Mukesh Patel.in
practical tax & investment planning online
international tax expert / columnist / author / speaker

TAX CONCESSIONS FOR AILING & DISABLED

Liberal deductions provided under the I.T. Act in respect of expenditure for medical treatment & maintenance!

 The Income-tax Act provides for special deductions in computing the taxable income of a taxpayer who is disabled or who is required to incur expenditure for the medical treatment, training or rehabilitation of a disabled dependent or any amount deposited for the maintenance of such disabled dependent.

Similarly deduction is also allowed to a taxpayer who is required to incur any expenditure for the medical treatment of specified diseases or ailments, either for himself or a dependent relative.

 DEDUCTION FOR PERSONS WITH DISABILITY

            Under the provisions of Section 80U of the Income-tax Act a resident individual suffering from a permanent physical disability (including blindness) or mental retardation, is allowed a deduction of Rs.50,000 in the computation of his taxable income. (more…)

TAX SAVING, THE HEALTHY WAY!

Take care of your family’s health insurance & check-up needs & avail useful tax saving deductions u/s. 80D!

Section 80D of the Income-tax Act provides that a taxpayer can claim a deduction up to Rs.15,000 per year in respect of health insurance premium paid by him or any contribution made to the Central Government Health Scheme (CGHS), by any mode other than cash, out of his income chargeable to tax. It needs to be noted that payment of premium, by any mode other than cash viz. cheque, draft or credit card, is one of the important conditions prescribed under Section 80D. 

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TAX INCENTIVES FOR AUTHORS!

While Rs.3 lakhs of specified royalty is exempt, an adhoc deduction of upto Rs.5,000 is also available out of honorarium!

             As per the provisions of Section 80QQB, for purposes of computing the taxable income in case of an author, who is an individual resident in India, a special deduction of upto Rs.3,00,000 is available in respect of specified royalty income earned by him.

             Such specified royalty income should be received in respect of any book authored by the individual, which is a work of literary, artistic or scientific nature. However, for the above purposes, a book shall not include brochures, commentaries, diaries, guides, journals, magazines, newspapers, pamphlets, text-books for school, tracts and other publications of similar nature by whatever name called. (more…)

AXE YOUR TAX AND RELAX!

With diverse recipes available for tax saving u/s. 80 C savings & investments require some smart planning!

             The scheme of Section80Cof the Income-tax Act provides for deduction out of taxable income of a taxpayer who is an individual or HUF, in respect of specified savings, investments and allocations made by them during the financial year.

             Section80C offers deduction to either an individual or HUF. However, there are diverse recipes under Section80Cprescribed for the two entities. An HUF does not enjoy the entire range of choices under Section80Cas available to an individual. Moreover, some investment or spending avenues, such as contribution to statutory or recognized provident fund or housing loan repayment are exclusively available only to the concerned salary earner or house owner as the case may be.

           However, there are several other deductions, which offer fairly flexible opportunities for tax planning and it is in respect of some of these, that a head of the household must do some smart thinking. 

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TAX FREE MEDICAL PERKS

 Salaried employees enjoy special tax shelter for various reimbursements of medical expenditure for self & family!

                    Section 17(2) of the Income-tax Act provides for taxability of perquisites in the hands of a salaried employee. In this context, a salaried employee must plan to take the benefit of a number of medical facilities provided by an employer to the employee, which are not treated as taxable perquisites as per the Proviso to Section 17(2), which carves out exceptions to the general rule of taxing perquisites. (more…)

WELCOME RELIEF FOR HOUSING DEVELOPERS!

Gujarat HC confirms ITAT’s liberal interpretation on tax holiday for residential projects u/s. 80IB(10)

       Housing developers having undertaken the business of developing and building residential housing projects, with a view to avail 100% deduction in respect of their profits as prescribed under Section 80IB(10) of the Income-tax Act, can truly heave a sigh of relief, with the Gujarat High Court finally resolving some burning controversies raised by the Revenue over the past few years.

        Around 50 Tax Appeals filed by the Department have come to be recently disposed of under a consolidated order passed in the case of ‘Radhe Developers, Shakti Corporation & Others’ by the Bench comprising of Hon’ble Mr. Justice Akil Kureshi and Ms. Justice Sonia Gokani, who were called upon to decide two key contentions relating to eligibility for claim of deduction under Sec. 80IB(10). (more…)

TAX CONCESSIONS FOR DONATIONS!

Contributions & Donations to approved Charities & Research Institutions qualify for deductions from 50% to 175% !

Section 80G of the Income-tax Act provides for deduction out of gross total income in respect of donations to approved Funds and Charitable Institutions. The benefit of this deduction and consequential tax saving is available to any taxpayer viz. individual, HUF, company, firm, etc., whether resident or non-resident. (more…)

PLANNING RECIPES FOR TAX SAVING

Head of the household must do some smart thinking for maximizing the family’s tax benefits u/s.80C!

A significant relaxation announced at the time of the passing of the Finance Bill, 2005, related to the abolition of the proposed condition for deduction of upto Rs.1,00,000 under Section 80C requiring that “the eligible investments must be made out of a taxpayer’s income chargeable to tax.”  With this restriction removed, it became possible for taxpayers to invest in various tax saving schemes or incur eligible expenditure, even by securing loans or gifts or withdrawing out of their exempt incomes or accumulations.  This point can be better appreciated by the illustration hereunder:

Illustration:  Mr. Smart’s gross taxable income is Rs.9,00,000, on which the income-tax payable for FY 2011-12 would work out to Rs.1,25,660.  He is under strain to invest Rs.1,00,000 and avail deduction under Section 80C, since he needs the entire income of Rs.7,74,340 (after tax provision of Rs.1,25,660) for meeting his family obligations.

Mr. Smart is in a position to withdraw Rs.70,000 from his PPF A/c and avail Rs.30,000 as a short term loan from his friend.  He should plan to raise this resource of Rs.1,00,000 and out of the same invest Rs.70,000 back in his PPF A/c and also invest Rs.30,000 in any other eligible investment under Section 80C.  He would thus be entitled to avail the benefit of deduction of Rs.1,00,000 under Section 80C, which would mean that his taxable income would now work out to Rs.8,00,000, the income-tax payable thereon amounting to Rs.94,760.  Out of the tax saved Rs.30,900 (1,25,660 – 94,760), he can smartly repay his friend’s loan of Rs.30,000 and draw satisfaction of having made the new 80C investment of Rs.30,000. (more…)

TAX HOLIDAY FOR LEAVE TRAVEL CONCESSION

Get LTC from your Employer and Enjoy Family Vacation with Tax Exemption

One of the important tax free perquisites available to salaried employees is ‘Leave Travel Concession’ (LTC) or ‘Leave Travel Assistance’ (LTA) which is treated as exempt under Section 10(5) of the Income-tax Act read with Rule 2B of the Income-tax Rules.

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TAX INCENTIVES FOR HIGHER EDUCATION

Eight Years Deduction for Interest on Loan for Higher Education, without any Monetary Ceiling

Section 80E provides for deduction in respect of any amount paid by an individual (without any monetary ceiling) by way of interest on loan taken from any bank or notified financial institution or an approved charitable institution for the purpose of pursuing his higher education or the higher education of his relatives viz. his spouse or his child or even in respect of a student for whom the individual is the legal guardian.

This deduction is allowed for a maximum period of eight years starting from the year in which the taxpayer starts paying interest or until the interest payable on such loan stands paid in full, whichever is earlier.

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