Taxation - Incentives, Rebates and Allowances
General Incentives|Income Tax Rebates |Relief for Foriegners|Concessions to NRI's|Incentives for the Corporate sector|Concessions for specific sectors
Tax Benefits - Deductions, Rebates & Donations
Income Tax Rebates
Section 80C| Section 80C Analysis|Section 88|Section 88B|Section 88C|Section 89 (1)|Section 10 (33)|Fringe Benefit Tax (FBT)
|INSERT (AY 2008-09)
Senior Citizens Savings Scheme 2004 and the Post Office Time Deposit Account added to the basket of saving instruments under Section 80C of the Income Tax Act.
Section 80L used to allow deduction of interest earned on, say, a National Savings Certificate or a bank deposit up to a limit of Rs 12,000. But now all these are gone .In their place has come Section 80C -- "u/s 80CCC, & u/s 80CCD", as the Finance Bill puts it. Thus, the new Section 80C of the Income Tax Act proposed in Union Budget gives you a bigger tax break than what the current regime offers.
- Deduction in respect of Life Insurance Premia, Contribution to Provident Fund, etc.
- Rs 1 lakh can be invested under this section without any individual sub-limits except in the case of Rs 10,000 in pension funds.
- Sections 88, 80L, 80CCC and 80CCD is clubbed in.
|INSERT (AY 2007-08)
It is proposed to insert clause (xxi) in sub-section (2) of this section in order to provide that the investment in a term deposit for a fixed period of not less than five years with any scheduled bank shall be eligible for a deduction under this section.
Schemes eligible for Section 80C benefits
- ELSS - Mutual Funds
- Life Insurance
- Senior Citizen Saving Scheme 2004
- Post Office Time Deposit Account
- 88 (Rebate on Life Insurance Premia, Contribution to Provident Fund, etc.)
- 80L (Deductions in respect to Interest on certain Securities, Dividends, etc.)
- Note :-
Rebate of Rs 5,000 for women and Rs 20,000 for senior citizens have been wiped off.
The key features of the new provision
- Exemption available to all taxpayers irrespective of income bracket -earlier Section 88 did not provide benefit to those having income exceeding Rs 500,000.
- No exemption/adjustment for interest income
- All saving modes/options under Section 88 covered and also 80CCC and 80CCD covered.
Following benefits will continue irrespective of changes
- Interest paid on housing loan for self-occupied house property.
- Medical insurance premium. (Additional deduction of Rs 15000 u/s 80D to an individual paying medical insurance premium for his/her parent(s)
- Specified expenditure on disabled dependant.
- Expenses for medical treatment for self or dependant or member of an HUF.
- Deduction in respect of interest on loans for pursuing higher studies - Section 80E.
- Deduction to person with disability.
Dividends from mutual funds are fully exempt from income tax under Section 10(33). Equity funds (schemes that invest 50 per cent of their funds in equity) are also exempt from dividend tax. This means that unlike companies, they do not have to pay tax at the rate of 10.2 per cent on the dividend that they distribute.
|INSERT (AY 2008-09)
Coir Board included in Section 10(29A) and exempted from income tax.
Upto 31 March 2005, rebates were available on the tax payable under three sections.
According to the section, 30 per cent or 20 per cent or 15 per cent of the amount invested in certain schemes (schemes referred in Section 80C) was available as a rebate on the tax payable.
- 30 per cent of the amount invested was available as rebate only if the salary income of the individual was less than Rs. 1 lakh and if it constituted 90 per cent or more of the assessee's gross total income.
- 20 per cent of the amount invested was available as rebate if the gross total income of the individual was less than Rs 1.5 lakh and the case did not fall under the above mentioned case.
- If gross total income was more than Rs. 1.5 lakh but less than Rs 5 lakh of the individual, a rebate of 15 per cent of the amount invested was available.
- If gross total income was more than Rs 5 lakh of the individual, then there is no rebate.
|INSERT (AY 2008-09)
A new sub-section (11C) in Section 80-IB to grant a five year tax holiday to encourage hospitals to be set up anywhere in India, except certain specified urban agglomerations, and especially in tier-2 and tier-3 towns in order to serve the rural hinterland. This window will be open for the period April 1, 2008 to March 31, 2013, during which the hospital must commence operations.
Under this section, an individual resident in India and above the age of 65 years was allowed to a maximum rebate of Rs. 20,000 on the tax payable.
Under this section a lady resident in India, aged below 65 years, was allowed a maximum rebate on the tax payable of Rs 5,000.
Section 89 (1)
This is available to an employee when he receives salary in advance or in arrear or when in one financial year, he receives salary of more than 12 months or receives 'profits in lieu of salary' W.e.f. 1.6.89, relief u/s 89(1) can be granted at the time of TDS by employees of all companies co-operative societies, universities or institutions as well as govt./public sector undertakings. The relief should be claimed by the employee in Form No. 10E and should be worked out as explained in Rule 21A of the Income Tax Rules.