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A GENERAL CHECK  LIST FOR TAX DEDUCTION/REBATE

(F.Y. 2007-2008 )

 

 

COMPILED BY

NIHAR RANJAN BEURA

MANAGER (FINANCE)

CRL-BEL,BANGALORE.

 

 

1.      House Rent Allowance – u/s 10 (13A) :

(a)    Original rent receipts from the landlord to be kept.

(Note: Rent Receipts upto 3000/- not required vide  CBDT Circular No.9/2003 dated 18.11.2003)

(b) Employee who is residing in his own accommodation is not eligible for the deduction

(c) Relationship of the owner of  the employee should be taken note of.

 

(d) The amount of exemption will be restricted to least of the following:

 

·        The actual HRA received or

·        Excess of rent paid over 10% of salary (Basic+ DA)

·        50% of salary(Basic+ DA+ADA) if accommodation located at Calcutta, New Delhi, Mumbai & Chennai otherwise 40% of salary (Basic+DA)

 

 

 

 

2.      Children Education Allowance - u/s 10 (14) :

Education Allowance is exempted to the extent of Rs.100 per child per month upto a maximum of two children.

 

 

 

3.      Deductions from Gross Total Income :

·        Medical Insurance Premia (Section 80D) :

(a) The premium should be paid by cheque by the employee on his health or on the health of his spouse or dependent parents or dependent children.

(b) This insurance scheme should be approved by Insurance Regulatory and Development Authority

(c) Deduction is restricted to the actual insurance premium paid or Rs.10,000 to 15,000  whichever is lower.

(d) Where the premium is paid to effect or to keep in force insurance on the health of dependent parent who is a senior citizen, the deduction amount will be actual insurance premium paid or Rs. 15,000 to 20,000 whichever is lower.

(e)Original receipt regarding the payment should be verified and a copy of the receipt retained on record.

 

 

 

 

 

4.   Deduction (Section 80 C)

 

Gross qualifying amount under this section is the aggregate of the following:

 

·        Life Insurance Premium ( JEEVAN DHARA/JEEVAN AKSHAY) :

 

 

(a) The policy should be in the name of the employee, spouse, children or jointly.

(b) In case the amount of premium paid during the year on any insurance policy other than a contract for deferred annuity exceeds twenty percent of the actual capital sum assured, an amount of only twenty percent of the actual capital sum assured should be reckoned for the purpose of calculation of rebate.

(c) The actual capital sum assured will not include any premiums agreed to be returned and any benefit such as bonus etc received over and above the sum actually assured.

(d)Original payments receipts should be verified and a copy to be retained for records except in the case of salary saving scheme.

 

 

 

 

·        National Saving Certificate  :

 

 

 

(a)The certificate should be in the name of the employee or jointly with spouse or minor children.

(b)  Original certificates to be verified and copy to be retained for records.

 

 

(c)    Accrued interest on NSC VIII issue is also deemed as reinvestment in NSC. The factor to be applied per thousand is as under:

 

 

NSC's Purchased

From                                 To                                Factor

01-04-2001                       28-02-2002                 0.141

01-03-2002                       31-03-2002                 0.131

01-04-2002                       28-02-2003                 0.120

01-03-2003                       31-03-2003                 0.103

01-04-2003                       31-03-2004                 0.096

01-04-2004                       31-03-2005                 0.088

01-04-2005                       31-03-2006                  0.082

 

   

·        Public Provident Fund :

 

(a)    The account should be in the name of the employee or spouse or minor children.

 

    (b)  Original receipts/Pass book to be verified and a copy to be retained for records

 

Ø      .

 

·        Fixed Deposit/5-year Post office Time Deposit Account :    

 

 

(a) Fixed deposit should be with scheduled bank/Post Office & for the term of 5 years and above.

 

(b) The Fixed Deposit should be in the name of the employee in case of the single holder type term deposit.

(c)  In the case of joint holder type deposit, the deduction from income under section 80C of the Act shall be available only to the first holder of the deposit.

(d) Original FD receipt to be verified and a copy to be retained for records.

 

 

·        ULIP, 1971 of UTI/LIC Mutual Fund (Dhanaraksha) :

 

(a) The policy should be in the name of the employee, spouse, children or jointly.

 

(b)  Original receipts regarding premium paid to be verified and a copy retained for records. 

 

·        Equity Linked Savings Scheme :

 

(a) The investment should be only in the name of the employee.

(b) Original receipts for the payment made should be verified and a copy to be retained for records.

 

 

·        Principal Repayment of Housing Loan  for purchase/construction of Residential House :

 

(I) The following payments are eligible for the purpose of rebate :

 

(a) Repayment of amount borrowed by the employee from Central/any State Government/any Bank/co-operative bank/LIC/ NHB /institutions engaged in the business of providing long term finance /any public limited company/co-operative society engaged in the business of financing the construction of houses/the Employer.

(b) Stamp duty, registration fee and other expenses for the purpose of transfer of such house property to the employee.

(II) The payments made towards the following are not eligible for rebate:

(a) The admission fee, cost of share and initial deposit to become a shareholder or member of the society.

(b) Any expenditure in respect of which deduction is allowable u/s 24 of the Act ( i.e. interest on loan borrowed for the purchase or construction of house property ).

(c)The cost of addition or alteration to, or renovation or repair of, house property which is carried out after the issue of the completion certificate or after the house property or part thereof is occupied by the employee or any other person on his behalf.

 

 

(III)            The house has to be completed before 31st March of the respective financial year. The Copy of house completion certificate should be retained as proof. The same can be from Municipal Corporation or Architect or Society Share Certificate. If jointly owned, the first name of the property should be of the employee.

 

·        Tution fees

 

(a) Tution fees paid to school, college, university or other educational institutes situated in INDIA for full time education. This does not include donation / development fees or payment of similar nature such as bus fees, exam fees, library fees-deposit, private tution fees etc.

(b) Original tution fee receipts are required to be verified and copy to be retained for records

 

·        Infrastructure Bonds/Tax Savings Bond :

 

(a) Any amount invested in debentures of, and equity shares in, a public limited company engaged in developing, maintaining or operating infrastructure facility including power and telecom sector, approved by the Board

(b) Original receipts and allotment letter to be verified and a copy to be retained for records. The first name, if jointly owned, should be in the name of the employee only.

 

·        Senior Citizens Savings Scheme:

 

(a)Employee has crossed 55 years of Age.

(b)Savings should be in the name in the name of the employee, spouse  or jointly.

 

(c) ) Savings  should be with scheduled bank/Post Office & for the term of 5 years and above.

 

 

·        Deduction in respect of interest on repayment of loan taken for higher education (U/S 80 E)

(a) Loan taken from any financial institution or an approved charitable institution.

(b) Loan should be for pursuing higher education for SELF  ( full time studies for any graduate or post graduate course in engineering , medicine, management, science , mathematics & statistics ).

(c) Deduction starts from the year from which employee start paying interest.

(d) Tax benefit available for maximum of 8 years or till loan is fully repaid, whichever is earlier. Amount must be paid out of his income chargeable to tax.

(e) Certificate from financial institute or charitable trust, showing repayment of loan amount, principal amount & interest amount during the year.

           

 

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