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Harshvardhan Roongta
CFP , Roongta Securities
(27 Apr- 16:00hrs)
Financial Planning and Asset Allocation
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Tax Deduction
80CCC
Nature of Deduction:
Payment of premium for annunity plan of LIC or any other insurer Deduction is available upto a maximum of Rs.10,000/-
Remarks:
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.The Finance Act 2006 has enhanced the ceiling of deduction under Section 80CCC from Rs.10,000 to Rs.1,00,000 with effect from 1.4.2007.
80CCD
Nature of Deduction:
Deposit made by an employee in his pension account to the extent of 10% of his salary.
Remarks:
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. The Finance Act, 2009 has extended benefit to any individual assesse, not being a Central Government employee.
80CCF
Nature of Deduction:
Subscription to long term infrastructure bonds.
Remarks:
Subscription made by individual or HUF to the extent of Rs. 20,000 to notified long term infrastructure bonds was exempt for the financial year 2010-11 and 2011-12. However, the exemption is no longer present from financial year 2012-13.
80D
Nature of Deduction:
Payment of medical insurance premium. Deduction is available upto Rs.15,000/ for self/ family and also upto Rs. 15,000/- for insurance in respect of parent/ parents of the assessee.
Remarks:
The premium is to be paid by any mode of payment other than cash and the insurance scheme should be framed by the General Insurance Corporation of India & approved by the Central Govt. or Scheme framed by any other insurer and approved by the Insurance Regulatory & Development Authority. The premium should be paid in respect of health insurance of the assessee or his family members. The Finance Act 2008 has also provided deduction upto Rs. 15,000/- in respect of health insurance premium paid by the assessee towards his parent/parents. W.e.f. 01.04.2011, contributions made to the Central Government Health Scheme is also covered under this section.
80DD
Nature of Deduction:
Deduction of Rs.40,000/ - in respect of (a) expenditure incurred on medical treatment, (including nursing), training and rehabilitation of handicapped dependant relative. (b) Payment or deposit to specified scheme for maintenance of dependant handicapped relative. W.e.f. 01.04.2004 the deduction under this section has been enhanced to Rs.50,000/-. Further, if the dependant is a person with severe disability a deduction of Rs.1,00,000/- shall be available under this section.
Remarks:
The handicapped dependant should be a dependant 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.
80DDB
Nature of Deduction:
Deduction of Rs.40,000 in respect of medical expenditure incurred. W.e.f. 01.04.2004, deduction under this section shall be available to the extent of Rs.40,000/- or the amount actually paid, whichever is less. In case of senior citizens, a deduction upto Rs.60,000/- shall be available under this Section.
Remarks:
Expenditure must be 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 a specialist working in a Government hospital.
80E
Nature of Deduction:
Deduction in respect of payment in the previous year of interest on loan taken from a financial institution or approved charitable institution for higher studies.
Remarks:
This provision has been introduced to provide relief to students taking loans for higher studies. The payment of the interest thereon will be allowed as deduction over a period of upto 8 years. Further, by Finance Act, 2007 deduction under this section shall be available not only in respect of loan for pursuing higher education by self but also by spouse or children of the assessee. W.e.f.01.04.2010 higher education means any course of study pursued after passing the senior secondary examination or its equivalent from any recognized school, board or university.
80G
Nature of Deduction:
Donation to certain funds, charitable institutions etc.
Remarks:
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
80GG
Nature of Deduction:
Deduction available is the least of (i) Rent paid less 10% of total income (ii) Rs.2000 per month (iii) 25% of total income
Remarks:
(1) Assessee or his spouse or minor child should not own residential accommodation at the place of employment. (2) He should not be in receipt of house rent allowance. (3) He should not have a self occupied residential premises in any other place.
80U
Nature of Deduction:
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.75,000/- shall be available u/s 80U. W.e.f. 01.04.2010 this limit has been raised to Rs. 1 lakh.
Remarks:
Certificate should be obtained on prescribed format from a notified ‘Medical authority’.
80RRB
Nature of Deduction:
Deduction in respect of any income by way of royalty in respect of a patent registered on or after 01.04.2003 under the Patents Act 1970 shall be available as :-Rs. 3 lacs or the income received, whichever is less.
Remarks:
The assessee who is a patentee must be an individual resident in India. The assessee must furnish a certificate in the prescribed form duly signed by the prescribed authority alongwith the return of income.
80QQB
Nature of Deduction:
Deduction in respect of royalty or copyright income received in consideration for authoring any book of literary, artistic or scientific nature other than text book shall be available to the extent of Rs. 3 lacs or income received, whichever is less.
Remarks:
The assessee must be an individual resident in India who receives such income in exercise of his profession. To avail of this deduction, the assessee must furnish a certificate in the prescribed form along with the return of income.
80C
Nature of Deduction:
This section has been introduced by the Finance Act, 2005. Broadly speaking, this section provides 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 is limited to Rs.1 lakh only.
Tax slab
| Income tax slab (in Rs.) | Tax |
|---|---|
| 0 to 2,00,000 | No Tax |
| 2,00,001 to 5,00,000 | 10% |
| 5,00,001 to 10,00,000 | 20% |
| Above 10,00,000 | 30% |
Education Cess 2%
Secondary and Higher Education Cess 1%
5 heads of income
- Salaries
- Income from
house property - Profits from
business or profession - Capital
gains - Income from
other sources
What is salary and what does salary include?
Salary is the remuneration received by or accruing to an individual, periodically, for service rendered as a result of an express or implied contract....
Which property income is exempt from tax?
Income from farm house (Sec.2(1A)(c) read with sec. 10(1)).
How is income from business or profession computed?
Income chargeable to tax is computed after deducting the following: 1. Expenditure incurred during the previous year wholly and exclusively for the pu...
How do I calculate by residential status?
As in most of the countries, the liability under the Indian Income tax law is also co-related to the residential status of the concerned tax payer. Se...
What income is taxed under Income from Other Sources?
All those incomes which are not exempt and are to be taxed and are at the same time not covered in any of the four heads of income namely salary, h...
FAQs
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Q. If I have paid more tax when filing my returns, will it be refunded?A.
Yes, the excess amount will be refunded by cheque or direct credit into your bank account. Disclaimer: While we have made efforts to ensure the accuracy of our content (consisting of articles and information), neither this website nor the author shall be held responsible for any losses/ incidents suffered by people accessing, using or is supplied with the content.
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Q. What are the benefits of filing my income tax returns?A.
One, it's your obligation to file your income tax returns. There may be legal consequences for not doing so. Two, tax paid is utilised for the development of the nation. Last but not the least, it will help you to be in the good books of the financial institutions such as banks. It's useful when you apply for a loan since you need to submit a copy of your income tax returns when applying for a loans.
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Q. Who are my relatives?A.
� Your wife or husband � Your brother or sister � Your wife or husband's brother or sister � Your parents � Your wife or husband's parents � Your parents' brothers and sisters � Your wife or husband's parents' brothers and sisters � Legal heir, if any
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Q. Do I need to pay tax on gifts received?A.
Gift received in cash, which exceed Rs 50,000, are taxable. However, gift tax is not applicable in the following situations: � Cash received from a relative � Cash received on the occasion of marriage � Cash received through a will or inheritance
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Q. What are receipts? Are all receipts considered as income?A.
A receipt is your entire income before tax deductions. Not all receipts are considered as income. Basically, they are of two kinds: 1. Capital receipt: This is the income earned by selling the source or asset. For example, income earned from selling a property, gold, etc. 2. Revenue receipt: Income from source such as salary, interest accrued on deposits, rent from property is termed as revenue receipt.
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Q. Who is a resident of India?A.
If you have spent more than 182 days in India then you are considered as a resident irrespective of your citizenship.
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Q. Is the income tax act applicable only to residents?A.
It is applicable to both residents and non-residents. If you earn income in India then you would have to pay more taxes even if you are a non-resident of the country.
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Q. Where do I file my income tax returns?A.
Normally, there are separate wards (sub offices of the regional income tax office) assigned for filing your tax returns. Within these wards are circles or divisions (sub offices of wards) for separate classes of people. For instance, if you are a salaried person, you will have to file your returns in a separate ward or circle, which will be different from a government or a private employee filing his returns. Similarly, if your income is less than Rs 10 lakh, a separate ward will be assigned to you and if it's more than Rs 10 lakh it will again be different ward. (Click here to know where you can file your returns.)
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Q. What happens if the form is not signed properly?A.
Your form will be treated as invalid
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Q. Can anyone else sign the form on my behalf?A.
Yes, in certain situations. For instance, if you have been away from India and want to file your tax returns, somebody else can sign on your behalf provided you have authorised him (or her) to do so.
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Q. What should I keep in mind while filing my returns?A.
� Avoid overwriting and correction on the form. � The form must be properly signed. � The document should be filled in block letters. � Enter the correct PAN number. � Proof of investment to be attached. � Original TDS certificates and challans for payments of advance tax and self assessment tax. � Mention the date, correctly.
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Q. What are the charges if I file income tax returns after the due date?A.
You may have to pay a penalty up to Rs 5,000
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Q. Which ITR Form is applicable to me?A.
There are four forms listed below. Choose your category, accordingly. If your income is from salary, pension, family pension and interest > ITR 1 Individuals and HUFs* with income from any source other than business or profession > ITR 2 Individuals and HUFs who are partners in a partnership firm and do not have any proprietary business or profession > ITR 3 Individuals and HUFs who have a proprietary business or profession > ITR 4
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Q. What documents do I need to file my income tax return?A.
Form 16: Your employer will give you this form. It has information about the income earned and the tax deducted from your salary during the year. Form 16A: This form is also called a TDS certificate and is for tax deducted at source on other income such as interest on bank deposit. It is given to you by financial institutions such as banks or companies, which deduct tax at source every month or year. Summary of all bank accounts or passbooks: You need a summary of all bank transactions carried out during the financial year, which include income earned, investments made, expenses etc. Property details: If you have purchased or sold any property during the year, you will need the details. If the property bought is on loans, do keep a copy of the home loan details with you. If you sold your property then you may be eligible for capital gain tax. Interest certificate: You need this certificate if you have taken a loan from a bank or financial institution, to buy a house. Broker contract notes: Bills for sale and purchase of shares and dividends. Investment details that have not been disclosed in form 16. For example if you have invested in tax-saving tools such as life insurance, Public Provident Fund and it is not mentioned in form 16 issued by your employer, you need the proof of investment. Tax payment challan, if any: If you have paid advance tax, you need to attach the proof.
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Q. What is the last date for filing your income tax returns?A.
The last date is July 31
Glossary
Abatement
A reduction in the assessment of tax, penalty or interest when it is determined the assessment is incorrect
Tax Calculator
Understand how much life insurance you need, primarily based on analysing the expense profile and the current wealth level of your dependants/family.
Get your Personal Finance queries answered
previous questions
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Q
i m freelance yoga trainer, and earn around 8 to 9 lacs in a year. do i need to pay any income tax or service tax in 2016, as it is exempted from income tax .
AIndividual Freelancers are taxed under Income Tax Act. Service Tax is charged when value of taxable service exceeds Rs. 10 lac. However, ?Yo...
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Q
tax savings
AYou can claim expenses incurred while conducting your business like Stationary office rent, expenses and salaries of employees (and freelanc...
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Q
Suppose i form an HUF and transfer my money into it & keep Bank Fixed deposits in the name of HUF so that it comes under lower tax bracket- is my Transfer permissible & allowd/taxable ? If taxable then what is the use of forming HUF?
ATransferring money into an HUF is not as easy as it seems as one cannot just transfer money or assets into the HUF name. HUF Capital can be ...
-
Q
what to do with notice: with subject non filing of Income tax return for financial year 2012-13. with information summary: Time deposit exceeding 200000 with a banking company, Contract of Rs. 10,00,000 or more in he commodity exchange, Sale of Option in securities(derivative) in a recognised stock exchange, TDS-194A, TDS-194j TDS Return -professional or technical fees . The notice received is almost 45 days after the date which is mentioned in the notice. What happens if the response is not given since it is past the 20 days deadline mentioned in the notice.
AYou should put the date of receipt of the any communication from income tax department on the letter itself as soon as you receive the same....
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Q
I have bought a flat in Thane in April 2011 for amount 18 Lakh on a housing loan (SBI Max-gain - RoI 9.85% Floating) for which current outstanding is 13 Lakh. I have bought another flat in Pune in Nov 2014 on another housing loan of 35 Lakhs (PNBHFL, RoI 10% Floating) where I am currently residing with my family (Note: all above dates & prices are as per Index-2 record) I am the sole earner of my family hence planning to sell Thane flat at approx. 40 Lakh in Jan 2016 to use the fund to repay my Pune home loan thus reduce liability. What should I do to avoid Capital gain? Can I avoid it by selling early or later?
AThe profits on sale of your thane flat shall be treated as long term as the same has been held by you for more than 36 months. In case you w...
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Q
I have traveled USA for 2 months on business visa. For same my company is paying me per diam of 60$ per day. Out of which I have saved 2000$ in two months. Do I need to pay tax on this amount? If I want to save tax on this what are the options?
AAny amount paid to an employee to meet actual expenses incurred on duty are fully exempt. However the amount of any such allowance which is ...
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Q
Hi, I paid service tax to Government as per bills in 2014-15. But I received part of that payment as final settlement in year 2015-16. My questions are As I paid service tax for complete payments raised and received only part payment, How do I claim refund of service tax? While payment from International Company they paid TDS for year 2015-16 instead of for 2014-15, now how to deal with Income tax rules? I already paid service tax but not Income tax in year 2014-15. For 2015-16 I do not have any income in the year 2015-16.
AThere is no provision for refund of service tax in case there is short payment or non payment of any invoice raised in respect of any servic...
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Q
I want to buy mutual funds for tax saving.Plz suggest. I already invested 1,25000 Last year as above. 1)Axis long term equity-30k. 2)Franklin tax shield-25k 3) Reliance tax saver-60k Please consider moderate risk/low risk with good returns
AAll the above tax saving funds are good. You can also consider investing in ICICI Prudential tax plan. Since Axis long term equity is the b...
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TAX SAVING INSTRUMENTS
| Institution | Interest% |
|---|
-
Bharat Co-operative Bank 9.50
Deutsche Bank 9.00
The Ratnakar Bank 9.00
Bank of Maharashtra 8.25
NHB SUVRIDDHI (Tax Saving ) 8.50
Cost Inflation Index
| Financial Year | (CII) |
|---|
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