Tax Exemption Options

Tax Exemption Options

Following table give you more idea about income tax exemption plans

Section	Product To Invest	Amount To Invest	Other Details
80C	NSC, Bank Deposits and Post office time deposit, EPF, PPF, ELSS, Life insurance plans, Pension plans.	Cannot exceed Rs.1 lakh	Mandatory requirements - Payment has to be made before 31 March. Who can avail the deduction - Individuals and HUF (both resident and non-resident).
80CCC	Pension plans of life insurers.	Limit of Section 80C (up to Rs.1 lakh)	Mandatory requirements - Payment has to be made before 31 March. Who can avail the deduction – Individuals
80D	Medical insurance policies taken for self, spouse, dependent parents or children, or any member of HUF.	Up to Rs.15,000; senior citizens can claim up to Rs.20,000	Mandatory requirements - Premium should be paid through a cheque out of income chargeable to tax Who can avail the deduction - Individuals and HUF.
80DD	Expenses on the medical treatment of a dependent who is a person with a disability.	Up to Rs.50,000, or up to Rs.75,000 if the dependent is a person with severe disability.	Mandatory requirements - Certification by a medical authority Who can avail the deduction - Resident individual or HUF.

               

Section	Product To Invest	Amount To Invest	Other Details
80DDB	Expenses on the medical treatment of a specified disease (cancer, AIDS, neurological diseases, chronic renal failure and more)	Rs.40,000 (if the person treated upon is less than 65 years of age),or Rs 60,000 (if the age of the person treated is 65 years or more)	Mandatory requirements - Certificate in Form No.10-l to be submitted along with the income tax is available if the amount is actually paid for treatment. Who can avail the deduction - Resident individual or HUF.
80E	Payment of interest on loan taken for higher studies.	Deduction available on the total interest portion of education loan, the Principal repayment gets no tax advantage	Mandatory requirements - Deduction is available in the year in which repayment starts and only for eight immediately succeeding assessment years. Who can avail the deduction – Individual
80G	Donations to certain funds and charitable institutions.	50 or 100 % deduction on the entire donated amount or 50 or 100 per cent deduction subject to 10 % of gross total income.	Mandatory requirements - Not applicable
80GG	Rent paid for residential purpose	Excess of actual rent paid over 10 % of GTI, or 25 % of GTI, or Rs.2,000 per month, whichever is the lowest.	Mandatory requirements - Should not be getting house rent allowance. Actual rent paid is in excess of 10% of the total income Who can avail the deduction - Self-employed or salaried.
80U	Expenses incurred on self, if disabled	Rs.50,000 for a person with disability, Rs.75,000 for a person with severe disability (disability of over 80 %)	Mandatory requirements - Certification by a medical authority to be furnished along with the income tax return form. Who can avail the deduction-Resident individuals

EPF BENEFITS

EPF BENEFITS

The scheme
This monthly pension comes to you, courtesy the Employees’ Pension Scheme (EPS), 1995. The EPS is run by the EPFO as a subset of the EPF, which is mandatory for establishments with more than 20 employees. Every month, 12 per cent of your basic salary and dearness allowance (DA) goes into the EPF. Your employer contributes an identical amount. If the sum of your basic and DA is up to Rs 6,500, you have no choice but to contribute to your EPF; the same goes for your company. But if your basic and DA exceed Rs 6,500, you can opt out. 

Most of the money your employer and you put in goes towards building your EPF kitty, on which you are currently earning 8.5 per cent. A part of it, however, goes towards funding your pension. More specifically, of every Rs 12 your employer contributes, Rs 8.33 goes into the EPS; the government chips in another Rs 1.16. When you turn 58, you start getting a pension.

Senior Citizens Savings Scheme

Senior Citizens Savings Scheme 2004

   Salient Features of the Scheme 

Tenure of the Scheme	5 years, which can be extended by 3 more years
Rate of interest	9% (simple interest)
Frequency of Computing interest	Quarterly
Tax aspects	Interest is fully taxable
Investment to be in multiples of	Rs.1000/-
Maximum investment limit	Rs.15 lakhs
Minimum eligible age	60 years (55 years for those who have retired under a voluntary or a special voluntary scheme provided investment is made within 1 month of date of receipt of retirement benefits for retired personnel of Defense Services (excluding Civilian Defense Employees) - no age limit.
Facility of premature withdrawals	Available after 1 year of holding but with penalty
Transferability feature	Not available
Tradability	Not available
Nomination Facility	Available
Mode of Holding	Generally single, Joint mode is permitted but only spouses will be allowed to open accounts jointly with beneficiaries.

Who can apply
The scheme is available for citizens above 60 years of age; however a provision has been put in place for individuals who have crossed 55 years of age. Such individuals may invest subject to the conditions that,

·           The person has retired under a voluntary retirement scheme or a special voluntary retirement scheme on the date of making the investment,

·           The investment is made within three months of the date of retirement,

·           And a certificate from the employer, indicating the fact of retirement, retirement benefits, along with period of such employment with the employer, is attached with the application form.

Non-Resident Indians and Hindu Undivided Families are not permitted to invest in the scheme.

Investment Limits
Investments can be made in any post-office by opening an account. Only one deposit can be made in each account; the deposit amount shall be a multiple of Rs.1,000 and should not exceed Rs.1,500,000.
A depositor can operate more than one account subject to the condition that all the deposits taken together don't exceed the specified amount i.e. Rs.1, 500,000. Also more than one account shall not be opened in the same post-office during a calendar month.

·           Interest rate - The scheme will offer an interest of 9 per cent per annum. The same will be payable on 31st March, 30th June, 30th September and 31st December each year.

·           Mode of holding - The depositor can hold an account either individually or jointly with his/ her spouse.

·           Nomination - Nomination facility has been provided under the scheme. In the event of death of the depositor, the amount due shall be paid to the nominee. Nomination facility is also available incase of joint accounts.

·           Maturity - The scheme has a tenure of 5 years. The account can be extended for a 3 year period by making an application.

·           Withdrawals - Investors will be permitted to prematurely liquidate their investments at any time after the expiry of 1 year from the date of opening of the account subject to the following conditions,

·           In case the account is closed after the expiry of 1 year but before the expiry of 2 years from the date of opening of the account, an amount equal to 1.5% of the deposit shall be deducted.

·           In case the account is closed on or after the expiry of 2 years from the date of opening of the account, an amount equal to 1% of the deposit shall be deducted.

·           Tax benefits - The interest income from the scheme is fully taxable.

Transfer of Account
The account can be transferred from one post-office to another.