Understanding Tax in India
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Transcript of Understanding Tax in India
Understanding Tax!
Tax 2008-2009 – The slabs!
Assessee (others) (Male < 65, HUF) – Rs: 1,50,000
Women Assessee ( < 65) – Rs: 1,80,000 Senior Citizen (65 or 65+) – Rs: 2,25,000
0 – 1,50,0000 – 1,50,000 -- NilNil
1,50,001 – 3,00,0001,50,001 – 3,00,000 -- 10% (15,000) + 3% E.C10% (15,000) + 3% E.C
3,00,001 – 5,00,0003,00,001 – 5,00,000 -- 20% (60,000) + 3% E.C20% (60,000) + 3% E.C
5,00,001 – above 5,00,001 – above -- 30% + 3% E.C30% + 3% E.C
10% Surcharge10% Surcharge -- above 10,00,000above 10,00,000
Rates – Ready Reckoner!
Rate Others Women < 65
Senior Citizens
Up to 1,50,000 - - -1,50,001 to 1,80,000 10% - -1,80,001 to 2,25,000 10% 10% -2,25,001 to 3,00,000 10% 10% 10%3,00,001 to 5,00,000 20% 20% 20%
5,00,001 & above 30% 30% 30%10,00,001 & above 10% Surcharge on Tax
Education Cess 2% Education Cess on( Tax + SC)
Income Tax Liability
10,00,000 2,05,000
5,00,000 55,000
3,00,000 15,000
1,50,000 0
0
Tax, Tax and more tax!!
20%
30%
10%
Tax
&
Planning
Relief(s) Available!
Section 80 C Section 80 CCC Section 80 CCD Section 80 D Section 80 E
80C - Conditions Apply!
Cannot exceed Rs.1,00,000
Sum may be paid or deposited at any time during the year
No limits for various items specified u/s. 80C. Therefore, an assessee may opt to invest even in only one item say insurance premium
Premium or other payment made on insurance policy not in excess of 20% of actual capital sum assured
Tuition Fee for any two children of the assessee
Principal repayment on loan borrowed for acquiring commercial property is not eligible
Residential property under construction for which principal has been repaid does not qualify for deduction
80C– More Conditions Apply!
Repayment of principal on loan borrowed for residential house (whether let-out or self occupied) only is entitled for deduction.
Where the loan is availed for any addition, alteration, repair or renovation no deduction can be claimed for principal repayment
Repayment of loan borrowed for housing from relatives, friends, non-specified employer / institution are not eligible for deduction.
However, any interest paid on such loan borrowed is deductible under section 24, while computing income under the head “House Property”
Fixed Deposit in Banks must be for 5 years
80C– Additional Options!
Five year time deposit in an account under Post Office Time Deposit Rules, 1981.
Deposit in an account under the Senior Citizens Savings Scheme Rules, 2004
80C - Popular Choices!
Mutual Funds
Insurance
ULIP
Principal repayment of Housing Loan
Tuition fee – paid for children (own, adopted, step) for full time education in India. [Note: Tuition fee paid for grandchildren is eligible for deduction for the HUF]
Fixed Deposits in Banks (5 years)
NSC – National Savings Certificate
PF – Provident Fund [SPF, PPF, RPF]
10 year Post Office Savings Bank (CTD)
Stamp Duty and Registration Charges
80CCC & 80CCD –Pension-No Tension!
80CCC-Contribution to pension scheme
Rs.1,00,000 (outer limit)
Disallowance on cancellation or lapse
All withdrawals are taxable on surrender / maturity
80CCD-Contribution to CG pension scheme
10% of Salary (Basic + DA)
All withdrawals are taxable on surrender / maturity
80D – Health is wealth (literally)!
80 D – Contribution to Medical Insurance Schemes
o Rs: 15,000
o Self + Spouse + Dependent Children + Dependent Parents
o Rs: 20,000 for senior citizens
o Now, an additional deduction of Rs: 15,000 (Rs: 20,000 if parents are senior citizens) is available to an individual for payment of
medical insurance premium for parents.
80E – It’s good to study!
80 E – Repayment of Education Loans
Only Interest is eligible for deduction
No Limit
Deduction eligible for initial year and immediately succeeding seven years
Deduction eligible for repayment of education loans made for spouse or children
What is the Tax liability if Total Income is Rs.300,000 (for Male assessee < 65)
i Rs.15,000
ii Rs.13,330
iii Rs.13,707
iv Rs.15,450
Test Yourself!
Fixed Deposit in Banks must be for ___ years to be eligible for Section 80C?
i 3
ii 5
iii 2
iv No specifications
Test Yourself!
What is the Tax liability if Total Income is Rs.180,000 (for Female assessee < 65)
i Rs.15,000
ii Rs.1,030
iii NIL
iv Rs.15,450
Test Yourself!
What is the maximum limit under Section 80E?
i Rs.15,000
ii Rs.5,000
iii Rs.20,000
iv None
Test Yourself!
What is the Tax liability if Total Income is Rs.500,000 (for Male Assessee < 65)
i Rs.56,650
ii Rs.77,250
iii Rs.75,000
iv Rs.50,600
Test Yourself!
Plan Ahead!Have A Non ‘Tax’ing Year!!