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Tax saving primer

The deductions under various sections can reduce your income tax substantially. Find out what are the tax deductions available and how you can avail them.

Print Edition: February 7, 2008

The deductions under various sections can reduce your income tax substantially. Find out what are the tax deductions available and how you can avail them.

SECTIONSWHO CAN CLAIMYOU HAVE TO...MAX DEDUCTION*
80CAll taxpayersInvest in PF, PPF, NSCs, bank FDs (over 5 years), insurance policies, Ulips, pension plans and ELSS funds. Also covers kids’ school fees and repayment of home loanRs 1 lakh
80DAll taxpayers, HUFsBuy a medical insurance policyRs 15,000; Rs 5,000 more for senior citizens
80DDResident taxpayers, HUFsPay for maintenance of a dependent suffering from a specified disabilityRs 50,000; Rs 25,000 more if disability severe
80DDBResident taxpayers, HUFsPay for medical treatment of a dependent suffering from a specified diseaseRs 40,000; Rs 20,000 more for senior citizen
80UResident taxpayersSuffer from a specified disabilityRs 50,000 (Rs 75,000 in case of severe disability)
80EAll individual taxpayersTake a loan for higher educationInterest fully deductible
80GAll taxpayersDonate to specified charitable institutions50-100% of donation depending on income and the charity’s credentials
10 (13A)Salaried taxpayersLive in a rented houseLeast of: HRA; rent less 10% salary; 50% salary (40% in non-metros)
24 (B)All taxpayersTake a home loan to buy, construct a houseRs 1.5 lakh
NRIs and expatriates not included in resident taxpayers category | *Annual deductions

CALCULATE YOUR TAXABLE INCOME

[Your gross income (including income from salary, business or profession, interest, short-term capital gains from assets other than stocks and equity funds, and rent)] MINUS [Any of the deductions from the table given above] IS EQUAL TO [Your taxable income for the year]

MALES

ANNUAL INCOMETAX (INCLUDING CESS, SURCHARGE)AFTER 80C, 80D DEDUCTIONSSAVINGS
Rs 2 lakh14,120Nil14,120
Rs 3 lakh40,17011,33028,840
Rs 5 lakh1,01,97066,43535,535
Rs 11 lakh3,16,1072,77,01839,089

INCOME AND TAX RATE

First Rs 1.1 lakh: Nil | Next Rs 40,000: 10% | Next Rs 1 lakh: 20% | Above Rs 2.5 lakh: 30%

 

FEMALES

ANNUAL INCOMETAX (INCLUDING CESS, SURCHARGE)AFTER 80C, 80D DEDUCTIONSSAVINGS
Rs 2.5 lakh21,115Nil21,115
Rs 4 lakh67,46531,93035,535
Rs 10 lakh2,52,8652,17,33035,535
Rs 11 lakh3,12,1412,73,05239,089

INCOME AND TAX RATE

First Rs 1.45 lakh: Nil | Next Rs 5,000: 10% | Next Rs 1 lakh: 20% | Above Rs 2.5 lakh: 30%

 

SENIOR CITIZENS (ABOVE 65)

ANNUAL INCOMETAX (INCLUDING CESS, SURCHARGE)AFTER 80C, 80D DEDUCTIONSSAVINGS
Rs 2 lakh1,030Nil1,030
Rs 4 lakh57,68020,60037,080
Rs 5 lakh88,58051,50037,080
Rs 11 lakh3,12,1412,61,72339,655

INCOME AND TAX RATE

First Rs 1.95 lakh: Nil | Next Rs 55,000: 20% | Above Rs 2.5 lakh: 30%

 

DATES TO REMEMBER

31 March: Last date for making all tax saving investments and deductible expenses for the financial year

31 July: Last date for filing of tax return by salaried individuals and professionals

15 September: First instalment of advance income tax (30% of advance tax payable)

31 October: Last date for filing income tax returns by assessees who are liable to get their accounts audited. This applies to individuals and HUFs engaged in partnership firms or sole proprietorships and professionals under certain specified conditions

15 December: Second instalment of advance income tax (30% of the advance tax payable)

15 March: Third instalment of advance income tax (balance of advance tax payable)

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