Ease Your Tax Burden - Invest Now

An small investor (and tax payer) is one who manages his finances in such a way that the TDS is just equal to the tax he is supposed to pay for a particular year. You need to balance your needs based on need for liquidity in hand, investment returns and tax savings.

Every individual get more tensed in the month of February /March every year as in this month when they feels like they are being subject to extortion in form of Tax Deduction at Source or Advance Tax. And advised if not want to pay tax then go to invest in tax saving investments.

There could be moments when you feel that you have paid too much of taxes or too much of tax has been deducted from your salary. So to avoid such situation one should start planning their taxes from the beginning of the year itself so that you don’t end your year by paying more taxes.

When the employer deducts tax at source, more particularly, during last two months, as he would like to avoid defaults on his part, to save on interest and penalties, he shall consider all your investments which give you tax deductions or savings. While deducting tax at source, he shall consider investments such as in

Insurance premium,

Provident fund contributions,

National saving certificates,

Investment in pension plans,

ULIPs, Mediclaim etc.

Not only this, he shall also consider certain amounts spent by you on specified items and on your health such as 

Tuition fee of children (80C), 

Repayment of principal amount of home loan (80C),

Medical expenses (80D, 80DD), 

Expenses on specified illnesses (80DDB) (upto Rs. 40,000 and Rs. 60,000 for senior citizens (Rs 1,00,000 wef A.y 2019-20) and for super senior citizen Rs 80,000 from A.y 2016-17 to 2018-19 ( Rs 1,00,000 from A.y 2019-20)

Any amount of interest paid on educational loan (80E) etc.

Donations made to specified eligible funds etc are also eligible for allowance (100% or 50% depending upon type of donation.

Employer is also supposed to consider your house rent receipts but may ask for landlord’s PAN number also.

You can plan you taxes including TDS by integrating your tax planning and investment planning. The investments you make should also have a tax saving objective. If choosing between two options with similar returns and safety features, tax saving would play an important role. In such situations, investments like housing, provident funds, insurance, equity linked saving options etc. can give you some relax feeling.

However, if tax has been deducted in absence of investment or forget to inform the Deductor in time (like bank etc), and your tax liability does not arise as per your income details or tax deduction becomes more than actual tax liability, you should not worry much as it is now mandatory for tax payers to quote then bank account number and details in the return itself which makes refunds faster, safer and hassle free.

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Submission of Investment Proof

Third quarter of this current financial year 2017-18 is near to end. All employees who earn more than taxable limits has to submit their investment/expenses proof, which makes them eligible to get benefit of tax saving option provided by Income Tax Department, to their Employer / HR department for the year 2017-18.

Since the Income Tax Department made it very clear to all employer to verify the geniuses of each claim made by their employee  (vide Circular No.01/2017). This submission is subject to TDS deduction on Salary. Employers have right to act as per guidelines in accordance with the income tax rules to safeguard the interest of the organisation.

Here some list of document pertaining to Expenses/Investment proof needs to submit with employers for the TDS purpose.

Tax Section	Guidelines
Rent Payments	Monthly rental receipts Following information is mandatory in the rent receipt. Landlord’s name and address, signature of the Landlord. Landlord’s PAN or a self-declaration, in case the annual rent amount is greater than 1.0 lakh. Revenue stamp to be affixed for the cash payments.
Insurance Premium/ULIP/ Pension scheme.	Premium receipts paid during current financial year, in name of self, spouse, children.
Children Tuition Fees.	Copy of Tuition Fees paid to educational institution. Payment in nature of Donations, Capitation fees, Uniform fee, Sports fee, Van Fees, Shoes & Sock etc., are not allowed.
Public Provident Fund- PPF	Copy of the stamped deposit receipt, paid during current financial year or Copy of the Passbook with clear mention as PPF Account
National Saving Certificate (NSC) And Interest accrued on  NSC deposited in the earlier FYs.	Copy of NSC certificate in the name of employee. Copy of the NSC’s purchased in the previous FYs. Interest accrued will be considered as other income too.
MEDICLAIM – Deduction U/S 80 D – including preventive health checkup. Employee, spouse, dependent children, and parents	Copy of premium receipt paid during the FY. Receipt of payment of preventive health check-up of the employee or family
Tax Saving Mutual Funds	Copy of investment certificate with the employee name, Investment Date, Amount, Type of Investment. Only the investments made under Tax Saving Fund / Plan will be considered
ELSS (Equity Linked Saving Scheme)	Copy of investment certificate with the employee name, Investment Date, Amount, Type of Investment. Only the investments made under Tax Saving Fund / Plan will be considered.
Income / Loss from House Property- Let out Property	Detailed calculation of Let out house property's income/loss.
Principal & Interest Repayment of Housing Loan	Interest certificate from the bank/financial institution with the total interest and principal paid/due for the FY.
Post Office –Term Deposit with more than 5 year term.	Copy of deposit receipt
Tax Saving Fixed Deposits with Scheduled Banks.	Copy of Deposit Receipt invested during current financial year, qualified benefit under Sec 80C of the Income Tax Act
Medical Treatment on Handicapped Dependent – Deduction U/S 80DD	Proof of a. Expenditure incurred towards medical treatment, training and rehabilitation of a handicapped dependent ., or b. Amount paid or deposited under any scheme framed in this behalf by the LIC or UTI or any other insurer and approved by the Board for the maintenance of the handicapped dependent c. Form 10-IA
Medical Treatment Expenses for the specified disease  – Deduction U/S 80DDB	Medical Bills / expenditure incurred by way of medical treatment for a specified disease along with a certificate from a hospital in the prescribed form. Form 10-I
Interest paid on Higher Education Loan – Deduction U/S 80 E	Copy of Bank certificate stating that the loan and interest has been paid and amount payable during the financial year
Additional Deduction in respect of housing loan interest for the first house property acquired in FY 16-17 U/s 80EE	Maximum deduction u/s 80EE is allowed Rs. 50000/-. The deduction shall be subject to the following conditions: 1. Loan should be sanctioned during the Financial Year 2016-17 2. The amount of loan sanctioned for acquisition of the residential house property does not exceed 35 lakh rupees; 3. The value of the residential house property does not exceed 50 lakh rupees; 4. The assesse does not own any residential house property on the date of sanction of the loan. All proofs should be provided, as applicable for loss on house property.
Donations eligible U/s 80G	Employers may not consider all the Donations for taxation, hence employees have to consider the same at the time of filing their personal returns and have to claim the tax refund
For Self – Permanent Disability – Deduction U/s 80 U	Any Individual suffering from a permanent physical disability (including blindness) or is subject to mental retardation, on the production of medical certificate from Government Hospital in the prescribed form and manner, along with a Return of Income, shall be allowed a deduction of Rs.75000/-. Where such assessee is a person with severe disability, a deduction of Rs.125,000/- can be claimed. (Photocopy of certificate (Form – 10 IA) issued by the competent medical authority specifying the % of disability)
For Self – Permanent Disability – Deduction U/s 80 U	Form 10 I-A
NPS – 80CCD(1B)	Copy of the stamped deposit receipt, paid during current financial year and copy of the Passbook with clear mention as NPS Account

SUGGESTION TO EMPLOYEE ON TAX SAVING INVESTMENT/EXPENSES 

Please review your tax liability of the year in start of the financial year. 

Keep copy of all investment/ expenses related with year. This habit helps you and your employer to clear off tax liability and saves you from interest / penalty factor for less tax payment.

This habit also helps you to assess your options to invest in right investment scheme which are eligible under section 80C.

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Tax Benefits For Senior Citizens

In this blog we will discuss Income Tax Benefits to Senior Citizen available as per Income Tax Act. A person becomes senior citizen once he attains 60 years of age. Income Tax Department categories Senior citizen into two part. First Senior Citizen is with age bracket of 60 years to 79 years old and Second Senior Citizen is with age bracket of 80 years and above. 

There are some tax exemption available for senior citizen. From F. Y. 2011-12 qualifying age limit for senior citizen has been reduced from 65 years to 60 years and from F Y 2015-16 exemption limit for senior citizen has been enhance from 2,50,000/- to 3,00,000/-. 

A new category of Very Senior Citizen has been introduced in F Y. 2011-2012 (A Y 2012-13) with qualifying age 80 years and above with enhance exemption limit of Rs.5,00,000/-.

Senior Citizens and very senior citizen are granted a higher exemption limit as compared to normal tax payers.

EXEMPTION LIMITS

The Exemption Limit of a Senior Citizen for the financial year 2016-17 available to a Resident Senior Citizen is Rs.3,00,000/-. An Additional benefit of Rs.50,000/- in form of higher exemption limit available to Resident Senior Citizen in comparison to non-senior citizen.

The Exemption Limit of a Very Senior Citizen for the financial year 2016-17 available to a Resident Senior Citizen is Rs.5,00,000/-. An Additional benefit of Rs.250,000/- in form of higher exemption limit available to Resident Very Senior Citizen in comparison to non-senior citizen and Rs.2,00,000/- higher than Resident Senior Citizen.

TAX BENEFIT OF MEDICAL INSURANCE

From Financial Year 2015-17 (A Y 2016-17) a Resident Senior Citizen can claim higher deduction of Rs.30,000/- under section 80D on insurance premium paid for Medical Insurance. Earlier it was Rs.20,000/-

HIGHER DEDUCTION U/S 80DDB

Section 80DDB provides deduction to an assessee in case of expense on medical treatment of specified ailments. Deduction Limits is Rs.40,000/- for normal patient while deduction limit Rs.60,000/- for a senior citizen patient.

From A Y 2016-17 higher limit of deduction of upto Rs.80,000/- is allowable for the expenditure incurred in respect of the medical treatment of a Very Senior Citizen.

TDS EXEMPTION ON BANK DEPOSITS

Senior Citizen can claim exemption on the Tax Deducted At Source (TDS) on interest income earned on bank deposits. It can be done by submitting Form 15H  under Section  197 of the IT Act.

HIGHER INTEREST RATES

Senior Citizen receives higher interest rates on 5 Year Fixed Deposit which is eligible for deduction from total income under Section 80C.

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Allowances or Exemptions available For Salaried For A. Y. 2018-19

Every taxpayer who are liable to file Income Tax Return under the head Salary do knows very well that what are the allowances / exemptions available under the head salary that help them to save tax 

Here we have made an efforts to Summarize all Allowances /Exemptions available 
under the head Salaries of Tax Payers for AY 2018-19 [ F Y 2017-18]

Allowances / Exemptions Under the head Salaries :

Sl. No.	Section	Particulars	Limit of Exemptions	Exemption Available To
1	10(7)	Any allowance or perquisite paid or allowed by Government to its employees posted outside India	Entire Amount	Individual- Salaried Employee (being a citizen of India)
2	-	Allowances to Judges of High Court/Supreme Court	Exempt, subject to certain conditions	Individual – Judges of High Court/Supreme Court
3	-	Compensatory allowance received by a Judge under article 222(2) of the Constitution	Fully Exempt
4	-	Salary and allowances received by a teacher /professor from SAARC member state (Subject to certain conditions).	Fully Exempt
5	10(45)	Following allowances and perquisites given to serving Chairman/Member of UPSC is exempt from tax: a) Value of rent free official residence b) Value of conveyance facilities including transport allowance c) Sumptuary allowance d) Leave travel concession	Fully Exempt
6	10(45)	Allowances to Retired Chairman/Members of UPSC	Exempt subject to maximum of Rs. 14,000 per month for defraying the services of an orderly and for meeting expenses incurred towards secretarial assistant on contract basis.
7	-	Allowances paid by the UNO to its employees	Fully Exempt Individual – Government employee	Individual – Employees of UNO
8	16 (ii)	Entertainment Allowance received by the Government employees (Fully taxable in case of other employees)	Least of the following is exempt from tax: a) Rs 5,000 b) 1/5th of salary (excluding any allowance, benefits or other perquisite) c) Actual entertainment allowance received	Individual – Government Employee
9	10(13A)	House Rent Allowance (Sec. 10(13A) & Rule 2A)	Least of the following is exempt: a) Actual HRA Received b) 40% of Salary (50%, if house situated in Mumbai, Calcutta, Delhi or Madras) c) Rent paid minus 10% of salary * Salary= Basic + DA (if part of retirement benefit) + Turnover based Commission Note: i. Fully Taxable, if HRA is received by an employee who is living in his own house or if he does not pay any rent ii. It is mandatory for employee to report PAN of the landlord to the employer if rent paid is more than Rs. 1,00,000 [Circular No. 08 /2013 dated 10th October, 2013].	Individual – Salaried employee
10	10(14)	Children Education Allowance	Up to Rs. 100 per month per child up to a maximum of 2 children is exempt	Individual – Salaried employee
11	10(14)	Hostel Expenditure Allowance	Up to Rs. 300 per month per child up to a maximum of 2 children is exempt	Individual – Salaried employee
12	10(14)	Transport Allowance is granted to an employee to meet expenditure on commuting between place of residence and place of duty	Up to Rs. 1,600 per month (Rs. 3,200 per month for blind, deaf, dumb and handicapped employees) is exempt	Individual – Salaried employee
13	10(14)	Allowance granted to an employee working in any transport business to meet his personal expenditure during his duty performed in the course of running of such transport from one place to another place provided employee is not in receipt of daily allowance	Amount of exemption shall be lower of following: a) 70% of such allowance; or b) Rs. 10,000 per month	Individual – Salaried employee
14	10(14)	Conveyance Allowance granted to meet the expenditure on conveyance in performance of duties of an office	Exempt to the extent of expenditure incurred for official purposes	Individual – Salaried employee
15	10(14)	Any Allowance to meet the cost of travel on tour or on transfer	Exempt to the extent of expenditure incurred for official purposes	Individual – Salaried employee
16	10(14)	Daily Allowance to meet the ordinary daily charges incurred by an employee on account of absence from his normal place of duty	Exempt to the extent of expenditure incurred for official purposes	Individual – Salaried employee
17	10(14)	Helper/Assistant Allowance	Exempt to the extent of expenditure incurred for official purposes	Individual – Salaried employee
18	10(14)	Research Allowance granted for encouraging the academic research and other professional pursuits	Exempt to the extent of expenditure incurred for official purposes	Individual – Salaried employee
19	10(14)	Uniform Allowance	Exempt to the extent of expenditure incurred for official purpose	Individual – Salaried employee
20	10(14)	Special compensatory Allowance (Hilly Areas) (Subject to certain conditions and locations)	Amount exempt from tax varies from Rs. 300 per month to Rs. 7,000 per month	Individual – Salaried employee
21	Sec. 10(14) read with Rule 2BB	Border area allowance Remote Locality or allowance or Disturbed Area allowance or Difficult Area Allowance (Subject to certain conditions and locations)	Amount exempt from tax varies from Rs. 200 per month to Rs. 1,300 per month	Individual – Salaried employee
22	Sec. 10(14)	Tribal area allowance in (a) Madhya Pradesh (b) Tamil Nadu (c) Uttar Pradesh (d) Karnataka (e) Tripura (f) Assam (g) West Bengal (h) Bihar (i) Orissa	Up to Rs. 200 per month	Individual – Salaried employee
23	Sec. 10(14)	Compensatory Field Area Allowance. If this exemption is taken, employee cannot claim any exemption in respect of border area allowance (Subject to certain conditions and locations)	Up to Rs. 2,600 per month	Individual – Salaried employee
24	Sec. 10(14)	Compensatory Modified Area Allowance. If this exemption is taken, employee cannot claim any exemption in respect of border area allowance (Subject to certain conditions and locations)	Up to Rs. 1,000 per month	Individual – Salaried employee
25	Sec. 10(14)	Counter Insurgency Allowance if this exemption is taken, employee cannot claim any exemption in respect of border area allowance (Subject to certain conditions and   locations)	Up to Rs. 3,900 per month	Individual – Salaried employee
26	Sec. 10(14)	Underground Allowance is granted to employees working in uncongenial, unnatural climate in underground mines	Up to Rs. 800 per month	Individual – Salaried employee
27	Sec. 10(14)	High Altitude Allowance is granted to armed forces operating in high altitude areas (Subject to certain conditions and locations)	a) Up to Rs. 1,060 per month (for altitude of 9,000 to 15,000 feet) b) Up to Rs. 1,600 per month (for altitude above 15,000 feet)	Individual – Members of Armed Forces
28	Sec. 10(14)	Highly active field area allowance is granted to members of armed forces (Subject to certain conditions and locations)	Up to Rs. 4,200 per month	Individual – Members of Armed Forces
29	Sec. 10(14)	Island Duty Allowance is granted to members of armed forces in Andaman and Nicobar and Lakshadweep group of Island (Subject to certain conditions and locations)	Up to Rs. 3,250 per month	Individual – Members of Armed Forces
30	-	City Compensatory Allowance	Fully Taxable	Individual – Salaried employee
31	-	Fixed Medical Allowance	Fully Taxable	Individual – Salaried employee
32	-	Tiffin/Lunch/Dinner/ Refreshment Allowance	Fully Taxable	Individual – Salaried employee
33	-	Servant Allowance	Fully Taxable	Individual – Salaried employee
34	-	Dearness Allowance	Fully Taxable	Individual – Salaried employee
35	-	Project Allowance	Fully Taxable	Individual – Salaried employee
36	-	Overtime Allowance	Fully Taxable	Individual – Salaried employee
37	-	Telephone Allowance	Fully Taxable	Individual – Salaried employee
38	-	Holiday Allowance	Fully Taxable	Individual – Salaried employee
39	-	Any Other Cash Allowance	Fully Taxable	Individual – Salaried employee

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Effect of GST on Insurance Premium

With  a hike in GST rates to 18% from the current 15%, the insurance sector are poised to get more expensive after July 1, 2017. The immediate effect will be the increase in premiums especially for families that own Life Insurance, Health Insurance and Car Insurance.

The existing and new insurance buyers would have to bear the updated prices. The Policy holders stand a chance to be benefited if the insurance providers get a green signal on the input tax credit benefit. Unfortunately, as of yet, it is still unclear since he Center/State GST  structure is very complex. It might create confusions and conformity for the insurance buyers and increase the administrative expenses for the insurance providers. If the insurance buyers remain confused about the GST updates, then irrespective of the increase or decrease in the prices the financial strength will adversely affected. The general insurance sector will be equally impacted. The overall outgo for health, car, and various non-life plans would be increased by 3 percent.

The Insurance policies premium represents two components - Savings and Risk Coverage. The service tax is levied specified only on the premium component. 

What GST (Goods And Service Tax) Rules says, the value of service on which the GST is levied regarding the life insurance sector shall be accordingly;

(i) The gross premium would be reduced by the amount allocated for or savings or investment on policyholders behalf.

(ii) When it comes to the single premium annual policies, ten percent of the single premium would be charged from the policy holder.

(iii) In other cases, 25 percent of the premium for the first year and 12.5% of the premium in the upcoming years will be charged.

(iv) In case the total premium paid by the policy holder is towards the life insurance's risk cover, oly the 18% GST would be levied on the total premium.

There are three types of life insurance;

* Term Insurance Plans - Basic life insurance policy

** ULIP Plans - Insurance and investment under a single integrated plan

*** Endowments Plans (including money back plan) - Life insurance policies that pay a lump sum on maturity/death or a fixed sum every month (like pension)

List of new revised rates on all insurance plans are as follows :

GST RATES : NEW RATES UNDER GST FOR INSURANCE POLICIES
INSURANCE PRODUCTS	BEFORE GST	AFTER GST	APPLICABILITY
Endowment Plans – 1st Year	3.75%	4.50%	On 25% of Premium
Endowment Plans – Renewal Premium	1.88%	2.25%	On 12.5% of Premium
Health Insurance Premium	15%	18%	On Entire Premium
Rider Premium	15%	18%	On Entire Premium
Annuity: Single Premium	1.50%	1.80%	On 10% of Premium
Term Insurance Premium	15%	18%	On Entire Premium
ULIP (On Charges)	15%	18%	On Premium minus Investment Amount
Vehicle Insurance	15%	18%	On Entire Premium
Travel Insurance	15%	18%	On Entire Premium

Life and health insurers will not have input tax credit as it is not available for life and health insurances ( as they are for personal purposes). Even corporate policyholders with group life and health insurance for their employees will not enjoy any input tax credit.

Life insurance provided under Government Schemes are exempted from GST;

1) Janashree Bima Yojna (JBY)

2) Aam Aadmi Bima Yojna (AABY)

3) Life Micro-Insurance product (as approved by the IRDA having maximum amount of cover of fifty thousand rupees)

4) Varishtha Pension Bima Yojna (VPBY)

5) Pradhan Mantri Jeevan Jyoti Bima Yojna (PMJJBY)

6) Pradhan Mantri Jan Dhan Yojna

7) Pradhan Mantri Vaya Vandan Yojna 

8) Any other insurance schemes of the State Government as may be notified by Government of India on the the recommendation of GST Centre.

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