Come November and December, and many
of you will be worrying about tax deductions. It’s a fact that many salaried
individuals in India end up paying a lot of tax because they are not aware
about the various available options available to them. However, if you will
make an effort to understand the ways to reduce tax and plan the same ahead of
time, you will not have much to fret about.
|
The plans may vary for different
persons depend on the financial status and income. Here are the tax slabs for
male and female as per income tax law:
Income
Tax Slabs 2011-2012 for Male and Female
|
Income
|
Tax
Rate
|
|
Upto
2.0 Lakhs
|
NO
TAX
|
|
2.0
Lakhs to 5 Lakhs
|
10%
|
|
5
Lakhs to 10 Lakhs
|
20%
|
|
Above10
Lakhs
|
30%
|
Income
Tax slabs 2011-2012 for Senior Citizen (Between 60 Yrs and 80Yrs)
|
Income
|
Tax
Rate
|
|
Upto
2.5 Lakhs
|
NO
TAX
|
|
2.5
Lakhs to 5 Lakhs
|
10%
|
|
5
Lakhs to 10 Lakhs
|
20%
|
|
Above
10 Lakhs
|
30%
|
|
Tax Exemptions
1) Section 80 C Limit Unchanged (Rs.
100,000)
Deduction on life insurance policy,
taken after 1 April 2012, will be allowed only if yearly premium is less than
10% of sum assured. This is a new change from c.y. earlier it was 20%. If it is
more than 10%, one is not eligible for deduction u/sec. 80C
·
ELSS
·
PPF
·
EPF
·
FD for 5 years
·
Pension Plans
·
NSC
·
Post Office SB
·
Infrastructure Bonds
·
Expenditure on Children Education (Up
to Rs. 200 per month for up to 2 children)
·
Tuition fees (Only Tuition fees
excluding Development Fees, Donations, etc. Maximum allowed: Rs. 24,000)
·
Housing loan principal
·
Deferred Annuity
·
Approved Super Annuation Fund
2) Section 80 CCF – Additional Rs. 20,000 on investments towards
approved Infrastructure bonds - (withdrawn)
3) Section 80CCD:
Deduction under this section can be
claimed only if the contribution to your NPS account is made by your employer
and the deduction is limited to a maximum of 10% of your basic salary. Returns
on NPS are tax free, but withdrawal is still taxable. The deduction under sec
80CCD is over and above the deduction available under sec 80C.
4) Section 80 D
Deduction of Rs. 15,000 is allowed if
the same is paid as premium for Medical Insurance taken for self/dependents or
towards preventive health check-up (max Rs. 5,000). In case any of
self/dependents is a senior citizen, the deduction allowed is Rs. 20,000.
Additional Rs. 15,000 is allowed as
deduction if the same is paid as premium for Medical Insurance taken for
parents. In case the parent is a senior citizen, the deduction allowed is Rs.
20,000.
5) Section 80DD
Exemption given for Expenditure made
for a disabled dependant towards Medical Treatment/Training/Rehabilitation. It
also includes the LIC/Insurance premium paid towards maintenance of such
dependant.
Maximum deduction allowed is Rs.
50,000 in case of normal disability and Rs. 1 lakh in case of severe
disability.
6) Section 80DDB
Exemption given for expenditure
incurred on specified disease or ailments such as cancer/aids. Maximum
deduction allowed is Rs. 40,000. In case of Senior Citizens, maximum deduction
allowed is Rs. 60,000.
7) Section 80E
Deduction is allowed for repayment of
interest component of Higher Education loan. All education after Class 12 is
allowed, either vocational or Fulltime. But should be from a
school/institute/university recognized by the government.
8 ) Section 80G - Contribution to exempt charities – 25/50/75/100%
depending on the charity and as per approval 100% exemption on donation to
political parties
9) Section 80U
Deduction up to Rs. 50,000 is allowed
in case of Permanent Disability.
In case of Permanent Disability
exceeding 80%, maximum deduction allowed is Rs. 100,000.
10) Section 24(1)(vi)
Housing loan interest. Maximum
Investment Limit – Rs. 150,000 (for loans taken after 1 April 1999, for loans
before that Maximum Investment Limit 30,000).
11) Superannuation – Any contribution made by a company to superannuation
fund up to Rs. 100,000 tax free in the hands of the employee.
12) Conveyance/Transport Allowance – Any Conveyance / Transport Allowance given to an
employee is tax free up to Rs. 9,600 (No Supporting Bills required).
13) Medical Allowance – Any Medical Allowance given to an employee is tax
free up to Rs. 15,000 (Supporting Bills required).
14) HRA – Any House Rent Allowance given to an employee is
tax free up to the minimum value of the following conditions (subject to – when
an employee can produce rent paid receipts from landlord for the period and if
the employee has not availed of tax exemptions for home loan interest /
principal repayment):
a) 50% of Annual Basic (40% of Annual
Basic in case of non-metros)
b) Actual HRA received
c) Rent Paid – (10% of Annual Basic)
15) Professional Tax – Any Professional Tax deducted from an employee’s
salary can be reduced from the annual salary income to arrive at taxable
salary.
16) Provident Fund – Provident Fund contributions (under section 80 C
and subject to an overall investment limit of Rs. 100,000 ) deducted from an
employee’s salary are tax exempt.
17) 80CCG – Direct Equity Investment – Under ‘Rajiv Gandhi Equity
Savings Scheme‘ – a new equity investor will be able to claim 50% of his
investment in direct equity as deduction subject to maximum investment of Rs.
50,000 and provided his taxable income is below Rs. 10 lakhs. The investment
will be subject to 3 years lock-in.
Update 23 Sep 2012: Government has
notified this scheme (RGESS). Mutual funds and ETFs that invest in BSE100 or
CNX 100 stocks or PSUs which are Navratna, Maharatna and Miniratna will qualify
under this scheme. These investments can be traded over stock exchange after 1
year of investment. New equity investor has been defined as someone who has
opened a Demat account but has not bought any securities till date of
notification of this scheme (22 Sep 2012).
18) Section 80TTA – Savings Bank Interest - No tax will be charged on
interest earned on balance in savings bank account subject to a maximum of Rs. 10,000
per year.
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