INVESTMENT PLAN DECLARATION

Transcription

1 INVESTMENT PLAN DECLARATION Important Guidelines 1. Please note that investments/payments intended to be made during the Financial Year April March 2017 alone can be declared. 2. If your Investment plan declaration is not submitted by the cut-off date, TDS will be calculated and deducted based on the assumption that there is no intention to invest. 3. According to Section 80 CCE, the aggregate amount of tax exemption for investments made under Section 80 C, Section 80 CCC and Section 80 CCD cannot exceed Rs.1,50,000. Relevant provisions of the Income Tax Act, 1961 with reference to deductions available for salaried employees 1. HRA Exemption u/s 10(13A): According to section 10(13A) of the Income Tax Act, HRA exemption provided to an employee, who pays rent for their accommodation is to be calculated as detailed below. The least of the following three options is to be considered for HRA exemption. HRA received, in excess of the above limits, is taxable. 1. The actual HRA received by you as per your salary structure or 2. The actual rent paid by you for the house minus 10% of the basic component as in your salary structure or 3. 50% of your basic component (if you live in a metro*) or 40% of your basic component (if you live in a non-metro*). *Mumbai, Chennai, Delhi and Kolkata are considered as Metros and all other Indian cities are considered as Non-metros. Kindly note: This exemption will be applicable only if House Rent Allowance (HRA) is opted for during the annual flexi-salary component selection process. An employee who owns a house in his/her name in the same city as the place of work is not eligible to claim this exemption. An employee who does not pay rent for his/her accommodation is not eligible to claim HRA exemption If your spouse is also employed in CSC, a declaration is required stating that your spouse is not claiming HRA exemption for the same. Documents required for availing HRA Deduction: o o For Rent below Rs.8000/- per month - Rent receipt duly signed by landlord with a copy of rental agreement should be submitted. If Rent is above Rs.8000/- per month - Rent receipt duly signed by the landlord, clearly mentioning the landlord s Permanent Account Number (PAN) and a copy of the rental agreement should be submitted.

2 2. Interest paid on Housing Loan for self occupied property u/s 24 Housing loan benefit is provided only on the Interest component of the Equated Monthly Installment (EMI) repaid to the bank/financial institution. The interest that is repaid is considered as a loss from house property and is reduced from the taxable income and then Income Tax is calculated on the remaining amount. The principal component of the EMI is not eligible for benefit under this section as per the Income Tax Act. This will be a part of 80C exemption. The construction of the house should be completed and the house should be occupied (either by self or let out) within the financial year to avail the benefit under Section 24. One-fifth i.e. 20% of the Interest paid during the construction period/prior to completion of the house can be considered for tax benefit on housing property loan as Pre EMI benefit from the financial year when the house has been occupied/construction has been completed. However, the overall limit of interest paid in case of self occupied property is restricted to Rs.2,00,000. Property under Joint Ownership - Interest on Housing Loan If the property is under joint ownership (e.g., 2 joint owners) then the employee would receive 100% / 2 (joint owners) = 50% housing loan interest deduction. If the property is under joint ownership (e.g., 3 joint owners) then, the employee would receive 100% / 3 (joint owners) = 33.33% housing loan interest deduction, etc. If only one of joint owner(s) is availing the deduction, the employee should submit a declaration from the other joint owner(s) committing that it is only the employee who is availing the deduction and the other joint owner(s) are not availing the deduction. Then the employee will be allowed to claim 100% housing loan interest deduction from his/her salary income. Computation of Housing loan benefit if the property is self occupied If the property is self occupied, the employee will not be provided HRA exemption from the month of occupation of the property during the Financial Year. For example, If the month of occupation of the property is November 2010, then HRA benefit can be claimed from April to October 2010 only. The maximum deduction under this section would be Interest on Housing loan paid or Rs. 2,00,000 whichever is lower. Loss on house property will be calculated as Rs. 200,000 or interest on Housing Loan paid (whichever is less). Computation of Housing loan benefit if the property is let out If the property is let out, then the computation will be as follows: Step 1 Rent received during the Financial Year minus the amount paid towards Municipal/Corporation/Local taxes minus 30% towards maintenance charges will be added to the taxable income.

3 Step 2 The actual interest paid to the bank/financial institution for the Financial Year will be deducted from the total taxable income calculated in Step 1. Step 3 Applicable Income tax will be levied on the taxable income arrived at after Step 2. Step 4 Illustration If Step 1 minus Step 2 results in a Loss on House property, such Loss can be offset against taxable income earned in the current year. Loss on house property will be calculated as rent received less 30% (for maintenance) less interest paid on housing loan. If the Taxable Salary Income is Rs.10,00,000 and if the rental income is Rs. 6,00,000 during the Financial Year and the Municipal/Corporation/Local taxes paid during the Financial Year is Rs. 1,00,000, then the income from let out property will be calculated as below: Scenario 1 Scenario 2 (A) Rental income Rs. 6,00,000 Rs. 6,00,000 (B) (minus) Municipal / Corporation / Local taxes - Rs.1,00,000 - Rs.1,00,000 (C) Sub total (A-B) Rs. 5,00,000 Rs. 5,00,000 (D) (minus) 30% towards maintenance (30% of Rs. 5,00,000) - Rs.1,50,000 - Rs.1,50,000 (E) Sub total (C-D) Rs. 3,50,000 Rs. 3,50,000 (F) Interest on Loan paid to Financial Institution - Rs.2,00,000 - Rs.5,50,000 (G) Net Income ( Loss) on House property (E - F) Rs. 2,00,000 - Rs.2,00,000 (H) Taxable Salary Income Rs.10,00,000 Rs.10,00,000 Net Taxable Income (G+H) Rs.12,00,000 Rs. 8,00, Investments under Section 80 C Section 80 C of the Income Tax Act provides tax benefit for certain financial products. The amount invested in these financial products is deductible for tax i.e. you don t have to pay income tax for that value. However, kindly note that the upper limit for investment which will be considered for exemption under this section is Rs 1,50,000 only. Thus if you are in the 30% tax range and you invest the maximum allowed under this section i.e. Rs. 1,50,000, then Rs. 45,000 will be reduced from your total tax liability. (Tax surcharge is not included in this example) There are a wide range of investments that are eligible for exemption under this section. The common investment options are: PF Deductions (Deducted through your monthly pay) Contribution to Public Provident Fund (for Self/Spouse/Children) Life insurance Premiums (In the name of Self, spouse and up to a maximum of 2 children). National Savings Certificate (NSC) Bonds (only in the name of Self) and Accrued interest on NSC (With Minimum Lock in period of 5 Years) Tax saving bonds ULIP/Tax Saving Mutual Funds [Investments in Mutual Fund or Equity Linked Saving Scheme / Systematic Investment Plan (SIP)] Tax Saving Fixed Deposits with 5 years plus tenure

4 Tuition fees spent on Child(ren) s education [Applicable only if Child Education Allowance (CEA) is opted for during the flexi-salary component selection process] Principal repayment on Housing Loan and Stamp Duty / Registration Charges paid for the House property during the first year of investment. Please note that investment in Kisan Vikas Patra (KVP) is not eligible for deduction under section (u/s) 80C. NSC Accrued Table Amount of Interest (Rs.) accruing on certificates of Rs. 100 denomination The year for which interest occurs If NSC (VIII Issue) is purchased after I Year 8.16 II Year 8.83 III Year 9.55 IV Year V Year VI Year Pension Fund (u/s 80CCC) Contribution to the Pension Plan of Life Insurance Corporation (LIC) /any other insurer for receiving pension from the approved pension fund (e.g. Jeevan Suraksha of LIC or any other Pension Plan). Medical insurance premium paid (Mediclaim) for dependants (u/s 80 D) Premium paid for Medi claim policy( inclusive of Rs towards Annual Preventive Health Check) for self subject to maximum of Rs 15,000 and premium paid towards, spouse or parents and children subject to a maximum of another Rs.15,000 per annum is allowed as deduction from taxable income. In case of preventive health check up for self, spouse and children the amount will be restricted to Rs and similarly the for preventive health check up of parents the amount upto Rs will be considered. An additional deduction of Rs. 5000/- is allowed if the policy covers dependant parents who are senior citizens i.e., greater than 65 years old). Please note that, In-laws, brothers, and sisters are not considered as dependants. Payments made to the Medical Insurance Company directly by the employee only will be considered for deduction under this category. Also the payment should be made through cheque or any other mode, other than cash. Any additional Medical insurance premium deducted from the employee s monthly salary will also be automatically considered for exemption under this section. No action is required by the employee. Maintenance/Medical treatment of Handicapped dependant (u/s 80DD) The amount of deduction permitted under this section is Rs. 50,000 for a person with disability (Disability percentage less than 80% as certified by a government authorized physician), and Rs. 1,00,000 for a person with a severe disability (Disability percentage greater than or equal to 80% as certified by a government authorized physician). Any maintenance/medical treatment should be supported by a permanent physical disability certificate from a physician, a surgeon, or a psychiatrist (as the case may be) working in a government hospital. The certificate should include the employee s name. Dependants include spouse, children, parents, brothers and sisters. In-laws are not considered as dependants.

5 Deduction for Medical Treatment (u/s 80 DDB) Section 80 DDB benefit can be claimed only when you file your Income Tax returns. Benefit cannot be provided at the time of deducting TDS from your salary. Education Loan Interest Repayment for self and dependents (u/s 80E) Interest on repayment of education loan availed for higher education for self, spouse, and up to two children will be exempted from tax. The total amount of interest paid will be allowed as deduction over a period of 8 years or until the interest is paid by the assessee in full, whichever is earlier. The deduction is available only for the higher studies pursued at the university/colleges recognised either by Central/State Government or any statutory body duly authorised by the Central/State Government. Loan should be in name of self or dependants and should be for higher education for self and dependants (spouse and children). Donations to Charitable or Religious Trust (u/s 80 G) Benefit under this section can be claimed only when you file your Income Tax returns. Benefit cannot be provided at the time of deducting TDS from your salary. However, deductions made from salary towards donations, which qualify for 100% deduction u/s 80G will be considered for tax calculations in the month of deduction. It may be noted that any donation exceeding Rs paid in cash shall not be eligible for deduction. Deduction for a person with disability (u/s 80U) Deduction is allowed to a person suffering from a permanent physical disability under sec 80 U. The amount of deduction permitted under this section is Rs. 50,000 to a person with disability (Disability percentage less than 80% as certified by a government authorized physician) and Rs. 1,00,000 to a person with a severe disability (Disability percentage greater than or equal to 80% as certified by a government authorized physician). Deduction for a bank interest on savings account (u/s 80TA) Deduction is allowed to a maximum of Rs on account of interest on savings account with any bank. The interest on term or fixed deposit will not be eligible for deduction under this section. Please note that the employee will have to furnish the details of Bank Interest on Savings Account at the time of filing of return and claim exemption under this Section (80TA).

6 Previous Employment Income If you have joined CSC on or after 1 April 2016, and if you were employed from 1 April 2016 till your date of joining, then it is mandatory that you submit a copy of FORM - 16 or a Statement certifying your earnings and deductions from your previous employer(s) within the cutoff date for submission of Investment Proofs. The following details should be provided in the Investment plan declaration form. Salary Income after deduction under Section 10 Previous Professional Tax ( PT) Previous Provident Fund( PF) Tax Deducted by previous employer(s) Number of occasions Leave travel Assistance (LTA) availed from your Previous Employer(s) from 1 st January 2016 Income Tax Slabs Income tax is deducted based on your taxable income and the slabs for FY are given below for your reference. Kindly note: Education cess of 3% is applicable for all income slabs.