Income Tax and its Deductions

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Along with guiding you the ways to invest your earnings we also show you the way to save taxes. We calculate the taxes on your behalf and make you pay the exact amount of the same.

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Presentation Transcript

Slide 1:

Income Tax and its Deductions Along with guiding you the ways to invest your earnings we also show you the way to save taxes. We calculate the taxes on your behalf and make you pay the exact amount of the same.

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Income tax is the share that is paid to the government by every citizen of that particular country from their income. Income tax is generally determined from the following types:- Income from salary Income from business & profession Income from property Income from capital gains Income from other sources

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A person is liable to pay a certain amount of tax charged upon the above mentioned income. However, it is possible to get reduction in the amount of tax, by making use of deductions and exemptions.

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An individual or a Hindu Undivided family who is earning income is entitled to the following deductions and exemptions:- Deduction under Section 80D: This section deals with medical claims. The individual can claim medical expenses not just for himself, but for his family and parents too. The maximum claim can be either Rs.15000 for self & family and Rs.15000 for the parents or he/she can claim Rs.35000, in case the parents are senior citizens. Medical insurance claim is not valid, if the dependent children are older than 18 years and are working.

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Deduction under Section 80C : This section deals with investment. For an individual to be entitled to claim this deduction, he/she must have a reasonable investment. Investment in greater funds, will provide greater benefits. Investment includes Life Insurance Premium, Provident Fund, fixed deposits, education fees, etc. The maximum amount of deduction that can be claimed is Rs.100000. Claiming for deduction under this section requires pre-planning of the PF deduction for the particular year.

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The Provident Fund. Provident Fund is a type of savings, which comprises of some contributions made by the employee during the time they worked, together with the employer ’ s contribution. This gives them savings at the maturity of every particular period, apart from their manual savings. The employer ’ s contribution of 12% is directly added into the PF account, whereas, the 12% from the employee ’ s salary is split into two parts: 3.67% goes to the PF and the remaining 8.33% is put into the pension scheme.

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Form issued – Saral II (ITR-1): Saral II (ITR-1) by the Income Tax department is a new form that has been issued for assessment purpose. This form is made available to those who have salaried income, pension income, a property or previous year ’ s losses or income from other sources. House Rent Allowance: This is the most commonly used exception method. In order to be able to claim tax exemption, you must be staying in a house for rent. You are entitled to use the following amounts:- Actual rent allowance from the employer Actual amount of rent paid by you with a deduction of 10% from your salary 50% or 40% of your salary.

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