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

Stick to Good Fund Manager who Can Multiply Your Investment

A manager may be the difference between the best and worst funds. Here's how you can find the right one    Does a mutual fund manager make a difference to your investment? The answer may not be as easy as you think, since most best-performing mutual funds have moved away from individualistic fund management to process-driven methods, limiting the scope of an individual's role in investment decisions. In fact, many fund managers would speak at length about how the "system" their fund house has in place makes their task of picking stocks easy even though it restricts their freedom. Still, the question is important, especially after recent reports that the Securities and Exchange Board of India ( Sebi ) may ask fund managers to disclose to investors their track record of managing money. Let us take a look at the universe of large-cap funds over the past five years. According to Value Research, an independent mutual fund tracking firm, the topper in the category is DSP...
Read more

Tata Fixed Income Portfolio Fund dividend

Invest In Tax Saving Mutual Funds Online Download Tax Saving Mutual Fund Application Forms Buy Gold Mutual Funds Call 0 94 8300 8300 (India)       Tata Mutual Fund has announced dividend under the dividend option of Tata Fixed Income Portfolio Scheme B2 Plan A-DQ, Tata Fixed Income Portfolio Scheme B2 Reg-DQ and Tata Fixed Income Portfolio Scheme B2 Direct-DQ. The record date has been fixed as August 29, 2013. Happy Investing!! We can help. Call 0 94 8300 8300 (India) 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 in Tax Saving Mutual Funds ( ELSS Mutual Funds ) to upto Rs 1 lakh and Save tax under Section 80C. Invest Tax Saving Mutual Funds Onlin...
Read more

NRIs and direct taxes code (DTC)

DTC Proposes To Do Away With Special Provision That Allows NRIs Liberalised Duration Of Stay In Country      THE new direct taxes code could bring a large number of global Indians under the tax net, as it does away with a provision that allowed individuals to escape tax in any country citing double tax avoidance.    The new legislation, introduced in Parliament on Monday, says an individual shall be a resident of India in any financial year if he is in the country for more than 59 days in that year, and has been has been India for more 365 days in four preceding financial years. A number of Indian industrialists including Vedanta's Anil Agarwal and Essar's Ravi Ruia have acquired non-resident status over the years.    The DTC has only attempted to clean up the provision in line with the laws globally. A phrase "being outside India" in the existing income tax law exempted individuals who stay outside the country for six months from paying taxes. This was prone ...
Read more

How to gauge the risk profile of your mutual fund portfolio?

MUTUAL funds are considered to be an investment option for those who do not generally devote a lot of time to monitoring and managing their portfolios. Investors experience both good as well as tough times as far as mutual fund investments are concerned. But while evaluating the portfolio of their equity mutual fund holdings there are a few points that one should check to know about the level of risk that they are facing. Often there are situations where there is a higher risk than what was estimated initially. Here are a few ways to evaluate various risk levels. Individual holding exposure : The portfolio of the equity fund where one has invested or plans to invest needs to be scrutinised to see whether the risk levels are such that could lead to a larger volatility in the holdings. Depending upon this factor and the risk taking ability of the investor the choice about a particular fund as an investment should be made. One key point to watch out is whether there is a large ex...
Read more

Health insurance guide - Part I

Insurance, by definition, is morbid. What if I die suddenly? What if my home caught fire? What if I had to undergo expensive medical treatment? What if something that I thought happened only to others befell me? Insurers, who work with large samples, calculate the probability of such an event and, hence, the possibility of them having to pay out a sum of money to mitigate, to the extent possible, the effects of that disaster. However, the possibility of you undergoing some kind of expensive medical treatment during your lifetime is far more likely than you dying suddenly or your house burning down. Given that costs at private healthcare facilities, where you are most likely to land up, is high, and, doubling every four years 10 months or so, the rest of your money life could easily go out of whack if you had to incur such expenses. Just 12 per cent of India's population is covered with some sort of health insurance. Pared to the bone, for a comparatively small price, health insu...
Read more
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