Income Tax Planning FY 2012-13

The changes brought about in the Income Tax Act for the Financial Year 2012-13 pertaining to individuals are sections(a) 80D(Preventive health check of Rs 5,000/-),(b)Section 80CCD(Employer's contribution to NPS upto 10% of salary as allowable business expenses) and (c) section 80CCG(50% deduction for fresh Investment in equity upto Rs 50,000/- for first time investors). Further section 80CCF for investment of Rs 20,000/- in infrastructure schemes has been withdrawn.

 

 Income Tax Planning
Tax rates for FY 2012-13

A. Individuals below 60 years of age(Men & Women)

Sl no

Income level/slabs

Income tax Rate

1

Total income up to Rs 2,00,000/-

NIL

2

Total income exceeds Rs 2,00,000/- but does not exceeds Rs 5,00,000/-

10% of amount 
by which the total income exceeds Rs. 2,00,000/-

3

Total income exceeds Rs. 5, 00,000/- 
but does not exceed Rs. 10, 00,000/-.

Rs. 30,000/- + 20% of the amount 
by which the total income exceeds Rs. 5,00,000/-.

4

Total income exceeds Rs. 10, 00,000/-.

Rs. 1,30,000/- + 30% of the amount 
by which the total income exceeds Rs. 10, 00,000/-.

Education Cess: 3% of the Income-tax.

B. An individual resident who is the age of 60  or above  but below  80 years

Sl no

Income level/slabs

Income tax Rate

1

 Total income does not exceed Rs. 2,50,000/-.

NIL

2

Total income exceeds Rs. 2,50,000/- 
but does not exceed Rs. 5,00,000/-

10% of the amount 
by which the total income exceeds Rs. 2,50,000/-.

3

  1. otal income exceeds Rs. 5,00,000/- 
    but does not exceed Rs. 10,00,000/-

Rs. 25,000/- + 20% of the amount 
by which the total income exceeds Rs. 5,00,000/-.

4

Total income exceeds Rs. 10,00,000/-

Rs.1,25,000/- + 30% of the amount by which the total income exceeds Rs. 10,00,000/-.

Education Cess: 3% of the Income-tax.

C. An individual resident who is of the age of 80 years or more 

Sl no

Income level/slabs

Income tax Rate

1

Total income does not exceed Rs. 5,00,000/-

NIL

2

Total income exceeds Rs. 5,00,000/- but does not exceed Rs. 10,00,000/-

20% of the amount by which the total income exceeds Rs. 5,00,000/-.

3

Total income exceeds Rs. 10,00,000/-

Rs. 60,000/- + 30% of the amount by which the total income exceeds Rs. 10,00,000/-.

Education Cess: 3% of the Income-tax.

Deduction u/s 80C (Max Rs. 1, 00,000)

80C deduction is available for the followings.

a. Premium on life insurance policy on the life of self, spouse and any child.

b. Contribution to non-commutable deferred annuity.

c. Contribution towards statutory provident fund/ approved superannuation fund.

d. Contribution to PPF account (subject to maximum Rs. 1,00,000/-).

e. Contribution to NSC, Interest deemed to be reinvested also qualifies for deduction.

f. Invest in Unit Linked Insurance Plan (ULIP) and equity linked saving scheme (ELSS).

g. Repayment of principal amount of housing loan.

h. Five year term deposit with a scheduled bank and post office.

i.Deposit under the senior citizens savings scheme.

Under section 80CCC: Contribution to pension fund.

Under section 80CCD: Pension scheme of central government.

Under section 80CCD (2): Investment in NPS upto 10% of salary  is allowed under the overall limit of Rs1,00,000/- of section 80C.Further As per Section 80CCD (2) of income tax act W.E.F 1st Apr, 2012 up to 10% of the salary (basic and dearness allowance) of employers Contribution in NPS can be deducted as ‘Business Expense’ from their Profit & Loss Account.

Under section 80CCG;RGESS (Rajiv Gandhi Equity Savings Scheme) The key feature of RGESS tax saving option is that it provides 50% tax rebate to new retail investors, whose annual income is below Rs 10 lakh. This is a once in lifetime investment and the maximum amount one can invest in it is Rs 50,000/-.

Deduction u/s 80D

80D deduction is available for health insurance premium.

a. Amount of Rs. 15,000/- will be allowed for deduction, in case of premium paid on self and family.

b. An additional sum of Rs. 15000/-( Rs. 20,000/- in case of senior citizen) will be allowed for deduction for dependent parents

c. Out of the above, Rs 5,000/- will  be  allowed for  preventive health check ups.

Deduction u/s 80DD

80DD deduction is available on the payment made for the disabled dependant in the event of death.

a. Rs. 50,000/- from gross total income, irrespective of expenditure (at least 40% disability) incurred

b. Rs. 1, 00,000/- where such dependant is a person with severe disability (more than 80% disability).

Deduction u/s 80DDB:

80DDB deduction is available for expenses on self or dependants actually incurred for specific disease.

a. Rs. 40,000/- or actual incurred whichever is lower

b. Rs. 60,000/- or actual incurred whichever is lower in case of senior citizen

Deduction u/s 80E

Any interest paid on loan taken by individual from any financial institution or approved charitable institution for purpose of pursuing his or spouse or children’s higher education.

Deduction u/s 80G

80G deduction is available, if an individual donates certain funds to approved charitable institutions.  It is depending on whom you donate to, half or the entire donation can become a deduction from your income.

Deduction U/s 80GG

80 GG deduction is available on the rent payment for furnished/ unfurnished accommodation subject to maximum of Rs 24,000/- pa. The individual should not have any house rent allowance and should not own any residential complex in India or abroad.  

Deduction U/s 80GGC

Any amount of contribution made to a political party or an electoral trust is deductible.

Deduction u/s 80U

80DD deduction is available on the payment made for the disabled assessee in the event of death.

a. Rs. 50,000/- from gross total income, irrespective of expenditure (at least 40% disability) incurred

b. Rs. 1, 00,000/- where such dependant is a person with severe disability (more than 80% disability).

Deduction U/s 24(B)

Interest amount up to Rs. 1, 50,000/- is allowed for deduction in case property is acquired after 1.4.1999.  However, if the house is rented out, then the entire interest due becomes due becomes deductible. 

 

Note:-  Get your tax planning done by SEBI registered investment advisor or  fee-only certified financial planner.

Select fee-only professionals as they provide unbiased recommendations by keeping the clients interest uppermost in mind. Also they will guide you with the help of chartered accountant and lawyer in tax related queries.

 

Last modified on Friday, 16 August 2013 13:40

Prakash Praharaj

Shri Prakash Praharaj has a passion for excellence. He has been awarded two gold medals for securing top positions both in Graduation and Post Graduation in Commerce. He is an MBA with specialization in Finance and marketing. He has been awarded Diploma in Treasury, Investment and Risk Management besides CAIIB from the Indian Institute of Bankers. He is a Certified Financial PlannerCM from the Financial Planning standards Board, India (FPSB), affiliated to FPSB, Denver, USA and Certified Personal Financial Adviser from NISM. He is also a SEBI registered Investment Adviser vide Reg. no. INA 000000045 dated 2nd August 2013.His book "Your Every day guide to Personal Finance and Insurance" has been published by CNBC TV 18 in August 2015.

2 comments

  • Minecraft.Net

    posted by Minecraft.Net

    Friday, 22 May 2015 09:59

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  • sonali

    posted by sonali

    Friday, 12 April 2013 14:21

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    Report

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