Download - Tax Saving Devices Final
-
8/2/2019 Tax Saving Devices Final
1/75
Tax Saving Devices
Presented By
CA Mayur Makadia
PartnerM A Shah & Co.Chartered Accountants
-
8/2/2019 Tax Saving Devices Final
2/75
17.02.2012 CA Mayur Makadia 2
SYNOPSIS
Concept of Deductions vs. Exemptions
Tax Saving Through Deductions
Tax Saving Devices U/Chap VI A Tax Saving Devices For Salaried People
Tax Saving Devices For Property Income
Tax Saving Devices For Capital Gains Income
-
8/2/2019 Tax Saving Devices Final
3/75
17.02.2012 CA Mayur Makadia 3
Tax Saving Devices U/Chap VIA
Deductions Available in Respect of CertainInvestments
Deductions Available in Respect of CertainPayments
Deductions Available in Respect of CertainIncomes
-
8/2/2019 Tax Saving Devices Final
4/75
17.02.2012 CA Mayur Makadia 4
Tax Saving Devices U/Chap VIA
-
8/2/2019 Tax Saving Devices Final
5/75
17.02.2012 CA Mayur Makadia 5
Investment Based Deductions
These deductions are available to all Individuals and
Hindu Undivided Families (HUFs).
Deduction available upto a maximum of Rs. 1,00,000against investment in any instrument specified u/s 80C.
Additional deduction of Rs. 20,000/- available againstinvestment in any Infrastructure Bonds specified u/s80CCF.
Instruments Specified may be market linked or fixedincome bearing.
Certain Minimum Lock in Period Prescribed for availingthe deduction.
-
8/2/2019 Tax Saving Devices Final
6/75
17.02.2012 CA Mayur Makadia 6
Investment Based Deductions
PUBLIC PROVIDENT FUND
Any individual other than NRI can open a PPF Accountincluding a minor [Father or mother (but not both)may open an account on behalf of a minor.
Salaried Persons can open a PPF A/c in addition totheir PF Account.
Option to pay each contribution in one lump sum p.a.,
or in instalments, not necessarily monthly.
Period: Initial Lock in period of 15 years - option to
continue after maturity in blocks of 5 years for anynumber of blocks.
-
8/2/2019 Tax Saving Devices Final
7/75
17.02.2012 CA Mayur Makadia 7
Investment Based Deductions
PUBLIC PROVIDENT FUND
Withdrawals Permitted
Only after the 6th year is complete
Only one withdrawal can be made in onefinancial year.
Amount of withdrawal 50 % of thebalance at the end of the 4th immediately
preceding year or at the end of thepreceding year, whichever is lower.
-
8/2/2019 Tax Saving Devices Final
8/75
17.02.2012 CA Mayur Makadia 8
Investment Based Deductions
PUBLIC PROVIDENT FUND
Loan Facility available
Loan is available only between the 2nd yearand the 5th year of opening the account.
Maximum permissible is 25 % of the
Balance available at the end of thepreceding 2 years.
-
8/2/2019 Tax Saving Devices Final
9/75
Investment Based Deductions
PUBLIC PROVIDENT FUND
Other Considerations:
Interest as well as withdrawal totally exemptfrom tax.
A/c can be opened either with a post office,
any branch of State Bank or any nationalizedBank.
17.02.2012 CA Mayur Makadia 9
-
8/2/2019 Tax Saving Devices Final
10/75
Investment Based Deductions
PUBLIC PROVIDENT FUND
The balance in the amount cannot be attached evenby the court.
A very good investment tool for conservativeinvestors.
Expected Returns for an annual contribution of Rs.1,00,000
17.02.2012 CA Mayur Makadia 10
Rate ofInterest
Amount Received After(In INR)
15 Yrs 20 Yrs 25 Yrs
8.60 % 30,90,100 53,12,696 86,70,131
8.00 % 29,32,428 49,42,292 78,95,442
7.00 % 28,07,724 46,55,253 73,07,620
-
8/2/2019 Tax Saving Devices Final
11/75
Investment Based Deductions
National Savings Certificates Minimum investment limit is Rs. 100 & no
maximum limit is prescribed. Investments
can be made in denominations of Rs 100,500, 1,000, 5,000 & 10,000.
Lock in period of 6 years (now 5 years) is
prescribed, however prematurewithdrawal permitted after 3 years underexceptional circumstances.
17.02.2012 CA Mayur Makadia 11
-
8/2/2019 Tax Saving Devices Final
12/75
Investment Based Deductions
National Savings Certificates Principal amount received at the time of
maturity is not taxable, however interestreceived is taxable annually.
Interest received qualifies as re-investment & therefore eligible for 80Cdeduction.
Available at any post office.17.02.2012 CA Mayur Makadia 12
-
8/2/2019 Tax Saving Devices Final
13/75
Investment Based Deductions
National Savings Certificates Can be pledged as a security for loan.
Rate of interest is now revised to 8.4%.
There is a plan to introduce NSC with a 10
year maturity period.
17.02.2012 CA Mayur Makadia 13
-
8/2/2019 Tax Saving Devices Final
14/75
Investment Based Deductions
Tax Saving Fixed Deposits Minimum investment of Rs.10,000 and
maximum of Rs.100,000.
Duration of investment is 5 years.
Two modes of Interest payment:
Traditional Interest is payable at monthly or
quarterly rests.
Reinvestment Interest is compoundedquarterly and reinvested with principal
amount.17.02.2012 CA Mayur Makadia 14
-
8/2/2019 Tax Saving Devices Final
15/75
Investment Based Deductions
Tax Saving Fixed Deposits Investments can be made by individuals and
HUFs.
Pre-mature withdrawal not allowed.
Loan facility not available.
Interest rates offered are in the range of8.5% - 10% (for Non-Sr. citizens)
For Sr. citizens interest rates are higher by 50 75 bps.
Interest received is taxable & subject to TDS.
17.02.2012 CA Mayur Makadia 15
-
8/2/2019 Tax Saving Devices Final
16/75
Investment Based DeductionsSr. Citizens Saving Scheme
Eligible assesses are as under
Persons 60 years or above.
Persons aged more than 55 years but less
than 60 years and who has retired.
Retired personnel of Defence services (excl.civil defence) irrespective of their age.
Saving instrument is a deposit with anypost office or branch of a nationalizedbank.
17.02.2012 CA Mayur Makadia 16
-
8/2/2019 Tax Saving Devices Final
17/75
Investment Based DeductionsSr. Citizens Saving Scheme
Minimum limit Rs. 1,000 & maximum Rs15,00,000.
Term of deposit is 5 years extendable to
further 3 years. Interest is payable at 9 % & is taxable.
Pre-mature withdrawal is permitted after a
period of 1 year in which case some penalcharges would be deducted.
NRIs and HUFs are not eligible.
17.02.2012 CA Mayur Makadia 17
-
8/2/2019 Tax Saving Devices Final
18/75
Investment Based Deductions
NABARD Bonds Eligible investors are as under: Individuals
HUF
Minor Children as natural / legal guardians
Minimum investment is five Bonds i.e. Rs.5,000/- and thereafter in multiples of onebond (F.V of one bond is Rs. 1,000).
The lock in period for investments is 5years.
17.02.2012 CA Mayur Makadia 18
-
8/2/2019 Tax Saving Devices Final
19/75
Investment Based Deductions
NABARD Bonds Rate of interest is 8.25% for Non-Sr.
citizens & 8.75% for Sr. citizens.
The interest income is taxable.
The bond is non-transferable.
The bond cannot be offered as a securityfor any loan or advance.
17.02.2012 CA Mayur Makadia 19
-
8/2/2019 Tax Saving Devices Final
20/75
Investment Based Deductions
Employees Provident Fund Salaried individuals are compulsorily
required to contribute 12% of the sum of
basic pay and dearness allowance toemployees provident fund (EPF).
This sum is deducted by the employers
from the monthly payroll of employees asa social security scheme akin to a forced-saving towards retirement planning.
17.02.2012 CA Mayur Makadia 20
-
8/2/2019 Tax Saving Devices Final
21/75
Investment Based Deductions
Employees Provident Fund The contribution made by the employee to
EPF is eligible for deduction u/s 80C.
The amount withdrawn on maturity (incl.interest earned) is tax-free.
17.02.2012 CA Mayur Makadia 21
-
8/2/2019 Tax Saving Devices Final
22/75
OTHER INVESTMENT BASED
DEDUCTIONS AVAILABLE
Contribution to Pension Fund u/s 80CCC Contribution to New Pension Scheme
(NPS) u/s 80CCD
Investment in Long Term InfrastructureBond u/s 80CCF
17.02.2012 CA Mayur Makadia 22
-
8/2/2019 Tax Saving Devices Final
23/75
Investment Based Deductions
Contribution to Pension Fund The persons eligible to claim this
deduction are resident as well as non-
resident individuals. Payments made to keep in force an
annuity plan for receiving pension at a
future date is allowed as a deduction. Maximum deduction allowed is Rs.
1,00,000.
17.02.2012 CA Mayur Makadia 23
-
8/2/2019 Tax Saving Devices Final
24/75
Investment Based Deductions
Contribution to Pension Fund Deduction in respect of this contribution &
in respect of any other investment u/s 80C
cannot exceed Rs. 1,00,000. Any amount withdrawn or pension
received from the plan is taxable in the
hands of the assessee or nominee in theyear of receipt.
17.02.2012 CA Mayur Makadia 24
-
8/2/2019 Tax Saving Devices Final
25/75
Investment Based Deductions
Contribution to New Pension Scheme The persons eligible to claim this deduction are
resident as well as non-resident individuals in
the age group of 18- 55 years. Maximum amount allowed as a deduction is as
under:
In case of employed persons
Employees contribution upto 10% of his salary.
Employers contribution upto 10% of employeessalary.
17.02.2012 CA Mayur Makadia 25
-
8/2/2019 Tax Saving Devices Final
26/75
Investment Based DeductionsContribution to New Pension Scheme In case of persons other than employees:
Contribution upto 10% of the Gross Total Income.
The amounts received under this scheme are
taxable on the following events: On maturity ; OR
Opting out of the scheme; OR
On receipt of pension from the annuity plan.
The amount received on maturity/opting out/byway of pension shall not be taxable in case theproceeds are utilized for buying an annuity planin the same year.
17.02.2012 CA Mayur Makadia 26
-
8/2/2019 Tax Saving Devices Final
27/75
Investment Based Deductions
Contribution to New Pension Scheme The overall deduction under this section,
u/s 80C & 80CCC cannot exceed Rs.
1,00,000.
17.02.2012 CA Mayur Makadia 27
-
8/2/2019 Tax Saving Devices Final
28/75
Investment Based DeductionsInvestment in Long Term Infrastructure
Bonds The persons eligible to avail this deduction
can be an individual or an HUF.
Minimum contribution is Rs. 10,000 &maximum amount is Rs. 20,000.
Tenure of this bonds is 10 years, however
exit option is available through secondarymarket or buyback after 5 years.
17.02.2012 CA Mayur Makadia 28
-
8/2/2019 Tax Saving Devices Final
29/75
Investment Based DeductionsInvestment in Long Term Infrastructure
Bonds Interest rates offered are in the range of 8% -
9% depending upon the investment option
chosen. Investment in Long Term Infrastructure Bonds is
eligible for deduction under Section 80CCFsubject to maximum limit of Rs. 20,000 which is
over and above the limit of Rs 1,00,000 availableu/s 80C, 80CCC & 80CCD.
17.02.2012 CA Mayur Makadia 29
-
8/2/2019 Tax Saving Devices Final
30/75
DEDUCTIONS BASED ONMARKET LINKED INSTRUMENTS
Equity Linked Savings Scheme (ELSS)Mutual Funds
Unit Linked Insurance Plans (ULIP)
17.02.2012 CA Mayur Makadia 30
DEDUCTIONS BASED ON
-
8/2/2019 Tax Saving Devices Final
31/75
DEDUCTIONS BASED ONMARKET LINKED INSTRUMENTS
Equity Linked Savings Scheme
Eligible persons are individuals includingNRI & HUFs.
Minimum limit of investment is Rs. 500 &
there is no maximum limit.
Rate of return is as per market situation
17.02.2012 CA Mayur Makadia 31
-
8/2/2019 Tax Saving Devices Final
32/75
DEDUCTIONS BASED ONMARKET LINKED INSTRUMENTS
Equity Linked Savings Scheme
Dividend Income arising from ELSS is
exempt from tax.
All ELSS have a lock-in period of 3 years
after which it can be sold back to the fundhouse & Capital gains if any are exempt.
17.02.2012 CA Mayur Makadia 32
-
8/2/2019 Tax Saving Devices Final
33/75
DEDUCTIONS BASED ONMARKET LINKED INSTRUMENTS
Unit Linked Insurance Plans
Eligible persons are individuals includingNRI & HUFs.
Unit Linked Insurance Plans (ULIPS) are acombination of Life Insurance as well asMutual Fund investment.
ULIPs give you life cover as well asexposure to stock market.
17.02.2012 CA Mayur Makadia 33
C O S S O
-
8/2/2019 Tax Saving Devices Final
34/75
DEDUCTIONS BASED ONMARKET LINKED INSTRUMENTS
Unit Linked Insurance Plans
Minimum limit of investment is Rs. 5,000 & thereis no maximum limit.
Rate of return is as per market situation.
All ULIPs have a lock-in period of 5 years
Premium in excess of 20% of sum assured is not
eligible for deduction.
17.02.2012 CA Mayur Makadia 34
DEDUCTIONS BASED ON
-
8/2/2019 Tax Saving Devices Final
35/75
DEDUCTIONS BASED ONMARKET LINKED INSTRUMENTS
Unit Linked Insurance Plans
Money invested in ULIPs is eligible for deductionunder Section 80C.
Maturity/ Death claim proceeds are notchargeable to tax.
17.02.2012 CA Mayur Makadia 35
-
8/2/2019 Tax Saving Devices Final
36/75
OTHER DEDUCTIONS
Life Insurance Premium
Children Tuition Fees
Purchase of House Property Related
17.02.2012 CA Mayur Makadia 36
OTHER DEDUCTIONS
-
8/2/2019 Tax Saving Devices Final
37/75
OTHER DEDUCTIONSLife Insurance Premium
Minimum & maximum contribution as per theterms of the insurance company.
Premium in excess of 20% of sum assured is noteligible for deduction
Minimum lock in period of 2 years.
17.02.2012 CA Mayur Makadia 37
OTHER DEDUCTIONS
-
8/2/2019 Tax Saving Devices Final
38/75
OTHER DEDUCTIONSLife Insurance Premium
Life insurance can be a term plan (which is non-money back) or endowment plan (which ismoney back)
LIP paid whether for term or endowment plan, iseligible for deduction under Section 80C.
Maturity (in case of endowment plan)/ Deathclaim proceeds are not chargeable to tax.
17.02.2012 CA Mayur Makadia 38
-
8/2/2019 Tax Saving Devices Final
39/75
OTHER DEDUCTIONSChildren Tuition Fees
The tuition fee paid for upto 2 children is fullyallowed as deduction subject to maximumoverall limit of Rs. 1,00,000.
Tuition Fees is eligible for deduction underSection 80C.
Tuition fees paid to any university, college,
school or other educational institution withinIndia is eligible.
Development fees or Donations or similar feespaid not eligible.
17.02.2012 CA Mayur Makadia 39
OTHER DEDUCTIONS
-
8/2/2019 Tax Saving Devices Final
40/75
OTHER DEDUCTIONSPurchase of House Property Related
Eligible persons are individuals & HUFs.
Eligible payments are as under:
Purchase or cost of construction of residential
house Stamp duty, registration fees & other
expenses for transfer of the property inassessees name.
However admission fees, transfer fees, etcpaid to society not eligible. Also renovation orrepair expense not eligible.
17.02.2012 CA Mayur Makadia 40
OTHER DEDUCTIONS
-
8/2/2019 Tax Saving Devices Final
41/75
OTHER DEDUCTIONSPurchase of House Property Related
Repayment of housing loan (principalcomponent)
House property should be held for a
minimum period of 5 years.
17.02.2012 CA Mayur Makadia 41
-
8/2/2019 Tax Saving Devices Final
42/75
PAYMENTS BASED DEDUCTION
Medical Insurance Premium (u/s 80D)
Maintenance Expenses of Physically
Disabled Dependant (u/s 80DD) Medical Expenses for specified Illnesses
(u/s 80DDB)
Interest on Education Loan (u/s 80E)
Donations (u/s 80G)
Rent paid (u/s 80GG)17.02.2012 CA Mayur Makadia 42
PAYMENTS BASED DEDUCTION
-
8/2/2019 Tax Saving Devices Final
43/75
PAYMENTS BASED DEDUCTIONMedical Insurance Premium
Eligible persons are individuals includingNRs & HUFs in respect of medical/healthinsurance premium paid for the following
persons: Self
Spouse
Parents Dependant Children
Any member of the family in case of HUF
.17.02.2012 CA Mayur Makadia 43
PAYMENTS BASED DEDUCTION
-
8/2/2019 Tax Saving Devices Final
44/75
PAYMENTS BASED DEDUCTIONMedical Insurance Premium
Premium needs to be paid by cheque.
Maximum limit is Rs 15,000 for non-sr.citizens & Rs 20,000 for sr. citizens.
The person paying the premium is entitledfor the deduction.
17.02.2012 CA Mayur Makadia 44
PAYMENTS BASED DEDUCTION
-
8/2/2019 Tax Saving Devices Final
45/75
PAYMENTS BASED DEDUCTIONMaintenance Expenses of Physically
Disabled Dependant Eligible persons are resident individuals & HUFs.
Eligible expenditure is as under: Medical Treatment of a dependant family member
with disability.
Disability may be:
Normal disability (less than 80% disabilty)
Severe disability (above 80%)
17.02.2012 CA Mayur Makadia 45
PAYMENTS BASED DEDUCTION
-
8/2/2019 Tax Saving Devices Final
46/75
PAYMENTS BASED DEDUCTIONMaintenance Expenses of Physically
Disabled Dependant Allowable deduction:
Normal disability Rs 50,000
Severe disability Rs. 1,00,000
This deduction will be available only on furnishingalong with the return of income a certificate issued
by the medical authority.
17.02.2012 CA Mayur Makadia 46
PAYMENTS BASED DEDUCTION
-
8/2/2019 Tax Saving Devices Final
47/75
PAYMENTS BASED DEDUCTIONMedical Expenses for specified Illnesses
Eligible persons are individuals & HUFs
Eligible expenditure is as under:
Expenditure actually incurred for medical treatment ofsuch disease or ailment as under:
Neurological diseases where the diseases level is certifiedand its 40% & above
Cancer
AIDS Chronic Renal Failure
Thalassaemia, etc
17.02.2012 CA Mayur Makadia 47
PAYMENTS BASED DEDUCTION
-
8/2/2019 Tax Saving Devices Final
48/75
PAYMENTS BASED DEDUCTIONMedical Expenses for specified Illnesses
Allowable deduction:
Non- Sr. Citizens Rs 40,000
Sr. Citizens Rs 60,000
This deduction will be available only on furnishingalong with the return of income a certificate issued
by the a neurologist, an oncologist, a urologist, ahematologist, an immunologist or such otherspecialist working in Government Hospital.
17.02.2012 CA Mayur Makadia 48
-
8/2/2019 Tax Saving Devices Final
49/75
PAYMENTS BASED DEDUCTION
Interest on Education Loan Eligible person is an individual. Eligible expenditure in respect of interest paid on
education loan are as under:
Loan taken for full-time studies of thefollowing persons:-
An individual himself
Spouse Children (for any graduate or post-graduate
course )
Loan taken from an approved financial
institution or charitable institution17.02.2012 CA Mayur Makadia 49
-
8/2/2019 Tax Saving Devices Final
50/75
PAYMENTS BASED DEDUCTION
Interest on Education Loan
The deduction is allowed in the initial
assessment year (i.e., the assessment yearrelevant to the previous year, in which theassessee starts paying the interest on loan) andseven assessment years immediately succeeding
the initial assessment year.
17.02.2012 CA Mayur Makadia 50
PAYMENTS BASED DEDUCTION
-
8/2/2019 Tax Saving Devices Final
51/75
PAYMENTS BASED DEDUCTIONDonations
Eligible persons are all tax payers. Eligible donations is as under:
Donations paid to certain funds, charitable
institutions etc. specified u/s 80G. Donations for the renovation or repair of any
temple, mosque, gurdwara, etc.
Donations by the company to the IndianOlympic Association or any other associationor institutions (established in India).
17.02.2012 CA Mayur Makadia 51
PAYMENTS BASED DEDUCTION
-
8/2/2019 Tax Saving Devices Final
52/75
PAYMENTS BASED DEDUCTIONDonations
Allowable deduction: Donations made to funds or institutions set up by
Central and State governments of India for the
welfare of the public, qualify for 100% deduction.
Donations made to other funds and institutions
qualify for only 50% deduction.
17.02.2012 CA Mayur Makadia 52
-
8/2/2019 Tax Saving Devices Final
53/75
PAYMENTS BASED DEDUCTIONRent Paid
Eligible persons are individuals (whethersalaried or otherwise, who do not receive
house rent allowance may claim deductionunder this section.
Eligible Expenditure is as under:
Rent paid for own residential accommodation,whether furnished or unfurnished.
17.02.2012 CA Mayur Makadia 53
-
8/2/2019 Tax Saving Devices Final
54/75
PAYMENTS BASED DEDUCTIONRent Paid
Individual should file a declaration in Form No.
10BA along with return of income.
Allowable Deduction: the least of the following three:
Rs. 2,000 per month; or
25% of the total income (after allowing all deductions
except under this section); or
the excess of actual rent paid over 10% of the total
income.
17.02.2012 CA Mayur Makadia 54
-
8/2/2019 Tax Saving Devices Final
55/75
INCOME BASED DEDUCTION
Royalty Income of Authors fromauthoring of any book of literary, artistic
or scientific nature upto a maximum ofRs. 3,00,000. (u/s 80QQB)
17.02.2012 CA Mayur Makadia 55
-
8/2/2019 Tax Saving Devices Final
56/75
OTHER DEDUCTION FOR
PHYSICAL HANDICAP Eligible person is resident Indian who is
physically handicapped or disabled.
Disabilities include Blindness, Low vision,Leprosy, Hearing impairment, Locomotors
disability, Mental retardation, Mentalillness, autism, cerebral palsy etc.
17.02.2012 CA Mayur Makadia 56
-
8/2/2019 Tax Saving Devices Final
57/75
OTHER DEDUCTION FOR
PHYSICAL HANDICAP Allowable deduction:
Normal disability (less than 80% disability)
Rs 50,000
Severe disability (more than 80%) Rs. 1,00,000
This deduction will be available only on
furnishing along with the return of income acertificate issued by the medical authority.
17.02.2012 CA Mayur Makadia 57
-
8/2/2019 Tax Saving Devices Final
58/75
Tax Saving Devices Salary Income
Not Much scope for tax planning forsalaried people as most of the allowances
/ reimbursements are now considered asperqs. and taxable.
There are a few exemptions in respect ofcertain allowances received as part ofsalary
17.02.2012 CA Mayur Makadia 58
-
8/2/2019 Tax Saving Devices Final
59/75
Tax Saving Devices Salary Income
Exempt Allowances are as under:
House Rent Allowance:
Actual HRA Received Rent Paid Minus 10% of the salary
50 % of the salary (if house situated in Mumbai,Delhi, Kolkata or Chennai) otherwise 40% of the
salary
Lowest of the 3 amounts is exempt.
17.02.2012 CA Mayur Makadia 59
-
8/2/2019 Tax Saving Devices Final
60/75
Tax Saving Devices Salary Income
Leave Travel Concession
Assistance granted by an employer to employeeand his family for journey to any place in India
If Journey performed by Air Economy classairfare
If Journey performed by Train A/C First ClassFare
If journey performed by Road First class Fare
17.02.2012 CA Mayur Makadia 60
-
8/2/2019 Tax Saving Devices Final
61/75
Tax Saving Devices Salary Income
The expenditure incurred on self and familyincluding parents, brothers and sisters dependenton the employee allowed.
Exemption available twice in a block of 4 years.
Only fare expenses are allowed as exemption andno lodging / boarding expenses etc. are allowed.
17.02.2012 CA Mayur Makadia 61
-
8/2/2019 Tax Saving Devices Final
62/75
Tax Saving Devices Salary Income
Childrens Education Allowance Rs. 100/-per month per child for maximum 2 children
Childrens Hostel Allowance Rs. 300/- permonth per child for maximum 2 children
Conveyance Allowance Rs. 800 per month(Rs. 1,600/- pm for handicapped people).
17.02.2012 CA Mayur Makadia 62
T S i D i H P t
-
8/2/2019 Tax Saving Devices Final
63/75
Tax Saving Devices House PropertyIncome
Deduction in respect of Interest Paid oncapital borrowed for acquiring / constructing
a house property allowed as deduction.
Interest for the period prior to acquisition /
construction allowed in 5 equal annualinstallments from date of acquisition /construction.
17.02.2012 CA Mayur Makadia 63
T S i D i H P t
-
8/2/2019 Tax Saving Devices Final
64/75
Tax Saving Devices House PropertyIncome
Quantum of Deduction
Where the property is let out actual interest
paid during the year. Where the property is self occupied actual
interest paid or Rs. 1,50,000/- whichever islow.
17.02.2012 CA Mayur Makadia 64
-
8/2/2019 Tax Saving Devices Final
65/75
17.02.2012 CA Mayur Makadia 65
Tax Saving Devices For Capital Gains
Investment in House Property (Sec 54 &Sec 54 F).
Investment in Bonds (Sec 54EC)
Tax Saving Devices For Capital Gains
-
8/2/2019 Tax Saving Devices Final
66/75
17.02.2012 CA Mayur Makadia 66
Tax Saving Devices For Capital GainsInvestment in House Property (Sec 54)
When Eligible Deduction available on Long Term Capital GainsArising on sale ofResidential House Property.
What is required to be done Invest the Capital Gains in Purchase of a
Residential House. Invest the Capital Gains in the construction of a
Residential House.
Tax Saving Devices For Capital Gains
-
8/2/2019 Tax Saving Devices Final
67/75
17.02.2012 CA Mayur Makadia 67
Tax Saving Devices For Capital GainsInvestment in House Property (Sec 54)
What is the Time Frame
The New Residential House should bepurchased within a period of 1 year before
the sale or within 2 years from the date ofsale of the old house.
In case of construction, the construction
should be complete within 3 years from thedate of sale.
Tax Saving Devices For Capital Gains
-
8/2/2019 Tax Saving Devices Final
68/75
17.02.2012 CA Mayur Makadia 68
Tax Saving Devices For Capital GainsInvestment in House Property (Sec 54)
What is the amount of deduction The Amount of Capital Gains or The cost of new property
whichever is lower.
What are the Other Conditions The new property must be held for at least 3 years
after purchase / construction. If transferred, before 3 years the cost to be reduced by the
gains exempted earlier resulting in a higher capital gain on
sale of new property. If the entire amount cannot be utilised for investment
in new property before the due date of ITR filing,unutilised amount to be deposited in special accountwith a nationalised bank.
Tax Saving Devices For Capital Gains
-
8/2/2019 Tax Saving Devices Final
69/75
17.02.2012 CA Mayur Makadia 69
Tax Saving Devices For Capital GainsInvestment in House Property (Sec 54F)
When Eligible Deduction available on Long Term Capital Gains Arising on sale ofany Asset (other than residetialhouse).
What is required to be done Invest the Sale Proceeds in Purchase of a
Residential House. Invest the Sale Proceeds in the construction of a
Residential House.
Tax Saving Devices For Capital Gains
-
8/2/2019 Tax Saving Devices Final
70/75
17.02.2012 CA Mayur Makadia 70
Tax Saving Devices For Capital GainsInvestment in House Property (Sec 54F)
What is the Time Frame
The New Residential House should bepurchased within a period of 1 year before
the sale or within 2 years from the date ofsale of asset.
In case of construction, the construction
should be complete within 3 years from thedate of sale.
Tax Saving Devices For Capital Gains
-
8/2/2019 Tax Saving Devices Final
71/75
17.02.2012 CA Mayur Makadia 71
a Sa g e ces o Cap ta Ga sInvestment in House Property (Sec 54F)
What is the amount of deduction If sale proceeds are less than the Cost of new
house, the entire capital gain If sale proceeds are more than the Cost of new
house, then proportionate capital gain
What are the Other Conditions The new property must be held for at least 3 years
after purchase / construction.
If transferred, before 3 years the Capital Gains exemptedearlier shall be taxable as LTCG in the year of transfer.
Tax Saving Devices For Capital Gains
-
8/2/2019 Tax Saving Devices Final
72/75
17.02.2012 CA Mayur Makadia 72
g pInvestment in House Property (Sec 54F)
No other property can be acquired / constructedwithin a period of 2 / 3 years.
Deduction available only if the assessee does not ownmore than 1 residential property (other than new
property) on date of sale.
If the entire amount cannot be utilised for investmentin new property before the due date of ITR filing,unutilized amount to be deposited in special account
with a nationalized bank
Tax Saving Devices For Capital Gains
-
8/2/2019 Tax Saving Devices Final
73/75
17.02.2012 CA Mayur Makadia 73
g pInvestment in House Property (Sec 54EC)
When Eligible Deduction available on Long Term Capital Gains Arising on sale ofany Asset (including residetialhouse).
What is required to be done
Invest the Capital Gains in Purchase of Bonds ofNHAI / REC.
Tax Saving Devices For Capital Gains
-
8/2/2019 Tax Saving Devices Final
74/75
17.02.2012 CA Mayur Makadia 74
g pInvestment in House Property (Sec 54EC)
What is the Time Frame The Investment in Bonds should be made
within a period of 6 months from the date ofsale of the asset.
What is the amount of deduction The Amount of Capital Gains or The cost of new property
whichever is lower.The maximum amount that can be invested insuch bonds is Rs. 50 Lakhs in one FY
Tax Saving Devices For Capital Gains
-
8/2/2019 Tax Saving Devices Final
75/75
g pInvestment in House Property (Sec 54EC)
What are the Other Conditions The bonds must be held for at least 3 years.
If transferred or any loan taken against such bonds,before 3 years the Capital Gains exempted earlier shall be
taxable as LTCG in the year of transfer etc.