section 80C:
  • 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.
  • Sum paid under contract for deferred annuity for individual, on life of self, spouse or any child .
  • Contribution made under Employee’s Provident Fund Scheme.
  • Contribution to PPF For resident 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.
  • Deposit in Sukanya Samriddhi Account as natural / legal guardian of girl child.
  • Contribution by employee to a Recognised Provident Fund.
  • Sum deposited in 10 year/15 year account of Post Office Saving Bank
  • Subscription to any notified savings certificate, Unit Linked Savings certificates. e.g. NSC VIII issue.
  • Contribution to Unit Linked Insurance Plan of LIC Mutual Fund e.g. Dhanrakhsa 1989
  • Payment made by way of installment or part payment of loan taken for purchase/construction of residential house property.
  • Subscription to equity shares/ debentures forming part of any approved eligible issue of capital made by a public company or public financial institutions.
  • 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.
  • Registration and Stamp Duty for purchase the house property
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 (1):
Deduction in respect of Contribution to Pension Account (by Assessee). Deduction available for the amount paid or deposited in a pension scheme notified or as may be notified by the Central Government subject to a maximum of :
(a) 10% of salary in the previous year in the case of an employee
(b) 10% of gross total income in any other case.

Section 80CCD(1A):
The maximum deduction allowable under this section is Rs. 1.00 lakh. in case of contribution to New Pension Scheme (NPS), it is Rs. 1.50 lakh w.e.f. 01.04.2015

3. Additional Savings eligible for Tax Exemption up to Rs. 50,000/- under Section 80 CCD (1B)

Section 80CCD(1B):
Contribution in NPS has been given more tax concession in the budget 2015. As per Section 80CCD(1B), an additional deduction of up to Rs. 50,000 over and above the Section 80C, 80CCC and 80CCD savings cap of Rs. 1.5 lakh, is allowed if such amount is contributed by the employee. So, overall tax savings of Rs. 2 lakh can be availed under Section 80C, 80CCC and 80CCD(1).

4. Deduction in respect of Contribution to Pension Account by Employer under Section 80CCD (2):

Deduction under Section 80CCD(2) is available for the amount paid or deposited by the employer of the assessee in a pension scheme notified or as may be notified by the Central Government subject to a maximum of 10% of salary in the financial year. This deduction is allowed over and above Savings value cap of Rs. 1.5 lakh under Section 80CCE (in the case of investment in NPS, savings value cap eligible for deduction will be Rs. 2 lakh).

5. Eligible deductions from Income from Section 80 D to 80 U towards amount spent on health insurance, medical treatment etc.

Section 80D: Deduction in respect of Medical Insurance:
Deduction is available upto Rs. 30,000/- for parents who are senior citizens and upto Rs. 25,000/- in other cases for insurance of self, spouse and dependent children. Amount of up to Rs.5000/- spent on preventive health check-up. So a maxium of Rs. 60,000 can be deducted which is spent towards Health Insurance premium.

Section 80DD: Deduction for medical treatment of physically challenged dependents:
In the case of salaried employee who is taking care of physically challenged Dependent Relative, an amount with the maximum limit of Rs.75000/- spent towards medical treatment or rehabilitation can be deducted from the income (In the case of severe disability maximum deduction would be Rs. 1,25,000).

Section 80DDB: Deduction in respect of specified disease:
Deduction in respect of specified disease for self or dependent relatives is deduction amount Rs.80,000 in case of senior citizen.

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.

Section 80G: Deduction for Donations
Notified donations under Sec. 80G will be eligible for deduction ( 100% or 50% as per the notification condition)

Section 80GG: Deduction in respect of House Rent Paid
Deduction available is the least of
  • Rs. 2000/- per month i.e. Maximum Deduction available is 24,000/-
Section 80 TTA: Deduction from gross total income in respect of any Income by way of Interest on Savings account
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

Section 80U: Deduction in respect of Person suffering from Physical Disability
Deduction of Rs. 75,000/- in respect of tax payer suffering from a physical disability. In the case of severe disability, deduction of Rs. 125,000/- will be allowed. Certificate from the approved medical authorities regarding the extent of disability will have to be produced (Rule 11D)

6. Deductions Allowable under Section 24 of Income Tax Act in respect of interest on house property :

Housing Property bought or constructed on or after 01.04.99 (completed within 3 years from a ailment of loan) and self occupied will be eligible for deduction of interest paid on housing loan with the maximum limit Rs. 2,00,000/-. In other cases deduction in respect of interest paid up to Rs.30,000 will be allowed. If the said house property is not self-occupied there is no limit in deduction in respect of interest paid on housing loan subject to inclusion of rental income in respect of the house property.
And additional House Building Loan Interest can be relief U/s 80EE Max Rs.1 Lakh w.e.f. 1/4/2013 and onwards

7. Relief Under Section 89(1)

Relief u/s 89(1) is available to an employee when he receives salary in advance or in arrear or when in one financial year, he receives salary of more than 12 months, or receives ‘profit in lieu of salary’ covered u/s 17(3). Relief u/s 89(1) is also admissible on family pension, as the same has been allowed by Finance Act, 2002 (with retrospective effect from 1/4/96). [Click here to Download the AutomaticArrears Relief Calculator U/s 89(1) with Form 10E ]
 
8. Deduction U/s 87A:- Tax Rebate Rs. 2000/- who's Taxable Income less than 5 Lakhs.

Sum up of Total Deduction Exemption for F.Y.2015-16
Deductions under 80C
Rs. 1,50,000
Deductions under 80CCD (1B) for contribution to NPS
Rs. 50,000
Interest on house property loan
Rs. 2,00,000
Exemption with new transportation allowance of Rs. 1,600 per month
Rs. 19,200
New deductible health insurance premium
Rs. 25,000
Total deductions / exemption
Rs. 4,44,200
Basic Income which is exempted from Income Tax
Rs. 2,50,000
Gross Total Income which can be tax free
Rs.6,94,200

Saturday, 16 May 2015

Many of our readers sought an answer of Can Account be opened without furnishing Birth Certificate of Girl Child? Or Is there any other document which can be submitted instead of Birth Certificate of Girl Child or What to do if the birth certificate does not have the name of the girl child?
Before giving answer to this question, let us first know the blueprint of the Sukanya Samriddhi Yojana.

Sukanya Samriddhi Yojana at Glance


1. Any Girl Child aged 10 years or less is eligible to open Sukanya Samriddhi Account either in post office or bank.
2. The account can be opened either by the parent or by the legal guardian. No other person can open account for the girl child, but depositor can be different person i.e. once account is opened by the parent, anyone can deposit amount into the account but do remember that the tax-benefit under section 80C for the deposited amount can only be claimed by the parent not by the depositor.
3. One account per girl child with a minimum deposit is Rs.1,000 per annum and maximum deposit of Rs.1.50 lakhs per annum. The deposits are to be made for 14 years from the date of opening of account and have no nexus with the age of the girl child.
4. Interest rate is flexible and shall be revised each year by the Government. For the current fiscal year i.e. 2015-16, interest rate is fixed at 9.20% p.a. (earlier 9.10% p.a.) which is compounded annually.
5. Amount deposited towards SSA, interest accrued on the deposited amount and maturity proceeds, all are tax-free i.e. SSA falls under EEE investment scheme wherein contributed amount is deductible under section 80C plus interest amount and maturity amount is tax-free.
6. The withdrawal up to 50% can be made when the girl child attains the age of 18 years and that too for the higher education or for marriage.
7. Sukanya Samriddhi Account will be matured after 21 years from the date of opening of account, not when the girl attains the age of 21 years.

Required Documents to open Sukanya Samriddhi Account


Following are the 3 documents required to open sukanya samriddhi account:
1.              Birth Certificate of the Girl Child having Name on it.
2.              Identity Proof of the Parent or Legal Guardian.
3.              Address Proof of the Parent or Legal Guardian.
Now the question arises, what if there is no birth certificate of the girl or the birth certificate do not have the name of the girl child on it?
In absence of the Birth Certificate or any other discrepancies in the Birth Certificate of the Girl Child, the following documents can be submitted in place of the birth certificate:
1.              Certificate of Date of Birth from the School Headmaster; or,
2.              Certificate of Date of Birth from the Hospital where the Girl Child was born.
But please bear in mind that the certificate should have the name of the Girl Child as this is the only document which will make Girl Child eligible to withdraw money at the time of maturity.


Wednesday, 15 April 2015

Download Income Tax Calculator for Govt & Non Govt employees for Assessment Year 2016-17 with all amended Tax Limit as per New Finance Budget 2015-16


* No change in tax slabs or minimum taxable limit for the Financial Year 2015-16 and Assessment Year 2016-17

* The transport allowance exemption hiked to Rs 1,600 per month from Rs 800 per month U/s 10

* Limit of deduction of health insurance premium increased from Rs. 15000 to Rs. 25000. For senior citizens limit increased from Rs 20000 to Rs 30000. U/s 80D

* Senior citizens above the age of 80 years, who are not covered by health insurance, to be allowed deduction of Rs 30000 towards medical expenditures.

* Deduction limit of Rs 60000 with respect to specified decease of serious nature enhanced to Rs 80000 in case of senior citizen. U/s 80DDB

*Additional deduction of Rs 25000 allowed for differently abled persons.U/s 80U

*Limit on deduction on account of contribution to a pension fund and the new pension scheme increased from Rs 1 lakh to Rs 1.5 lakh.U/s 80CCC


*Payments to the beneficiaries including interest payment on deposit in Sukanya Samriddhi scheme to be fully exempt. Max Rs.1.5 Lakh U/s 80C


Saturday, 11 October 2014

Click here to download  
Download from above link the All in One Master of Form 16 Part B + 12 BA  for the Financial Year 2014-15 [ This Excel Utility can prepare at a time 50 employees Form 16 Part B with 12 BA]
A very important criterion to be kept in mind while taking a Home Loan is the Tax Benefit on Home Loan. To explain the Tax Benefit on Home Loan, we would be dividing the Repayment of Home Loan into 2 components:-
1.                 Repayment of the Principal Amount U/s 80C Max Rs.1.5 Lakh
2.                 Repayment of the Interest on Home Loan U/s 24B & 80EE 
As the repayment comprises of 2 different components, the tax benefit on home loan is governed by different sections of the Income Tax Act and these are claimed as tax deductions under different sections while filing the Income Tax Return.

The Sections under which Tax Benefit on Home Loan can be claimed are explained below:-
Section 24B: Income Tax Benefit on Interest on Home Loan
Tax Benefit on Home Loan for payment of Interest is allowed as a deduction under Section 24 of the Income Tax Act. As per Section 24B, the Income from House Property shall be reduced by the amount of Interest paid on Home Loan where the loan has been taken for the purpose of Purchase/ Construction/ Repair/ Renewal/ Reconstruction of a Residential House Property.
The maximum tax deduction allowed under Section 24B of a self-occupied property is subject to a maximum limit of Rs. 2 Lakhs (increased in Budget 2014 from 1.5 Lakhs to Rs. 2 Lakhs).
In case the property for which the Home Loan has been taken is not self-occupied, no maximum limit has been prescribed in this case and the taxpayer can take tax deduction of the whole interest amount under Section 24B.
Please Note: In case a property has not been self-occupied by the owner by reason of the fact owing to his employment, business or profession carried on at any other place, he has to reside at that other place not belonging to him, then the amount of tax deduction allowed under Section 24 shall be Rs. 2 Lakhs only.
It is also important to note that this tax deduction of Interest on Home Loan under Section 24B is deductible on payable basis, i.e. on accrual basis. Hence, deduction under Section 24B should be claimed on yearly basis even if no payment has been made during the year as compared to Section 80C which allows for deduction only on payment basis.
Moreover, if the property is not acquired/constructed completed within 3 years from the end of financial year in which the loan was taken, the interest benefit in this case would be reduced from 2 Lakhs to Rs 30 thousand only.
Now, As per Section 24B of the Income Tax Act, tax deduction for payment of Interest would only be allowed from financial year 2011-12 on wards.  However, the Interest paid on Home Loan before the completion of Construction (i.e. Rs. 2,00,000) would be allowed as tax deduction for the next 5 Financial years @ 40,000 p.a. commencing from Financial Year 2011-12 onwards. (Easy amounts have been taken in this example for simplification purposes)
Section 80EE :- Income Tax benefits on Interest on Home Loan ( w.e.f. 1/4/2013)
As per the Budget 2013 Speech inserted a new section in the Income Tax Act which provides additional tax deduction of Rs. 1,00,000 to first time home buyers in respect of Interest on Home Loan provided that:-
1.                 The Loan is sanctioned between 1st April 2013 and 31st March 2014
2.                 The Amount of Loan sanctioned for the acquisition of Residential House Property does not exceed Rs. 25,00,000
3.                 The Value of the Residential House Property does not exceed Rs. 40,00,000
4.                 The Assessee does not own any House Property on the date of sanction of Loan
5.                 This deduction under Section 80EE is only available for Financial Year 2013-14
The Deduction under Section 80EE shall not exceed Rs. 1 Lakh and shall only be allowed for Financial Year 2013-14. However, in case where the interest payable in Financial Year 2013-14 is less than Rs. 1 Lakh, the balance amount shall be allowed as deduction in Financial year 2014-15.
In other words, in case the taxpayer has only been able to claim Rs. 40,000 as deduction whereas he was allowed a deduction of Rs. 1,00,000, the balance deduction of Rs. 60,000 which the taxpayer was not able to claim in the financial year 2013-14 can be claimed in the financial year 2014-15.
The above 3 Sections relating to Tax Benefits on Home Loans have been summarised as under:-
Particulars
Quantum of Deduction (Rs.)
Self Occupied Property
Non-Self Occupied Property
Section 24B
2,00,000
No Limit
Section 80C
1,50,000
1,50,000
Section 80EE
1,00,000
1,00,000
                                             TOTAL = 4,50,000/-Can get tax relief 
1.                 The above tax deductions are per person and not per Property. So in case you’ve purchased a property jointly and have taken a joint home loan, each person repaying the amount would be eligible to claim whole deduction separately.
2.                 If you are living in a rented premise and are taking Tax Benefit of HRA Allowance, even then you can claim Tax benefit on home loan under Section 24B, Section 80EE & Section 80C.
For claiming the above tax deductions, you would be required to furnish the statement provided by the lender clearly indicating the amount payable and paid towards Interest and Principal. After claiming the above deductions of Tax Benefit on Home Loan, the balance Income of an Individual would be taxed as per the Income Tax Slab Rates. (Recommended Read: Income Tax Slab Rates)

Click below link to download Automated Tax Compute Sheet + Individual Salary Sheet + Individual Salary Structure + HRA Calculation  + Form 16 Part A&B and Part B for Non-Govt employees for the FY 2014-15