Category: Income Tax

Tax Benefits of Health Insurance and medical expenses

Tax Benefits of Health Insurance and medical expenses

As a first step in your financial plan, you must ensure that you have adequate health insurance for self and family members. Buying health insurance will serve the purpose of protecting financial instability and give access to quality health care.

Premium paid for health insurance also enjoys certain tax benefits in income tax act 1961 that you must know to reduce your tax liability.

Section 80D – Income tax benefit on health insurance

While calculating your taxable income for a financial year, premium paid during that year for the health insurance policy can be claimed as tax deduction under section 80D of income tax act 1961.

Please remember that tax benefit available under section 80D is over and above the limit of Rs 1, 50,000 as specified under section 80C.

In order to claim tax deduction under section 80D, you need to pay the premium either through a cheque or credit card as cash payment does not qualify for tax deduction under this section.

Under section 80D, you can avail tax deduction up to Rs 25,000. If its for a senior citizen then tax deduction will be up to Rs 50,000 (FY 18-19).

Section 80DD – Tax deduction on health insurance premium paid for handicapped relative

Under section 80DD, you can avail tax benefits if premium paid for health insurance is for a handicapped dependent relative.

Deduction can be claimed up to Rs 75,000 if the handicapped dependent’s disability is between 40% and 80%. In case of more than 80% disability, tax deduction limit is Rs 1,25,000.

Section 80DDB – Tax benefit for medical treatment of a relative suffering disease

Medical expenses incurred by you on the treatment of your relative suffering from a specified diseases like AIDS, Parkinson’s, chronic renal failure, malignant cancers, thalassemia, haematological disorders, dementia and other specified neurological diseases can claim tax deduction of Rs 40,000 under section 80DDB.

For a senior citizen and very senior citizen, tax deduction limit is Rs 1,00,000 (FY 18-19).

Section 80U – Tax Deduction for Self Suffering from disability

If you are suffering from any disability then tax deduction can be claimed under section 80U of income tax act 1961. If your disability is not less than 40% then tax deduction of Rs 75,000 can be claimed. If disability is 80% or above then you can claim a higher deduction of Rs 1,25,000.

Using Income Tax Calculator, To calculate and Optimize you tax outgo. Download Mobile app from

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Requesting a new PAN card

Requesting a new PAN card

You may need to get a new PAN card if you have to update your address, or in case the existing PAN card is lost, or if the card has a old photograph which needs to be replaced. In these cases, the person already has a PAN card, but seeks a new card with updated details, or is seeking a duplicate card with the same number. The procedure is quite simple to follow.

Application

The form ‘Request for New PAN Card Or/ And Changes Or Correction in PAN Data’ can be downloaded/submitted online from NSDLTIN website or the website of any other facilitator. The form has to be filled up with all details, including photograph.

Documentation

If there are no changes in details, no new documents except for a copy of the old card and photograph is needed. If there is no proof of existing PAN card, the application is taken on good effort basis.

Changes

If the address or any other detail needs to be modified before re-issue, the applicant should provide proof of identity and address, date of birth, along with copy of the old PAN card and photograph.

Charges

Rs 107 is payable as fee for the issue of a new PAN card. If the address for delivery of the card is international, a fee of Rs 989 is payable.

Multiple PANs

It is illegal to have more than one PAN card. If you inadvertently hold more than one card, you must quote the other PANs and submit them for cancellation.

Tracking Status of Application

You can check the status of your PAN application using Acknowledgement Number at

https://tin.tin.nsdl.com/pantan/StatusTrack.html

Points to note

  • If a PAN card is lost even before it is delivered against a new application, the application submitted for PAN can be used as documentary proof, instead of a copy of the old PAN.
  • If the applicant is not an individual or HUF, it is mandatory to provide office address and proof of office address in case of applications for issue or re-issue of PAN cards.
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Components of Salary and their Tax Benefits

Components of Salary and their Tax Benefits

1) Basic Salary

Basic Salary is usually 40-50%of the total CTC. Basic Salary is entirely taxable.

2) House Rent Allowance

House Rent Allowance is offered to salaried individuals to cover their rented accommodation expenses. HRA is exempted from Income Tax (the lowest amount of the following)
a) Actual rent paid minus 10% of basic salary.
b) 50% of the basic salary if the house is in metro cities or 40% of basic salary if the house is in any other city
c) Actual HRA received.

HRA exemption is NOT applicable for those living in a rent-free accommodation or their own house.

3) Conveyance or transport allowance

Conveyance or transport allowance is applicable for the commute between home and office. You can get a tax exemption of up to Rs. 1,600 per month on conveyance expenses. This is application for FY 2017-18.

4) Fuel reimbursement

Fuel reimbursement can be claimed on petrol/diesel expenses by producing actual bills. To claim fuel reimbursement, it is compulsory to have the vehicle in your own name.

5) Children Education Allowance

Children’s education allowance provides a tax break of Rs 100 per month per child towards educational expenses and Rs 300 per month per child towards children’s hostel expenses.

6) Medical reimbursement

Medical reimbursement is the amount paid to an employee upon submission of medical bills. You can get an income tax exemption of up to Rs 15,000 per year for medical reimbursements. This is application for FY 2017-18.

7) Telephone/mobile expenses

Telephone/mobile expenses are fully exempted from income tax, based on actual bills submitted to the employer.

8) Food Coupons

Food coupons or meal vouchers provided by the employer are tax exempt up to the limit of Rs 50 per meal.

9) Leave Travel Concession

Leave Travel Concession (LTC) is a tax exemption provided on the actual travel costs of the employee as well as their dependents. LTC is applicable only on travel within India.

10) Employees Provident Fund

Employees Provident Fund (EPF) is a compulsory saving component EPF contributions are made both by the employer and the employee.
The employer’s share of contribution is an employee’s Provident Fund is entirely tax-free.

11) Tax Deduction

Tax deducted at source or TDS is the income tax deducted by your employer, a compulsory requirement of the government. TDS is calculated on the basis of average income tax rates for the financial year.

12) Education cess

is a tax levied by the government to fund primary and secondary education initiatives. Education cess is 3% of the tax payable over and above the income tax liability.

13) Professional Tax

Professional Tax is a tax levied by the state government. The amount varies by income with a maximum deductible limit of Rs 2,500.

Note that for FY 2018-19, Standard deduction for Salaried individuals to Rs 40,000 in place of transport allowance and Medical reimbursement.

Using Income Tax Calculator, To calculate and Optimize you tax outgo.
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Tax Deduction for Health Insurance Premium

Tax Deduction for Health Insurance Premium

  1. Investments made towards payment of health insurance premiums qualify for a tax deduction under Section 80D of the Income Tax Act. These limits are for FY 2017-18.
  2. Individual assessees can claim deduction for premiums paid towards health insurance of self, spouse, parents and children. HUF can claim deduction for insuring the health of any member of the HUF.
  3. The deduction that can be claimed by an assessee is up to Rs 25,000 for health insurance premium paid for self, spouse and dependent children if under the age of 65 and Rs 30,000 if above the age of 65 years.
  4. A further deduction of Rs 25,000 could be claimed, for buying health insurance policy for parents of the assessee. It is Rs 30,000 if either of the parents is a senior citizen.
  5. The service tax paid on the medical insurance premium is not allowed as a deduction.
Deduction available under section 80D For FY 17-18
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Tax deduction on house rent allowance (HRA)

Tax deduction on house rent allowance (HRA)

  • A tax exemption on house rent allowance (HRA) received is available under Section 10 (13A) of the Income Tax Act to individuals.
  • It is a deduction available to a salaried person who has an HRA component as part of his salary package and is staying in a rented accommodation.
  • The exemption for HRA deduction is the minimum of
  1. Actual HRA received,
  2. 50% of salary if living in metro else 40% and
  3. Excess of rent paid over 10% of salary.
  • HRA exemptions are only available on submission of rent receipts or the rent agreement with the house owner by the tenant.
  • The rented premises must not be owned by the person claiming the tax exemption. If you stay with your parents and pay rent to them then you can claim that for tax deductions.
  • If monthly rent is above Rs.8,333, landlord’s PAN is a must. Income Tax (I-T) Department now wants tenants to produce their landlord’s PAN for HRA exemptions of Rs 1 lakh or more annually or Rs 8,333 monthly.

What should you do if your landlord doesn’t have PAN?
If your landlord doesn’t have a PAN, you have to make a declaration. According to the Central Board of Direct Taxes (CBDT) circular, in case the landlord does not have a PAN, a declaration to this effect from the landlord along with the name and address of the landlord should be filed by the employee.

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View your tax deducted in Form 26AS

View your tax deducted in Form 26AS

View your tax deducted in Form 26AS

A taxpayer can view the tax credit or the tax that has been deducted on his behalf in the form of TDS. This information is available in Form 26AS and can be downloaded from the Income Tax website. It provides information about the tax deducted by various entities on behalf of the taxpayer.

Form 26AS contains details of tax deducted at source on salary, interest income, real estate or other investments, advance tax, refund received during the year and other related information.

The various ways to view one’s tax credit:
1. Income tax e-filing website
2. The TRACES website
3. The taxpayer’s Internet banking access

Through income tax e-filing website

The site can be accessed on http://incometaxindiaefiling.gov.in. One must have a login id and password, or register on the website. On logging in, one can click on “My Accout/View Form 26AS”. On clicking the same, the user will be redirected to the TRACES website. The user will have to select the assessment year for which he wishes to view Form 26AS. The form will be displayed and can be downloaded.

Through the TRACES website

Visit http://contents.tdscpc.gov.in/en/home.html and click on the “Tax Payer” tab. Next, click on “register as new user” page and carry out registration process. On successful registration, an activation link and codes will be sent to the registered email id and mobile number. After clicking on the activation link and entering the code, one can login to the TRACES website and access Form 26AS.

Tax payer’s Internet banking access

A taxpayer who has Internet banking access with a bank authorized by the Income Tax Department to show tax credit, can use this facility. Log in to Internet banking and click on View Form 26AS. To know if a bank is authorized, one can visit http://contents.tdscpc.gov.in/en/netbanking.html.

Points to note

  1. View of Form 26AS through Internet banking is available only if the PAN is mapped to that particular account.
  2. Only a PAN holder whose TDS has been deducted or who has deposited tax (self assessment tax, advance tax, TDS on property) can register on TRACES

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Income Tax Slab Rates for FY 2017-18 (AY 2018-19)

Income Tax Slab Rates for FY 2017-18 (AY 2018-19)

Part I: Income tax slab for individual tax payers & HUF (less than 60 years old) (both men & women)

Income Slab Tax Rate
Income up to Rs. 2,50,000* No Tax
Income from Rs. 2,50,000 – Rs. 5,00,000 5%
Income from Rs. 5,00,000 – 10,00,000 20%
Income more than Rs. 10,00,000 30%
Surcharge:
10% of income tax, where total income is between Rs. 50 lakhs and Rs.1 crore.
15% of income tax, where total income exceeds Rs. 1 crore.
Cess: 3% on total of income tax + surcharge.
* Income upto Rs. 2,50,000 is exempt from tax if you are less than 60 years old.
Rebate under Section 87A: Rs 2,500 or 100% of income tax (whichever is lower) for individuals with income below Rs 3.5 Lakhs

Part II: Income tax slab for individual tax payers & HUF (60 years old or more but less than 80 years old) (both men & women)

Income Slab Tax Rate
Income up to Rs. 3,00,000* No Tax
Income from Rs. 3,00,000 – Rs. 5,00,000 5%
Income from Rs. 5,00,000 – 10,00,000 20%
Income more than Rs. 10,00,000 30%
Surcharge:
10% of income tax, where total income is between Rs. 50 lakhs and Rs.1 crore.
15% of income tax, where total income exceeds Rs. 1 crore.
Cess: 3% on total of income tax + surcharge.
* Income up to Rs. 3,00,000 is exempt from tax if you are more than 60 years but less than 80 years of age.
Rebate under Section 87A: Rs 2,500 or 100% of income tax (whichever is lower) for individuals with income below Rs 3.5 Lakhs

Part III: Income tax slab for super senior citizens (80 years old or more) (both men & women)

Income Slab Tax Rate
Income up to Rs. 5,00,000* No Tax
Income from Rs. 5,00,000 – 10,00,000 20%
Income more than Rs. 10,00,000 30%
Surcharge:
10% of income tax, where total income is between Rs. 50 lakhs and Rs.1 crore.
15% of income tax, where total income exceeds Rs. 1 crore.
Cess: 3% on total of income tax + surcharge.
*Income up to Rs. 5,00,000 is exempt from tax if you are more than 80 years old.

Using Income Tax Calculator, To calculate your net taxable income and ways to save on taxes. Download Mobile app from

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