Easy chart of deductions u/s 80C to 80U every individual

should aware of !
January 11, 2011 by taxworry 16 Comments
The season of tax has arrived. Therefore , there is need for easy chart of all
tax deduction u/s 80c to 80U for an Individual taxpayer?Under Income tax , deduction u/s
80C,80CCC, 80D, 80DD,80DDB,80G , 80GG, 80GGA, 80GGC , 80IAB , 80IB , 80IC , 80ID ,80IE ,
80JJA , 80QQB ,80RRB , 80U are relevant to Individuals depending on the condition fulfillment. The
following chart of deductions will give instant and fair idea about certain deductions to individual tax
payers. (section 80IAB to 80IE are not discussed which are specific to business men ) .
Sl No Section Details of deductions Quantum
1 80C General deduction for investment in
PPF,PF,Life Insurance, ULIP, Stamp
duty on house, Fixed deposits for 5
years , bonds etc
Maximum Rs1 ,00,000 is allowed.
Investment need not be from taxable
income.
2 80CCC Deduction in case of contribution to
pension fund. However, it should be
noted that surrender value or employer
contribution is considered income.
Maximum is Rs 1,00,000
3 80CCD Deduction in respect to contribution to
new pension scheme. Employees of
central and others are eligible.
Maximum is sum of employers and
employees contribution to the
maximum : 10 % of salary.
4 It should be noted that as per section 80CCE , the maximum amount of
deduction which can be claimed in aggregate of 80C ,80CCC & 80CCD
is Rs 1,00,0000
5 80D Medical insurance on self, spouse ,
children or parents
Rs 15,000 for self , spouse & children
Extra Rs 15,000 for insurance on
parents. IF parents are above 65 years,
extra sum should be read as Rs 20,000
Thus maximum is RS 35,000 per
annum
6 80DD For maintenance including treatment
or 7insurance the lives of physical
disable dependent relatives
Rs50,000 . In case disability is severe
, the amount is Rs 1,00,000.
7 80DDB For medical treatment of self or
relatives suffering from specified
disease
Acutal amount paid to the extent of Rs
40,000. In case of patient being Sr
Citizen , amount is Rs 60,000
8 80E For interest payment on loan taken
for higher studies for self or
education of spouse or children
Actual amount paid as interest and
start from the financial year in which
he /she starts paying interest and runs
till the interest is paid in full.
9 80G Donations to charitable institution 100% or 50% of amount of donation
made to 19 entities (National defense
fund , Prime minister relief fund etc. )
10 80GG For rent paid. This is only for people not getting any
House Rent Allowance. Maximum is
Rs 2000 per month. Rule 11B is
method of computation.
11 80GGA For donation to entities in scientific
research or rural development f
Only those tax payers who have no
business income can claim this
deduction .Maximum is equivalent to
100 % of donation.
12 80GGC For contribution to political parties 100 % of donations
13 80QQB Allowed only to resident authors for
royalty income for books other than
text book
Royalty income or Rs 3,00,000
whichever is less.
14 80RRB For income receipt as royalty on
patents of resident individuals
Actual royalty or Rs 3,00,000
whichever is less.
15 80U Deduction in respect of permanent
physical disability including
blindness to taxpayer
RS 50,000 which goes to Rs 1,00,000
in case taxpayer is suffering from
severe disability.

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The fifth character of the PAN is the first character
(a) of the surname / last name of the person, in the case of a "Personal" PAN card, where the
fourth character is "P" or
(b) of the name of the Entity/ Trust/ Society/ Organisation in the case of Company/ HUF/ Firm/
AOP/ BOI/ Local Authority/ Artificial Jurdical Person/ Govt, where the fourth character is
"C","H","F","A","T","B","L","J","G".
Nowadays, the DOI (Date of Issue) of PAN card is mentioned at the right (vertical) hand side of the photo
on the PAN card.
[edit]See also
Fringe Benefits Tax (India)
Indian Revenue Service
Tax Deduction Account Number
[edit]External links
Indian Income Tax Department Website
Permanent account number overview from Income Tax India
Categories:
Taxation in India
Universal identifiers

Tax Deduction At Source (TDS)

Nothing is as tangled and knotty as the TDS provisons. While some TDS rates are specified in the
individual section which deal with the tax treatment of the particular stream of income, some rates are
included as part of a separate schedule. To make matters worse, these rates get tampered and modified
every year. This result in so much chaos and confusion, that sometimes those who have to apply TDS, do
not have a clue about what rate to use. Imagine the plight of tax payer.
The genasis of the problem lies in the complicated nature of the tax laws. The authorities complain that
less than 2% of our population actually pays taxes. However, simpliflying the provisions is not viewed as
a possible solution. On the other hand, in an effort to bring more and more people into the tax net, the
lawmakers simply endup complicating the law. And the rule is simple more the complexity more the room.
TDS is final tax payable- at the time of filling his returns, the assessee pays the balance if any or asks for
refund, as the case maybe. Ergo, it behooves the Department to have a standard uniform rate -
convenient both for itself as well as the taxpayers.
The most unfortunate part is that we could have easily done away with any TDS provided the deparrtment
had good infrastructure to apprehend assessees avoiding tax only through TDS.
Types of payment, relevant provisions, person responsible for deduction of tax and type of payee.
Rates For TDS In India.
TDS Return.
Tax Deduction Account Number (TAN).
How To Deposit In TDS.
Exemption From TDS.
TDS Exemption For Individual.
Certificate Of Deduction.
No Objection Certificate In TDS.
Special Cases In TDS.

Service Tax In India

Dr. Manmohan Singh, the then Union Finance Minister, in his Budget speech for the year 1994-95
introduced the new concept of Service Tax and stated that '' There is no sound reason for exempting
services from taxation, therefore, I propose to make a modest effort in this direction by imposing a tax on
services of telephones, non-life insurance and stock brokers.''
Service Tax has been introduced in order to explore new avenues for taxation and to bring more people
into the tax net. Service Tax generated revenue of Rs 2612 crores in 2000-2001. In 2001-2002 it is
estimated at 3600 crores.
Bringing services under taxation is not simple as the services are intangible and are provided by large
groups of organized as well as unorganized service providers including retailers who are scattered across
the country. Further, there are several services, which are of intermediate nature. The low level of
education of service providers also poses difficulties to both-tax administration and assessees.
The Service Tax assessee is the person/firm who provides the service. Hence, the Service Tax must be
paid by the person/firm providing the service.
As stated earlier, service tax was introduced in India for the first time in 1994. Chapter V of the Finance
Act, 1994 (32 of 1994) (Sections 64 to 96) deals with imposition of Service Tax interalia on-
a. Service rendered by the telegraph authorities to the subscribers in relation to telephone
connections.
b. Service provided by the insurer to the policy-holder in relation to general insurance business.
c. Service provided by a stockbroker.
The Finance Acts of 1996, 1997, 1998, 2001, 2002 and 2003 added more services to tax net by way of
amendments to Finance Act, 1994. At present total number of services on which Service Tax is levied
has gone upto 58 despite withdrawal of certain Services from the tax net or grant of exemptions (Goods
Transport Operators, Outdoor Caterers, Pandal and Shamiana Contractors, and Mechanized Slaughter
Houses).
Service tax Includes
Service tax is a form of indirect tax that is applicable to the services that are taxable in nature. This tax
came into existence as government wants an easy option that is transparent in nature that can generate
revenue for the nation in an easy way. In past few years service tax is applied on various new services.
Unlike value added tax that is applicable on goods and commodities, this tax is imposed on various
services that is provided by the financial institutions such as banks, stock exchange, colleges, transaction
providers, telecom providers. Banks are the first that charges service tax to its customer since inception
often they termed service charges as processing fees. The responsibility of collecting the tax lies with the
Central Board of Excise and Customs (CBEC) its a body under the Ministry of Finance. This body
formulates the tax structure in the country.
Service tax was imposed first in India in July 1994. The service tax is applicable all over India however
due to the national interest and for the betterment of the people of Jammu and Kashmir it is waved off. In
2006- 2007 service tax was increased from 10% to 12% however it was again reduced from 12% to 10%
in the Union budget of 2009. It is often noticed that there is a lack of service tax information among the
people. Government has gradually increased the list of taxable services to increase the revenue. Lets
have a look at the major services that comes under the scanner of service tax:

Value Added Taxes (VAT) in India

Value Added Tax (VAT) is nothing but a general consumption tax that is assessed on the value added to
goods & services. It is the indirect tax on the consumption of the goods, paid by its original producers
upon the change in goods or upon the transfer of the goods to its ultimate consumers. It is based on the
value of the goods, added by the transferor. It is the tax in relation to the difference of the value added by
the transferor and not just a profit.
All over the world, VAT is payable on the goods and services as they form a part of national GDP. More
than130 countries worldwide have introduced VAT over the past 3 decades; India being amongst the last
few to introduce it.
It means every seller of goods and service providers charges the tax after availing the input tax credit. It is
the form of collecting sales tax under which tax is collected in each stage on the value added of the
goods. In practice, the dealer charges the tax on the full price of the goods, sold to the consumer and at
every end of the tax period reduces the tax collected on sale and tax charged to him by the dealers from
whom he purchased the goods and deposits such amount of tax in government treasury.
VAT is a multi-stage tax, levied only on value that is added at each stage in the cycle of production of
goods and services with the provision of a set-off for the tax paid at earlier stages in the cycle/chain. The
aim is to avoid 'cascading', which can have a snowballing effect on the prices. It is assumed that because
of cross-checking in a multi-staged tax; tax evasion would be checked, hence resulting in higher revenues
to the government.
Importance of VAT in India
India, particularly being a trading community, has always believed in accepting and adopting loopholes in
any system administered by State or Centre. If a well-administered system comes in, it will not only close
options for traders and businessmen to evade paying their taxes, but also make sure that they'll be
compelled to keep proper records of sales and purchases.
Under the VAT system, no exemptions are given and a tax will be levied at every stage of manufacture of
a product. At every stage of value-addition, the tax that is levied on the inputs can be claimed back from
tax authorities.
At a macro level, two issues make the introduction of VAT critical for India
Industry watchers believe that the VAT system, if enforced properly, will form part of the fiscal
consolidation strategy for the country. It could, in fact, help address issues like fiscal deficit problem. Also
the revenues estimated to be collected can actually mean lowering of fiscal deficit burden for the
government.
International Monetary Fund (IMF), in the semi-annual World Economic Outlook expressed its concern for
India's large fiscal deficit - at 10 per cent of GDP.
Moreover any globally accepted tax administrative system would only help India integrate better in the
World Trade Organization regime.
Advantages of VAT
1. Coverage If the tax is considered on a retail level, it offers all the economic advantages of a
tax of the entire retail price within its scope. The direct payment of tax spreads out over a large
number of firms instead of being concentrated only on particular groups, such as wholesalers &
retailers.
2. Revenue Security - Under VAT only buyers at the final stage have an interest in undervaluing
their purchases, as the deduction system ensures that buyers at earlier stages are refunded the
taxes on their purchases. Therefore, tax losses due to undervaluation will be limited to the value
added at the last stage.
Secondly, under VAT, if the payment of tax is avoided at one stage nothing will be lost if it is
picked up at later stage. Even if it is not picked up later, the government will at least have
collected the VAT paid at previous stages. Where as if evasion takes place at the final/last stage
the state will lose only tax on the value added at that particular point.
3. Selectivity - VAT is selectively applied to specific goods & business entities. In addition, VAT
does not burden capital goods because of the consumption-type. VAT gives full credit for tax
included on purchases of capital goods.
4. Co-ordination of VAT with direct taxation - Most taxpayers cheat on sales not to evade VAT
but to evade their personal and corporate income taxes. Operation of VAT resembles that of the
income tax and an effective VAT greatly helps in income tax administration and revenue
collection.
To know more about advantages of VAT click here: Advantages of VAT
Disadvantages of VAT
1. VAT is regressive
2. VAT is difficult to operate from position of both administration and business
3. VAT is inflationary
4. VAT favors capital intensive firms
Items covered under VAT
All business transactions that are carried on within a State by individuals/partnerships/ companies
etc. will be covered under VAT.
More than 550 items are covered under the new Indian VAT regime out of which 46 natural &
unprocessed local products will be exempt from VAT
Nearly 270 items including drugs and medicines, all industrial and agricultural inputs, capital
goods as well as declared goods would attract 4 % VAT in India.
The remaining items would attract 12.5 % VAT. Precious metals such as gold and bullion will be
taxed at 1%.
Petrol and diesel are kept out of the VAT regime in India.
Tax implication under Value Added Tax Act
Seller Buyer
Selling
Price
(Excluding
Tax)
Tax
Rate
Invoice
value
(InclTax)
Tax
Payable
Tax
Credit
Net
TaxOutflow
A B 100
4%
CST
104 4 0 4.00
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12.5%
VAT
128.25 14.25 0* 14.25
C D 124
12.5%
VAT
139.50 15.50 14.25 1.25
D Consumer 134
12.5%
VAT
150.75 16.75 15.50 1.25
Total to Govt.
VAT
CST
16.75 4.00

Methods Of Collecting And Charging The VAT

Generally, there are 2 methods that are followed while charging and collecting the VAT:
1. Invoice or tax credit method The tax is collected and charged separately on the basis of the tax
that is paid on the purchase and the tax that is payable on the sale, shown separately in the
invoice. Therefore, the difference between the tax paid on purchase and the tax payable on sale
as per the invoice is the VAT.
2. Subtraction Method Under this method, the tax is collected and charged on the aggregate value
of the tax payable on sale and purchase by applying the rate of tax, applicable to the goods.
Therefore, the difference between the sale price and purchase price would be VAT. It means VAT
is the tax which consumers ultimately face. It is collected at each stage. The tax earlier paid can
be allowed as set off or credit. Therefore, it is called as Last Point Tax
Top
Constitutional Framework Which Deals With The Levy Of Sale Tax
The states are empowered to impose sale tax on the goods that are subject to purchase or sale by
enacting laws. The Parliament has enacted the CST Act and the states are in the process of enacting
laws. The sale of goods or purchase includes:
a. the sale of goods, defined under the Sale of Goods Act.
b. transfer of goods used as otherwise in pursuance of the contract.
c. transfer of goods used otherwise in Works Contracts.
d. delivery of goods in pursuance to Hire Purchase Agreement or on installment.
e. transfer of right to use to goods on lease or otherwise.
f. supply of food by the club or body to its members.
g. supply of food articles or drinks for consumption.
The transaction referred above from (c) to (g) are considered to be deemed sale and power can be
exercised to impose tax on such sale by the states. States are also empowered to provide levy, creating a
liability to pay tax and other payment assessment and certain procedural formalities like maintenance of
accounts, records, appeals and issue of declaration of Tax Invoice, Input Tax Credit, etc.
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Contents
[hide]
1IncomeTaxDepartment
2Overview
o 2.1ChargetoIncometax
o 2.2ResidentialStatus
o 2.3HeadsofIncome
o 2.4IndividualHeadsofIncome
2.4.1IncomefromSalary
2.4.2IncomefromHouseproperty
2.4.3IncomefromBusinessorProfession
2.4.4IncomefromCapitalGains
2.4.5IncomefromOtherSources
3Deduction
o 3.1Section80CDeductions
o 3.2Section80CCF:InvestmentinInfrastructureBonds
o 3.3Section80D:MedicalInsurancePremiums
o 3.4InterestonHousingLoansSection
4UseofDeductions
5TaxRates
o 5.1Surcharge
o 5.2TaxRatefornonIndividuals
o 5.3RefundStatusforSalariedtaxpayers
6CorporateIncometax
o 6.1TaxPenalties
7Seealso
8References
9Externallinks
[edit]Income Tax Department
The CBDT is a part of Department of Revenue in the Ministry of Finance. On one hand, CBDT provides
essential inputs for policy and planning of direct taxes in India,at the same time it is also responsible for
administration of direct tax laws through the Income Tax Department. The Central Board of Direct Taxes is a
statutory authority functioning under the Central Board of Revenue Act, 1963. The officials of the Board in their
ex-officio capacity also function as a Division of the Ministry dealing with matters relating to levy and collection
of direct taxes. The Central Board of Revenue as the Department apex body charged with the administration of
taxes came into existence as a result of the Central Board of Revenue Act, 1924. Initially the Board was in
charge of both direct and indirect taxes. However, when the administration of taxes became too unwieldy for
one Board to handle, the Board was split up into two, namely the Central Board of Direct Taxes and Central
Board of Excise and Customs with effect from 1.1.1964. This bifurcation was brought about by constitution of
the two Boards u/s 3 of the Central Boards of Revenue Act, 1963. Income Tax in India was introduced by
James Wilson.
Organisational Structure of the Central Board of Direct Taxes : The CBDT is headed by Chairman and
also comprises of six members, all of whom are ex-officio Special Secretary to Government of India.
Member (Income Tax) Member (Legislation and Computerisation) Member (Revenue) Member (Personnel &
Vigilance) Member (Investigation) Member (Audit & Judicial)
The Chairman and Members of CBDT are selected from Indian Revenue Service (IRS), a premier civil service
of India, whose members constitute the top management of Income Tax Department.
Responsibilities of Chairman and Members, Central Board of Direct Taxes
Various functions and responsibilities of CBDT are distributed amongst Chairman and six Members, with only
fundamental issues reserved for collective decision by CBDT. In addition, the Chairman and every Member of
CBDT are responsible for exercising supervisory control over definite areas of field offices of Income Tax
Department, known as Zones.
[edit]Overview
[edit]Charge to Income-tax
Every Person whose total income exceeds the maximum amount which is not chargeable to the income tax is
an assesse, and shall be chargeable to the income tax at the rate or rates prescribed under the finance act for
the relevant assessment year, shall be determined on basis of his residential status.
Income tax is a tax payable, at the rate enacted by the Union Budget (Finance Act) for every Assessment Year,
on the Total Income earned in the Previous Year by every Person.
The changeability is based on nature of income, i.e., whether it is revenue or capital. The principles of taxation
of income are-:
Income Tax Rates/Slabs Rate (%)
for men:
Up to 1,80,000 = NIL ,
1,80,001 5,00,000 = 10%,
5,00,001 8,00,000 = 20%,
8,00,001 upwards = 30%,
Up to 1,90,000 (for resident women)= NIL
Up to 2,50,000 (for resident individual of 60 years or above)= 0,
Up to 5,00,000 (for very senior citizen of 80 years or above)= 0.

Education cess is applicable @ 3 per cent on income tax, surcharge = NA
[edit]Residential Status
The three residential status, viz.,
Resident Ordinarily Residents
Under this category ,person must be living in India at least 182 days during previous year Or must
have been in India 365 days during 4 years preceding previous year and 60 days in previous year.
Ordinary residents are always taxable.
Resident but not Ordinarily Residents
Must have been a non-resident in India 9 out of 10 years preceding previous year or have been in
India in total 729 or less days out of last 7 years preceding the previous year. Not Ordinarily
residents are taxable in relation to income received in India or income accrued or deemed to be
accrue or arise in India and income from business or profession controlled from India.
Non Residents
Non Residents are exempt from tax if accrue or arise or deemed to be accrue or arise outside
India. Taxable if income is earned from business or profession setting in India or having their head
office in India.
[1]

[2]

[edit]Heads of Income
The total income of a person is divided into five heads, viz., taxable
[3]
:
[edit]Individual Heads of Income
[edit]Income from Salary
All income received as salary under Employer-Employee relationship is taxed under this head.
Employers must withhold tax compulsorily, if income exceeds minimum exemption limit, as Tax
Deducted at Source (TDS), and provide their employees with a Form 16 which shows the tax
deductions and net paid income. In addition, the Form 16 will contain any other deductions
provided from salary such as:
1. Medical reimbursement: Up to Rs. 15,000 per year is tax free if supported by bills.
2. Conveyance allowance: Up to Rs. 800 per month (Rs. 9,600 per year) is tax free if
provided as conveyance allowance. No bills are required for this amount.
3. Professional taxes: Most states tax employment on a per-professional basis, usually a
slabbed amount based on gross income. Such taxes paid are deductible from income
tax.
4. House rent allowance: the least of the following is available as deduction
1. Actual HRA received
2. 50%/40%(metro/non-metro) of basic 'salary'
3. Rent paid minus 10% of 'salary'. basic Salary for this purpose is basic+DA
forming part+commission on sale on fixed rate.
Income from salary is the least of all the above deductions.
[edit]Income from House property
Income from House property is computed by taking into account what is called Annual Value of
the property. The annual value (in the case of a let out property) is the maximum of the following:
Rent received
Municipal Valuation
Fair Rent (as determined by the I-T department)
If a house is not let out and not self-occupied, annual value is assumed to have accrued to the
owner. Annual value in case of a self occupied house is to be taken as NIL. (However if there is
more than one self occupied house then the annual value of the other house/s is taxable.) From
this, deduct Municipal Tax paid and you get the Net Annual Value. From this Net Annual Value,
deduct :
30% of Net value as repair cost (This is a mandatory deduction)
Interest paid or payable on a housing loan against this house
In the case of a self occupied house interest paid or payable is subject to a maximum limit of
Rs,1,50,000 (if loan is taken on or after 1 April 1999 and construction is completed within 3 years)
and Rs.30,000 (if the loan is taken before 1 April 1999). For all non self-occupied homes, all
interest is deductible, with no upper limits.
The balance is added to taxable income.
[edit]Income from Business or Profession

carry forward of losses
An example .. An architect works out of home and co-ordinates work for his clients. All the
following expenses would be deductible from his professional fees.
he uses a computer,
he travels to sites in his car,
he has a peon to help him collect payments
He has a maid who comes in daily
part of the society maintenance bills
entertainment expenses incurred..
books and magazines for his professional practice.

The income referred to in section 28, i.e, the incomes chargeable as "Income from Business or
Profession" shall be computed in accordance with the provisions contained in sections 30 to 43D.
However, there are few more sections under this Chapter, viz., Sections 44 to 44DA (except
sections 44AA, 44AB & 44C), which contain the computation completely within itself. Section 44C
is a disallowance provision in the case non-residents. Section 44AA deals with maintenance of
books and section 44AB deals with audit of accounts.
In summary, the sections relating to computation of business income can be grouped as under: -
1. Deductible Expenses - Sections 30 to 38 [except 37(2)].
2. Inadmissible Expenses - Sections 37(2), 40, 40A, 43B & 44-C.
3. Deemed Incomes - Sections 33AB, 33ABA, 33AC, 35A, 35ABB & 41.
4. Special Provisions - Sections 42 & 43D
5. Self-Coded Computations - Sections 44, 44A, 44AD, 44AE, 44AF, 44B, 44BB, 44BBA,
44BBB, 44-D & 44-DA.
The computation of income under the head "Profits and Gains of Business or Profession"
depends on the particulars and information available.
[4]

If regular books of accounts are not maintained, then the computation would be as under: -
Income (including Deemed Incomes) chargeable as income under this head xxx Less: Expenses
deductible (net of disallowances) under this head xxx Profits and Gains of Business or
Profession xxx
However, if regular books of accounts have been maintained and Profit and Loss Account has
been prepared, then the computation would be as under: -
Net Pr of i t as per Pr of i t and Loss Account
xxx
Add : I nadmi ssi bl e Expenses debi t ed t o Pr of i t and Loss Account
xxx
Deemed I ncomes not cr edi t ed t o Pr of i t and Loss Account
xxx
xxx
Less: Deduct i bl e Expenses not debi t ed t o Pr of i t and Loss Account
xxx
I ncomes char geabl e under ot her heads cr edi t ed t o Pr of i t & Loss
A/ c xxx
xxx
Pr of i t s and Gai ns of Busi ness or Pr of essi on
xxx
[edit]Income from Capital Gains
Transfer of capital assets results in capital gains. A Capital asset is defined under section 2(14) of
the I.T. Act, 1961 as property of any kind held by an assessee such as real estate, equity shares,
bonds, jewellery, paintings, art etc. but does not include some items like any stock-in-trade for
businesses and personal effects. Transfer has been defined under section 2(47) to include sale,
exchange, relinquishment of asset, extinguishment of rights in an asset, etc. Certain transactions
are not regarded as 'Transfer' under section 47.
For tax purposes, there are two types of capital assets: Long term and short term. Long term
asset are held by a person for three years except in case of shares or mutual funds which
becomes long term just after one year of holding. Sale of such long term assets gives rise to long
term capital gains. There are different scheme of taxation of long term capital gains. These are:
1. As per Section 10(38) of Income Tax Act, 1961 long term capital gains on shares or
securities or mutual funds on which Securities Transaction Tax (STT) has been
deducted and paid, no tax is payable. STT has been applied on all stock market
transactions since October 2004 but does not apply to off-market transactions and
company buybacks; therefore, the higher capital gains taxes will apply to such
transactions where STT is not paid.
2. In case of other shares and securities, person has an option to either index costs to
inflation and pay 20% of indexed gains, or pay 10% of non indexed gains. The
indexation rates are released by the I-T department each year.
3. In case of all other long term capital gains, indexation benefit is available and tax rate is
20%.
All capital gains that are not long term are short term capital gains, which are taxed as such:
Under section 111A, for shares or mutual funds where STT is paid, tax rate is 10% From
AsstYr 2005-06 as per Finance Act 2004. For AsstYr 2009-10 the tax rate is 15%.
In all other cases, it is part of gross total income and normal tax rate is applicable.
For companies abroad, the tax liability is 20% of such gains suitably indexed (since STT is not
paid).
[edit]Income from Other Sources
This is a residual head, under this head income which does not meet criteria to go to other heads
is taxed. There are also some specific incomes which are to be taxed under this head.
1. Income by way of Dividends
2. Income from horse races
3. Income from winning bull races
4. Any amount received from key man insurance policy as donation.
5. Income from shares (dividend otherthanindian company)
[edit]Deduction
While exemptions is on income some deduction in calculation of taxable income is allowed for
certain payments.
[edit]Section 80C Deductions
Section 80C of the Income Tax Act [1] allows certain investments and expenditure to be deducted
from total income upto the maximum of 1 lac. The total limit under this section is Rs. 100,000
(Rupees One lac) which can be any combination of the below:
Contribution to Provident Fund or Public Provident Fund. PPF provides 8% return
compounded annually. Maximum limit to contribute in it is 70,000 for each year. It is a long
term investment with complete withdrawal not possible till 15 years though partial withdrawal
is possible after 5 years. Besides, there is employee providend fund which is deducted from
the salary of the person. This is about 10% to 12% of the BASIC salary component. Recent
changes are being discussed regarding reducing the instances of withdrawal from EPF
especially when one changes the job. EPF has the option of full settlement on leaving the
job, taking VRS, retirement after 58. It also has options of withdrawal for certain expenses
related to home, marriage or medical. EPF contribution includes 12% of basic salary from
employee and employer. It is distributed in ratio of 8.33:3.67 in Pension fund and Providend
fund
Payment of life insurance premium
Investment in pension Plans. National Pension Scheme is meant to save money for the post
retirement which invests money in different combination of equity and debt. depending upon
age up to 50% can go in equity. Annuity payable after retirement is dependent upon age.
NPS has six fund managers. Individual can make minimum contribution of Rs6000/- . It has
22 point of purchase (banks).
Investment in Equity Linked Savings schemes (ELSS) of mutual funds. Among other
investment opportunities, ELSS has the least lock-in period of 3 years. However, one should
note that after the Direct Tax Code is in place, ELSS will no longer be an investment for 80C
deduction.
Investment in National Savings Certificates (interest of past NSCs is reinvested every year
and can be added to the Section 80 limit)
Tax saving Fixed Deposits provided by banks for a tenure of 5 years. Interest is also taxable.
Payments towards principal repayment of housing loans. Also any registration fee or stamp
duty paid.
Payments towards tuition fees for children to any school or college or university or similar
institution. (Only for 2 children)or towards coaching fee of various competitive exams.
Post office investments
The investment can be from any source and not necessarily from income chargeable to tax.
[edit]Section 80CCF: Investment in Infrastructure Bonds
From April, 1 2010, a maximum of Rs. 20,000is deductible under section 80CCF provided that
amount is invested in infrastructure bonds. This is in addition to the 100,000 deduction allowed
under Section 80(C).
[edit]Section 80D: Medical Insurance Premiums
Health insurance, popularly known as Mediclaim Policies, provides a deduction of up to Rs.
35,000.00 (Rs. 15,000.00 for premium payments towards policies on self, spouse and children
and (read as in addition to) Rs. 15,000.00 for premium payment towards non-senior citizen
dependent parents or Rs. 20,000.00 for premium payment towards senior citizen dependent).
This deduction is in addition to Rs. 1,00,000 savings under IT deductions clause 80C. For
consideration under a senior citizen category, the incumbent's age should be 65 years during any
part of the current fiscal, eg. for the fiscal year 2010-11, the incumbent should already be 65 as
on March 31, 2011), This deduction is also applicable to the cheques paid by proprietor firm..
[edit]Interest on Housing Loans Section
For self occupied properties, interest paid on a housing loan up to Rs 150,000 per year is exempt
from tax.(Excluding Rs.1,00,000/p.a. u/s 80c Saving) However, this is only applicable for a
residence constructed within three financial years after the loan is taken and also the loan if taken
after April 1, 1999.
If the house is not occupied due to employment, the house will be considered self occupied.
For let out properties, the entire interest paid is deductible under section 24 of the Income Tax
act. However, the rent is to be shown as income from such properties. 30% of rent received and
municipal taxes paid are available for deduction of tax.
The losses from all properties shall be allowed to be adjusted against salary income at the source
itself. Therefore, refund claims of T.D.S. deducted in excess, on this count, will no more be
necessary.
[5]

[edit]Use of Deductions
While the use of the above sections helps one to pay less or no money as tax if one falls in the
tax bracket, one should look at this more as an investment-return opportunity. One should still file
income tax return, even if one is not paying any tax. Except ELSS (Equity Linked Savings
Scheme) and the NPS (National Pension Scheme), other schemes under 80C typically offer a
relatively risk-free investment and guaranteed returns.
[edit]Tax Rates
In India, Individual income tax is a progressive tax with three slabs. About 10 per cent of the
population meets the minimum threshold of taxable income
[6][7]

From April 1, 2011 new tax slabs apply, which are as follows:
No income tax is applicable on all income up to Rs. 1,80,000 per year. (Rs. 1,90,000 for
women, Rs. 2,50,000 for senior citizens of 60 till 80 yrs (excluding 80) and Rs. 5,00,000 for
very senior citizens of 80 yrs and above and must be resident of india)
From 1,80,001 to 5,00,000 : 10% of amount greater than Rs. 1,80,000 (Lower limit changes
appropriately for women and senior citizens)
From 5,00,001 to 8,00,000 : 20% of amount greater than Rs. 5,00,000 + 32,000 ( Rs. 31,000
for women and Rs. 25,000 for senior citizens)
Above 8,00,000 : 30% of amount greater than Rs. 8,00,000 + 92,000 ( Rs. 91,000 for women
and Rs. 85,000 for senior citizens)
[edit]Surcharge
Surcharge has been abolished for personal income tax in the financial year 2009-10.
A 7.5% surcharge (tax on tax) is applicable if the taxable income (taking into consideration all the
deductions) is above Rs. 10 lakh (Rs. 1 million). The limit of 10 lacs was increased to Rs. 10
crore (Rs. 100 million) with effect from 1 June 2009
All taxes in India are subject to an education cess, which is 3% of the total tax payable. With
effect from assessment year 2009-10, Secondary and Higher Secondary Education Cess of 1% is
applicable on the subtotal of income tax. The education cess is mainly applicable on excise duty
and service tax
From income tax year 2010-11, education cess would be 3% and no surcharge would be levied.
[edit]Tax Rate for non-Individuals
There are special rates prescribed for Firms, Corporates, Local Authorities & Co-operative
Societies.
[8]

[edit]Refund Status for Salaried tax payers
The Income Tax Department has put on its website the list of income tax refunds of all salary tax
payers which could not be sent to the concerned persons for want of correct address. (link to
check refund)
Salary taxpayers who have not received refunds for assessment years 2003-04 to 2006-07 can
click on the link below and query using the PAN number and assessment year whether any
refund due to them has been returned undelivered. .
[9]

[edit]Corporate Income tax
For companies, income is taxed at a flat rate of 30% for Indian companies, with a 5% surcharge
applied on the tax paid by companies with gross turnover over Rs. 1 crore (10 million). Foreign
companies pay 40%.
[10]
An education cess of 3% (on both the tax and the surcharge) are
payable, yielding effective tax rates of 32.5% for domestic companies and 41.2% for foreign
companies.
[11]
From 2005-06, electronic filing of company returns is mandatory.
[12]

[edit]Tax Penalties
The major number of penalties initiated every year as a ritual by I T Authorities is under section
271(1)(c) which is for either concealment of income or for furnishing inaccurate particulars of
income. What is inaccurate particulars of income is not defined under Income Tax Act 1961 ,
however recently Supreme Court in case of CIT vs Reliance Petroproducts states as under "If
we accept the contention of the Revenue then in case of every Return where the claim made is
not accepted by Assessing Officer for any reason, the assessee will invite penalty under Section
271(1)(c). That is clearly not the intendment of the Legislature."
Read more: http://taxworry.com/landmark-judgment-by-supreme-court-on-penalty-us-2711c-in-
favour-of-taxpayers/#ixzz1F5mJSvsn "If the Assessing Officer or the Commissioner (Appeals) or
the Commissioner in the course of any proceedings under this Act, is satisfied that any person-
(b) has failed to comply with a notice under sub-section (1) of section 142 or sub-section (2) of
section 143 or fails to comply with a direction issued under sub-section (2A) of section 142, or
(c) has concealed the particulars of his income or furnished inaccurate particulars of such
income,
he may direct that such person shall pay by way of penalty,-
(ii) in the cases referred to in clause (b), in addition to any tax payable by him, a sum of ten
thousand rupees for each such failure;
(iii) in the cases referred to in clause (c), in addition to any tax payable by him, a sum which shall
not be less than, but which shall not exceed three times, the amount of tax sought to be evaded
by reason of the concealment of particulars of his income or the furnishing of inaccurate
particulars of such income.
[edit]See also
Service tax in India
Central Excise (India)
[edit]References
1. ^ Determination of Residential Status
2. ^ A Study of the Indian Tax System - Part I and II - Sunil Thacker
3. ^ Taxable heads of income
4. ^ Business Income
5. ^ http://www.incometaxindia.gov.in/publications/1_Compute_Your_Salary_Income/2_Income
_from_house_property.asp
6. ^ Income Tax Rates changed for 2011-12
7. ^ Finance Act 2011 comes into effect
8. ^ Tax Rates for Assessment Year 2008-09
9. ^ NSDL Refund Status Check
10. ^ Income Tax Act, Tax rates for foreign companies
11. ^ Finance Act 2010
12. ^ Surcharge has been revised from 10% to 7.5% w.e.f AY 2010-11.Corporate taxpayers must
file electronically, point 4 of IT circular.
[edit]External links
Indian Income


79
[CHAPTER XII-D
SPECIAL PROVISIONS RELATING TO TAX ON DISTRIBUTED PROFITS OF
DOMESTIC COMPANIES
Tax on distributed profits of domestic companies.
115-O.
80
[(1) Notwithstanding anything contained in any other provision of this Act and subject
to the provisions of this section, in addition to the income-tax chargeable in respect of the total
income of a domestic company for any assessment year, any amount declared, distributed or paid
by such company by way of dividends (whether interim or otherwise) on or after the 1st day of
April, 2003, whether out of current or accumulated profits shall be charged to additional income-
tax (hereafter referred to as tax on distributed profits) at the rate of twelve and one-half per cent.]
(2) Notwithstanding that no income-tax is payable by a domestic company on its total income
computed in accordance with the provisions of this Act, the tax on distributed profits under sub-
section (1) shall be payable by such company.
(3) The principal officer of the domestic company and the company shall be liable to pay the tax
on distributed profits to the credit of the Central Government within fourteen days from the date
of
(a) declaration of any dividend; or
(b) distribution of any dividend; or
(c) payment of any dividend,
whichever is earliest.
(4) The tax on distributed profits so paid by the company shall be treated as the final payment of
tax in respect of the amount declared, distributed or paid as dividends and no further credit
therefor shall be claimed by the company or by any other person in respect of the amount of tax
so paid.
(5) No deduction under any other provision of this Act shall be allowed to the company or a
shareholder in respect of the amount which has been charged to tax under sub-section (1) or the
tax thereon.
80a
[(6) Notwithstanding anything contained in this section, no tax on distributed profits shall be
chargeable in respect of the total income of an undertaking or enterprise engaged in developing
or developing and operating or developing, operating and maintaining a Special Economic Zone
for any assessment year on any amount declared, distributed or paid by such Developer or
Enterprise, by way of dividends (whether interim or otherwise) on or after the 1st day of April,
2005 out of its current income either in the hands of the Developer or Enterprise or the person
receiving such dividend not falling under clause (23G) of section 10.]

Advance Tax

Al l per sons i ncl udi ng sal ar i ed empl oyees and pensi oner s,
i n
whose case t ax payabl e dur i ng a Fi nanci al Year i s Rs.
10, 000/ = or mor e af t er adj ust i ng al l deduct i ons, r ebat es
&
TDS ar e r equi r ed t o pay Advance Tax. The r at es f or
payment
of Advance Tax ar e announced i n t he Fi nance Act ever y
year .

For Compani es
By 15t h J une - 15%of Advance Tax
By 15t h Sept ember - 30%of Advance Tax
By 15t h December - 30%of Advance Tax
By 15t h Mar ch- 25%of Advance Tax
By 31st Mar ch - Tax on Capi t al Gai ns or Casual I ncomes
ar i si ng
af t er 15Th Mar ch, i f any.

For Non- Compani es
By 15t h J une - NI L
By 15t h Sept ember - 30%of Advance Tax
By 15t h December - 30%of Advance Tax
By 15t h Mar ch- 40%of Advance Tax
By 31st Mar ch - Tax on Capi t al Gai ns or Casual I ncomes
ar i si ng
af t er 15Th Mar ch, i f any.