Income from salary, deductions and tax planning (2)

TAXATION FOR SALARIED

EMPLOYEES AND ITS

IMPORTANCE

By Yash Dani & Co Chartered Accountants

C/o Hotel Payal Agra Gate circle

INCOME TAX PROVISIONS FOR SALARIED EMPLOYEES

As per Taxation Rules, it is mandatory for an earning individual/entity to file a return irrespective of the fact that tax has been deducted at source by his/her employer or not, and whether he/she is eligible for a refund or not.

TAX SLABS FOR FILING INCOME TAX RETURNS

CESS AND WHY IT IS LEVIED

Cess

It is a Tax which is levied by government for some specific purpose .Currently Education & higher education cess is 2% and 1 % respectively

Cess is levied on Total tax calculated on Net Income

DUE DATES FOR FILING RETURNS

SALARIED EMPLOYEES = 31St JULY OF

EVERY YEAR

TAX PLANNING

Conceptually tax planning for salaried employees can be divided into two broad categories.

1. Salary Restructuring

2. Investing in Tax Saving Devices

SALARY RESTRUCTURING

An employee can restructure his salary to reduce the Tax outgo by availing exempt allowances, benefits and perquisites.

ALLOWANCES AND RESPECTIVE EXEMPTIONS

M

Allowances and Respective exemptions

Type of Allowance Allowance exempt u/s 10Conveyance Allowance Exempt up to Rs 1600 p.m (Earlier 800

pm)Children Education Allowance Rs 100 p.m Per Child. Max for 2

childrenHostel Expenditure Allowance Up to Rs. 300 per month per child up

to a maximum of 2 children is exemptUniform Allowance Exempt to the extent of expenditure

incurredFamily Pension received by the family members of Armed Forces

Fully Exempt

House Rent Allowance (Sec. 10(13A) & Rule 2A)

Least of the following is exempt: a) Actual HRA Received b) 40% of Salary c) Rent paid minus 10% of salary

Entertainment Allowance received by the Government employees (Fully taxable in case of other employees)

Least is deductible : a) Rs 5,000 b) 1/5th of salary c) Actual allowance received

TAX SAVING TECHNIQUES

AND

DEDUCTIONS

TAX SAVING TECHNIQUE

Tution Fees Medical Insurance Life Insurance Donations Education Loans Housing Loans

PPF 5 Years FDR ELSS NSC New Pension Scheme Sukanya Samriddhi

Yojna

BY SPENDING BY INVESTING

LIFE INSURANCE PREMIUM Premium paid falls in the ambit of sec 80C.

Max Deduction = 20% of Sum Assured or Premium Paid W.E.L.

Policies issued on or after April 01 2012,

Max Deduction = 10% of Sum Assured or Premium Paid W.E.L.

Policy Terminated / Ceased = Benefits Reversed

Traditional Products 2 Years

ULIP 5 Years

Tuition fees

Tuition Fees paid on your

Child’s Education can be claimed as deduction u/s

80C .

Maximum allowable

deduction is Rs 1,50,000.

Deduction can only be claimed on the Tuition fees of Two Children.

PUBLIC PROVIDENT FUND

TENURE

INITIAL DEPOSIT

TAX BENEFIT

INTEREST Rate of Interest 8.1% (From FY 2016-17)

Min 15 Years of Holding

Min Rs.100 to Max Rs. 1,50,000

Interest are Tax Free

Deposit claimed as deduction u/s.80C

ELSS-Equity Linked Saving SchemeTax savings Mutual Funds

Amount invested in ELSS qualifies for tax

exemptions under section

(u/s) 80C of the Indian Income

Tax ACT

Long-term capital gains from these funds are tax free in

your hands.

Lock-in period is

only 3 years

You can also choose to

invest through a

Systematic Investment

Plan

SUKANYA SAMRIDDHI ACCOUNT SCHEME Eligibility : Only for girl child Age limit Minimum – from the birth Maximum – 10 years No of accounts Minimum – 1 Maximum – 2 Minimum deposit (multiples of 100)Rs.1000 per year Maximum deposit Rs.1,50,000 per year No. of deposits No limit (either in month or financial year) Mode of deposit Cash or Cheque or Demand Draft Interest rate 9.1% for financial year 2014-15. Partial withdrawals Maximum up to 50% Maturity age 21 years Term period Minimum term of is 14 years from date of opening

a account. . Grace Period One year grace period is allowed to open account. Girl child who is born between 2.12.2003 & 1.12.2004 can open account up to 1.12.2015

NATIONAL PENSION PLAN

Additional TAX DEDUCTION

Of Rs. 50000/- is allowed u/s.

80CCD

TAX BENEFIT ON HOME LOAN- SEC 80C ,24B

TAX DEDUCTION U/s. 80C Max upto

Rs. 1,50,000/-

Principal Amount of

Home LoanInterest Paid on Home Loan availed before FY 2016-17

TAX EXEMPTION U/s. 24B, Max Upto Rs. 2,00,000/- for Self Occupied Property

Entire Interest paid will be TAX EXEMPTED U/s. 24B, for Let Out Property

ADDITIONAL TAX DEDUCTION U/ SEC. 80EE from FY 2016-17

Additional Tax Deduction of Rs.50,000/-* on Home Loan Interest subject to following conditions:-

• HOME LOAN SANCTIONED IN FY 2016-17

• LOAN AMOUNT SHOULD BE LESS THAN 35 LACS.

• VALUE OF HOUSE SHOULD NOT BE MORE THAN Rs. 50 LACS

• HOME BUYER SHOULD NOT HAVE ANY EXISTING RESIDENTIAL HOUSE IN HIS NAME

CONDITIONS:

80D-MEDICLAIM

DEDUCTION U/S 80D

Rs 25000 in case of family

Rs 30000 in case of Senior Citizens

Additional deduction for health Check-ups

= Rs 5000 included in above limit.

Note: Payment should be made through Cheque Only

80E-DEDUCTION FOR INTEREST ON EDUCATION LOAN

80U-DEDUCTION IN CASE OF PERSON WITH DISABILITY

Deduction u/s 80U

Disability less then 80% deduction is Rs 50000

Disability more then 80% deduction is Rs 100000

80G-DEDUCTION IN RESPECT OF DONATIONS PAID

Contributions made to certain Relief funds or charitable trust can

be claimed as deduction.

Donations greater then Rs 10000 should be made through cheque.

Rebate u/s. 87 A

Resident individuals.

Rebate in Tax is of Rs 2000 & Rs 5000 from AY 2017-18

Rebate is allowed before levy of Education Cess, SHE Cess & Surcharge.

To claim rebate income should not exceed 5 Lacks.

CONDITIONS:

A

Interest Earned on Saving Bank Accounts =

Max Deduction Upto Rs.10000/- U/s.80TTA .

WHY YOU SHOULD FILE INCOME TAX RETURN????

All Salaried Employers are under Certain Impressions:

That Employer already deducted Income Tax and I am not required to file Income Tax Return.

My Total Income is below taxable limit, so I m not required to file Income Tax Return.

Income Tax department has come with a notification that if income is below Rs.500000/-*(subject to certain conditions) than no return is required to be filed.

SOME OF THE MAJOR BENEFITS :-

STANDARD INCOME PROOF FOR VARIOUS PURPOSES

FOR AVAILING ANY LOAN FACILITY• HOME LOAN• PERSONAL LOAN• VEHICLE LOAN• EDUCATION LOAN

REFUND IN CASE OF EXCESS TAXES PAID CAN BE CLAIMED

FOR VISA AND EMMIGRATION PROCESSING

YASH DANI & CO.CHARTERED

ACCOUNTANTSC/o Hotel Payal, Agra Gate Circle,

P.R. MargAJMERCont:

95095839919549583991