SALARY TAX STRUCTURING - amarjeetsinghassociates.inamarjeetsinghassociates.in/Image/Salary Tax Structuring.pdfdetail of tax saving instruments contd…. 5. tax saving fd from banks/post

AMAR JEET SINGH & ASSOCIATES CHARTERED ACCOUNTANTS

SALARY

TAX

STRUCTURING

2. LEAVE TRAVEL ALLOWANCE 1. HOUSE RENT ALLOWANCE

LTA CAN BE CLAIMED TWICE IN A BLOCK OF 4 YEARS (I.E. ONCE IN 2 YEARS)

FOR DOMESTIC TRIP FOR SELF AND DEPENDENTS

ONLY TRAVEL EXPENSES ARE COVERED

CURRENT BLOCK IS 2014-2017

HRA DEDUCTION IS LEAST

OF THE FOLLOWINGS 40% OF BASIC + DA (50%

FOR METRO CITIES) HRA RECEIVED HOUSE RENT PAID-10% OF

BASIC+DA IF RENT IS IN EXCESS OF RS. 1 LAKH, PAN OF THE HOUSE OWNER IS REQUIRED

DEDUCTION

FROM SALARY

DEDUCTION FOR

HOME LOAN INTEREST & PRINCIPAL

PRINCIPAL INTEREST

DEDUCTION u/s 80C (Max 1.5 Lakhs)

DEDUCTION u/s 24 (Max 2 Lakhs for

home loan) 30,000/- for

improvement loan

FIRST HOME BUYER:

Additional Deduction of Rs.

50K u/s 80EE

#HOUSE SHOULD BE IN THE NAME

OF THE ASSESSEE

#LOAN SHOULD BE FROM

RECOGNISED FINANCIAL

INSTITUTION

#DEDUCTION IS AVAILABLE FROM

THE YEAR OF POSSESSION/

COMPLETION

#ALL BENEFITS ARE REVERSED IF

PROPERTY IS SOLD WITH IN 5

YEARS

# DEDUCTION UPTO 2 L TOWARDS

INTEREST ON HOUSING LOAN

#HRA AND INTEREST DEDUCTION

CAN BE CLAIMED

SIMULTANEOUSLY

#DEDUCTION IS AVAILABLE FROM

THE YEAR OF POSSESSION/

COMPLETION

4

OTHER LOAN

ADDITIONAL DEDUCTION OF HOUSE LOAN (S.80EE)

#ADDITIONAL DEDUCTION OF 50K

TOWARDS THE INTEREST PAYMENT OF

HOUSING LOAN

# IT SHOULD BE TAKEN FROM 01/04/2016

#ONLY FROM BANK AND HOUSING

FINANCE COMPANIES

#LOAN SHOULD NOT EXCEED 35L

# COST OF HOUSE SHOULD NOT EXCEED

50L

#ONLY INTEREST AMOUNT PAID IS

LIABLEFOR DEDUCTION AND NO DEDUCTION

FOR PRINCIPAL AMOUNT

# LOAN SHOULD BE FOR SELF/SPOUSE/CHILDREN

#LOAN SHOULD BE FOR FULL TIME COURSE

#FOR MAXIMUM OF 8 YEARS

EDUCATION LOAN

AGGREGATE DEDUCTION OF RS. 1.5L

SECTION 80C

LIC/TUTION FEE/PPF/FD etc

SECTION 80CCC

PENSION PLAN OF INSURANCE

CO/MUTUAL FUND/NPS

SECTION 80CCD

CG EMPLOYEE PENSION SCHEME

S. 80CCD(1B) ADDITIONAL 50K FOR INVESTING IN NPS

TAX SAVINGS INSTUMENTS

80C_INVESTMENT OPTIONS

1 • PROVIDENT FUND

2 • SUKANYA SAMRIDHI ACCOUNT

3 • NATIONAL SAVING CERTIFICATE

4 • SENIOR CITIZENS SAVING SCHEME

5 • TAX SAVING FIXED DEPOSIT ( For 5 Yrs.)

6 • LIFE INSURANCE PREMIUM

7 • TAX SAVING MUTUAL FUNDS (ELSS)

8 • PRINCIPAL REPAYMENT OF HOUSING LOAN

9 • STAMP DUTY AND REGISTRATION COST OF HOUSE

10 • TUTION FEE FOR 2 CHILDREN

7

DETAIL OF TAX SAVING INSTRUMENTS Contd….

1. EPF/VPF

#MANDATORY FUND

#EMPLOYER AND EMPLOYEE

CONTRIBUTION 12% OF SALARY

# ONLY EMPLOYEE

CONTRIBUTION IS EXEMPTED

#CAN BE OPENED AT POST OFFICE, 24

NATIONALISED BANK AND ICICI BANK

# MANDATORY LOCK IN PERIOD 15Y+5 Y

EXTENTION OPTIONAL

# MIN INV 500/Y

# MAX 1.5L/Y

# INTEREST 8.1%

# CAN BE OPENED IN THE NAME OF MINOR

ALSO

2. PPF

8

DETAIL OF TAX SAVING INSTRUMENTS Contd….

3. SUKANYA SAMRIDDI ACCOUNT

#FOR GIRL CHILD AGED BELOW

10Y(MAX FOR 2 CHILD)

#DEPOSIT FOR 14 Y

#ACCOUNT MATURES AT 21Y

#50% AMOUNT CAN BE WITHDRAWN AT

THE TIME OF MARRIAGE

.#INTEREST 8.6% AND TAX FREE

#TAX SAVING FD SCEME OF INDIA POST

#NO MAX LIMIT HOWEVER FOR 80C 1.5L

.#CAN BUY NSC FROM RS. 100, 500, 1000, 5000,10000

#BETTER THAN FD AT BANK

#CERTIFICATE CAN BE KEPT AS COLLATERAL

SECURITY FOR GETTING BANK LOAN

#INTEREST RATE 8.1% & TAXABLE

4. NATIONAL SAVING CERTIFICATES (NSC)

9

DETAIL OF TAX SAVING INSTRUMENTS Contd….

5. TAX SAVING FD FROM BANKS/POST OFFICE

#MINIMUM TENURE SHOULD

BE 5 Yrs.

#INTEREST RATE 7% TO 7.5%

#POST OFFICE TIME DEPOSIT FD ACCOUNT GIVES MORE INTEREST

@ 7.9%

#INTEREST IS TAXABLE

#FOR AGED ABOVE 60Y

#MIN 1000 MAX 15L

#INTEREST RATE 8.6%

#NO PARTIAL WITHDRAWAL FOR 5

YEARS

#CAN BE OPENED AT POST OFFICE, 24 NATIONALISED BANK AND ICICI

BANK

#INTEREST IS TAXABLE

6. SENIOR CITIZENS SAVINGS SCHEME

10

DETAIL OF TAX SAVING INSTRUMENTS Contd….

7. LIFE INSURANCE PREMIUM

#LIFE INSURANCE SHOULD BE ADEQUATE

TO REPLACE YOUR INCOME

#MATURITY PROCEEDS ARE TAX FREE

#FOR HIMSELF SPOUSE

CHILDEREN (DEPENDENT OR

NOT/MARRIED OR NOT)

#UPTO 20% (policy up to 31.03.12)/15%(For 80DDB

or 80U person from 01.04.13)/10% OF

CAPITAL SUM ASSURED

#LOWEST COST PENSION PLAN

#MIN INVESTMENT 6000/YEAR

#LOCKING P ERIOD IS FOR 60 Y

#AT THE TIME OF DEATH ENTIRE AMOUNT GOES

TO NOMINEE

NOTE: BUDGET 2015 ANNPOUNCED ADDITIONAL

DEDUCTION OF RS 50K U/S 80CCD(1B) THAT CAN

BE CLAIMED APART FROM 80C/80CCC

8. NATIONAL PENSION SCHEME (NPS)

11

DETAIL OF TAX SAVING INSTRUMENTS Contd….

9.EQUITY LINKED SAVING SCHEME (ELSS)

#AKA TAX SAVING MUTUAL FUND

#MIN 500 MAX NO LIMIT BUT 80C

UPTO 1.5L

#CAN INVEST MAX 2 FUNDS

#GAIN IS TAX FREE

#SHORTEST LOCK IN PERIOD OF 3

YEARS

#ASSURED RETURNS OF 1-2%

/Annum

#ON MATURITY CAN’T WITHDRAW

ENTIRE CORPUS HAVE TO BUY

ANNUITY

#PPF/EPF, NPS IS BETTER PENSION

PLANS WHICH HAVE MORE

FLEXIBILITY & RETURNS

10. PENSION PLANS OF INSURANCE COMPANIES

12

DETAIL OF TAX SAVING INSTRUMENTS

11.TUTION FEE

#FOR MAXIMUM 2 CHILDREN IS EXEMPTED

#FOR FULL TIME COURSE ONLY

#INSTITUTE SHOULD BE LOCATED IN INDIA

#ONLY TUTION FEE IS ALLOWED OTHER

CHARGES LIKE DEVELOPMENT FEE

TRANSPORT CHARGES ETC SHALL NOT BE CONSIDERED FOR

DEDUCTION

#FOR PURCHASE OF NEW

RESIDENTIAL UNIT ONLY

#HOUSE SHOULD BE IN THE NAME

OF ASSESSEE

#PAYMENT SHOULD BE DONE FROM HIS FUNDS

12. STAMP DUTY AND REGISTRATION CHARGES

SECTION 80D

MEDICAL INDURANCE FOR FAMILY & PARENTS

DEDUCTION UPTO Rs. 50K

SECTION 80DD

MEDICAL TREATMENT OF DISABLED DEPENDENT

DEDUCTION UP TO Rs. 1.25L

SECTION 80DDB

TREATMENT OF CERTAIN DISEASE/AILMENT

DEDUCTION UPTO Rs. 40K

SECTION 80U

PHYSICALLY DISABLED ASSESSEE

DEDUCTION UPTO Rs. 1.25 L

HEALTH RELATED TAX SECURITY

1. MEDICAL INSURANCE

#25000 FOR MEDICAL INSURANCE FOR

SELF AND FAMILY 30,000/- IN CASE YOU

ARE SENIOR CITIZEN

# ADDITIONAL RS. 30,000/- CAN BE

CLAIMED FOR INSURANCE TAKEN FOR

PARENTS WHO ARE ABOVE 60 Y

#IRRESPECTIVE OF PARENTS DEPENDENT

OR NOT

#CAN’T BE CLAIMED FOR IN LAWS

DISEASES RELATED SECURITY

15

2) 80DD

TREATMENT OF HANDICAPPED DEPENDENTS

#CAN CLAIM FOR THE TREATMENT AND

MAINTENANCE OF DIFFERENTLY ABLED

DEPENDENT

#75,000/- OR ACTUAL EXPENDITURE WHICHEVER IS

LESS

#DEPENDET CAN BE PARENTS, SPOUSE, CHILDEREN 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

3) S. 80DDB

TREATMENT OF CERTAIN DISEASES

# MAX DEDUCTION IS RS 40K /60K FOR SENIOR CITIZEN

#FOR SELF, SPOUSE, CHILDREN, PARNETS & SIBLINNGS IF THEY ARE

DEPENDENTS

#DISEASES LIKE HEMOPHILIA, MALIGNANT

CANCERS, AIDS, THALASSEMIA, PARKINSON’S

DISEASE, CHRONIC RENAL FAILURE, NEUROLOGICAL

DISEASES

#CERTIFICATE FROM A SPECIALIST FROM GOVT.

HOSPITAL

IS REQUIRED

4) S. 80U

PHYSICAL DISABLED ASSESSEE

#IN CASE TAX PAYER SUFFERS FROM CERTAIN

DISABILIITIES/DISEASES

# 75000 TO 125000 BASED ON DISABILITY

#DISEASES COVERED ARE LOCO MOTOR DISABILITY, LEPROSY CURED, AUTISM,

CEREBRAL PALSY, BLINDNESS AND VISION PROBLEMS, HEARING IMPAIRMENT,

MENTAL RETARDATION/ILLNESS

# A CERTIFICATE FROM NEUROLOGIST/CIVIL

SURGEION/MEDICAL OFFICER OF GOVT HOSPITAL IS

REQUIRED

DONATIONS

80G

DONATION TO CERTAIN

CHARITABLE FUNDS

INSTITUTIONS MAX OF 10%

ANNUAL INCOME

S. 80GGA

DONATION FOR SCIENTIFIC

RESEARCH OR RURAL

DEVELOPMENT

FULL DONATION AMOUNT EXEMPT

DONATION TO

POLITICAL PARTIES

MAX OF 10% of

ANNUAL INCOME

01

PROPOSED AMENDMENT IN PERSONAL TAXATION OF BUDGET 2018

RELIEF TO SENIOR CITIZENS

02

03

17

DEDUCTOION u/s 80D ON MEDICAL PREMIUM AND MEDICAL EXPENDITURE OF SENIOR CITIZENS INCREASED FROM INR 30K to INR 50K

Earlier a deduction upto INR 30K allowable to an assessee being an individual or HUF in respect of followings expenditure for senior citizens:-

(i) Health insurance (ii) Medical expenditure

It is proposed to increase this limit to INR 50K

DEDUCTION u/s 80DDB for SPECIFIED DISEASES INCREASED FROM INR 60K & 80K FOR SENIOR AND VERY SENIOR CITIZENS RESPECTIVELY to INR 1L

Earlier a deduction is available to an individual and Hindu undivided family with regard to amount paid for medical treatment of specified diseases in respect of very senior citizen upto INR 80K and in case of senior citizens upto INR 60K It is proposed to raise this monetary limit of deduction to INR 1L for both senior citizens and very senior citizens.

DEDUCTION OF INR 50K IN RESPECT OF INTEREST FROM BANK AND POST OFFICE TO SENIOR CITIZEN

It is proposed to insert a new S. 80TTB so as to allow a deduction upto INR 50K in respect of interest income from deposits held by senior citizens.

It is also proposed to amend S. 194A so as to raise the threshold for deduction of tax at source on interest income for senior citizens from Rs 10K to Rs 50K.

04 STANDARD DEDUCTION OF INR 40K INSTEAD OF PRESENT TRANSPORT ALLOWANCE OF INR 19,200 AND MEDICAL ALLOWANCE OF INR. 15K (AGGREGATE 34,200 .)

Section 16, inter-alia, provides for certain deduction in computing income chargeable under the head “Salaries”. it is proposed to allow a standard deduction upto INR 40K or the amount of salary received, whichever is less. Consequently the present exemption in respect of Transport Allowance (except in case of differently abled persons) and reimbursement of medical expenses is proposed to be withdrawn.

KEY TAKE AWAY

i) Now there would be no need to submit medical bills to employer

ii) Earlier no deduction was allowable to Pensioners now they can also claim straight forward benefit of proposed standard deduction INR 40K.

STANDARD DEDUCTION ON SALARY INCOME

PROPOSED AMENDMENT IN PERSONAL TAXATION

Our Location

211, M. S Chamber,

Laxmi Nagar

New Delhi -110092

Our Phone

+91 11 40106467

+91 9911011042

+91 8448406842

Email / Website

www.amarjeetsinghassociates.in

[email protected]

[email protected]

AMAR JEET SINGH & ASSOCIATES CHARTERED ACCOUNTANTS

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