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Income from salary, deductions and tax planning (2)

A complete guide to Tax deductions on Salary.

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Income from salary, deductions and tax planning (2)

  1. 1. TAXATION FOR SALARIED EMPLOYEES AND ITS IMPORTANCE By Yash Dani & Co Chartered Accountants C/o Hotel Payal Agra Gate circle
  2. 2. 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.
  3. 3. TAX SLABS FOR FILING INCOME TAX RETURNS
  4. 4. 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
  5. 5. DUE DATES FOR FILING RETURNS SALARIED EMPLOYEES = 31St JULY OF EVERY YEAR
  6. 6. TAX PLANNING  Conceptually tax planning for salaried employees can be divided into two broad categories. 1. Salary Restructuring 2. Investing in Tax Saving Devices
  7. 7. SALARY RESTRUCTURING  An employee can restructure his salary to reduce the Tax outgo by availing exempt allowances, benefits and perquisites.
  8. 8. ALLOWANCES AND RESPECTIVE EXEMPTIONS
  9. 9. M Allowances and Respective exemptions Type of Allowance Allowance exempt u/s 10 Conveyance Allowance Exempt up to Rs 1600 p.m (Earlier 800 pm) Children Education Allowance Rs 100 p.m Per Child. Max for 2 children Hostel Expenditure Allowance Up to Rs. 300 per month per child up to a maximum of 2 children is exempt Uniform Allowance Exempt to the extent of expenditure incurred Family 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
  10. 10. TAX SAVING TECHNIQUES AND DEDUCTIONS
  11. 11. 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
  12. 12. 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
  13. 13. 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.
  14. 14. 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
  15. 15. ELSS-Equity Linked Saving Scheme Tax 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
  16. 16. 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
  17. 17. NATIONAL PENSION PLAN Additional TAX DEDUCTION Of Rs. 50000/- is allowed u/s. 80CCD
  18. 18. TAX BENEFIT ON HOME LOAN- SEC 80C ,24B TAX DEDUCTION U/s. 80C Max upto Rs. 1,50,000/- Principal Amount of Home Loan Interest 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
  19. 19. 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:
  20. 20. 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
  21. 21. 80E-DEDUCTION FOR INTEREST ON EDUCATION LOAN
  22. 22. 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
  23. 23. 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.
  24. 24. 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:
  25. 25. A Interest Earned on Saving Bank Accounts = Max Deduction Upto Rs.10000/- U/s.80TTA .
  26. 26. 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.
  27. 27. 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
  28. 28. YASH DANI & CO. CHARTERED ACCOUNTANTS C/o Hotel Payal, Agra Gate Circle, P.R. Marg AJMER Cont: 9509583991 9549583991

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