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Saturday, 8 February 2014

Tax Deductions Available Under Various Sections For Assessment Year 2014-15



Individuals whose Annual Income is above `2,00,000/ p.a- will be liable to pay Taxes on the earnings above the prescribed amount. However those earning below `5,00,000/ p.a- will get a Tax Credit of `2000/- on the Tax payable. Now we will look at the Tax Deductions available under the Income Tax Act and Sections applicable. We would also find out Investment and Saving options which could be availed.

 DEDUCTIONS U/S 80C

Deductions are available to the Individuals under Section 80C, 80CCC & 80CCD up to the extent `1,00,000/-. These are now effectively clubbed under Section 80C with the aggregate deduction ceiling of `1,00,000/-. 

SAVING/INVESTMENT SCHEMES
RETURN ON INVESTMENT
LOCK IN PERIOD
Contribution to Employee’s Provident Fund (EPF)
Varies year to year (Generally between 8.25%-9.5%)approx
Till the Retirement
Public Provident Fund (PPF)
Varies year to year (Generally between 8.25%-9.5%)approx
15 years, Can be extended.
Equity Linked Saving Scheme (ELSS)
Varies as it is Market Linked.
3 years, Can be extended.
National Saving Certificate (NSC)
8%-9%
5 years.
Term Policies
Nil
5 years or More
Unit Linked Investment Plan (ULIP)
Varies as it is Market Linked.
5 years or More.
Life Insurance/Flexi Insurance Policies
4%-8%
Based on Maturity Term.

DEDUCTIONS U/S 80D

Further deductions up and above the Deductions availed U/S 80C is available U/S 80D. It covers the premium paid on the Health Insurance cover for self and family. Deduction of `15,000/- can be availed for the premium paid for Self, Spouse and dependent children. Additional deductions are available on premium paid on the Mediclaim Insurance of the parents. So further deduction of `15,000/- can be claimed and if the parents are senior citizens then the deduction is enhanced by `5,000/- to `20,000/- respectively.

DEDUCTIONS U/S 80E

Deduction is also available on the education loan for higher studies (Graduation or Post Graduation) in the fields of Medicine, Engineering, Management, or Science. The deduction is available from the 1st year and subsequently for next 7 years. Deduction available is `40,000/- p.a on the EMI paid as principal cum interest.

DEDUCTIONS U/S 80G

Deductions are also available for the donations made to notified NGO’s, Charitable Institutions are eligible for 50% or 100% deduction as provided under the act. However the maximum limit to the deduction claimed is 10% of the Adjusted Gross Total Income after claiming other deductions.

DEDUCTIONS U/S 24(b)

Deductions up to `1,50,000/- is available on the interest paid on the Loan availed for purchase/construction of self occupied House Property. However the acquisition and construction of such house property should be completed within 3 years from the end of Financial year in which Home Loan was taken.

My upcoming blogs will concentrate on the various Investment options, Health Insurance and their features.

2 comments:

  1. Thanks for an interesting article. After looking through different websites I finally found something worth reading.

    PIC Bonus 2014

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    Replies
    1. @Leona...Thanks alot for appreciating my efforts....But one thing I will like to ask U....This post is for the Tax Payers in India...nd I guess You are not from India so how does it help you????

      Anywys,

      Thanks 1nc again.

      Regards,
      Amritesh

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