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Tintu Thomas Income Tax- Personal Taxation…2017-2018 A Guide to…
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A guide to Income Tax personal taxation 2017-2018

Apr 11, 2017

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Tintu Thomas
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Page 1: A guide to Income Tax personal taxation 2017-2018

Tintu Thomas

Income Tax- Personal Taxation…2017-2018

A Guide to…

Page 2: A guide to Income Tax personal taxation 2017-2018

Tintu Thomas

What is….Income Tax?

• Constitution of India → Schedule VII → Union List → Entry 82 has given power to the Central Government to levy a tax on any income other than agricultural income which is defined in Section 10(1) of the Income Tax Act, 1961.

• Income tax is that percentage of your income that you pay to the government to fund infrastructural development, pay the salaries of those employed by the state or central governments, etc.

• All taxes are levied based on the passing of a law, and the law that governs the provisions for our income tax is the Income Tax Act, 1961.

• The Income Tax Department is the biggest revenue mobilizer for the Government.

Page 3: A guide to Income Tax personal taxation 2017-2018

Tintu Thomas

Benefits of proper tax remittance…

No audit risk Peace of Mind Good Credit Rating Social Responsibility and Contribution to the Country Enhanced sense of security Tax saving plans leads to monetary gains(Via Investments)

Page 4: A guide to Income Tax personal taxation 2017-2018

Tintu Thomas

Tax Slabs…

Current year(2016-17)

Proposed for Next year(2017-18)

* 2+1=3% Cess will be on total the tax payable

Page 5: A guide to Income Tax personal taxation 2017-2018

Tintu Thomas

Tax Rebate under Sec 87 A…Explained

AY 2017-2018

Category Rebate

2,50,000 to 5,00,000 5,000

5,00,001 to 10,00,000 Nil

Above 10,00,000 Nil

AY 2018-2019 (Proposed)

Category Rebate

2,50,000 to 3,50,000 2,500

3,50,001 to 5,00,000 Nil

5,00,001 to 10,00,000 Nil

Above 10,00,000 Nil

Page 6: A guide to Income Tax personal taxation 2017-2018

Tintu Thomas

Tax saving sections…

Section 80C

Wide range of options

PPF,ELSS,SSA,FD etc

Section 80CCC

Pension Products

Section 80CCD

Central Government Employee Pension

Scheme

Section 80CCD(1B)

Additional exemption of Rs: 50,000 for investment in NPS

NP

SIn

vest

men

ts &

E

xpen

ditu

re

Maximum of Rs: 1.5 Lakh Deduction for Income Tax combining these 3 sections

Page 7: A guide to Income Tax personal taxation 2017-2018

Tintu Thomas

Tax saving sections…contd

Section 80D

Medical Insurance for

family and parents

Hea

lth &

wel

l be

ing

Deduction up to Rs: 50,000

Section 80DD

Medical treatment of

disabled dependent

Deduction up to Rs: 1.25

Lakh

Section 80DDB

Treatment of certain

Disease/AilmentDeduction up

to Rs: 40,000

Section 80U

Physically disabled AssesseDeduction up

to Rs: 1.25 Lakh

Section 80E

Interest payable on educational

loanLoan

s

Full exemption

Section 24

Interest payable for housing loan & Home

improvement loanDeduction up to Rs: 2 Lakh for home loan & Rs: 30,000 for home Improvement loan

Section 80EE

Additional deduction of

Rs: 50,000 for interest on

housing loanFor first home buyers

Page 8: A guide to Income Tax personal taxation 2017-2018

Tintu Thomas

Tax saving sections…contd

Section 80GG

For paying rent in case of no

HRAOth

ers

Deduction up to Rs: 24,000

Section 80CCG

Rajiv Gandhi Equity Savings Scheme

(RGESS)Deduction up to Rs:

25,000(50% of amount

invested)

Section 80TTA

Interest received from Savings Bank

AccountDeduction up to

Rs: 10,000

Section 80G

Donation to certain

charitable funds/institution

s

Don

atio

ns

Max of 10% of annual Income

Section 80GGA

Donations for scientific research or

rural development

Full exemption

Section 80GGC

Donation to political parties

Max of 10% of annual Income

Page 9: A guide to Income Tax personal taxation 2017-2018

Tintu Thomas

Tax saving sections…80C/80CCC/80CCD combined maximum amount that can be claimed Rs: 1.5 Lakh

Inve

stm

ent

Opt

ions

(Deb

t) Provident

Fund (EPF/V

PF)

Public Provid

ent Fund (PPF)

Sukanya

Samridhi

Account

National

Savings

Certificate

(NSC)

Senior Citizen

s Saving

s Schem

e (SCSS)

Tax Saving Fixed

Deposits

(For 5 Yrs)

Inve

stm

ent

Opt

ions

(O

ther

s)

Life Insura

nce Premiu

m

Pension plans

from Mutual Funds

Pension plans

from Insura

nce Compa

nies

National

Pension

Scheme

(NPS)

Tax saving Mutual Funds (ELSS)

Central Govt.

employees

pension

Scheme

Exp

endi

ture

s

Principal repayment of housing loan

Stamp Duty and

registration cost of the

house

Tuition fee for 2

children

80C

80C 80CCC80C 80CCD

80C

Page 10: A guide to Income Tax personal taxation 2017-2018

Tintu Thomas

Tax Saving Sections…Explained

1. EPF/VPF (Employee Provident Fund)

• EPF –Mandatory fund• Employee contribution 12% which matches the employer• Only employees contribution is tax exempted• Interest earned from EPF/VPF is tax exempted• Can be withdrawn/transferred

SEC 80C

2. PPF (Public Provident Fund)

• PPF can be opened at post office, 24 nationalized bank and ICICI bank• Mandatory locking period of 15 years + 5 years extension (Optional)• Maximum investment Rs: 1.5 Lakh/Year, min Rs: 500/Year• Interest is market linked, ~ 8.1%• Can be opened in the name of minors also

SEC 80C

Page 11: A guide to Income Tax personal taxation 2017-2018

Tintu Thomas

Tax Saving Sections…Explained

3. Sukanya Samriddi Account (SSA)

• Can be opened for girl child aged <10 (Max 2 child)• Deposit to be made for 14 years, account matures at 21 years• Max investment of 1.5 lakh/Year, Min Rs: 1000/Year• 50% of amount can be withdrawn at the time of marriage(18 Yrs)• Interest rate is market liked ~8.6%, and is tax free

4. National Savings Certificate (NSC)

• Tax saving FD scheme of India Post• No max limit, but max can be claimed under 80C is 1.5 Lakh• Can buy NSC from Rs: 100,500,100,5000,10000• Better than FD at bank• Certificate can be kept as collateral security for getting bank loan• Interest rate is market liked ~8.1%, and is taxable

SEC 80C

SEC 80C

Page 12: A guide to Income Tax personal taxation 2017-2018

Tintu Thomas

Tax Saving Sections…Explained

5. Tax saving FD from Banks/Post Office

• Minimum tenure should be 5 yrs.• Interest rate ~ 7%-7.5%• Post office time deposit FD account gives more interest @ 7.9%• Interest earned is taxable

6. Senior Citizens Savings Scheme (SCSS)

• For senior citizens(Aged above 60)• Max investment Rs: 15 lakh, min Rs:1000• Interest paid is @ 8.6%• No partial withdrawal for 5 years• Can be opened at post office, 24 nationalized bank and ICICI bank• Interest earned is taxable

SEC 80C

SEC 80C

Page 13: A guide to Income Tax personal taxation 2017-2018

Tintu Thomas

Tax Saving Sections…Explained

7. Life insurance

• Best insurance can that can buy are term plan.• Life insurance should be adequate to replace your income• Maturity proceeds are tax free

8. National Pension Scheme (NPS)

• Lowest cost pension plan • Min investment 6000/Year• Locking period is for 60 years• During the time of death entire amount goes to the nominee.

Budget 2015 announced additional deduction of Rs: 50,000 on NPS u/s 80CCD(1B) that can be claimed apart from 80C,80CCC Etc

SEC 80C

SEC 80CCC

SEC 80CCD(1b)

Page 14: A guide to Income Tax personal taxation 2017-2018

Tintu Thomas

Tax Saving Sections…Explained

9. Equity linked savings Scheme (ELSS)

• AKA tax saving mutual fund• Min investment Rs: 500, no max investment but max that can be claimed u/s 80C is

1..5 lakh• Can invest max 2 funds• Gains from ELSS is tax free• Shortest locking period-3 years

10. Pension plans from insurance companies

• Pension plans from insurance companies qualify for deduction under section 80CCC

• Assured returns ~1-2%/Annum• Low returns, on maturity can’t withdraw the entire corpus have to buy Annuity• PPF/EPF, NPS is better pension plans which have more flexibility & returns

SEC 80C

SEC 80CCC

Page 15: A guide to Income Tax personal taxation 2017-2018

Tintu Thomas

Tax Saving Sections…Explained

11. Tuition Fee

• Expenses on tuition fee for maximum of two children is exempted• Deduction is for full time course only, the institute should be located in India• This deduction can’t be claimed for the tuition fees of self & spouse• Development fees, transport charges, mess charges, library fees, late fees etc are

not considered for deduction

12. Stamp Duty and registration charges

• For the purchase of new residential unit only• House should be on the name of the assesse, payment should be done from his

funds• Payment should have been made on current financial year can’t be carry

forwarded.

SEC 80C

SEC 80C

Page 16: A guide to Income Tax personal taxation 2017-2018

Tintu Thomas

Tax Saving Sections…Explained

13. Home Loan: Interest & Principal SEC 24 SEC 80C SEC 80EE

Home Loan

Principal

Interest

Deduction u/s 80C(Max 1.5 Lakhs)

Deduction u/s 24 up to 2 lakhs

Additional Deduction of Rs: 50,000 u/s 80EE (First home buyer)

Page 17: A guide to Income Tax personal taxation 2017-2018

Tintu Thomas

Tax Saving Sections…Explained

ii. Deduction on Interest payment of house loan

• Deduction up to 2 Lakh towards the interest paid towards housing loan.• We can claim Interest and HRA together• Deduction is available from the year of possession/Completion• Section 24 covers Loss/Gain from housing property• Rent received= Income, Rent Paid= Expense (in case of rented out property)• ie (income – expense)= amount for deduction*

SEC 80C i. Deduction on principal repayment of house loan

• House should be on the name of the assesse• Deduction can be claimed for multiple properties• Loan should be recognized financial institution.• Deduction is available from the year of possession/Completion• All benefits are reversed if the property is sold within 5 years.

SEC 24

Page 18: A guide to Income Tax personal taxation 2017-2018

Tintu Thomas

Tax Saving Sections…Explained

14. Home Improvement Loan

• Deduction up to Rs: 30,000 towards the interest paid towards housing loan taken for home improvement- Self occupied home

• It can be taken for furnishing, repairing, painting of new or existing home• This deduction is over and above the Rs: 2 Lakh for the interest payment of

housing loan.• Can take 80% of the amount estimated for home improvement

SEC 80EE iii. Additional Deduction on interest payment of house loan

• Additional Deduction of Rs: 50,000 towards the interest payment of housing loan-first home buyers.

• Loan should be taken from 01/04/2016 onwards• Loan should only be taken from banks/ Housing finance companies• Loan should not exceed Rs: 35 Lakhs, house shouldn’t cost > Rs: 50 Lakhs

SEC 24

Page 19: A guide to Income Tax personal taxation 2017-2018

Tintu Thomas

Tax Saving Sections…Explained

15. Medical Insurance

• Can claim Rs: 25,000 for medical insurance taken for Self and family, Rs: 30,000 in case if you are senior citizen

• Additional Rs: 30,000 can be claimed for insurance taken for parents who are >60yrs

• This deduction can’t be claimed irrespective your parents are depended or not• Deduction can’t be claimed for In-laws

Budget 2013 introduced deduction of Rs: 5,000 towards the preventive health check-up for self, spouse, children and parents. This is within the Rs: 25,000 limit of your health insurance

16. Handicapped Dependents

• Can claim for expenses for the treatment and maintenance of dependent who is differently abled.

• Max claim is up to Rs: 75,000 or actual expenditure which ever is less• Dependent can be Parents, spouse, children or siblings• 40% or more for blindness and vision problems, Leprosy, Hearing Impairment, Loco

motor disability, mental retardation/ illness• Disability certificate is required for deduction.

SEC 80D

SEC 80DD

Page 20: A guide to Income Tax personal taxation 2017-2018

Tintu Thomas

Tax Saving Sections…Explained

17. Treatment of certain Diseases

• Max Deduction is Rs: 40,000, for senior citizen Rs: 60,000• Can be claimed for Self, Spouse, Children, parents & siblings if they are

dependents.• Diseases covered- Hemophilia, Malignant Cancers, AIDS, Thalassemia,

Parkinson’s disease, Chronic Renal failure, Neurological Diseases.• Ailment/Treatment certificate from a specialist from Government Hospital is

required

18. Physical Disabled Assesse

• Tax payer can claim deduction u/s 80U in case he suffers from certain Disabilities/Diseases

• Deduction can be claimed fro Rs: 75,000 to 1,25.000 based on the disability• Diseases covered are Loco motor disability, leprosy cured, Autism, Cerebral palsy,

Blindness and vision problems, Hearing impairment, Mental retardation/ illness• A certificate of ailment from a neurologist/Civil Surgeon/Medical officer of

Government hospital is required

SEC 80DDB

SEC 80U

Page 21: A guide to Income Tax personal taxation 2017-2018

Tintu Thomas

Tax Saving Sections…Explained

19. Education Loan

• Entire interest paid towards the educational loan in the financial year is liable for Deduction

• Loan should be for Self/Spouse/Children• Loan should be for full time course only• Educational loan deduction can be claimed for maximum of 8 Years• No principal amount toward the loan is liable for deduction

SEC 80E

20. Donation to approved charitable organizations

• Max exemption you can claim is 10% of your income after 80C to 80U• Donations vary in deduction from 50% to 100%• Deduction made the approved list of institution/organization is available for

deduction• Receipt should have registration number from IT, should be signed, stamped from

the institution/organization• Receipt name should match your PAN name

SEC 80G

Page 22: A guide to Income Tax personal taxation 2017-2018

Tintu Thomas

Tax Saving Sections…Explained

21. Donation for Scientific Research

• 100% deduction for payments towards scientific research association/university/college who undertake scientific research

• Any institution/organization undertaking any program on rural development• To a University/college/institution that researches on social science or statistics

SEC 80GGA

22. Donation to political Parties

• 100% deduction towards the donation towards registered political parties.• Max claim is limited to 10% of your gross annual income

SEC 80GGC

Page 23: A guide to Income Tax personal taxation 2017-2018

Tintu Thomas

Tax Saving Sections…Explained

SEC 80GG 23. House Rent in case HRA is not part of salary

• Can claim deduction in case HRA is not there as a salary component• Cannot claim the amount if your spouse / children owns a property• HRA deduction will be the lowest of the following”

o 5000/Montho 25% of your annual incomeo Rent paid excess of 10% of annual income

24. Rajiv Gandhi Equity Savings Scheme (RGESS)

• Max deduction is 50% of amount invested, maximum amount is Rs: 25,000( ie.Min 50,000 should be invested)

• Can make use of RGSS for 3 consecutive years• RGSS is for promoting new investors in stock market• If your annual income is >Rs: 12 Lakhs you cant claim RGSS

SEC 80CCG

25. Interest on Savings Account

• Rs: 10,000 deduction towards the interest received from savings bank account.

SEC 80TTA

Page 24: A guide to Income Tax personal taxation 2017-2018

Tintu Thomas

Tax on salary components…

Fully Taxable

Basic Salary

DA

Special Allowance

Band Pay

Bonus

Over Time

Arrears

Personal Pay

Food Allowance

Furniture Allowance

Shift Allowance

Partially Taxable/Tax Free

Medical Reimbursement up to Rs: 15,000/Year

Transport allowance up to Rs: 19,200/Year

Leave travel Allowance (LTA)

Vehicle Maintenance

House Rent Allowance (HRA)

Uniform Allowance up to Rs: 24,000/year

Children Education Allowance Rs: 1200/Year, Hostel expenditure Rs: 3600/Year - for max 2 children

News Paper/Journal Allowance up to Rs: 12,000/ Year

Telephone Allowance

Meal Coupons

Page 25: A guide to Income Tax personal taxation 2017-2018

Tintu Thomas

Partially Taxable salary components…

1. House Rent Allowance

HRA claimed is the lowest of the following,

40% of Basic + DA (50% for Metros) HRA Received House Rent Paid – (10% of Basic + DA)

If the rent is >1 lakh, PAN of the house owner is required

2. Company Car/ Car maintenance allowance

If the car and maintenance reimbursement is provided by company

<=1600cc, Rs: 21,600/Year is taxable >1600cc, Rs: 28,800/Year is taxable Rs: 10,800/Year as driver salary is taxable

If the car and maintenance is done by yourself

<=1600cc, Rs: 21,600/Year is tax free >1600cc, Rs: 28,800/Year is tax free Rs: 10,800/Year as driver salary is tax free

Page 26: A guide to Income Tax personal taxation 2017-2018

Tintu Thomas

Partially Taxable salary components…

5. Leave Travel Allowance (LTA)

• LTA can be claimed twice in a block of 4 years(ie. Once in 2 years)• Claimed for domestic trips for self and dependents• Only travel expenses are covered• Max limit is decided by employer• Current Block is 2014-2017

4. Mobile Phone bills & Internet Bills Reimbursement

• Official Mobile Phone bills & Internet Bills Reimbursement are tax free

3. Meal coupons

• Rs: 26,400/Year is tax free(Assuming 22 working days a month)- 50/Meal(2 Meals a day)

Page 27: A guide to Income Tax personal taxation 2017-2018

Tintu Thomas

Thank You…