FinShiksha Personal Income Tax Simplified

Taxes
It’s that time of the year again!

Copyright FinShiksha www.finshiksha.com contactus@finshiksha.com

This is our family

This, is our family

We are a salaried couple
Our children are in school
And, we look after our parents


What are the various expenses and
avenues which save taxes for me and
my family?


Medical Insurance

I have a medical policy for
my wife & children

Up to Rs.15,000 paid on Medical
insurance premium can be claimed to
save tax

My parents have medical
policies . I pay those
premiums too

This, in addition to your own policy
premium, gives a benefit of up to
Rs15,000 more. For individuals aged
above 65 years, the benefit can be
upto Rs 20,000


Education

Fees – phew!

Tuition fees give tax benefit too
(for up to 2 children, upto Rs 1
lakh. Both parents can claim this
benefit separately)

Any interest repaid on an
education loan gives tax benefit


Education

Even we may
want to study
further!

Any interest repaid on an
education loan gives tax benefit


Home sweet home..

Our house is on a home
loan , we pay a lot in
EMI every year

Do you live here?

Tax exemption entitled on the EMI

Principle up to Rs.1,00,000 Interest up to Rs.1,50,000


Home sweet home..

Our 2nd house is on loan
too, we pay a lot in EMI
every year

You may have rented out
your house – while you
live in an earlier home

Tax exemption entitled on the EMI

Principle up to Rs.1,00,000 Interest – as much as you have repaid during the year !


Home sweet home..

Joint loan?

A husband and wife, both of whom are tax-payers with independent income sources, get tax deduction benefits,
with respect to the same housing loan; to the extent of the amount of loan taken in their own respective name.


Donations

Donations made every year to charitable institutes also get tax exemptions

Amount qualifying for deduction
– 100%

Government funds/Trusts

Amount qualifying for deduction
50% * Lower of following two
amounts:

•Actual donation or,
•10% of Gross total income
Private funds/Trusts

•Deduction under this section cannot exceed your taxable income.
•Donation made in kind is not recognised for deduction – it must be cash/cheque etc
•There is a specified short list of institutions which qualify for 100% benefit


So, here are your options
While that was the logical classification, the Income Tax Department looks at in different groups

Investments Sec 80C
-NSC Sec 80CCF
- PPF Max - Rs.1,00,000 each
Max - Rs.20,000
- EPF
- Tuition fees of children
- Insurance premium Infrastructure bonds
- ELSS - Specific mutual funds
- Bank FD of tenure over 5 years
- House loan repayment - Principal only
- Pension plan (section 80CCC)

Sec 24
Sec 80E Interest on Home Loan
Interest on Education loan repaid during If Self occupied – Rs.1.5Lacs
the year (Including any taken for dependents) If Let out – Actual amount repaid

Max – No Upper Limit Max – 1.5Lacs or actual

Charity Sec 80G Sec 80D
Max -Rs.15,000+Rs.15,000
Any donations made to various charitable
organizations and certain funds are exempt
from tax Medical insurance premium paid for
Max –No Upper Limit dependents
Medical insurance premium paid for Parents


Other perquisites

Up to Rs.9,600 of conveyances expenses Up to Rs.15,000 of medical expenses
during the year can be claimed to save tax during the year can be claimed to save tax
– by each salaried individual – by each salaried individual

In addition, there are other perquisites on tuition fees, phone bills and food items that companies extend to their
employees. You need to check with you company for specific policies.


Remember

PLAN, DON’T BE HASTY

START EARLY

FIT THIS IN YOUR FAMILY’S OVER ALL FINANCIAL PLAN

Remember – It is best to consult a Chartered Accountant or your personal Financial Advisor before you embark
upon your Tax planning. The final authority on the subject or your specific needs will be the Income Tax
Department. Visit www.incometaxindia.gov.in for details.


Quick reference

Avenue Return Are returns taxed Lock in Period

NSC 8% Yes - interest 6 years

Depends on equity market& fund
ELSS No 3 years
manager

Depends on scheme & fund
Insurance No Varies
management

Infra Bonds Approximately 5% to 8. 5% Nil 3 to 10 years

EPF/PPF 8-8.50% No 15 years

Bank FD Approximately 9.5% currently Yes 5 Years


FinShiksha Personal Income Tax Simplified

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