Tax planning does not mean evading tax

 

Tax planning does not mean evading tax, but paying the right amount of tax to the government, said well-known chartered accountant B Chandrakanth Rao.

 

Speaking on the topic Personal Income Tax Planning,organized by Mangalore Productivity Council on Tuesday February 19, he said that tax planning was complex and time consuming in the past but the easy regime introduced by Prime Minister Dr Manmohan Singh during his tenure as finance minister has brought relief to the tax payers, he informed.

 

Most of the time we are busy in earning and spending, hence we do not take time to devise a right strategy to save tax which is an essential need. Moreover, one should understand the taxation laws to plan for the future,he advised.

 

Providing some tips to save income tax, he said that if any non-resident Indian is residing in India for less than 6 months in a year, the money earned by him abroad will not be accounted for taxation.

 

A salaried person should have provisions to receive his salary in various kinds of allowances other than receiving in a lump sum, he added.

 

When it comes to the matter of investment, there is no better option than owning a house. One should plan it as early as possible, he suggested.

 

Public Provident Fund (PPF), Unit Linked Insurance Plan, Equity Linked Savings Schemes are the other options to save the tax, he told.

IT Deductions

1.80C

Qualifying products: NSC, notified bank deposits and post office time deposits, EPF and PPF, ELSS, life insurance plans, deferred pension plans

Mandatory requirements: Payment has to be made before 31 March 2008

Who can avail the deduction: Individuals and HUF (both resident and non-resident)

How much: Cannot exceed Rs 1 lakh.

2. 80CCC

Qualifying products: Pension plans of life insurers

Mandatory requirements: Payment has to be made before 31 March 2008

Who can avail the deduction: Individuals

How much: Within the overall limit of Section 80C (up to Rs 1 lakh)

3. 80D

Qualifying products: Medical insurance policies taken for self, spouse, dependant parents or children, or any member of HUF

Mandatory requirements: Premium should be paid through a cheque out of income chargeable to tax

Who can avail the deduction: Individuals, HUF

How much: Up to Rs 15,000; senior citizens can claim up to Rs 20,000

4. 80DD

Qualifying products: Expenses on the medical treatment of a dependent who is a person with a disability

Mandatory requirements: Certification by a medical authority

Who can avail the deduction: Resident individual or HUF

How much: Up to Rs 50,000, or up to Rs 75,000 if the dependant is a person with severe disability

5. 80DDB

Qualifying products: Expenses on the medical treatment of a specified disease (cancer, AIDS, neurological diseases, chronic renal failure and more)

Mandatory requirements: Certificate in Form No. 10-I to be submitted along with the income tax return form. Deduction is available if the amount is actually paid for treatment

Who can avail the deduction: Resident individuals or HUF

How much: Rs 40,000 (if the person treated upon is less than 65 years of age), or Rs 60,000

6. 80E

Qualifying products: Payment of interest on loan taken for higher studies

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: Individuals

How much: Deduction available on the total interest portion of education loan, the principal repayment gets no tax advantage

7. 80G

Qualifying products: Donations to certain funds and charitable institutions

Mandatory requirements: Not applicable

Who can avail the deduction: Resident individuals or HUF

How much: 50 or 100 per cent deduction on the entire donated amount, or 50 or 100 per cent deduction subject to 10 per cent of gross total income

8. 80GG

Qualifying products: Rent paid for residential purpose

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

How much: Excess of actual rent paid over 10 per cent of GTI, or 25 per cent of GTI, or Rs 2,000 per month, whichever is the lowest

9. 80U

Qualifying products: Expenses incurred on self, if disabled

Mandatory requirements: Certification by a medical authority to be furnished along with the income tax return form

Who can avail the deduction: Resident individuals

How much: Rs 50,000 for a person with disability, Rs 75,000 for a person with severe disability (disability of over 80 per cent