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)
Section 80C Analysis
|As per Assessment Year 2006-07|
As the taxation system has drastically shown a change in every steps of money involvement, it has become necessary to think twice in parking your money in the right place. Section 88 are now available for deduction under the newly introduced section 80C.
- Rs 1 lakh can be invested under this section without any sub-limits.
- Investment in pension funds under section 80CCC can still be up to a maximum of Rs 10,000 and treated as a part of investments of Rs 1 lakh under section 80CCE.
- For individuals who are looking for more returns from their investments, can move away from low-return infrastructure bonds. Earlier they were bound to purchase for Rs 30,000 for getting maximum tax benefits.
In simple words
A tax payer can invest up to Rs 1 lakh in EPF, PPF, life insurance, infrastructure bonds, NSC, repayment of home loans, tax saving mutual funds, pension plan, etc without any individual sub-limits except in the case of Rs 10,000 in pension funds.
For an individual who has availed of a home loan, she can get a deduction for its repayment from her taxable income up to Rs 1 lakh. She benefits the most as apart from getting debt free, gets benefits from two sections of income tax.
- First, for deduction in respect to interest on home loan under section 24
- Secondly, deduction in respect to repayment of home loan under section 80C.
The good thing
Now you can invest your full quota of investments (i.e. Rs 1 lakh) in tax saving mutual funds, in case you are willing to take that extra bit of risk. Or if you want to play safe and are looking for a fixed rate of return, they opt for NSCs or PPF depending upon the term of investment.
Salaried employees who are looking for an extremely safe investment, with handsome return should ask their employers to voluntarily deduct extra provident fund over and above the normal 12% deductions. The same will fetch you a return of 9.5% compounded annually. Investments made in PF are highly secure.
If you do not want to lock in your money for long can go for investment in infrastructure bonds. The lock-in period is minimum three years, but mind you, it will fetch the least amount of returns, between 5% and 5.5% annually.
- 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.