TDS On Purchase Of Immovable Property Effective 1st June, 2013 - A Guide

Any person purchasing immovable property ( other than rural agricultural land) of Rs. 50 lac or more is required to deduct tax @1% from the payment made to seller. This new rule (Section 194IA of the Income Tax Act) introduced in the budget this year, is applicable from June1, 2013. 

Responsibility of the Purchaser of the Immovable Property:

Step-1  –   Deduct TDS 

(i) Deduct tax @1% from the payment made to the seller.

(ii)  Collect the permanent Account Number (PAN) of the seller and verify the same with the Original PAN card.

Step-2        Online filling of statement at www.tin.nsdl.com

(i) It is mandatory to furnish the PAN of seller as well as the purchaser while providing the information regarding the sale transaction in the online from (From No.26QB).

(ii) Please insure that there is no error in quoting the PAN or other details in filling online form 26QB.

Step-3         Depositing the tax deducted

(i)   Deposit the tax deducted through e-payment only, either at the time of filling of Form 26QB or subsequent to it, e-payment can be made using electronic payment facility at any authorized bank, including self net banking facility.

(ii)   In case, the payment of tax deducted is made subsequent to the filling of Form 26QB,pay tax using electronic payment facility at any authorised bank within 7 days after online filling of statement at www.tdscpc.gov.in

(iii)  If there is a delay beyond 7 days in payment of tax, the statement filed online would be treated as “Invalid”. In that case Form 26QB,will need to be filed again.

 Step-4           Issue of TDS Certificate

(i)  Download TDS certificate from TRACES(www.tdscpc.gov.in)

Responsibility of the Seller of the Immovable Property

(i) Provide your PAN to the Purchaser for furnishing information regarding TDS to  the Income Tax Department.

(ii) Verify deposit of taxes deducted by the Purchaser in your Form 26AS Annual Tax Statement.

TAN NOT REQUIRED (ONLY PAN NO TAN)

TAN of the deductor is not required for the payment and reporting of the Tax deducted under this section and PAN allocated to the deductor shall be used for  payment and reporting of TDS made under this section.

To whom and what does this apply to?   

• All persons buying immovable property from a resident Indian have to deduct the tax.
• This applies on purchase of all kinds of real estate such as Land, Building, Land along with Building/flat.
•  It applies to property bought in a resale and also on purchases from builders. The  only exception is if you are buying agricultural land.
• The seller needs to be a resident of India, and could be either individual, partnership, company or other person mentioned in tax laws.
• If you are buying immovable property from a non-resident seller, the tax deduction rules are different.
• Payment to non- resident sellers would continue to be governed under provisions of section 195 of the Income- tax 1961 as before. 
  

  When should the tax be deducted?      

• If you maintain books of accounts, the tax should be deducted at the time of paying the seller or crediting his account, whichever is earlier.
• If you do not maintain books of accounts (most individual buyers would come in this category) you need to deduct the tax at the time of paying the seller.
  

By when and how should the tax be deposited with the Government?       

The buyer needs to deposit the amount within seven days from the end of the month in which the tax is deducted.  So ,if you deducted tax in August 2013,you need to deposit it with the Government by  September 7.  The deposit needs to be done electronically using Form 26QB. This will have details such as name, address and permanent account number (PAN) of the buyer and seller. In case the seller does not furnish his PAN, tax will have to be deducted at 20 percent.

Does the buyer need to give any certificate to the seller?

Yes, the buyer has to give tax deducted at source (TDS) certificate to the seller within 15 days from the due date for depositing the tax deducted. So, if you deduct tax in August and deposit it by September 7,you need to issue the TDS certificate by September 22. This should be issued in Form 16B which can be downloaded electronically from the Web site of the income tax Department.

If a buyer pays for the property in installments, should he deduct tax with each  installment?

Yes. In such cases, tax has to be deducted at the time of payment of each installment.

An article by - CA ARPIT GUPTA 

Please comment in comment box so that further discussion can be continued with some new issues. 

Rule 6 of Service Tax Rule 1994, amended through Notification No. 16/2013

GOVERNMENT OF INDIA

MINISTRY OF FINANCE

(DEPARTMENT OF REVENUE)

Notification No 16 /2013-Service Tax

New Delhi, the  22nd November, 2013

   1 Agrahayana, 1935 Saka

           

G.S.R           (E).-In exercise of the powers conferred by sub-section (1) read with sub-section (2) of section 94 of the Finance Act, 1994 ( 32 of 1994), the Central Government hereby makes the following rules further to amend the Service Tax Rules, 1994,  namely:-

1.        (1) These rules may be called the Service Tax  Third ( Amendment) Rules, 2013.

           (2)  They shall come into force on the 1^st day of January, 2014.

2.      In the Service Tax Rules, 1994,  in rule 6,  in sub-rule (2),  in the proviso,  for the words “ rupees ten lakh” , the words   “ rupees one lakh”   shall be substituted.

F.No: 137/116/2012- Service Tax

(Rajeev Yadav)

Director

ANALYSIS:

The Threshold limit for mandatory e-payment of Service tax duty has been reduced to Rs. 1 lakh against Limit of Rs 10 Lacs previously. Hence where the assessee has paid service tax of Rs 1 Lac or more (via Cash / Cenvat / PLA), he is required to deposit in electronic mode only.

NOTE:

 Similar amendment has been carried out in Service Tax Also through Notification no. 15/2013

Rule 8 of Central Excise Rules 2002 amended

GOVERNMENT OF INDIA
MINISTRY OF FINANCE
DEPARTMENT OF REVENUE

Notification No. 15/2013 – Central Excise (N.T.)

New Delhi, the 22^nd November, 2013

01, Agrahayan 1935 Saka

G.S.R. (E). - In exercise of the powers conferred by section 37 of the Central Excise Act, 1944 (1 of 1944), the Central Government hereby makes the following rules to further amend the Central Excise Rules, 2002, namely:-

1. (1)   These rules may be called the Central Excise (Second Amendment) Rules, 2013.

    (2)   They shall come into force with effect from the 1st day of January, 2014.

2. In the Central Excise Rules, 2002, in rule 8, in sub-rule (1), in the third proviso, for the words  “rupees ten lakh”,  the words “rupees one lakh” shall be substituted.

F. No. 201/02/2013-CX.6

(Pankaj  Jain)
Under Secretary to the Government of India 

ANALYSIS:

The Threshold limit for mandatory e-payment of Central Excise duty has been reduced to Rs. 1 lakh against Limit of Rs 10 Lacs previously. Hence where the assessee has paid service tax / central Excise of Rs 1 Lac or more (via Cash / Cenvat / PLA), he is required to deposit in electronic mode only.

NOTE:

 Similar amendment has been carried out in service tax also through Notification No. 16/2013

Rule 8 9 & 10 of Central Excise Valuation Rules 2000 amended

Date:	25-11-2013
Notification No:	Central Excise Circular No. 975/09/2013-CX
Issuing Authority:	Central Excise
Type:	Circular
File No:	F. No. 6/12/2009-CX-1
Subject:	Regarding amendment of rule 8, 9 and 10 of the Central Excise Valuation (Determination of Price of Excisable Goods) Rules, 2000
Government of India Department of Revenue Central Board of Excise & Customs New Delhi ****** Circular No. 975/09/2013-CX New Delhi, the 25th November, 2013 To All Chief Commissioners of Central Excise & Customs, All Chief Commissioners of Central Excise, All Directors General, Sir/Madam, Subject – Amendment of rule 8, 9 and 10 of the Central Excise Valuation (Determination of Price of Excisable Goods) Rules, 2000 - reg . I am directed to invite your attention to amendments in rule 8, 9 and 10 of the Central Excise Valuation (Determination of Price of Excisable Goods) Rules, 2000. Under transaction value regime each transaction or removal is required to be assessed independently, as would be clear from the language of section 4 of the Central Excise Act, 1944. Section 4(1) of the Central Excise Act, 1944 reads as – Section 4 – Valuation of excisable goods for purposes of charging of duty of excise - (1) Where under this Act, the duty of excise is chargeable on any excisable goods with reference to their value, then, on each removal of the goods, such value shall – Rules 8, 9 and 10 of the Central Excise Valuation Rules, 2000 dealing with determination of assessable value in case of captive consumption and sale to related person have been amended vide notification no. 14/2013 – Central Excise (N.T.) dated 22.11.2013 to clearly state that these rules apply irrespective of whether the whole or a part of the clearances of manufactured goods are covered by the circumstances given in these rules. Each clearance is required to be assessed according to section 4(1)(a) or the relevant rule dealing with the circumstances of clearance of the goods, as the case may be. For example, if an assessee clears his goods in such a way that first removal of goods is to an independent buyers, some goods are captively consumed, second removal is to such a related person who is covered under rule 9 and third removal is to a person who is covered under rule 10, then the first removal should assessed under section 4(1)(a), captively consumed goods should be assessed under rule 8, second removal should be assessed under rule 9 and third removal should be assessed under rule 10 of these rules. It may be noted that Central Excise Valuation (Determination of Price of Excisable Goods) Rules, 2000 are not required to be followed sequentially. Each of these rules provide for arriving at the assessable value of goods under different contingencies as noted by Hon’ble Supreme Court at paragraph 70 in case of Commissioner of Central Excise, Mumbai vs M/s FIAT India Pvt Ltd [2012 (283) ELT 161 or 2012-TIOL-58-SC-CX]. Serial no. 5, 12 and 14 of the Circular no. 643/34/2002-CX dated 1-7-2002 are deleted in view of the amendments in the Central Excise Valuation (Determination of Price of Excisable Goods) Rules, 2000, as these amendments address the issues on which these clarifications were issued. The amended rules and accordingly this circular shall apply with effect from 1st December, 2013. Yours Faithfully, (Pankaj Jain), Under Secretary (CX-1) F. No. 6/12/2009-CX-1

A useful presentation in PPT on clubbing of Income under Income Tax Act 1961-
Download from the link given below and Please let me know if you have any query regarding this.
at 0860 466 48 20

http://www.scribd.com/doc/131832575/Clubbing-of-Income

Happy reading

Benefits available to defaulters under Service Tax by BUDGET 2013

NEW VOLUNTARY COMPLIANCE ENCOURAGEMENT SCHEME, 2013 (VCES) under Service Tax by BUDGET 2013

A new scheme is proposed to be introduced to encourage voluntary compliance main features:
The scheme can be availed of by non-filers or stop-filers or persons who have not made a truthful declaration in their return. 
but to promote voluntary compliance interest and penalties is exempted if they pay their dues truthfully by 30June/31Dec. 2014

Amendments in Budget 2013

Closer look of BUDGET 2013 

As many as 72 indirect tax clauses are sought to be amended this year, against 43 last year, a closer look at the Finance Bill 2013‐14 has revealed.
An analysis of Finance Bills tabled in Parliament in the last 10 years show Chidambaram has always been more aggressive on fine‐tuning indirect tax laws
On the direct tax front, however, only 53 clauses were amended, down from 113 last year, the highest ever in the UPA regime.

ADDED ADVANTAGES OF RAJIV GANDHI EQUITY SAVING SCHEME u/s 80CCG BY FINANCE ACT 2013

RAJIV GANDHI EQUITY SAVING SCHEME AMENDED BY FINANCE ACT 2013

Who are the Eligible Investor ?

- who opened a demat account as a ‘first holder’ after November 23, 2012.

- Opened a demat account prior to this date but never bought any shares or traded in the Futures and Options (F&O) segment.

- still qualifies if his name appeared second in a joint demat account before this date.

- Opened a demat a/c to invest in a Gold ETF too doesn’t disqualify him , Since the demat account has no equity security.

Comparative analysis of Changes with provisions introduced by Finance Budget 2013-14

Particulars	FY 2012-13	FY 2013-14
Section	80CCG
Maximum Eligible total Income	Rs 10 Lac	Rs. 12 Lac
Investment in	Listed Equity Shares	Listed Equity Shares / Units of Equity oriented fund*
Maximum amount can be Invest	Rs. 50000	Rs. 50000
Maximum Deduction	Rs. 25000	Rs. 25000
Duration of deduction	Only 1 FY	3 consecutive FY incl. current
Is this over & above the Section 80C limit?	Yes	Yes

 Extra Charges – Additional expenses incurred on the acquisition of eligible securities like brokerage, stamp duty, securities transaction tax (STT), service tax etc will not be considered.

Lock-in period

- Overall lock-in period of 3 years which is further divided.

• First year is the fixed lock-in period – During this time frame, the investor will not be permitted to sell, pledge or hypothecate any of the shares.
• Next two years are the flexible lock-in years – The investor can sell but will have to buy other eligible securities with the proceeds in the same financial year. This is to ensure adherence to a cumulative holding period of 270 days during each of the 2 years of flexible lock-in.

What can be bought?

- Stocks from the universe that comprise the BSE-100 or CNX-100,

- Shares of listed Navratna, Maharatna and Miniratna public sector enterprises – Click here to see which stocks fall into this category,

- Initial Public Offerings (IPOs) of PSUs with turnover more than Rs 4,000 crore and where the government shareholding pattern is at least 51%,

- Units of Exchange Traded Funds (ETFs) or mutual fund schemes investing in RGESS eligible shares provided these units are listed and traded on the stock exchange and settled through the depository mechanism.

As per regulations, the initial offering period of any mutual fund should not be more than 15 days. But schemes eligible under RGESS have it extended right up to 30 days.

Note :-

* As Per Section 10 (38)

“equity oriented fund” means a fund—

(i) where the investible funds are invested by way of equity shares in domestic companies to the extent of more than 91% of the total proceeds of such fund; and

(ii) which has been set up under a scheme of a Mutual Fund specified under clause 10(23D)

author can be reached at caarpitgupta11@gmail.com

BUDGET 2013 - EVADE TAXES, NOW BE READY TO GO TO JAIL

IMPORTANT PROPOSED CHANGES OF BUDGET 2013 - 

Now Failure to pay excise duty and service tax could lead to arrest of defaulters. 
Offences relating to excise and customs duty evasion of over Rs 50 lakh would be non‐bailable.
Similarly, failure to deposit service tax exceeding Rs 50 lakh would result in imprisonment up to seven years.

Major amendments for INDIRECT TAXES from BUDGET 2013

Major amendments for Indirect Tax from BUDGET 2013

Proposals under Indirect Tax - 

SERVICE TAX : - 

1.  No change in the normal rates of 12 percent for excise duty and service tax.

2.  Vocational courses offered by institutes affiliated to the State Council of Vocational Training and testing activities in relation to agricultural produce also included in the negative list for service tax.

3.  Exemption of Service Tax on copyright on cinematography limited to films exhibited in cinema halls.

4. Proposals to levy Service Tax on all air conditioned restaurant.

5.  For homes and flats with a carpet area of 2,000 sq.ft. or more or of a value of Rs. 1 crore or more, which are high-end constructions, where the component of services is

greater, rate of abatement reduced from from 75 to 70 percent.

6. A onetime scheme called ‘Voluntary Compliance Encouragement Scheme’ proposed to be introduced. Defaulter may avail of the scheme on condition that he files truthful declaration of Service Tax dues since 1st October 2007.

EXCISE DUTY : - 

1.  Relief to readymade garment industry. In case of cotton, zero excise duty at fibre stage also. In case of spun yarn made of man made fibre, duty of 12 percent at the fibre stage.

2.  Handmade carpets and textile floor coverings of coir and jute totally exempted

from excise duty.

3.  To provide relief to ship building industry, ships and vessels exempted from excise duty. No CVD on imported ships and vessels.

4.  Specific excise duty on cigarettes increased by about 18 %. Similar increase on cigars, cheroots and cigarillos.

5.  Excise duty on SUVs increased from 27 to 30 %. Not applicable for SUVs registered as taxies.

6.   Excise duty on marble increased from Rs. 30 per square meter to Rs. 60 per square meter.

7.   Proposals to levy 4 % excise duty on silver manufactured from smelting zinc or lead.

8.  Duty on mobile phones priced at more than Rs. 2000 raised to 6 %

9.   MRP based assessment in respect of branded medicaments of Ayurveda, Unani, Siddha, Homeopathy and bio-chemic systems of medicine to reduce valuation disputes.

CUSTOM DUTY : -

1.  No change in the peak rate of basic customs duty of 10 perent for non-agricultural products.

2. Period of concession available for specified part of electric and hybrid vehicles extended upto 31 March 2015.

3. Duty on specified machinery for manufacture of leather and leather goods including footwear reduced from 7.5 to 5 %

4.  Duty on pre-forms precious and semi-precious stones reduced from 10 to 2 perent.

5.  Export duty on de-oiled rice bran oil cake withdrawn.

6.  Duty of 10 percent on export of unprocessed ilmenite and 5 percent on export on ungraded ilmenite.

7.  Concessions to air craft maintenaince, repair and overhaul (MRO) industry.

8.  Duty on Set Top Boxes increased from 5 to10 percent.

9.  Duty on raw silk increased from 5 to 15 percent.

10.  Duties on Steam Coal and Bituminous Coal equalised and 2 percent custom duty and 2 % CVD levied on both kinds coal.

11.  Duty on imported luxury goods such as high end motor vehicles, motor cycles, yachts and similar vessels increased.

12.  Duty free gold limit increased to Rs. 50,000 in case of male passenger and Rs.1,00,000

in case of a female passenger subject to conditions.

Major amendments for Income Tax from BUDGET 2013

Main Features of budget 2013 - 

Proposals under Income tax 


1. Relief for Tax Payers in the first bracket of Rs. 2 lakhs to Rs. 5 lakhs. A tax credit of Rs. 2000 to every person with total income upto Rs. 5 lakhs.
2. Surcharge of 10 percent on persons (other than companies) whose taxable income exceed Rs. 1 crore
3. Increase surcharge from 5 to 10 percent on domestic companies whose taxable income exceed Rs. 10 crore.
4. In case of foreign companies who pay a higher rate of corporate tax, surcharge to increase from 2 to 5 percent, if the taxabale income exceeds Rs. 10 crore.
5. In all other cases such as dividend distribution tax or tax on distributed income, current surcharge increased from 5 to 10 percent.
6. Additional surcharges to be in force for only one year.
7.  Education cess to continue at 3 percent.
8. Permissible premium rate increased from 10 percent to 15 percent of the sum assured by relaxing eligibility conditions of life insurance policies for persons suffering from disability and certain ailments.
9. Contributions made to schemes of Central and State Governments similar to Central Government Health Scheme, eligible for section 80D of the Income tax Act.
10.  Donations made to National Children Fund eligible for 100 percent deduction.
12. Investment allowance at the rate of 15 percent to manufacturing companies that invest more than Rs.  100 crore in plant and machinery during the period 1.4.2013 to 31.3.2015.
13. ‘Eligible date’ for projects in the power sector to avail benefit under Section 80- IA extended from 31.3.2013 to 31.3.2014.
14. Concessional rate of tax of 15 percent on dividend received by an Indian company from its foreign subsidiary proposed to continue for one more year.
15. Securitisation Trust to be exempted from Income Tax. Tax to be levied at specified rates only at the time of distribution of income for companies, individual or HUF etc. No further tax on income received by investors from the Trust.
16.  Investor Protection Fund of depositories exempt from Income-tax in some cases.
17. Parity in taxation between IDF-Mutual Fund and IDF-NBFC.
18. A Category I AIF set up as Venture capital fund allowed pass through status under Income-tax Act.
19. TDS at the rate of 1 percent on the value of the transfer of immovable properties where consideration exceeds Rs. 50 lakhs. Agricultural land to be exempted.
20. A final withholding tax at the rate of 20 percent on profits distributed by unlisted companies to shareholders through buyback of shares.
21. Proposal to increase the rate of tax on payments by way of royalty and fees fortechnical services to non-residents from 10 percent to 25 percent.
22. Reductions made in rates of Securities Transaction Tax in respect of certain transaction.
23. Proposal to introduce Commodity Transaction Tax (CTT) in a limited way. Agricultural commodities will be exempted.
24. Modified provisions of GAAR will come into effect from 1.4.2016.
25. Rules on Safe Harbour will be issued after examing the reports of the Rangachary Committee appointed to look into tax matters relating to Development Centres & IT Sector and Safe Harbour rules for a number of sectors.
26. Fifth large tax payer unit to open at Kolkata shortly.
27. A number of administrative measures such as extension of refund banker system to refund more than Rs. 50,000, technology based processing, extension of e-payment through more banks and expansion in the scope of annual information returns by Income-tax Department.

Going to invest before 31st March - RAJIV GANDHI EQUITY SAVINGS SCHEME is good option

MAIN PROVISIONS OF RAJIV GANDHI EQUITY SAVINGS
SCHEME
 Finance Minister Mr. P Chidambaram has launched an
equity scheme called Rajiv Gandhi Equity Savings Scheme, or RGESS,
is an attempt to lure new investors to the stock market.
The main provisions of this scheme are as under:
1. The gross total income should be less than or equal to Rs. 10 lakhs.
2. Person has never invested in equities before through a Demat
account or in derivatives, then only he is eligible to invest in RGESS. It
means tax benefits are available to first-time investors in stock
market.
3. Any individual can invest up to Rs. 50000 in RGESS and can claim
the Deduction U/S 80CCG of 50% of investment amount.
4. There would be a lock-in period of three years, but Govt. has
allowed some flexibility to exit after a year of investment.
5. To be able to invest in RGESS, one need to open a Demat Account
and submit Form A, which is a declaration that an individual has never
invested in equities.
6. Individual can either buy shares of companies that are part of the
BSE 100 or National Stock Exchange (NSE) CNX 100 through a stock
broker or on your own. Or you can buy RGESS MF schemes.
7. Individual can buy Exchange Traded Funds or ETFs that are available
on the BSE or the NSE that track either the Sensex or Nifty indices.

If one has any problem regarding above or want any consultancy on above issue please feel free to contact me between 4.00PM to 6.00PM on working days

Income Tax Calculator

Calculate your Income Tax online for any Assessment Year up to A.Y. 2013-14 through following link -

http://law.incometaxindia.gov.in/DIT/Xtras/taxcalc.aspx

or

http://finotax.com/itax/itaxcalc1.htm

Get IFSC Code, MICR Code, BSR Code and Location of all bank in INDIA through using any of following links -

http://banksifsccode.com/

http://www.ifsccodeonline.com/

Rajiv Gandhi Equity Savings Scheme

Rajiv Gandhi Equity Savings Scheme (RGESS)

Rajiv Gandhi Equity Savings Scheme (RGESS) was announced by the then Finance Minister Pranab Mukherjee in his 2012-13 budget speech. The scheme is exclusively for the first time retail investors in securities market. This Scheme would give tax benefits to new investors who invest up to Rs. 50,000 and whose annual income is below Rs. 10 lakh.

The key features of the scheme are as under:

• Scheme is open to new retail investors, identified on the basis of their PAN numbers. This includes those who have opened the Demat account but have not made any transaction in equity and /or in derivatives till the date of notification of this Scheme and all those account holders other than the first account holder who wish to open a fresh account.
• Those investors whose annual taxable income is upto Rs. 10 lacs are eligible under the Scheme.
• The maximum Investment permissible under the Scheme is Rs. 50,000 and the investor would get a 50% deduction of the amount invested from the taxable income for that year.
• Under the Scheme, those stocks listed under the BSE 100 or CNX 100, or those of public sector undertakings which are Navratnas, Maharatnas and Miniratnas would be eligible. Follow-on Public Offers (FPOs) of the above companies would also be eligible under the Scheme. IPOs of PSUs, which are getting listed in the relevant financial year and whose annual turnover is not less than Rs. 4000 cr for each of the immediate past three years, would also be eligible.
• In addition, considering the requests from various stake holders, Exchange Traded Funds (ETFs) and Mutual Funds (MFs) that have RGESS eligible securities as their underlying and are listed and traded in the stock exchanges and settled through a depository mechanism have also been brought under RGESS.
• To benefit the small investors, the investments are allowed to be made in installments in the year in which tax claims are made.
• The total lock-in period for investments under the Scheme would be three years including an initial blanket lock-in period of one year, commencing from the date of last purchase of securities under RGESS.
• After the first year, investors would be allowed to trade in the securities in furtherance of the goal of promoting an equity culture and as a provision to protect them from adverse market movements or stock specific risks as well as to give them avenues to realize profits.
• Investors would, however, be required to maintain their level of investment during these two years at the amount for which they have claimed income tax benefit or at the value of the portfolio before initiating a sale transaction, whichever is less, for at least 270 days in a year. The calculation of 270 days includes those days pursuant to the day on which the market value of the residual shares /units has automatically touched the stipulated value after the date of debit.
• The general principle under which trading is allowed is that whatever is the value of stocks / units sold by the investor from the RGESS portfolio, RGESS compliant securities of at least the same value are credited back into the account subsequently. However, the investor is allowed to take benefits of the appreciation of his RGESS portfolio, provided its value, as on the previous day of trading, remains above the investment for which they have claimed income tax benefit.
• For the purpose of valuation of shares, the closing price as on the previous day of the date of trading will be considered so that new investors are certain about their debits and credits into the account.
• In case the investor fails to meet the conditions stipulated, the tax benefit will be withdrawn.
• The deduction from taxable income available under the scheme can be claimed under Section 80CCG of Income Tax Act.

Allowable Deductions from Gross Total Income

Deductions Allowable under various sections of Chapter VIA of Income Tax Act :

• Section 80C (Various investments)
• Section 80CCC (Premium for Annuity plans)
• Section 80CCD (Contribution to Pension Account)
• Section 80CCF (Investment in Infrastructure Bonds)
• Section 80CCG Rajiv Gandhi Equity Saving Scheme (RGESS)
• Section 80D (Medical/ Health Insurance)
• Section 80DD (Rehabilitation of Handicapped Dependent Relative)

• Section 80DDB (Medical Expenditure on Self or Dependent Relative)
• Section 80E (Interest on Loan for Higher Studies)
• Section 80G (Various Donations)
• Section 80GG (House Rent Paid)
• Section 80U (Employee suffering from Physical Disability)
• Section 80RRB (Royalty of a Patent)
• Section 80TTA (Interest on Savings Bank)

Section 80C:

This section has been introduced by the Finance Act 2005. Broadly speaking, this section provides deduction from total income in respect of various investments/ expenditures/payments in respect of which tax rebate u/s 88 was earlier available. The total deduction under this section (alongwith section 80CCC and 80CCD) is limited to Rs. 1 lakh only.

• Life Insurance Premium For individual, policy must be in self or spouse's or any child's name. For HUF, it may be on life of any member of HUF.
• Sum paid under contract for deferred annuity For individual, on life of self, spouse or any child .
• Sum deducted from salary payable to Govt. Servant for securing deferred annuity for self-spouse or child Payment limited to 20% of salary.
• Contribution made under Employee's Provident Fund Scheme.
• Contribution to PPF For individual, can be in the name of self/spouse, any child & for HUF, it can be in the name of any member of the family.
• Contribution by employee to a Recognised Provident Fund.
• Sum deposited in 10 year/15 year account of Post Office Saving Bank
• Subscription to any notified securities/notified deposits scheme. e.g. NSS
• Subscription to any notified savings certificate, Unit Linked Savings certificates. e.g. NSC VIII issue.
• Contribution to Unit Linked Insurance Plan of LIC Mutual Fund e.g. Dhanrakhsa 1989
• Contribution to notified deposit scheme/Pension fund set up by the National Housing Scheme.
• Certain payment made by way of instalment or part payment of loan taken for purchase/construction of residential house property.
  
  Condition has been laid that in case the property is transferred before the expiry of 5 years from the end of the financial year in which possession of such property is obtained by him, the aggregate amount of deduction of income so allowed for various years shall be liable to tax in that year.
• Contribution to notified annuity Plan of LIC(e.g. Jeevan Dhara) or Units of UTI/notified Mutual Fund. If in respect of such contribution, deduction u/s 80CCC has been availed of rebate u/s 88 would not be allowable.
• Subscription to units of a Mutual Fund notified u/s 10(23D).
• Subscription to deposit scheme of a public sector, company engaged in providing housing finance.
• Subscription to equity shares/ debentures forming part of any approved eligible issue of capital made by a public company or public financial institutions.
• Tuition fees paid at the time of admission or otherwise to any school, college, university or other educational institution situated within India for the purpose of full time education of any two children. Available in respect of any two children

Section 80CCC: Deduction in respect of Premium Paid for Annuity Plan of LIC or Other Insurer

Payment of premium for annuity plan of LIC or any other insurer Deduction is available upto a maximum of Rs. 100,000/-. (This limit has been increased from Rs. 10,000/- to Rs. 1,00,000/- w.e.f. 01.04.2007).

The premium must be deposited to keep in force a contract for an annuity plan of the LIC or any other insurer for receiving pension from the fund.

Note: The limit for maximum deduction available under Sections 80C, 80CCC and 80CCD (combined together) is Rs. 1,00,000/- (Rs. one lac only). An additional deduction upto a maximum of Rs. 20,000/- will be available from Assessment Year 2011-12 (FY 2010-11) for investment in Infrastructure Bonds.

Section 80CCD: Deduction in respect of Contribution to Pension Account

Deposit made by a Central government servant in his pension account to the extent of 10% of his salary. Where the Central Government makes any contribution to the pension account, deduction of such contribution to the extent of 10% of salary shall be allowed. Further, in any year where any amount is received from the pension account such amount shall be charged to tax as income of that previous year.

Section 80CCF: Investment in Long Term Infrastructure Bonds

Investments in Long Term Infrastructure Bonds issued by Industrial Finance Corporation of India, LIC, Infrastructure Development Finance Company Limited or a Non-Banking Finance Company classified as an Infrastructure Finance Company by RBI with a minimum tenure of 10 years and Lock in period of 5 years. Maximum amount of deduction available is Rs. 20,000/- The deduction is over and above the combined deduction of Rs. 100,000/- available under section 80C, 80CCC and 80DDD.

The benefits under this section were extended by one year in the Budget 2011 but the same has not been done in Budget. Therefore, the deduction under this section shall not be available for AY 2013-14.

Section 80CCG: Rajiv Gandhi Equity Saving Scheme (RGESS)

As per the Budget 2012 anouncements, a new scheme Rajiv Gandhi Equity Saving Scheme (RGESS) will be launched. Those investors whose annual income is less than Rs. 10 lakh can invest in this scheme up to Rs. 50,000 and get a deduction of 50% of the investment. So if you invest Rs. 50,000 (maximum amount eligible for income tax rebate is Rs. 50,000), you can claim a tax deduction of Rs. 25,000 (50% of Rs. 50,000). View key features of Rajiv Gandhi Equity Saving Scheme (RGESS).

Section 80D: Deduction in respect of Medical Insurance

Deduction is available upto Rs. 20,000/- for senior citizens and upto Rs. 15,000/ in other cases for insurance of self, spouse and dependent children. Additionally, a deduction for insurance of parents (father or mother or both) is available to the extent of Rs. 20,000/- if parents are senior Citizen and Rs. 15,000/- in other cases. Therefore, the maximum deduction available under this section is to the extent of Rs. 40,000/-. From AY 2013-14, within the existing limit a deduction of upto Rs. 5,000 for preventive health check-up is available.

Section 80DD: Deduction in respect of Rehabilitation of Handicapped Dependent Relative

Deduction of Rs. 50,000/- w.e.f. 01.04.2004 in respect of

1. Expenditure incurred on medical treatment, (including nursing), training and rehabilitation of handicapped dependent relative.
2. Payment or deposit to specified scheme for maintenance of dependent handicapped relative.

Further, if the defendant is a person with severe disability a deduction of Rs. 100,000/- shall be available under this section. The handicapped dependent should be a dependent relative suffering from a permanent disability (including blindness) or mentally retarded, as certified by a specified physician or psychiatrist. Note: A person with 'severe disability' means a person with 80% or more of one or more disabilities as outlined in section 56(4) of the 'Persons with disabilities (Equal opportunities, protection of rights and full participation)' Act.

Section 80DDB: Deduction in respect of Medical Expenditure on Self or Dependent Relative

A deduction to the extent of Rs. 40,000/- or the amount actually paid, whichever is less is available for expenditure actually incurred by resident assessee on himself or dependent relative for medical treatment of specified disease or ailment. The diseases have been specified in Rule 11DD. A certificate in form 10 I is to be furnished by the assessee from any Registered Doctor.

Section 80E: Deduction in respect of Interest on Loan for Higher Studies

Deduction in respect of interest on loan taken for pursuing higher education. The deduction is also available for the purpose of higher education of a relative w.e.f. A.Y. 2008-09.

Section 80G: Deduction in respect of Various Donations

The various donations specified in Sec. 80G are eligible for deduction upto either 100% or 50% with or without restriction as provided in Sec. 80G

Section 80GG: Deduction in respect of House Rent Paid

Deduction available is the least of

1. Rent paid less 10% of total income
2. Rs. 2000/- per month
3. 25% of total income, provided
   • Assessee or his spouse or minor child should not own residential accommodation at the place of employment.
   • He should not be in receipt of house rent allowance.
   • He should not have self occupied residential premises in any other place.

Section 80U: Deduction in respect of Person suffering from Physical Disability

Deduction of Rs. 50,000/- to an individual who suffers from a physical disability(including blindness) or mental retardation. Further, if the individual is a person with severe disability, deduction of Rs. 100,000/- shall be available u/s 80U. Certificate should be obtained from a Govt. Doctor. The relevant rule is Rule 11D.

Section 80RRB: Deduction in respect of any Income by way of Royalty of a Patent

Deduction in respect of any income by way of royalty is respect of a patent registered on or after 01.04.2003 under the Patents Act 1970 shall be available upto Rs. 3 lacs or the income received, whichever is less. The assessee must be an individual resident of India who is a patentee. The assessee must furnish a certificate in the prescribed form duly signed by the prescribed authority.

Section 80 TTA: Deduction from gross total income in respect of any Income by way of Interest on Savings account

Deduction from gross total income of an individual or HUF, upto a maximum of Rs. 10,000/-, in respect of interest on deposits in savings account ( not time deposits ) with a bank, co-operative society or post office, is allowable w.e.f. 01.04.2012 (Assessment Year 2013-14).

Deductions Allowable under Section 24 of Income Tax Act :

Where a housing property has been acquired / constructed / repaired / renewed with borrowed capital, the amount of interest payable yearly on such capital is allowed as deduction under Section 24 of Income Tax Act, subject to the limits stated below. Penal interest on housing loan is not eligible for deduction. If a fresh loan has been raised to repay the original loan and the new loan has been used only for the purpose of repaying the original loan then, the interest accrued on such fresh loan is allowed for deduction.

1. If the property is acquired or constructed with the capital borrowed on or after 01-04-1999 and such acquisition or construction is completed within 3 years of the end of the financial year in which capital was borrowed then the actual interest payable is allowed as deduction subject to a maximum Rs. 1,50,000/-.
2. In other case interest up to maximum Rs.30,000/- is deductible.
3. The ceiling of Rs.1,50,000/- or Rs. 30,000/- is only in case the property is self occupied. There is no limit on deduction of interest if the property is let out.

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