Know Your Income Tax Deduction

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.

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.

Writer Apurv Gourav is a part time Financial Planning Consultant with Birla Sun Life. He is also pursuing Certified Financial Planning. 

Tax Efficient Perks You Must Ask Your Employer For

For employees the benefits go beyond salaries to include lifestyle perks such as company accommodation or club membership. But here we are not talking about lifestyle perk but certain useful benefits you should receive as an employee. Because time has changed, people don’t spend their entire career in just one company retiring with full pension and benefits for life. In fact by the time you reach the age of 50 you would have changed at least 5 employers. So take an advantage of this, your employer will definitely not want to lose you if your skills are marketable.

Here is a list of things you can try asking your employer for, either at the negotiation table before you take a new job, or at an annual review when you have demonstrated that you are an excellent employee.

Raise

Everyone asks for a raise. And they would have tried doing this atleast once in their career period. The higher your income, the more tax you pay, and at times it is a small raise to the next tax bracket that means less take-home pay than before. But on the other hand your employer reduces your salary for specific benefits like pension contributions, gym membership. It is only the basic-rate taxpayers will benefit from having access to extras which otherwise is afford, while higher-rate taxpayers can cut a chunk off their income tax bill.

Pay for Education

Your employer should be willing to fund his employees who are seeking further knowledge in their profession. Education can take the form of on-line courses, part-time university or college credits, or professional courses. You can talk to your HR about the direct benefits of employer-funded education. These include increased loyalty, reduced employee turnover, increased productivity, ability to take on new projects and the opportunity to show leadership skills. So you may end up getting that raise after they pay for your education anyway. The benefit you receive on opting doing so is the cost of the course is deductible to your employer, and it rarely shows up on your pay stub as a taxable benefit.

Car Allowance

If the company is providing their employees with car allowance, it comes in a form of an additional pay. But mostly comes in form of a credit card or reimbursement plan. If so then it allows you to avoid additional taxation as it’s considered a company expense. If you are the one paying then consider a more fuel-efficient vehicle that will reduce the tax you pay.  Or in the case where the employer provides you with a car lease option, you should consider availing of the same as it would be a tax efficient option.

Ask your employer for a better employer-funded coverage of your retirement. A qualified plan can help you keep more of what you earn. Tax-deductible qualified plans provide retirement benefits for the business owner and employees and through life insurance can provide death benefits.

Source:- Silicon India