Again it is that time of the year, when you have to plan FOR your taxes. Tax Planning should be a well thought over as the purpose is not just to save tax but to invest in the right product suitable as per one’s need. I am a strong believer of ” One Size Doesn’t fit all “ and the same applies to Tax Planning as well.
The objective should be to allocate this amount allocated towards your goals rather than just ” Axe the Tax.”
5 Income Tax Deductions that can be claimed:
1.Section 80 C :
a.The limit for Section 80C for FY 2014-15 is Rs. 1,50,000. This includes school tuition fees, Life insurance premiums, Tax saving Mutual Funds, PPF , principal component of Home loan EMI and other instruments. Make sure you have utilized Rs. 1,50,000 . Individuals as well as HUFs can take benefit of this Section.
b.Section 80CCC: Deduction in respect of Premium Paid for Annuity Plan of LIC or Other Insurer. Only individuals can claim rebate under this section and not HUFs.
c.Section 80CCD:Deduction in respect of contributions made towards National Pension Scheme(NPS). Only individuals can claim rebate under this section and not HUFs.
Please note: Total Deduction under section 80C, 80CCC and 80CCD(1) together cannot exceed Rs 1,50,000 for the financial year 2014-15.
d.Section 80CCG:Deduction in respect of contributions made towards Rajiv Gandhi Equity Saving Scheme (RGESS).Investors whose annual income is less than Rs. 10 lakhs can invest in this scheme (up to Rs. 50,000) and get a deduction of 50% of the investment. This is over and above the deduction amount of Rs.1,50,000 .
So, if you invest Rs. 50,000, you can claim additional deduction of Rs. 25,000 (50% of Rs. 50,000).
2.Section 80 D:
Deduction is available upto Rs. 15,000/ in other cases for insurance of self, spouse and dependent children. Additionally, a deduction for insurance of parents (father or mother or both) is available to the extent of Rs. 20,000/- if parents are senior Citizen and Rs. 15,000/- in other cases. Therefore, the maximum deduction available under this section is to the extent of Rs. 40,000 for FY 2014-15. This Rs.40,000 also includes Rs. 5,000 for preventive health check-up.
Deduction can be claimed by individual as well as HUF.
Please note: that deduction will not be claimed if premium payment is made in cash.
3.Section 80 G :
Deduction is available for donations towards Social Causes upto either 100% or 50% . Some of the options are National Defence Fund set up by the Central Government, Prime Minister’s National Relief Fund, Indira Gandhi Memorial Trust. National sports fund etc.
Please note: 80G deduction not applicable in case donation is done in form of cash for amount over Rs 10,000.
4. Section 80GG:
Deduction in respect of House Rent Paid Available is least of the following;
1. Rent paid minus 10% of total income
2. Rs. 2000/- per month
3. 25% of total income, provided
Please note: This benefit can only be claimed if Assessee or his spouse or minor child should not own residential accommodation at the place of employment Or He should not be in receipt of house rent allowance Or He should not have self occupied residential premises in any other place.
5.Section 80 TTA:
Deduction from gross total income in respect of any Income by way of Interest on Savings account upto a maximum of Rs. 10,000/- in respect of interest on deposits in savings account only with a bank, co-operative society or post office, is allowable.
Please note:This benefit can be claimed by individual and HUF both.
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About the Author: Gurleen Kaur is a Financial Consultant and devotes her time to her company www.hareepatti.com. She has done her Bachelors in Finance and Investment Analysis(BFIA) from College of Business Studies(CBS, Delhi) and MBA from IMT, Ghaziabad. She will be a Certified Financial Planner soon. She can be Contacted at gurleen@hareepatti.greatestdesignever.com