Investments
allowable as deduction under Income Tax Act
This time you all are waiting for submitting
your investment declarations to your employer. Investments are one of the major
aspects for minimizing your tax bill. The Income Tax Act provides that on
determination of the gross total income of an assessee after considering income
from all the heads, certain deductions therefrom may be allowed. Here an
attempt is made to explain all types of investment like deduction under income
tax act:
Payment
of premium for annuity plan of LIC or any other insurer:
Deduction is available upto a maximum of Rs.
1,00,000/-. The premium must be deposited to keep
in force a contract for an annuity plan of the LIC or any other insurer for
receiving pension from the fund. The Finance Act 2015 has enhanced the ceiling of deduction under Section 80CCC from Rs.100,000 to
Rs. 1,50,000 with effect from A.Y. 2016-17.
Deposit
made by an employee in his pension account to the extent of 10% of his salary:
Where the Central Government makes any
contribution to the pension account, deduction of such contribution to the
extent of 10% of salary shall be allowed. Further,
in any year where any amount is received from the pension account such amount
shall be charged to tax as income of that previous year. The Finance Act, 2009 has extended benefit to any individual assesse, not
being a Central Government employee.
Investment
under Rajiv Gandhi Equity Savings Scheme, 2013:
The deduction was 50 % of amount invested in such equity shares or Rs. 25,000, whichever is lower. The maximum Investment permissible
for claiming deduction under RGESS is Rs. 50,000.
Payment
of medical insurance premium:
Deduction is available upto Rs.15,000/ for self/ family and also upto Rs. 15,000/- for insurance in respect of
parent/ parents of the assessee.In case of senior citizens, a deduction
upto Rs.20,000/-
shall be available under
this Section. Insurance premium of senior citizen parent/ parents of the
assessee also eligible for enhanced deduction of Rs. 20000/-The premium is to be paid by any mode of payment other
than cash and the insurance scheme should be framed by the General Insurance
Corporation of India & approved by the Central Govt. or Scheme framed by
any other insurer and approved by the Insurance Regulatory & Development
Authority. The premium should be paid in respect of health insurance of the
assesse or his family members. w.e.f. 01.04.2011, contributions made to the Central Government Health Scheme
is also covered under this section.
Deduction
of Rs.40,000/
In
respect of (a) expenditure incurred on medical treatment, (including nursing),
training and rehabilitation of handicapped dependent relative. (b) Payment or
deposit to specified scheme for maintenance of dependent handicapped relative: W.e.f.
01 .04.2004 the deduction under this
section has been enhanced to Rs.50,000/- Further, if the dependent is a person with severe
disability a deduction of Rs.1,00,000/–
shall be available under this section. Budget 2015 has Further Proposed to hike the limit from A.Y. 2016-17 to Rs. 75000 from existing Rs. 50,000/- and for person with severe disability to Rs. 1.25 lakh from existing Rs. 1 Lakh.
Deduction
of Rs.40,000/-
in respect
of medical expenditure incurred:
W.e.f.
01.04.2004, deduction under this section shall be available to the extent of Rs.40,000/- or
the amount actually paid, whichever is less. In case of senior citizens,
a deduction upto Rs.60,000/-
shall be available under
this Section. Budget 2015 has proposed deduction of Rs. 80000/- for senior citizen aged 80 year or More from A.Y. 2016-17.
Deduction
in respect of payment in the previous year of interest on loan taken from a
financial institution or approved charitable institution for higher studies:
This provision has been introduced to
provide relief to students taking loans for higher studies. The payment of the
interest thereon will be allowed as deduction over a period of upto 8 years. Higher education means any course of study pursued
after passing the senior secondary examination or its equivalent from any
recognized school, board or university.
Deduction
in respect of interest on loan taken for residential house property:
Vide Finance Act 2013, an individual is allowed a deduction upto a limit of
Rs 1,00,000 being paid as interest on a loan
taken from a Financial Institution, sanctioned during the period 01-04- 2013 to 31-03-2014 (loan not to exceed Rs 25 lakhs) for acquisition of a residential house whose value
does not exceed Rs 40 lakhs.
Deduction
in respect of interest on deposits in savings account:
Section 80TTA is introduced wef A.Y. 2013-14 to provide deduction to an individual or a Hindu
undivided family in respect of interest received on deposits (not being time
deposits) in a savings account held with banks, cooperative banks and post
office. The deduction is restricted to Rs 10,000 or actual interest whichever is lower.
Deduction
of Rs.50,000/-
to an
individual who suffers from a physical disability (including blindness) or
mental retardation:
Further, if the individual is a person with
severe disability, deduction of Rs.75,000/- shall
be available u/s 80U.W.e.f. 01.04.2010 this limit has been raised to Rs. 1 lakh. Budget 2015
proposed to amend section 80U to raise
limit of deduction in respect of a person with disability from Rs. 50,000/- to Rs. 75,000 and for person with severe disability from one lakh
rupees to one hundred and twenty five thousand rupees.
Rebate
Of Rs 2000 For Individuals Having Total Income
Upto Rs 5 Lakh:
Finance Act 2013 has provided relief in the form of rebate to
individual taxpayers, resident in India, who are in lower income not exceeding
Rs 5,00,000/-. The amount of rebate is Rs 2000/- or the amount of tax payable, whichever is lower.
Patent
registered;
Deduction in
respect of any income by way of royalty in respect of a patent registered on or
after 01.04.2003 under the Patents Act 1970 shall be available as :-Rs. 3 lacs or the income received, whichever is less: The assessee
who is a patentee must be an individual resident in India. The assessee must
furnish a certificate in the prescribed form duly signed by the prescribed
authority along with the return of income.
Now, while filling your investment
declarations for FY 2015-16, keep in mind to make it part of
your declarations. In case if you are investing in any of the above investments
ensure you are getting the benefit while deducting TDS.
