Understanding tax!

1. Understanding Tax!

2. Tax 2008-2009 – The slabs!
 Assessee (others) (Male < 65, HUF) – Rs: 1,50,000
 Women Assessee ( < 65) – Rs: 1,80,000
 Senior Citizen (65 or 65+) – Rs: 2,25,000
0 – 1,50,0000 – 1,50,000 -- NilNil
1,50,001 – 3,00,0001,50,001 – 3,00,000 -- 10% (15,000) + 3% E.C10% (15,000) + 3% E.C
3,00,001 – 5,00,0003,00,001 – 5,00,000 -- 20% (60,000) + 3% E.C20% (60,000) + 3% E.C
5,00,001 – above5,00,001 – above -- 30% + 3% E.C30% + 3% E.C
10% Surcharge10% Surcharge -- above 10,00,000above 10,00,000

3. Rates – Ready Reckoner!
Rate Others Women <
65
Senior
Citizens
Up to 1,50,000 - - -
1,50,001 to 1,80,000 10% - -
1,80,001 to 2,25,000 10% 10% -
2,25,001 to 3,00,000 10% 10% 10%
3,00,001 to 5,00,000 20% 20% 20%
5,00,001 & above 30% 30% 30%
10,00,001 & above 10% Surcharge on Tax
Education Cess 2% Education Cess on( Tax + SC)

4. Income Tax Liability
10,00,000 2,05,000
5,00,000 55,000
3,00,000 15,000
1,50,000 0
0
Tax, Tax and more tax!!
20%
30%
10%

5. Tax
&
Plannin
g

6. Relief(s) Available!
 Section 80 C
 Section 80 CCC
 Section 80 CCD
 Section 80 D
 Section 80 E

7. 80C - Conditions Apply!
 Cannot exceed Rs.1,00,000
 Sum may be paid or deposited at any time during the year
 No limits for various items specified u/s. 80C. Therefore, an assessee may opt
to invest even in only one item say insurance premium
 Premium or other payment made on insurance policy not in excess of 20% of
actual capital sum assured
 Tuition Fee for any two children of the assessee
 Principal repayment on loan borrowed for acquiring commercial property is
not eligible
 Residential property under construction for which principal has been repaid
does not qualify for deduction

8. 80C– More Conditions Apply!
 Repayment of principal on loan borrowed for residential house
(whether let-out or self occupied) only is entitled for deduction.
 Where the loan is availed for any addition, alteration, repair or
renovation no deduction can be claimed for principal repayment
 Repayment of loan borrowed for housing from relatives, friends,
non-specified employer / institution are not eligible for deduction.
 However, any interest paid on such loan borrowed is deductible
under section 24, while computing income under the head “House
Property”
 Fixed Deposit in Banks must be for 5 years

9. 80C– Additional Options!
 Five year time deposit in an account under Post
Office Time Deposit Rules, 1981.
 Deposit in an account under the Senior Citizens
Savings Scheme Rules, 2004

10. 80C - Popular Choices!
 Mutual Funds
 Insurance
 ULIP
 Principal repayment of Housing Loan
 Tuition fee – paid for children (own, adopted, step) for full time
education in India. [Note: Tuition fee paid for grandchildren is
eligible for deduction for the HUF]
 Fixed Deposits in Banks (5 years)
 NSC – National Savings Certificate
 PF – Provident Fund [SPF, PPF, RPF]
 10 year Post Office Savings Bank (CTD)
 Stamp Duty and Registration Charges

11. 80CCC & 80CCD –Pension-No Tension!
80CCC-Contribution to pension scheme
 Rs.1,00,000 (outer limit)
 Disallowance on cancellation or lapse
 All withdrawals are taxable on surrender / maturity
80CCD-Contribution to CG pension scheme
 10% of Salary (Basic + DA)
 All withdrawals are taxable on surrender / maturity

12. 80D – Health is wealth (literally)!
80 D – Contribution to Medical Insurance Schemes
o Rs: 15,000
o Self + Spouse + Dependent Children + Dependent Parents
o Rs: 20,000 for senior citizens
o Now, an additional deduction of Rs: 15,000 (Rs: 20,000 if parents
are senior citizens) is available to an individual for payment of
medical insurance premium for parents.

13. 80E – It’s good to study!
80 E – Repayment of Education Loans
 Only Interest is eligible for deduction
 No Limit
 Deduction eligible for initial year and immediately succeeding seven
years
 Deduction eligible for repayment of education loans made for
spouse or children

14. What is the Tax liability if Total Income is
Rs.300,000 (for Male assessee < 65)
i Rs.15,000
ii Rs.13,330
ii
i
Rs.13,707
iv Rs.15,450
Test Yourself!

15. Fixed Deposit in Banks must be for ___ years to be
eligible for Section 80C?
i 3
ii 5
ii
i
2
iv No specifications
Test Yourself!

16. What is the Tax liability if Total Income is
Rs.180,000 (for Female assessee < 65)
i Rs.15,000
ii Rs.1,030
ii
i
NIL
iv Rs.15,450
Test Yourself!

17. What is the maximum limit under Section
80E?
i Rs.15,000
ii Rs.5,000
ii
i
Rs.20,000
iv None
Test Yourself!

18. What is the Tax liability if Total Income is
Rs.500,000 (for Male Assessee < 65)
i Rs.56,650
ii Rs.77,250
ii
i
Rs.75,000
iv Rs.50,600
Test Yourself!

19. Plan Ahead!
Have A Non ‘Tax’ing Year!!