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Rules of investments

Thumb Rule of Investing that every investor should consider before starting their investment journey

In this article, we will discuss the Thumb Rule of Investing. Thumb Rules of Investing     In terms of investing, there are certain thumb rules that help us ascertain how fast our money grows or how fast it loses its value. Then, there are rules to make our investment process easier. Like how should we do our asset allocation, how much to save for retirement & for emergencies etc. Various points to be considered before starting investing are:   1 . The Emergency Fund Rule    As the name suggests, the money kept aside for emergency use is called an emergency fund. It is a good practice to keep at least 6 months to 1 year’s expenses as an emergency fund. While calculating your expenses you should include expenses for food, utility bills, rent, EMIs etc. & instead of keeping it idle in savings bank accounts invest these funds in liquid funds or in FD. These funds provide a little more returns than savings bank accounts. At the same time, like saving banks accounts, liquid funds & FD are highly liquid, i.e. the money is available in very short notice.   2. 100 minus age rule   The 100 minus age rule is a great way to determine one’s asset allocation i.e., how much you should allocate in equities investment & how much in debt investment. For this, subtract your age from 100, and the number that you arrive at is the percentage at which you should invest in equities. The rest should be invested in debt. For example, if you are 30 years old and you want to invest Rs 8,000 every month. Here if you use the 100 minus age rule, the percentage of your equity allocation would be 100 – 30 = 70%.  So Rs 5,600 should go to equities and Rs 2,400 in debt. Similarly, if you are 20 years old and want to invest Rs 8,000 every month, then according to the 100 minus age rule the equity allocation would be 100 – 20 = 80%. i.e., Rs 6,400 should go in equities and Rs 1,600 in debt. 3. The 10,5,3 Rule   When you invest or even think of investing money, the first thing that you usually look for is the rate of returns that you will get from your investments. The 10,5,3 rule helps you to determine the average rate of return on your investment. Though there are no guaranteed returns for investments, but as per this rule, one should expect 10% returns from long term equity investment, 5% returns from debt instruments & 3% average rate of return that one usually gets from savings bank accounts.   4. Not considering the impact of inflation on returns   One of the common mistakes that most investors tend to make is to ignore the effect of inflation on returns. We all know that the value of the rupee is not the same as what it was 10 years ago. It’s worth was way more than what it is today. And after a few years, it will decrease even further. It’s almost inevitable. In other words, inflation bites into the value of the rupee and decreases its purchasing power. So, while making any investment, your main aim should be to fetch returns that beat inflation.   5. 10% for Retirement Rule   When you start earning in your early or mid twenties, saving for retirement is the last thing in your mind. But starting to save from your first salary, no matter how little the amount is, you will be able to create a huge corpus for retirement. Ideally it should be 10% of your current salary which you should increase by another 10% every year. For example, If you are 25-year-old & earn Rs 30,000 a month. You have decided to invest 10% of your salary, i.e. Rs 3000, every month & increase it by another 10% every year. The retirement corpus you will be able create by investing in an instrument that provides 10% returns will be approx. to Rs 3.3 crores. A great way to build your retirement corpus is by investing in NPS following the 10% rule. Current Age 25 Investment amount every month Rs 3,000 % of increase in investment amount every month 10% Average rate of return 10% Retirement age 60 Tenure of investment 35 Total retirement corpus Rs 3.3 Crores approx. 6. Rule of 72   We all want our money to double & look for the ways it can be done in the shortest amount of time. Well, calculating the number of years in which your money doubles is very easy with the Rule of 72. Take the number 72 & divide it with the rate of return of the investment product. The number at which you will arrive is the number of years in which your money will double. For example, If you have invested Rs 1 lakh in an investment product that provides you a rate of return of 6%. Now, if you divide the number 72 with 6, you arrive at 12. That means, your Rs 1 lakh will become Rs 2 lakh in 12 years.   7. Rule of 114   Like the ‘rule of 72’ tells you in how many years your money can be doubled, this rule tells you how many years it will take to triple your money. Rule of 114 is similar to Rule of 72. For this, take the number 114 and divide it with the rate of return of the investment product. The remainder is the number of years when your investment will triple. So, if you invest Rs 1 lakh in a product that gives you an interest rate of 6%, then as per the rule of 114, it will become Rs 3 lakh in 19 years.   8. Rule of 144   Two multiplied by 72 is 144. Hence, you can simply understand that ‘rule of 144’ helps you calculate in how many years

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Updated return

Section 139(8A) – Updated Return – Conditions, Time Limit, Tax Liability & Eligible Assessee

In this article, we will discuss about Section 139(8A) – Updated Return in detail. Updated Return – Section 139(8A)    A new provision under section 139(8A) of the Act for furnishing the updated income tax return of income by any individual whether he has furnished a return formerly for the related assessment year or not. Finance Bill, 2022 has inserted a new section, Section 139(8A) in Income Tax Act. This new section provides for facilitating filing of ‘Updated Return’ by the taxpayers. This section has effect from 1st April 2022.   Conditions that need to be fulfilled    A taxpayer can file an updated return within 2 years from the end of the relevant Assessment Year. Thus, a taxpayer can now file an updated return for the period from AY 2020-21 (i.e. FY 2019-20). Updated return can be filed irrespective of the fact that whether the original return was filed by the taxpayer or not. However, to file an updated return, the taxpayer has to fulfil the below-mentioned conditions: a.     Updated return can be filed only if the taxpayer has to disclose any additional income, which was missed/omitted earlier & pay the additional tax thereon on such missed/omitted additional income. b.      Updated return cannot be filed to reduce any income and report loss or increase the loss thereby resulting in reduction of tax liability or increase in tax refund. c.      The option of updated return can be opted only once for one assessment year. d.      If an assessee opts for filing return of income under Section 139(8A) then, they are required to pay additional tax as per Section 140B which ranges from 25% to 50% in the following manner) If  the return of income is filed within 12 months from the end of relevant assessment year, then        additional tax shall be equal to 25% of aggregate of tax and interest payable. (i.e if the return of          income is filed on or before 31.03.2024 for assessment year 2022 – 23). If the return of income is filed after 12 months but before 24 months from the end of relevant assessment year, then additional tax shall be equal to 50% of aggregate of tax and interest payable. (i.e if the return of income is filed on or before 31.03.2025 for assessment year 2022 – 23). Interest under Section 234 A/B/C shall be calculated till the actual date of filing of return of income. Surcharge, Health and Education Cess, Fees & Interest are included while calculating additional tax to be paid under Section 140B of the Income Tax Act. e.      While filing an updated return, the proof of payment of additional income tax & interest thereon shall have to be submitted by the taxpayer. f.      A taxpayer cannot file an updated return in case of search & seizure or case where any prosecution proceedings have been initiated against the taxpayer.   Applicability   This section is applicable to all the assesses. However, there are some cases mentioned in the proviso where the updated return cannot be filed. If not satisfied, such assessee are not eligible for filing the updated return. Following are the exceptions (return cannot be filed): i.        Updated return is being filed for a return of loss or has the effect of decreasing the total tax liability determined on the basis of return furnished u/s 139(1), (4) or (5). ii.      Updated return results in refund or increases the refund due on the basis of return furnished u/s 139(1), (4) or (5). The only benefit to the assessee is to voluntarily disclose the error or omission and save themselves from the future litigation. iii.     Assessee cannot file updated return if a search has been initiated under section 132 or books of account or other documents or any assets are requisitioned under Section 132A in the case of such person; or a survey has been conducted under Section 133A. iv.     Any proceeding for assessment or reassessment or revision of income under this Act is pending or has been completed for the relevant assessment year in case of an assessee. v.      AO has information in respect of such person for the relevant assessment year in his possession under Smugglers and Foreign Exchange Manipulators (Forfeiture of Property) Act, 1976 or Prohibition of Benami Property Transactions Act, 1988 or Prevention of Money-laundering Act, 2002 or Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015 or information for the relevant assessment year has been received under an agreement referred to in section 90 or section 90A in respect of such person and the same has been communicated to him, prior to the date of furnishing of return under this sub-section; or any prosecution proceedings under the Chapter XXII have been initiated for the relevant assessment year in respect of such person, prior to the date of furnishing of return under this sub-section.   Time limit to file an Updated Return   The updated return can be filed within period of 24 months from the end of the relevant assessment year. For example, the updated return pertaining to FY 2019-20 can filed latest by 31st March, 2023, for FY 20-21 can filed latest by 31st March, 2024 & for FY 2021-22 can filed latest by 31st March, 2025.   Can an Updated return be revised?   If assessee files his return of income under Section 139(8A) for AY 2021 – 22 by 31st March 2023 paying the additional tax of 25% as prescribed under the relevant provisions of the Act and later on, a mistake was noted in the return of income filed under Section 139(8A), can assessee file his return of income under Section 139(8A) again to rectify a mistake which has effect of increasing the tax liability – No, Section 139(8A) states that where an updated return has already been furnished by him an assessee cannot

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Presumptive Taxation

Presumptive Taxation Scheme under sections 44AD, 44ADA & 44AE

In this article, we will discuss about presumptive taxation scheme under sections 44AD, 44ADA & 44AE of the Income Tax Act,1961 What is Presumptive Taxation Scheme?   As per the Income Tax Act, 1961 a person engaged in business or profession is required to maintain regular books of account & also he has to get his accounts audited. To give relief to small taxpayers from this tedious work, the Income-tax Act has provided the presumptive taxation scheme under sections 44AD, 44ADA & 44AE. A person adopting the presumptive taxation scheme can declare income at a prescribed rate & is not required to maintenance his books of account & to get its accounts audited. Section 44AD: For Small Businesses. Section 44ADA: For professionals. Section 44AE: For GTA Businesses Presumptive Taxation Scheme under sections 44AD Applicability i.     It is designed to give relief to small taxpayers engaged in any business (except the business of plying, hiring or leasing of goods carriages referred to in section 44AE) ii.    Presumptive taxation scheme under section 44AD can be adopted by following persons: a) Resident Individual b) Resident Hindu Undivided Family (HUF) c) Resident Partnership Firm (not Limited Liability Partnership Firm) iii.    In other words, the scheme cannot be adopted by a non-resident & by any person other than an individual, a HUF or a partnership firm (not Limited Liability Partnership Firm. iv.    This scheme cannot be adopted by a person who has made any claim for deductions under section 10A/10AA/10B/10BA or under sections 80HH to 80RRB in the relevant financial year Not Applicable to   i.     Business of plying, hiring or leasing of goods carriages referred to in section 44AE2.A person who is carrying on any agency business. ii.    A person who is earning income in the nature of commission or brokerage iii.   A person carrying on profession referred to in section 44AA (1) is not eligible for presumptive taxation scheme iv.   An insurance agent cannot adopt the presumptive taxation scheme. Insurance agents earn income by way of commission & hence, they cannot adopt the presumptive taxation scheme of section 44AD v.    A person whose total turnover or gross receipts for the year exceed Rs. 2 crores cannot adopt the presumptive taxation scheme. It can be opted by the eligible persons, if the total turnover or gross receipts from the business do not exceed Rs. 2 crores. Manner of computation   (i) In case of a eligible person adopting the provisions of section 44AD, income is computed on presumptive basis at the rate of 8% of the turnover or gross receipts of the eligible business for the year. (ii) In order to promote digital transactions and to encourage small unorganized business to accept digital payments, section 44AD is amended with effect from the assessment year 2017-18 to provide that income shall be computed at the rate of 6% instead of 8% if turnover/gross receipt is received by an account payee cheque or an account payee bank draft or use of electronic clearing system through a bank account or through such other electronic mode as may be prescribed during the previous year or before the due date of filing of return under section 139(1) (iii)  However, a person may voluntarily disclose his business income at more than 8% (in case of cash transitions) or 6% (other than cash), as the case may be, of turnover or gross receipt. (iv)   Presumptive income computed as per the prescribed rate is the final income and no further expenses will be allowed or disallowed. i.e. In case of a person who is opting for the presumptive taxation scheme of section 44AD, the provisions of allowance/disallowances as provided for under the Income-tax Act will not apply and income computed at the presumptive rate of 6% or 8% will be the final taxable income of the business covered under the presumptive taxation scheme. Separate deduction on account of depreciation is also not available. (v)    No need to maintain books of account as prescribed under section 44AA   Payment of Advance tax   In respect of income from business covered under section 44AD: a.   Any person opting for presumptive taxation scheme is liable to pay whole amount of advance tax on or before 15thMarch of the previous year. b.   If he fails to pay the advance tax by 15th March of previous year, he shall be liable to pay interest as per section 234C.Note: Any amount paid by way of advance tax on or before 31st day of March shall also be treated as advance tax paid during the financial year ending on that day.   Provisions applied if a person declares income at a lower rate, i.e., at less than 6% or 8%.  A person can declare income at lower rate (i.e., at less than 6% or 8%), if he does so, & his income exceeds the maximum amount which is not chargeable to tax, then: He is required to maintain the books of account as per the provisions of section 44AA and has to get his accounts audited as per section 44AB. Consequences if a person opts out from the presumptive taxation scheme of section 44AD   1   If a person opts for presumptive taxation scheme, then he is also requiring to follow the same scheme for next 5 years. 2.  If he failed to do so, then presumptive taxation scheme will not be available for him for next 5 years. For example – An assessee opts presumptive taxation scheme under Section 44AD for AY 2021-22. However, for AY 2022-23, if he did not opt for presumptive taxation Scheme. In this case, he will not be eligible to claim benefit of presumptive taxation scheme for next five AYs, i.e. from AY 2023-24 to 2027-28. 3.   Further, he is required to keep and maintain books of account and he is also liable for tax audit as per section 44AB from the AY in which he opts out from the presumptive taxation scheme. [If

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TDS – Quick and Complete Summary [Part-II]

In the last part of this summary, we have learned about the basic meaning of TDS, some concepts which were very useful and commonly applied on all sections, and the various sections under which the TDS is being deducted. Now, In the Part-II, we will get the details about the procedural parts regarding compliance of TDS. So, let’s proceed with that: 1. What is the Time Limit for Payment of deducted Tax? TDS needs to be deposited on or before the 7th day of Next Month in which such tax is deducted. For the month of March, the last date for depositing TDS is 30th April. [However, In case of Govt. Employer when TDS is deposited without Challan (i.e. through Book entry) then TDS deposit date shall be the Same Day.] 2. What is the Due Date for Quarterly Return of TDS? (i) For First Quarter (i.e. Qtr ending on 30June)       —              —               —  31st July (ii) For Second Quarter (i.e. Qtr ending on 30 Sep)   —              —               —  31st Oct (iii) For Third Quarter (i.e. Qtr ending on 31 Dec)     —              —                —  31st Jan (iv) For Fourth Quarter (i.e. Qtr ending on 31 Mar)   —              —                —  31st May 3. What is the TDS Certificate? TDS certificate is the statement issued by Deductor to the Effect that tax has been deducted and specifying the amount, Section, Rates etc under which it has been deducted. In common parlance, it is widely known as Form-16 (in case of Salary) and Form-16A (in other cases). 4. What is the Time Limit for the issue of TDS Certificate? In Case of Form-16: It is issued Annually and the due date for issue of Form 16 is 31st May of the following year from the year in which Tax has been deducted. In Case of Form-16A: It is to be issued Quarterly and the due date for issue of Form-16A; 15 days from the due date of Furnishing Return (i.e. which comes as 15Aug, 15Nov, 15Feb, 15June) [Imp. Note- If TDS Certificate is not issued within the said time limit then there is a penalty of Rs. 100/- per day per certificate up to which the failure continues subject to max. of TDS amount.] 5. What is the Lower Deduction Certificate? It is a certificate issued by the Assessing Officer (AO) u/s 197 on request of Assessee; if AO is satisfied that on the income of Assessee which is liable for tax deduction under TDS is such that deduction should be made on lower rates, then AO may issue a Certificate in this regard i.e. called Certificate of Lower Deduction. [Note- Certificate of Lower Deduction cannot be issued for TDS to be deducted u/s 194-IA] 6. What is Form 15G & 15H? It is a Self Declaration given by Assessee to the Payer (Deductor) that his/her tax on total income including the income on which TDS is to be deducted shall be Nil. On receipt of such form the Deductor submit this form to the Income-tax department and did not deduct any amount as TDS. Form 15G is for any assessee (excluding Firm & Company) while Form 15H is for Resident Individual who is Senior Citizen. Form 15G & Form 15H can be given only when there is a liability for TDS under 5 Section only i.e. 192A (RPF), 193 (Int. on Securities), 194A (Other Interest), 194DA (Insurance Amount), 194-I (Rent). It cannot be submitted against any other Section Liability. [Note- If any of Such Income received by any person (who is eligible for 15G) is exceeding the exemption limit then 15G can’t be submitted.] 6. What if there is no PAN detail of Payee? (i) In case the Payee (Deductee) has not provided the PAN then the TDS shall be deducted at the Rates HIGHEST from the following: – Rate given in relevant TDS Sections – At the Rates in Force (i.e. given in Finance Act) – 20% [Note:- But if the amount received itself is within the threshold limit of TDS then NO question of Deduction at higher rates.] (ii) If PAN is not given then there would not be provided any Lower tax deduction certificate. Also, any request submitted in Form 15G or 15H shall be taken as Invalid. 7. What are the consequences of Failure to Deduct or Pay TDS? If any such person who is liable to deduct TDS; – Does not deduct whole or any part of TDS; OR – Has deducted but not deposited whole or any part of TDS; Then Such person would be considered as Assessee-in-Default for tax not so deducted or deposited and therefore shall be liable for the Interest u/s 220 and Penalty u/s 221 for being Assessee in Default. V. Important Note: – If Deductor has not deducted the TDS and paid the whole amount to the Deductee (Payee); & – Deductee (resident only) has himself/herself declare this amount in his return and paid the tax thereon; then the Deductor shall not be considered as Assessee-in-Default. But still, he will be liable for the Interest on Late Deduction of TDS. 8. What are the consequences of Late Deduction/Payment of TDS? If any person is liable for deduction of TDS does not Deduct TDS within time OR after deduction does not Pay within Time then s/he shall be liable to simple interest as follows: Late Deduction: 1% Per Month or part thereof [From When Deductible –to– When Deducted] Late Payment: 1.5% Per Month or Part thereof [From Deducted –to– Actual Payment] And such interest shall be paid before filing of Return of TDS. 9. Default in Furnishing Quarterly Return of TDS? When a Person fails to Deliver the Quarterly

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All About HUF – A Clear Approach

I believe you must have heard of Hindu Undivided Family (HUF). Most of the people think that this is a person which are created by some kind of Agreements etc. Well, if you are also one of them then it’s time to bust your myth about that. Because the fact is something far different from that. So, Let’s understand the concept in a bit detail: 1. What is HUF? A Hindu Undivided Family (HUF), as its name suggests is Joint Family which is taken as a separate entity from that of the Individual Members consisting in HUF. The Head of the Family (i.e. Father/ any elected person in case of the death of Father) is called Karta which operates the business of the HUF. 2. How HUF is created? HUF does not arise from a contract. But, it is a Creation of Law. After marriage as soon as a Child is Born, HUF comes into existence. Hindu, Buddhists, Jains, and Sikhs can form HUF. HUF usually has assets which come from a Gift, a will, or ancestral property, or property acquired from the sale of joint family property or property contributed to the common pool by members of HUF. 3. Which Individuals are part of HUF? HUF consist of Co-Parceners (who are Family Members) and the distant relatives i.e. called as Members of HUF. 4. Who are Co-Parceners and Members? Co-Parceners: Co-Parceners are the Family Members and it is consist of 4 levels of Lineal descendants including the first male ancestor. It is only a Co-Parcener who can demand the Partition of HUF. It will include the following: 1. Mr. X (Karta) 2. Son/ Daughter of Mr. X 3. Grandson/Granddaughter of Mr. X 4. Great Grandson/ Great Granddaughter of Mr. X [Note: HUF can’t be expanded over the above 4 lineal descendant lines]   Members of HUF: Any other distant Relatives who are not the Family Member (e.g. Brother-in-law, Sister-in-law etc.) would be deemed as the Member of HUF. Although they are Members of HUF, they are not the Co-Parceners. A member can not demand the Partition of HUF. [Imp. Note: Wife is not considered as the direct part of HUF i.e. Co-Parcener. She will be a Member in Husband’s family HUF. Although, She will be a Co-Parcener in her Father’s Property. ALL CO-PARCENERS ARE MEMBERS, BUT ALL MEMBERS ARE NOT CO-PARCENER.] 5. Partition of HUF? Under Hindu Law, Partition of HUF can be of 2 types: Total Partition & Partial Partition;   Total Partition: It is a type of Partition in which entire family property is being divided among the Co-Parceners. After the total partition HUF ceases to Exist. Partial Partition: It is a type of Partition in which some of the willing co-parceners get out of the HUF and rest of them continue the HUF. The Partial Partition may be property specific also when some of the properties are divided among the co-parceners and balance continue to be the property of the HUF.   [Imp. Note: Under the Income tax Act, ONLY TOTAL PARTITION IS RECOGNISED, a partial partition is not considered as the partition.] 6. Assessment after Total Partition: When a claim of total partition has been made by any Co-Parcener on behalf of HUF, the Assessing Officer shall enquire about it. For this, he shall serve a notice to all the Co-Parceners of the HUF and enquire whether the total partition has taken place and if yes, then on which date it is affected. If the Partition of the has been affected in the previous year, the total income of the HUF of the previous year up to the date of partition shall be the Total Income of HUF. EVERY MEMBER SHALL BE JOINTLY AND SEVERALLY LIABLE for the tax on such assessed income of HUF. The Several liability of a Co-Parcener would be proportionate to the share of joint family property allotted to him on such partition. 7. Some Important Points: Is there any minimum no. of co-parceners required for an entity to be taxed as HUF? A HUF can be formed with just two members one of whom is a co-parcener. But for an entity to be taxed as a HUF, it should have at least two co-parceners. For example; When any HUF consist of only Husband and Wife, then there is only one co-parcener (because the wife is a member but not a co-parcener) and therefore, in such case income can’t be taxed in hands of HUF. It will be taxed in the hands of Individual Co-Parceners. Can HUF pay remuneration to Karta or Any Member of HUF? Yes. As per Supreme Court decision in Jugal Kishor Baldeo Sahai Vs. CIT, such remuneration would be deductible if it is paid: – Under a valid and Bonafide Agreement; and – In the interest of and expedient for the business of family; and – Reasonable and not Excessive. What is the position of a Married daughter? Unmarried daughters would always be a Co-Parcener and have the equal right over the property just like a Son. Although, the Status of Married Daughters would be as follows: – In Her Father’s Property: She will remain a Co-Parcener even after the marriage. – In her In-Laws House: She will always be a Member but Not the Co-Parcener. Although, Husband can give his co-parcenary right to her wife. Can HUF run a Sole Proprietorship Business? Since HUF is one person as per Income Tax Act, a Proprietor of a business can be an Individual or a HUF. A Proprietorship concern is not governed by any specific law as such, and therefore there is no bar on HUF becoming a Proprietor of any concern. In case of any Ideas, Suggestions or Any other information, please do comment below. You can subscribe for our blogs @taxeffects.com and providing us your email in the “Follow” section. You can also reach us at taxeffectsofficial@gmail.com. Share It . .

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Tax Deductions [Updated] : A Quick Summary

Every Person wants to SAVE TAXES..!! Isn’t it..?? But how could anyone do that?? How and where to Invest? What is the most tax-efficient investment? Pretty much Confused. Right..?? These are some of the very common questions which can easily be seen floating around. To achieve that purpose we need to understand the concept of TAX DEDUCTIONS. Tax Deductions are the reduction in your overall tax liability when you invest in some of the specified investments. So, today we are gonna have a quick summary of the entire deductions. So, Let’s understand them: * Deduction u/s 80C [Most Popular Deduction]   Eligible Assessee: Individual & HUF Deduction for: Various Type of INVESTMENTS. Some of the most common investments are as follows:- – Payments made Toward Life Insurance Premium (for Self, Spouse, and Children) – Payments made towards Provident Fund with a Lock in Period – 15 years – Equity Linked Saving Scheme (ELSS) with a min. lock-in period of 3 years – Tuition Fees paid maximum for Two Children. – Payment made towards the Principal amount of Housing Loan – Having a Fixed Deposit/Deposit in Post Office (Now IPPB) with a min. lock-in of 5 Years – Amount Deposited in Sukanya Samridhi Account – National Saving Certificate – Purchasing Bonds of NABARD. Max. Deduction: Rs. 1,50,000/-   * Deduction u/s 80CCC: Eligible Assessee: Individual Only. Deduction for: Premium Paid for Annuity Plan of LIC or Any other Insurer. Max. Deduction: Rs. 1,50,000 (combined with 80C)   * Deduction u/s 80CCD: There is a further classification of this particular Section. Section 80CCD(1) Eligible Assessee: Individual Only (whether Employed or Not). Deduction for: Payment towards the NPS Pension Account. Max. Deduction: 10% of Salary (Basic+DA only) /20% of GTI (in case of Self Employed) [but deduction allowed in combination with 80C] [Imp. Note- The AGGREGATE of Deductions u/s 80C, 80CCC, 80CCD(1) shall not exceed Rs. 1,50,000] Section 80CCD(1B) Eligible Assessee: Individual Only (whether Employed or Not). Deduction For: Payment toward the NPS Account made by the Employee/Self Employed person can be diverted to this section when 80CCD(1) limit has exhausted Max. Deduction: Rs. 50,000 – THIS IS AN ADDITIONAL DEDUCTION i.e. allowed without combining with 80C. Section 80CCD(2) Eligible Assessee: Individual Only (must be Employed) Deduction For: Employer contribution towards the NPS account of Employee. Max. Deduction: 10% of Salary (Basic+DA only) – THIS IS AN ADDITIONAL DEDUCTION  i.e. allowed without combining with 80C.   * Deduction u/s 80D: Eligible Assessee: Individual & HUF Deduction For: Amount paid for Medical Insurance Premium  / Medical Expenditure / Preventive Health Check. [Note: But if the Payment has been made ONLY FOR Preventive health checkup then the max. deduction allowed would be only Rs. 5,000]. Max. Deduction: Rs. 25,000 (For Self, Spouse, Children) + Rs. 25,000 (For Parents) [Note: If the Person toward whom the above payments are being made is SENIOR CITIZEN (60 years or more) then the limit of Rs. 25,000 would be increased to Rs. 30,000.  This limit has been further increased to Rs. 50,000 from Finance Act, 2018 i.e. Maximum Deduction under this Section can be availed from A.Y. 2019-20 would be Rs. 1,00,000.] * Deduction u/s 80DD: Eligible Assessee: Individual & HUF (Resident Only) Deduction For: Expenditure incurred on Medical treatment (including nursing), Training, or Rehabilitation of disabled (Divyang) DEPENDANT. Note-1: Dependant means Spouse, Children, Parents, Brother, and Sister/Any Member (in case of HUF). And to claim this deduction Certificate of Disability is Required from the Prescribed medical authority. Note-2: This Deduction is allowed when the payment is made for Dependant. If the Assessee himself is Divyang Person then he will be allowed deduction u/s 80U and not u/s 80DD. Max. Deduction: Fixed Deduction of Rs. 75,000 (if Disability is 40% or More) / Rs. 1,25,000 (If Disability is 80% or more) * Deduction u/s 80DDB: Eligible Assessee: Individual & HUF (Resident Only) Deduction For: Expenses incurred for the treatment of the specified diseases. Any reimbursement (if any) from Insurance Company shall be deducted and balance expense amount shall be allowed as deduction. Max. Deduction: Rs. 40,000 / Rs. 60,000 (for Senior Citizen ie. 60 yrs. or more) / Rs. 80,000 (For Very Senior Citizen i.e. 80 yrs. or more) [Important Note: From Finance Act, 2018 (i.e. From A.Y. 2019-20) the Deduction for Senior Citizen i.e. 60 years or more would be allowed up to Rs. 1,00,000. The category of Very Senior Citizen has been eliminited].  * Deduction u/s 80E: Eligible Assessee: Individual Only. Deduction For: Interest on Loan for Higher Education paid during the relevant previous year. Max. Deduction: 100% Interest amount [Note: The deduction of Interest would be available in max. 8 years starting with the year of payment] * Deduction u/s 80EE: Eligible Assessee: Individual only (and only when he is purchasing First home ever) Deduction For: Payment of Interest on Housing Loan which has been taken for the First Home Purchase. Max. Deduction: Rs. 50,000 But deduction would be allowed subject to the following conditions: – Value of Property to be purchased should be Max. 50 Lakhs. – Value of Loan taken should be Max. 35 Lakhs. – The Loan must have been taken between 01 April 2016 to 31st March 2017. * Deduction u/s 80G: Eligible Assessee: All Assessees Deduction For: Donation made towards Certain funds, Charitable Institution etc. Max. Deduction: 100% or 50% of donation made depending on the type of Donation. [Imp. Note- Donation made in cash above Rs. 2,000 shall not be allowed as deduction]  * Deduction u/s 80GG: Eligible Assessee: Individual only (whether Employed or Self Employed) Deduction For: Deduction in respect of Rents Paid. Max. Deduction: It shall be allowed LEAST of the following-                               – Rs. 5,000/- Per Month                               – 25% of Total Income                               – Rent Paid minus 10% of Total Income   [Note: Total Income shall be considered before deduction under this Section]   * Deduction U/s 80GGA: Eligible Assessee: All Assessee Deduction For: Certain Donation for Scientific Research or Rural

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