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Monday, 25 April 2022

Deductions referred to in Chapter VI A of the Income Tax Law contain various subsections of section

80 that allows the appraiser to claim deductions from total gross income.

Chapter VI A of the Income Tax Law contains various subsections of section 80 that allow the appraiser to claim deductions from the total gross income in connection with various tax-saving investments, eligible expenses, donations, etc. Such deductions allow the appraiser to reduce the tax due.

Chapter VI A of the Income Tax Law contains the following sections:

80C: Deduction relating to the life insurance premium, deferred annuities, pension fund (PF) contributions, subscription to certain stocks or bonds, etc. The deduction limit is Rs 1.5 lakh along with section 80CCC and section 80CCD (1 ).

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80CCC: Deduction for contributions to certain pension funds. The deduction limit is Rs 1.5 lakh along with section 80C and section 80CCD(1).

80CCD(1): Deduction in the form of a contribution to the pension scheme of the central administrations - in the case of an employee, 10 % of wages (base + DA) and in any other case, 20%of his total gross income in the tax year will be tax-free. The general limit is Rs 1.5 lakh along with 80C and 80CCC.

80CCD (1B): Deductible up to Rs 50,000 against contributions to the Central Government Pension Scheme (NPS).

80CCD(2): Deduction related to the employer's contribution to the central government pension system. A tax credit is granted on the employer's 14 %contribution if that contribution is paid by the central government, and if the contribution is paid by any other employer, a tax credit of 10 % is granted.

80D: Health insurance premium deduction. Premium paid up to Rs 25,000 is eligible for deduction for non-elderly persons. For the elderly, the limit is Rs 50,000 and the total u/s 80D limit is Rs 1 lakh

80DD: Support deduction, including treatment for a disabled dependent. The maximum deduction limit is Rs 75,000.

80DDB: Deduction against expenses up to Rs 40,000 for treatment of a specific disease by a neurologist, oncologist, urologist, haematologist, immunologist or another specialist as may be appointed.

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80E: Deduction of interest on a loan granted for higher education, with no upper limit.

80EE: Interest deduction up to Rs 50,000 on a loan taken out to purchase a residential house.

80EEA: Interest deduction of up to 1.5 lakh on a loan taken out to purchase some housing (affordable housing).

80EEB: Interest deduction up to 1.5 lakh on a loan taken out to purchase an electric car.

80G: Donations to certain foundations, charities, etc. Depending on the nature of the donee, the limit ranges from 100% of the total donation to 50% of the total donation, or 50% of the donation with a ceiling of 10% of gross income.

80GG: Deductions related to rent paid by unpaid subjects who do not receive HRA benefits. The deduction limit is Rs 5,000 per month or 25 % of gross income per year, whichever is less.

80GGA: Full deductions for certain donations to research or rural development.

80GGC: Full deductions from donations to political parties, provided such donations are not monetary donations.

80TTA: Interest deduction on savings checking accounts up to Rs 10,000 in case of experts other than senior citizens.

80TTB: Interest deduction on deposits up to Rs 50,000 for senior citizens.

80U: Disability deduction. Depending on the type and amount, the maximum disability allowance allowed under this section is Rs 1.25 lakh.

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Wednesday, 20 April 2022

Income Tax Deductions U/s 80 CCD (1B)| Payment of income tax is required for every Indian citizen

who has an income tax, in accordance with the rules and regulations of the Income Tax Act1961. But

this does not mean that you have to pay tax on all the income you earn. . in this financial year. There

are several provisions in the Income Tax Act that allow you to claim deductions for certain investments

and expenses.

Plan your taxes to save on your income

By carefully planning your taxes, you can save a significant amount on your tax liability and create an additional source of income for yourself. With the double benefit of tax savings and income generation, these deductions give you significant benefits. From time to time, the government introduces new deductions or amendments, which you should keep an eye on. One of these deductions available to you is U/s 80 CCD (1B), which applies to contributions paid to the NPS.

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About NPS

NPS or National Pension System is a pension scheme available to both civil servants and individuals. NPS is one of the most popular options available for people looking to set up a retirement fund along with regular monthly income. Money deposited with NPS is invested in a variety of stocks and investment opportunities, including the stock market. It is widely regarded as one of the cheapest capital investment options. Since the revenues are directly related to the market trend, there is no guarantee of any specific amount, but over time the NPS revenues are among the highest in the market.

Two types of NPS accounts you should know about

NPS has two types of accounts: NPS level 1 and NPS level 2.

Level 1 account: This has a fixed blocking period until the subscriber reaches the age of 60. Only partial withdrawals are allowed under certain conditions. Contributions paid at Level 1 are non-taxable and are deductible in accordance with Section 80CCD (1) and Section 80CCD (1B). However, you can invest up to Rs. 2 lakh in the level 1 NPS account and request the full amount deducted eg. rupees. 1.50 lakh under section 80CCD (1) and Rs. 50,000 under section 80CCD (1B).

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Level 2 Account: This is a mandatory voluntary savings account that allows subscribers to withdraw funds as they wish. But a contribution paid to a Tier 2 account is not eligible for a tax deduction. To open a Tier 2 account, Contributing to NPS is now subject to the Exempt-Exempt-Exempt (EEE) tax regime, under which the amount deposited in NPS, the income received and the reimbursement amount is tax-deductible. According to the latest guidelines, you can withdraw up to 60% of the amount at maturity, and the remaining 40% must be reinvested to purchase an annuity that gives you a regular monthly annuity.

What is Section 80CCD (1B)

Section 80CCD of the Income Tax Act deals with the deductions offered to individuals contributing to the NPS. Under section 80CCD, prior to 2015, an individual could claim a tax deduction of up to Rs. 1 lakh against contributions paid to NPS. In the 2015 budget, the government increased the maximum amount payable to the NPS to Rs. 1.50 lakh per year. Additionally, a new subsection 1B was introduced which offered an additional deduction of up to Rs. 50,000 / - for contributions paid by individual taxpayers to the NPS. Additional deduction in the amount of Rs. 50,000 / - under section 80CCD (1B) available for valuation in excess of the benefit of Rs. 1.50 lakh is available as a deduction under section 80CCD (1). Therefore, raising the maximum exemption limit to Rs. 2.00 lakh with Section 80CCD (1) + Section 80CCD (1B).

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DID YOU KNOW?

Section 80C + Section 80CCC + Section 80CCD (1) For example, consider yourself an individual who invests Rs. 1 50 000 / - pursuant to Section 80C (PPF, Tax Saver FD, ELSS, etc.). You have now decided to deposit Rs. 70,000 / year in favor of NPS. Now you can apply for a deduction of 50,000 rubles. 2.00 lakh, i.e. rupees. 1.50 lakh under section 80C and Rs. 50.000 / - pursuant to section 80CCD (1B).

What to look for when applying for deductions under section 80CCD (1B)

Here are some important points related to Section 80CCD (1B) that you should be aware of. Additional deduction in the amount of Rs. 50,000 / - Available only for contributions paid to NPS Tier 1 accounts.

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Level 2 accounts are not eligible for deduction under section 80CCD (1B).

Deductions under Section 80CCD (1B) are available to both employees and self-employed persons.

Documentary evidence of the operation related to the contribution to the NPS must be provided.

Partial withdrawals are allowed under the NPS but are subject to certain conditions.

The general exemption limit under section 80CCD (1B) is Rs. 50,000 / - and is not subject to exceptions under section 80 C. As such, you may be eligible for a maximum deduction of Rs. 2.00.000 / -

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Tuesday, 19 April 2022

The five most important sections of income tax| Anyone who earns income in the state is responsible

for paying income tax. The Income Tax Law consists of different articles that deal separately with

various aspects of taxation in the country. In addition, this law also provides taxpayers with several

income tax deductions that they can claim when filing their Income Tax Returns (ITR). Once the

deductions have been made, the tax will be charged on the total tax base according to the rates of the

taxpayer's income tax bracket.

Income Tax Act has 23 chapters in total and 298 sections, according to the official website of the Department of Income Tax. Although it is very tedious to review all the sections and chapters of the income tax, the Income Tax Administration encourages taxpayers to take advantage of the deductions and rebates provided for in the Income Tax Law, to reduce the amount subject to tax.

However, there are five sections in particular that every taxpayer should know, which will be especially useful when he decides to invest his group in one of the investment vehicles.

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Section 80C - Tax deduction on investments

Section 80C of the Income Tax Act allows deductions for investments made in certain instruments. Two of the most popular are tax-saving mutual funds and tax-saving fixed deposits. Tax-saving mutual funds are equity-oriented; This means that at least 65% of its entities must invest in inequality.

The Equity Linked Savings Scheme (ELSS) comes with a 3-year lock-in period of a minimum of 80% of the group invested in the shares and is eligible for tax deductions of up to Rs. 1.5 lakhs under Section 80C of the Income Tax Act.

Similarly, a tax-saving fixed deposit system has a maturity of at least 5 years, with a maximum deduction of Rs. 1.5 lakhs an investor can claim. Tax on interest earned in excess of 10% will be based on the rates in the personal income tax bracket.

You can invest in time deposits with returns of up to 8.35% at Finserv Markets (with an additional 0.25% above current senior rates). You can choose between flexible tenures ranging from 12 months to 5 years and benefit from guaranteed returns.

Deduction 80CCC - Tax Deduction for Contribution to Pension Funds

As a result of an attempt to encourage taxpayers to begin investing in pension funds, Section 80CCC provides an income tax deduction for Chapter VI-A pension funds from the taxpayer's gross gross income for that tax year. . This provides a tax deduction for any amount paid or deposited in the annual premium plan of any insurance company (LIC or other). Also, the maximum deduction that can be claimed through Section 80CCC is Rs. 1.5 lakhs.

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The five most important sections of income tax

Section 80CCD - Tax Deduction for Contribution to the National Pension Scheme

Section 80CCD establishes income tax deductions for contributions to the National Pension System (NPS). Also, the maximum deduction that can be claimed from Section 80CCD (1) is 10% in the case of a salaried person (employee) from non-employees (self-employed).

Section 80CCD (1B) entitled to get an additional deduction of up to Rupees Fifty Thousand for the group deposited by the individual into their NPS account.

Section 80CCD(2) allows individuals to claim an additional deduction on their contribution to an employee's pension account of up to 10% of their salary.

Section 80TTA - Tax exemption for interest on a savings account

Under Section 80TTA of the Income Tax Act (Chapter VI-A), individuals can claim an exemption of up to Rs. 10,000 per year of interest earned on deposits in savings accounts held in banks, post offices or cooperatives.

Section 80TTB - Interest Income Tax Exemption for Seniors Citizen above 60 Years Age.

According to the 80 TTB section of the Income Tax Law, seniors (age 60 and over) can claim tax credits on the interest income from deposits they hold. The maximum allowable deduction in a financial year is Rs. 50000.

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