IMPORTANCE OF STARTING INVESTMENT EARLY IN ONE'S CAREER.pptx

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1. Tax Planning, importance of starting investment early in one’s career A Presentation by D.P. SINGH Assistant Accounts OFFICER

2. Salary includes Pay as defined in FR 9(21) & leave salary Dearness Allowance HRA (with provision for exemption) Transport Allowance Bonus Honoraria Overtime Allowance Reimbursement of CEA, HS Interim Relief, if any. Pension Government’s or any other employer’s contribution to the New Pension Scheme. Leave encashment.

3. But does not include:- Value of Leave Travel Concession Retirement Gratuity/Death Gratuity Cash equivalent of leave salary in respect of earned leave at credit received at the time of retirement on superannuation or otherwise. Uniform Allowance.

4. Tax Slab Individuals below the age of Sixty years (New Tax Regime,Section-115-BAC). Total Income Rate of Tax Up to RS. 3,00,000 Nil RS.3,00,001 to 6,00,000 5 %(Tax rebate u/s 87A) Rs.6,00,001 to 9,00,000 10 % (Tax rebate u/s 87A up to 7 Lac Rs.9,00,001 to 12,00,000 15% Rs.12,00,001 to 15,00,000 20% Above Rs. 15,00,000 30%

5. Tax Slab Individuals below the age of Sixty years (Old Tax Regime) Income Tax Slab Income Tax Rate Up to RS.2,50,000 NIL RS.2,50,001 to 5,00,000 5 % above Rs.2,50,000 Rs.5,00,001 to 10,00,000 Rs. 12,500 + 20% above Rs.5,00,000 Above Rs.10,00,000 Rs.1,12,500 + 30% above Rs.10,00,000

6. Option to choose Tax Regime For those who opt for old regime, A deduction of Rs.12,500/- is allowed as rebate under Sec. 87-A to individuals whose taxable income is up to Rs.5 Lac. For those who opt for new regime, if the total income: ( i ) does not exceed Rs.7 lac , he shall be entitled to a deduction from income tax, of an amount equal to the tax or Rs.25,000 whichever is less. (ii) exceeds Rs.7 lac and the income tax payable exceeds the amount by which the total income is in excess of Rs.7 lac , a deduction of an amount by which the income exceeds Rs.7 lac is allowed as rebate.

7. Option to choose Tax Regime The taxpayer opting for concessional rates in the New Tax Regime will not be allowed certain Exemptions and Deductions (like 80C, 80D, 80TTA, HRA) available in the Old Tax Regime. However, the deductions under section 80CCD(2), 80CCH(2) shall be available in the New Tax Regime. 80CCD(2):- Govt. Contribution towards NPS. 80CCH(2):- The aggregate amount that applicants and the federal government give to the Agniveer Corpus Fund.

8. HRA exempt The amount of HRA, which is to be treated as ‘exempt’ from income tax has to be taken as the least of the following:- ( i ) Actual HRA received, or (ii) Rent paid in excess of 10% of salary( B. Pay not DA), or (iii) 50% o salary if the employee is in Chennai/Mumbai/Kolkata/Delhi and 40% of salary if the employee is in any other place. NOTE:- For purpose of deduction of tax, the payment of rent by the employees drawing more than Rs.3000 as HRA should be verified through rent receipts, though no rent receipt is required for drawal of HRA.

9. Section 80E ( Deduction for education loan interest) Applies to individuals paying interest on education loan for higher studies including loan for themselves, their spouse or their children. The loan must be from Bank or recognized financial institution. There is no maximum limit to the amount of interest you can claim as a deductor . Admissible for 7 assessment years immediately succeeding the initial assessment year or until the interest is paid in full. Whichever is earlier. Encourage higher education by making it financially more accessible through tax incentive on loan interest.

10. Section 80EE ( Interest on Home loan) Section 80EEA provides a distinct opportunity for an extra deduction up to Rs.50,000/- on the interest paid for home loan ( until you clear all your outstanding dues on a home loan ), in addition to the standard Rs.2 lac deduction under Section -24B. To qualify for this benefits, certain criteria made to e satisfied: First time Home buyer Loan limit- the home loan should not exceed Rs.35 Lac No other residential property. Property value:- The cost of the Residential property should be within Rs.50 Lac  

11. Difference Between 80EE and 80EEA Given that there are a lot of similarities between Section 80EE and 80EEA, especially in terms of conditions and eligibility, it might be a little confusing to understand the precise difference between 80EE vs 80EEA. For your easy reference, the table given below charts the 80EE and 80EEA differences. Parameters Section 80EE Section 80EEA Eligibility criteria First-time homebuyers First-time homebuyers Maximum deduction allowed Rs 50,000 Rs 1.5 lakhs Property value limit Rs 50 lakhs Rs 45 lakhs (Stamp value) Sanction date April 1, 2016, to March 31, 2017 April 1, 2019, to March 31, 2022. Maximum Loan Amount The maximum loan value is Rs 35 lakhs Not described   Property Specification Not described Property size must be less than 645 sq. ft for those in Metropolitan cities and below 968 sq. ft in other areas

12. Section 80EEB  Income Tax Deduction for Repayment of Electronic Vehicle Loan. This section was introduced to promote the purchase of electric vehicles among individuals by giving them tax relief on the interest paid on loans taken to purchase such vehicles from any financial institution from 01/04/2019 to 31/03/2023.

13. Deduction Deduction allowed under the default tax regime ( Section 115-BAC):- Section Deduction allowed under the default tax regime Maximum Limit 16 ( ia ) Standard Deduction Rs.50000 87-A Rebate:- Where taxable income is less than Rs.7 lac Where taxable income is more than Rs.7 Lac Rs.25,000 or tax, whichever is less Amount of tax in excess of difference between taxable income and Rs.7 Lac

14. Deduction Deduction allowed under Old Tax regime :- Section Deduction allowed under Old Tax regime Maximum Limit 16 ( ia ) Standard Deduction Rs.50000 16 (ii) Entertainment Allowance Rs.5,000 16 (iii) Professional Tax Paid Rs.3000

15. Section 80C, 80CCC, 80CCD (1) Deduction towards payments made to:- Section 80C Life Insurance Premium Provident Fund Subscription to certain equity shares Tuition Fees (not other charge as dev.fee) National Savings Certificate Housing Loan Principal,/HBA etc CGEGIS Fixed Deposit for a minimum of 5 years in Scheduled Bank Combined deduction limit of  ₹ 1,50,000 Section 80CCC Annuity plan of LIC or other insurer towards Pension Scheme Section 80CCD(1) Contribution to Pension Scheme of Central Government Section 80CCD(1B) Deduction towards payments made to Pension Scheme of Central Government, excluding deduction claimed under 80CCD (1) 50,000/- (old regime)

16. Section 80CCD(2) Deduction towards contribution made by an employer to the Pension Scheme of Central Government If the employee is Central/State Government - @14% If the employee is a PSU or others - @10% Both regime Section 80 TTA Deduction on interest received on saving bank accounts Deduction limit Rs.10,000/- Section 80 E Deduction in respect of interest on loan taken for higher education Full amount of int. during fy . Section 80 EE Deduction in respect of interest on loan taken for house property. The loan should be sanctioned between 1.4.16 to 31.3.17.The value for the property should not exceed Rs.50 Lac and the sanction loan amount should not exceed Rs.35 Lacs Rs.50000 (In addition to 24(b) Section 80 EEB Deduction in respect of purchase of electric vehicle ( The loan should be sanctioned between the period from April 1, 2019 to March 31, 2023) Interest on loan. Rs.1,50,000 Section 80 G Donation to certain funds charitable institution (20 Nos ) i.e. Swachh Bharat Kosh , Clean Ganga Fund and National Fund for control of Drug Abuse-100% PM Drought relief funds – 50% 100% /50% Section 24(B) Interest on borrowed capital for purchase of a house on or after 01.04.1999 Rs.2,00,000 Section 8D Health insurance premium, CGHS Payment made for preventive health check-up for self & family Up to Rs.25,000(aggregate)

17. DDO has to do. Obtain Tax deduction Account Number (TAN) from ITO. Deduct tax correctly from the salary of employee. Deposit tax deducted into Government Account in time. File quarterly statements of TDS in From-24 Q fro the period ending on 30 th June, 30 th Sept., 31 Dec. and 31 st march of each financial year. Form 16 : Drawing & Disbursing Officer to his Employee at the end of the financial year up to 31 st May. Details provided in the form 16 : Income of employee, Deductions / Exemptions and Tax Deducted at Source for the purpose of Computing Tax Payable / Refundable.

18. Form 26AS  Provided by : Income Tax Department (It is available on e-Filing Portal: Login > e-File > Income Tax Return > View Form 26AS) Details provided in the form : Tax Deducted / Collected at Source.

19. AIS- Annual Information Statement Provided by : Income Tax Department (It can be accessed in Services menu after logging on to Income Tax e-Filing portal) Details provided in the form : Tax Deducted / Collected at Source Payment of taxes Demand / Refund Other information (like Pending/Completed proceedings)

20. Arrear of Salary Form 10E - Form for furnishing particulars of Income for claiming relief u/s 89(1) when Salary is paid in arrears or advance Provided by : An Employee to the Income Tax Department Details provided in the form : Arrears / Advance Salary

21. Income Tax Returns As per income tax laws, filing income tax returns is mandatory for individuals whose total income during the financial year exceeds the basic exemption limit of more than the gross total income of ₹ 2,50,000 under the old regime or ₹ 3,00,000 under the new regime. You will be attracting penalties by not filing returns. Also, it will hamper your chances of getting a loan, when you apply for a visa for travel purposes, or even property registration.

22. I. Tax from Salary If employee fail to furnish PAN and Aadhaar Number (PAN should be linked with Aadhaar ) . The tax at higher rate under section 206-AA and 139-AA will be deducted. House Rent Allowance received by an employee living in his own house or in a house for which he does not pay any rent, is not exempt from income tax in any circumstances. In such cases, the whole amount of HRA received should be included in the total income.