Deduction Under Section-80C

80C deduction are the most popular Income Tax Deductions. The 80C deduction limit for AY 2018-19, 2019-20 and 2020-21 is ? 1,50,000. The various options of investments and payments that qualify for deduction under this section are:

Investments in Tax Saving FDs

Tax-saving FDs are like regular fixed deposits but come with a lock-in period of 5 years and tax break under Section 80C on investments of up to Rs 1.5 lakh.

Eligibility : Can be opened by Resident Indian individuals.

Liquidity: Fixed Deposits have lock-in period of 5 years.

Rate of Interest : FD interest rate across different banks ranges from 5.5% to 7.75%

Investment Limit: Minimum investment limit is Rs 1000.

Tax Treatment : Interest earned in taxable.

Investments in PPF (Public Provident Fund)

PPF are long term investments backed by government of India. Deposits made in a PPF account are eligible for tax deductions under Section 80C.

Eligibility : Can be opened by Resident Indian individuals, salaried and non-salaried individuals. A HUF cannot open a PPF account.

Liquidity: PPF account have lock-in period of 15 years, but can be further extended by 5 years. Partial withdrawals are allowed after 7 years.

Rate of Interest : Current interest rate is 8.0% p.a.

Investment Limit: Minimum and maximum investment limit is Rs 500 and Rs 1.5 lakh respectively.

Tax Treatment : Interest earned is tax-free.

Investments in EPF (Employee Provident Fund)

EPF is a retirement benefit scheme that is available to all salaried employees. This amounts to 12% of basic salary + DA, that is deducted by an employer and deposited in the EPF or other recognised provident funds.

Eligibility : Can be opened by employee with basic salary greater than 15,000 /month

Liquidity: Can withdraw PF balance after 2 months of leaving job and does not take up employment within two months with an employer covered by PF Act

Rate of Interest : Interest rate on the EPF is 8.55%.

Investment Limit: Both employer and employee have to contribute a minimum 12% of Basic Pay + D.A.

Tax Treatment :Entire PF balance (including interest) is tax-free, if withdrawn after continuous service of 5 years

Investments in NPS (National Pension System)

The NPS is a pension scheme that has been started by the Indian Government to allow the unorganised sector and working professionals to have a pension after retirement. Investments of up to Rs 1.5 lakh can be used to avail tax deductions under Section 80C

Eligibility : Can be opened by every Indian citizen between the age of 18 and 60

Liquidity: Partial withdrawals are allowed after 15 years but under special conditions

Rate of Returns : Returns rate on the NPS varies between 12% – 14%

Investment Limit: No limit on maximum contribution

Tax Treatment : Employer contributions are tax-free

Investments in ULIP (Unit linked Insurance Plans)

ULIPs are a mix of insurance and investment. A part of the invested amount in ULIPs is used to provide insurance and the rest of the amount is invested in the stock markets. Investments of up to Rs 1.5 lakh in ULIPs are eligible for tax breaks under Section 80C

Eligibility : An investor can buy ULIP for self or spouse or child

Liquidity: Interest rate varies as it is market linked

Rate of Returns : Return rate on the ULIP varies between 12% – 14%

Investment Limit: No limit on maximum contribution

Tax Treatment : Investment and withdrawals & maturity amount are tax-free

Investments in Sukanya Samriddhi Yojana

Sukanya Samriddhi Yojana :Scheme is one of the most popular schemes by the Government of India. The scheme is aimed at the betterment of girl child in the country

Eligibility : Parents/guardians can open an account in the name of a girl child till she attains the age of 10 years

Liquidity: Up to 50% of the deposit amount can be prematurely withdrawn once the girl reaches the age of 18 years

Rate of Interest : Interest rate on Sukanya Samriddhi Yojana is 8.5%

Investment Limit: Investment is limited to maximum Rs.1,50,000 in a financial year

Tax Treatment : Investment and withdrawals & maturity amount are tax-free

 Senior Citizens Savings Scheme: 

Investments in Senior Citizens Saving Scheme, which as the name would suggest is suitable for senior citizens, qualify for deduction under Section 80C of the Income Tax Act. This scheme has tenure of 5 years. To participate in the Senior Citizens Saving Scheme, an individual has to be at least 60 years of age. Those who have taken VRS (voluntary retirement scheme) can opt for it after the age of 55.

 Stamp Duty and Registration Charges: 

 While buying a property, one of the largest expenses you will have to bear is the stamp duty and registration charges. To give taxpayers some relief, the government has included these expenses under Section 80C of the Income Tax Act, 1961. The deduction can only be claimed once the property construction is complete and you have legal possession of the house.

 Equity Linked Saving Scheme:

 Investments in equity linked savings scheme qualify for tax deduction under section 80C of the Income Tax Act Now, an essential point to be noted about equity linked savings scheme is that they have a mandatory lock-in period of three years from the date of investment. If you are considering investing in this scheme, make sure to invest for longer periods like five to seven years as they are equity schemes. Equity schemes are an ideal option for wealth creation over a long period.

Payments in Children’s tution fees

The tuition fee paid for the education of two children is eligible for tax deduction under Section 80C of up to Rs 1.5 lakh. The fee can be paid to any school, college, university or educational institute situated in India. The fees have to be for a full-time course only.

Deferred Annuity Plan

You can claim deduction in respect of payment made by you under Deferred Annuity Plan. This annuity may be in your name, your spouse's name or in the name of any of your child. But to claim deduction under this annuity plan, there should be no provision of receiving cash in lieu of annuity.
And, if you're a government employee and any sum is deducted from your salary under deferred annuity plan, then deduction is restricted to only 1/5th of your salary.

Principal Repayment of Housing Loan

You can claim the deduction of principal repayment of your housing loan taken for purchase or construction of residential house property. Deduction can also be availed in respect of stamp duty charges, registration fee and other expenses paid for purchase of your house. This deduction is available for both individuals and HUF.

But keep in mind that if you sell/transfer such house property in respect of which such deduction was taken before expiry of 5 years from the end of financial year in which possession was taken, then the deduction availed in the earlier years will be taxable for you in that year.

Example: If you have taken home loan of Rs. 50,000 /- at the rate of interest is 10%, the bifurcation of installment is as follows:

Year	Financial Year	Installment	Interest	Principal paid
1	2015-16	Rs. 15,773.54	Rs. 5,000.00	Rs. 10,773.54
2	2016-17	Rs. 15,773.54	Rs. 3,922.65	Rs. 11,850.89
3	2017-18	Rs. 15,773.54	Rs. 2,737.56	Rs. 13,035.98
4	2018-19	Rs. 15,773.54	Rs. 1,433.96	Rs. 14,339.58

• Others

1.     Subscription to any deposit scheme/pension fund of National Housing Bank (NHB)

2.     Subscription to bonds issued by National Bank for Agriculture and Rural Development (NABARD)

3.     Subscription to notified deposit scheme of:

4.     Public Sector Housing Finance Company

5.     Housing Development Authority of cities, towns and villages

6.     Contribution towards annuity plans of LIC like Jeevan Dhara, Jeevan Akshay etc. or any other insurer as approved by Central Government.

7.     Subscription to equity shares or debentures of Public Company or any Public financial institution forming part of any eligible issue of capital approved by Board where proceeds are utilized for infrastructure company.

8.     Stamp duty, registration fee incurred for the purpose of transfer of such house property to the assessee.

For more details about this deduction Read More.

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Last date to file GST annual returns extended till Nov 30

New Delhi, Aug 26 The finance ministry on Monday said the last date for filing annual GST returns has been extended by three months to November 30 as taxpayers were facing technical problems in furnishing returns.

Earlier, GST taxpayers were to file required returns by August 31.

"It is hereby informed that the last date for furnishing of annual return in the Form GSTR-9 / Form GSTR-9A and reconciliation statement in the Form GSTR-9C for the financial year 2017-18 is extended from August 31, 2019 to November 30, 2019," the Central Board of Indirect Taxes & Customs (CBIC) said in a statement.

GSTR 9 is an annual return to be filed yearly by taxpayers registered under the Goods and Services Tax (GST). It consists of details regarding the outward and inward supplies made or received under different tax heads.

While extending the date, the CBIC said "certain technical problems are being faced" by the taxpayers as a result annual return for the period July 1, 2017 to March 31, 2018 could not be furnished by persons registered under GST.

GSTR-9C is filed by those whose annual turnover exceeds Rs 2 crore. It is a statement of reconciliation between GSTR-9 and the audited annual financial statement, while GSTR-9A is the annual return to be filed those who have opted for the Composition Scheme under GST.

What is the consequence of non-filing the return? 
Failure to file annual return shall attract a late fee of INR 200 per day during the period of failure, subject to a maximum of 0.25% of the said Financial Year's turnover. 

Whether the annual return can be revised 

As there is no specific provision in GST law to revise the annual return hence, based upon the current version of the law, it appears that once filed the same cannot be revised. 

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Section-80CCF and Section 80CCG

Section 80CCF of the Income Tax Act is a special provision introduced for benefiting the investors of certain government-approved bonds schemes. The section was discontinued w.e.f AY 2013-2014. Section 80CCF was formulated in the year 2010 and came in force in 2011 under the income tax act.The deduction is avaliable to Indian resident,Individuals, HUFs and Minors also shall be take the benefit for this deduction. The minimum investment must be Rs 5,000. The is no higher cap limit, however the deduction limits to Rs 20000. The bonds must have a 5 year lock-in period. Sometimes companies offer buyback options wherein the investor can surrender the bonds after 5 years without up giving up his interest income. These bonds are listed on the stock exchange

T

      These bonds are issued by infrastructure companies seeking approval of the government, and they offer a decent rate of interest plus additional tax benefits.Corporations like the Life Insurance Corporation, Integrated Infrastructure Finance Company, Industrial Financial Corporation of India, and non-banking financial institutions which are approved by the government as infrastructure companies.The benefits of Section 80CCF are over and above that of Section 80C.

Investors should remember that Section 80CCF applies only to certain investments.

Let us consider an example for better understanding

Mr Sunil, aged 30, works in a company, has earned a salary of Rs 7.5 lakhs this year. As per the income tax slabs, he is liable to pay tax on the amount exceeding Rs 2.5 lakhs, i.e. on Rs 4 lakhs. In order to reduce his tax liability, he invests Rs 100000 in schemes eligible for the deduction of section 80C. The limit of section 80C is Rs 1.5 lakh

Thus, now his taxable income at Rs 4 lakhs minus Rs 1 lakh = Rs 3 lakhs

Further, he also invests in government approved infrastructure bonds worth Rs 30,000.

Such bonds being eligible for deduction u/s 80CCF reduces his taxable income to Rs 3 lakhs minus Rs 20,000 = Rs 2.8 lakhs as the deduction u/s 80CCF is up to Rs 20,000.

Thus, we can see that Mr sunil has reduced his tax liability considerably.

Section 80CCG

Deduction under section 80CCG has been discontinued starting from 1st April 2017.

The Rajiv Gandhi Equity Savings Scheme was introduced in Budget 2012. This deduction was over and above the 80C deduction available to individuals

THEREFORE, the conditions under section 80 CCG for claiming deduction would be :–

  The gross total income of the assessee for the relevant assessment year should be less than or equal to ₹ 12 lakhs.

  The assessee should be a new retail investor as per the requirement specified under the notified scheme.

The investment should be in such listed equity shares or listed units of equity-oriented fund specified under the notified scheme.

The minimum lock in period in respect of such investment should be three years from the date of acquisition 

 Tax Benefit

The deduction was 50 % of amount invested in such equity shares or ₹ 25,000, whichever is lower. The maximum Investment permissible for claiming deduction under RGESS is Rs. 50,000. The benefit is in addition to deduction available u/s Sec 80C

Mr A, new retail investor, have made the following investment in equity share/units of equity oriented fund of Rajiv Gandhi Equity Savings Scheme for the Previous year 2012-13,2014-15 and 2015-16 as below :

Particulars	P.Y 2013-14	P.Y 2014-15	P.Y 2015-16
Investment in listed equity shares	₹ 15,000	₹ 42,000	₹ 30,000
Investment in units of equity oriented fund	₹ 45,000		₹ 12,000
Sale of all units of equity oriented fund purchased in P.Y 2013-14		₹60,000
Gross Total Income (comprising of salary income and bank interest)	₹11,50,000	₹11,75,000	₹12,25,000
Deduction under section 80 CCG	₹ 25,000	₹21,000	Nil
Remark	(Restricted to 50 % of ₹ 50,000)	(Restricted to 50 % of ₹42,000)	(Not eligible since GTI exceeding   ₹12,00,000
Amount liable to tax (on account of violation of condition)		₹ 22,500

Note :-  Since the deduction under section 80 CCG was not allowed during the P.Y 2015-16 on account of the Gross Total Income exceeding ₹ 12 lakhs, no amount relating to that year can be subject to tax in the P.Y.2012-15, being the year of violation of condition, even though the units were sold within 3 years. However a deduction of ₹ 22,500 (50 % of ₹45,000) was allowed under section 80 CCG in respect of investment of ₹15,000 in units of equity oriented fund in the P.Y,2013-14. Since such units have been sold in the P.Y. 2014 -15, the condition under section 80 CCG has been violated and ₹ 22,500 would be subject to tax in the P.Y.2014-15.

Budget 2019 Highlights: Union Budget Highlights

The budget has been presented with a 10-year vision in mind. The startups are being given a whole set of tax benefits.

-The budget is for a New India has a roadmap to transform the agriculture sector of the country, this budget is one of hope, says Narendra Modi

-Fully automated GST Refund module shall be implemented; multiple tax ledgers to be replaced by one; invoice details to be captured in a central system

-Basic customs duty on certain items to be increased to promote the cherished goal of Makein India. Import of defence equipment not manufactured in India are being exempted from basic customs duty.

-The government today increased customs duty on Gold. According to the Budget proposals, import duty to be hiked on gold and precious metals to 12.5%, from current level of 10%.

-I propose to increase special additional excise duty and road and infrastructure cess each one by 1 rupee a litre on petrol and diesel.

-Nirmala Sitharaman kept the Income tax slab Rates unchanged but announced a slew of new income tax proposals

-To provide further impetus to affordable housing, additional deduction of 1.5 lakh rupees on interest paid on loans borrowed upto 31 March 2020 for purchase of house up to ₹45 lakh.

-Additional income tax deduction of 1.5 lakh rupees on the interest paid on the loans taken to purchase Electric Vehicles.

-To discourage the practice of making business payments in cash, the government proposes to levy TDS of 2% on cash withdrawal exceeding ₹1 crore in a year from a bank account.

- PAN and Aadhaar  now interchangeable: More than 120 crore Indians now have Aadhar card, therefore for ease of tax payers I propose to make PAN card and Aadhar card interchangeable and allow those who don't have PAN to file returns by simply quoting Aadhar number and use it wherever they require to use PAN.

-Public sector banks to be provided 70,000 crore rupees to boost capital and improve credit.

-For purchase of high-rated pooled assets of financially sound Non Banking Finance Companies amounting to 1 lakh crore rupees during 2019-20, one-time six-month partial credit guarantee to be given to public sector banks (PSBs).

-India's sovereign external debt to GDP is among the lowest globally at less than 5%. Govt will start raising a part of its gross borrowing program in external markets in external currencies.

-A new series of coins of Re 1, ₹2, ₹5, ₹10, ₹20 easily identifiable to the visually impaired were released by the PM on 7th March 2019. These coins will be made available for public use shortly.

-Four new embassies to be opened in 2019-20, to improve footprint of India's overseas presence and to provide better public services to local Indian communities.

-Regulation authority over housing finance sector to be returned from National Housing Bank to RBI.

-To further encourage women entrepreneurship, Women Self Help Group(SHG) Interest Subvention Programme to be expanded to all districts in India.

-Non-performing asset(NPAs) recovery of ₹4 lakh crore over the last four years, NPAs down by ₹1 lakh crore in the last one year.

-To popularise sports at all levels, National Sports Education Board for development of sportspersons to be set up under Khelo India.

-Exclusive TV programme exclusively for startups to be started, channel will be designed and executed by startups themselves.

-I propose to consider issuing Aadhar card for Non Resident Indians (NRIs) with Indian passports after their arrival in India without waiting for the mandatory 180 days

-New National Educational Policy to be brought in to transform Indian educational system; major changes in higher as well as school system to be brought in.

-India will be made open defecation free on 2 October 2019, as per the dream of Prime Minister Narendra Modi.

-Jal Shakti Ministry will look at the mgmt of our water resources and water supply in an integrated and holistic manner and will work with states to ensure 'Har Ghar Jal', to all rural households by 2024 under 'Jal Jeevan Mission'.

-The government will invest widely in agricultural infrastructure and support private entrepreneurship in driving value addition to farmers produce and those from allied activities too, like bamboo, timber and also for generating renewable energy.

-9.6 crore toilets have been constructed since 2 October 2014. More than 5.6 lakh villages have become open defecation free. I propose to expand the Swachh Bharat mission to undertake sustainable solid waste management in every village.

-The government will bring out a policy framework for making India a global hub of aircraft financing and leasing activities. The idea is to encourage new industries to come up, leveraging India’s existing capabilities that will add more quality jobs.

-India has emerged as a major space power. To harness India's space ability commercially, a public sector enterprise, New Space India Limited (NSIL) has been incorporated to tap the benefits of ISRO

-Every rural family, except those who are unwilling to take the connection will have electricity and clean cooking gas.

-In the second phase of PMAY, 1.95 crore houses are proposed to the beneficiaries.

-It is the right time to consider increasing minimum public shareholding in the listed companies, I have asked market regulator Sebi to consider raising the current threshold of 25% to 35%.

-Government will invite suggestions for further opening up of FDI in aviation sector, media, animation AVGC and insurance sectors in consultation with all stakeholders. 100% FDI will be permitted for insurance intermediaries.

-Credit Guarantee Enhancement Corporation will be set up in 2019-20, action plan to deepen markets for long-term bonds with specific focus on infrastructure sector to be put in place.

-Pension benefit to be extended to around 3 crore retail traders and shopkeepers with an annual turnover less than ₹1.5 crore under Pradhan Mantri Karam Yogi Man Dhan Scheme.

-Comprehensive restructuring of National Highways Programme will be done, to ensure the creation of National Highways Grid of desirable capacity.

Railway infrastructure would need an investment of 50 lakh crores between 2018 and 2030; PPP to be used to unleash faster development and delivery of passenger freight services.

-Current rental laws are archaic. A modern tenancy law would be finanlised and forwarded to states

-Schemes such as 'Bharatmala', 'Sagarmala' and UDAN are bridging the rural and urban divide, improving our transport infrastructure.

-India Inc, our job creators, are the nation's wealth creators; together, we can prosper. I wish to propose no. of reforms to kickstart virtuous cycle of growth.

-The Indian economy will grow to become a  $3 trillion economy in the current year itself. It is now the sixth largest in the world. 5 years ago it was at the 11th position.

-Average amount spent on food security per year approximately doubled during 2014-19 compared to preceding five years.

-Vision for the decade: From 1.85 trillion dollars in 2014, the economy has reached 2.7 trillion US dollars withing five years. We are well within capacity to reach $5 trillion economy in next few years.

House Rent Allowance (HRA)

Most employees receive HRA as part of their salary. The intention is usually to meet cost of a rented accommodation that you may be living in.

In case you pay rent, a portion of the HRA may be exempt from tax for you. If you do not live in a rented house, the entire amount will taxed as part of your salary each month, at the applicable tax rates.

If you have to claim a deduction from HRA – you must live in a rented accommodation, there must be a rent agreement and you should be able to support the rent payment you make each month.  You cannot pay rent to your spouse – however, you can enter into a rent agreement with your parents or children. If you enter into a rent agreement with your parents or children, make sure they are including rent receipts as part of their taxable income.

The deduction available is the minimum of the following amounts–

• HRA received – if you have stayed in rented accommodation for part of the year, consider HRA for only that part.
• 50% of your Basic Salary when you live in a rented place in Mumbai, Calcutta, Delhi or Chennai OR if you are in any other city 40% of your Basic Salary
• Rent paid less 10% of Basic Salary

Basic Salary includes dearness allowance, where applicable.

Example –

Mr A lives in Mumbai and gets Rs 50,000 as basic salary & Rs 20,000 as HRA. The rent paid by him for his house is Rs 18,000.

The amount exempt to be taxed from HRA will be minimum of these three:

• HRA received = Rs 20,000
• 50% of Basic since he lives in Mumbai = Rs 25,000
• Rent paid – 10% of Basic = Rs 18000 – Rs 5,000 = Rs 13,000

Therefore HRA exempt = Rs 13,000. And Rs 20,000 – Rs 13,000 = Rs 7,000 will form part of his Taxable Income on account of HRA.

Note that – in case you are claiming any other deduction for your house property – say towards a loan – HRA exemption has no impact on that. You are eligible to claim HRA deduction if you meet the conditions stated above.

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