Skip to main content

Income Tax Deductions for 2014 You Should Not Ignore

Download Tax Saving Mutual Fund Application Forms

Invest In Tax Saving Mutual Funds Online

Buy Gold Mutual Funds

Leave a missed Call on

94 8300 8300

 

It’s that time of the year when you have to start submitting your investment proofs to your employer for tax deductions. Most of you may be planning your tax investments over the next couple of months, and we thought it would be a good idea to give a primer on some important sections of the Income Tax Act under which you can claim tax benefit.

Let’s start by discussing the “not-so-popular” sections of the Income Tax Act.

Sec 80D: Premium paid towards health insurance for yourself, spouse, dependent children and your parents is deductible from your taxable income. The limit is Rs. 20,000 in the case of senior citizens and Rs. 15,000 in all other cases. You can further claim Rs. 15,000 (Rs. 20,000 if parents are senior citizens) for buying health insurance policy for your parents.

Sec 80DD: Expenses incurred towards medical treatment of dependent parents, spouse, children and siblings suffering from a disability is eligible for deduction. The limit is Rs. 50,000 and this has been increased to Rs. 1 lakh for severe disability.

Sec 80DDB: Expenses incurred towards treatment of specified illnesses for self, spouse, children, siblings and dependent parents is eligible for tax deduction upto Rs. 60,000 for senior citizens and Rs. 40,000 for others.

Sec 80G: This is for Donations to recognized Charitable institution. Depending on the institution, you can get upto 50% to 100% of the donations made as tax deduction. You can claim deductions under Sec 80G, 80GGA and 80GGC.

Sec 80E: Interest on education loan taken by the borrower, parent or spouse from a recognized financial institution is fully tax deductible. The loan must be taken for a full-time course, which can either be a graduate course in engineering, medicine or management or post graduate course in engineering, medicine, management, applied sciences or pure sciences including mathematics and statistics.

Sec 24b: You can claim a deduction of upto Rs. 1.5 lakh a year on the interest payments on your home loan. In case of a let out or deemed to be let out property, interest paid is fully deductible. Further, if you buy a second home under another home loan, the entire interest paid on this can be claimed as a deduction.

Sec 80C: This is the most popular section under the Income Tax Act and used to the maximum by most assesses. The limit of investment under this section is Rs. 1 lakh per year, irrespective of your income and the tax bracket. Since there are no sub-limits under this section, you can choose your investments according to your wish. The following investments/payments fall under the ambit of Sec 80C:

1) Public Provident Fund
2) National Savings Certificate 
3) Equity Linked Savings Scheme
4) Bank fixed deposits above 5 years tenure
5) Infrastructure bonds (available over and above Rs. 1 lakh, upto Rs. 20,000)
6) NABARD Bonds
7) Unit Linked Insurance plans
8) Employee Provident Fund
9) Payment on Life Insurance policies
10) Full time education fees paid for up to 2 children’s education
11) Principal repayment on home loan

As you can see, there are several options for you to claim deduction under Sec 80C. One important consideration is the lock in period. Based on your Financial Priorities in the near future, you can choose Tax Saving Mutual Funds (Lock in period of 3 Years) to Public Provident Fund (Lock in period of up to 15 Years, based on opening date). While objective is to reduce tax liability, one should also not get stuck in a longer lock in period.

While many people plan their investments correctly to get the full benefit under this section, there are some people who under-invest, thus not obtaining tax deductions to the fullest. We have found this to be common among people below 35 years, who do not understand the importance of Tax Planning. It is highly recommended to invest up to the maximum limit of Rs. 1 lakh under Section 80 C to avoid payment of extra taxes, by choosing different options to diversify your investment portfolio.

There are many others who also over-invest under Sec 80C. You may be wondering how this could happen. More often than not, it is due to the principal repayment on home loan. The principal component of your EMI is eligible for tax deduction up to Rs. 1 lakh under Sec 80C. You may forget this component, and continue to make investments for tax purposes, only to realize later that you have invested way beyond Rs. 1 lakh.

The investments you make should not be with the sole intention of reducing tax outflow. It should be with a long term view of augmenting savings and retirement planning. It is thus recommended to avail the services of a Financial Planner who can help you in your investments and also tax planning.

 

 

For further information contact Prajna Capital on 94 8300 8300 by leaving a missed call

 

 

Leave a missed Call on 94 8300 8300

 

Leave your comment with mail ID and we will answer them

OR

You can write back to us at

PrajnaCapital [at] Gmail [dot] Com

 

---------------------------------------------

Invest Mutual Funds Online

Invest Any Mutual Fund Online

 

Download Mutual Fund Application Forms from all AMCs

Download Mutual Any Fund Application Forms

---------------------------------------------

 

Best Performing Mutual Funds

    1. Largecap Funds             Invest Online
      1. DSP BlackRock Top 100 Fund
      2. ICICI Prudential Focused Blue Chip Fund
      3. Franklin India Bluechip
      4. ICICI Prudential Top 100 Fund

B. Large and Midcap Funds         Invest Online

      1. ICICI Prudential Dynamic Plan
      2. HDFC Top 200 Fund
      3. UTI Dividend Yield Fund
      4. Birla Sun Life Front Line Equity Fund
      5. Franklin India Prima

C. Mid and SmallCap Funds          Invest Online

      1. Reliance Equity Opportunities Fund
      2. DSP BlackRock Small & Midcap Fund
      3. Sundaram Select Midcap
      4. IDFC Premier Equity Fund
      5. Birla Sun Life Dividend Yield Plus
      6. SBI Emerging Businesses Fund
      7. HDFC Mid-Cap Opportunities Fund
      8. ICICI Prudential Discovery Fund

D. Small and MicroCap Funds   Invest Online

      1. DSP BlackRock MicroCap Fund

2.       Franklin India Smaller Companies

E. Sector Funds          Invest Online

      1. Reliance Banking Fund
      2. Reliance Banking Fund
      3. ICICI Prudential Banking and Financial Services Fund

F. Tax Saver Mutual Funds      Invest Online

1. ICICI Prudential Tax Plan

2. HDFC Taxsaver

      1. DSP BlackRock Tax Saver Fund
      2. Reliance Tax Saver (ELSS) Fund

G. Gold Mutual Funds        Invest Online

      1. Relaince Gold Savings Fund
      2. ICICI Prudential Regular Gold Savings Fund
      3. HDFC Gold Fund
      4. Birla Sun Life Gold

H. International funds         Invest Online

1. Birla Sun Life International Equity Plan A

2. DSP BlackRock US Flexible Equity

3. FT India Feeder Franklin US Opportunities

4. ICICI Prudential US Bluechip Equity

5. Motilal Oswal MOSt Shares NASDAQ-100 ETF

Popular posts from this blog

ULIP Review: ProGrowth Super II

  If you are interested in a death cover that's just big enough, HDFC SL ProGrowth Super II is something worth a try. The beauty is it has something for everybody — you name the risk profile, the category is right up there. But do a SWOT analysis of the basket, and the gloss fades     HDFC SL ProGrowth Super II is a type-II unit-linked insurance plan ( ULIP ). Launched in September 2010, this is a small ticket-size scheme with multiple rider options and adequate death cover. It offers five investment options (funds) — one in each category of large-cap equity, mid-cap equity, balanced, debt and money market fund. COST STRUCTURE: ProGrowth Super II is reasonably priced, with the premium allocation charge lower than most others in the category. However, the scheme's mortality charge is almost 60% that of LIC mortality table for those investing early in life. This charge reduces with age. BENEFITS: Investors can choose a sum assured between 10-40 times the annualised premium...

Section 80CCD

Top SIP Funds Online   Income tax deduction under section 80CCD Under Income Tax, TaxPayers have the benefit of claiming several deductions. Out of the deduction avenues, Section 80CCD provides t axpayer deductions against investments made in specific sector s. Under Section 80CCD, an assessee is eligible to claim deductions against the contributions made to the National Pension Scheme or Atal Pension Yojana. Contributions made by an employer to National Pension Scheme are also eligible for deductions under the provisions of Section 80 CCD. In this article, we will take a look at the primary features of this section, the terms and conditions for claiming deductions, the eligibility to claim such deductions, and some of the commonly asked questions in this regard. There are two parts of Section 80CCD. Subsection 1 of this section refers to tax deductions for all assesses who are central government or state government employees, or self-employed or employed by any other employers. In...

How to Pick Top Performing Mutual Fund Schemes

Download Tax Saving Mutual Fund Application Forms Invest In Tax Saving Mutual Funds Online Buy Gold Mutual Funds Leave a missed Call on 94 8300 8300   How to Pick Performing Schemes  Funds that continue to stay in the top grade of performance over longer periods are the ones to bet on, advise investment experts   The mutual fund performance charts of the past few months make for an impressive reading. Funds across all categories boast of stellar returns. Sample this: The mid and small cap category has averaged 77 percent return over the past 12 months, with the best fund delivering a staggering 120 percent. The tax-saving funds also average an impressive 51 percent, including a fund which has soared 92 percent. Many of the table-toppers are funds of proven quality and track record. However, there are also schemes that are not that well-known. Some of these have rarely made it to the performance charts in the past, yet, of late, they bo...

What is Electronic Clearing Service (ECS)?

  As the name suggests, it's an electronic process through which money can be transferred from one bank account to another. According to RBI, this mode is usually used for regular payments and receipts, like distribution of dividend, interest, salary, pension etc. This mode is also used for collection of bills for telephone, electricity, water, various types of taxes, payment of EMIs , investments in mutual funds , payment of insurance premium etc. There are two types of ECS , like most other banking transactions, ECS credit and ECS debit. An ECS credit is used by a bank account holder , usually a large company or an institution for services like payment of dividend, in terest, salary, pension etc. If your mutual fund pays you dividend to your bank account, of all probability it is being paid through ECS credit.ECS debit, on the other hand, is used when a company or an institution is getting money from a large number of people. For example if you are investing in a mutual fund sc...

Bharat Bond ETF

Top SIP Funds Online   The government of India has paved the way for the launch of India's first corporate bond ETF called as Bharat Bond ETF. Edelweiss Mutual Fund will be managing it. The fund is mandated to invest in AAA-rated bonds of select public sector companies (see the table 'List of constituents and their proportions in the portfolio'). The government has a threefold objective behind launching this product. One, to deepen the liquidity of the Indian debt markets and provide a gateway for easy retail participation. Two, to solve investors' dilemma of picking premium bonds. Lastly, to help the underlying government-owned companies raise funding for their operations. But does it make sense for you, the investor, to invest in it? Lets find out. What is the product? As the name suggests, it is an exchange-traded fund which will be listed on a stock exchange from where its units can be bought and sold post launch. It will have two variants - one maturing in 3 ye...
Related Posts Plugin for WordPress, Blogger...
Invest in Tax Saving Mutual Funds Download Any Applications
Transact Mutual Funds Online Invest Online
Buy Gold Mutual Funds Invest Now