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    Tax Tips

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    maruthappan sundaram
    The document discusses the difference between financial year, assessment year, income tax exemptions, deductions, and rebate. It provides examples to explain these concepts. The financial year is the period for which income is earned, while the assessment year is the period in which that income is taxed. Exemptions exclude certain income from taxation, deductions reduce taxable income, and rebate reduces the total tax payable. Sections 80C, 80CCD, 80D, 80EE, and 80EEB of the Income Tax Act are also explained regarding eligible exemptions and deductions.

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    Tax Tips

    Uploaded by

    maruthappan sundaram
    30 views15 pages
    The document discusses the difference between financial year, assessment year, income tax exemptions, deductions, and rebate. It provides examples to explain these concepts. The financial year is the period for which income is earned, while the assessment year is the period in which that income is taxed. Exemptions exclude certain income from taxation, deductions reduce taxable income, and rebate reduces the total tax payable. Sections 80C, 80CCD, 80D, 80EE, and 80EEB of the Income Tax Act are also explained regarding eligible exemptions and deductions.

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    TAX TIPS

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    Tax tips

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    The document discusses the difference between financial year, assessment year, income tax exemptions, deductions, and rebate. It provides examples to explain these concepts. The financial year is the period for which income is earned, while the assessment year is the period in which that income is taxed. Exemptions exclude certain income from taxation, deductions reduce taxable income, and rebate reduces the total tax payable. Sections 80C, 80CCD, 80D, 80EE, and 80EEB of the Income Tax Act are also explained regarding eligible exemptions and deductions.

    Copyright:

    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    30 views15 pages

    Tax Tips

    Uploaded by

    maruthappan sundaram
    The document discusses the difference between financial year, assessment year, income tax exemptions, deductions, and rebate. It provides examples to explain these concepts. The financial year is the period for which income is earned, while the assessment year is the period in which that income is taxed. Exemptions exclude certain income from taxation, deductions reduce taxable income, and rebate reduces the total tax payable. Sections 80C, 80CCD, 80D, 80EE, and 80EEB of the Income Tax Act are also explained regarding eligible exemptions and deductions.

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    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
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    of 15

    By Maruthappan

    What is Financial Year mean?


    &
    What is Assessment Year mean?

    • The income you earned from 1st April 2020 to 31st March 2021
    is the income earned in the current Financial Year (FY) 2020-21.

    • Income earned in the current Financial Year 2020-21 (i.e. from


    1st April 2020 to 31st March 2021) will become taxable in
    Assessment Year 2021-22 (i.e. from 1st April 2021 to 31st March
    2022)
    Some examples of Assessment Year and
    Financial Year or Previous Year

    Period Financial Year Previous Year Assessment Year

    1 April 2018 to 31st 2018-19 2018-19 2019-20


    March 2019

    1 April 2019 to 31st 2019-20 2019-20 2020-21


    March 2020

    1 April 2020 to 31st 2020-21 2020-21 2021-22


    March 2021
    Tax Regimes compared
    Income Tax Exemption Vs Tax Deduction Vs Tax
    Rebate
    • What are Income Tax Exemptions?
    • Exemption means ‘exclusion’. Income Tax Exemption simply means
    the income which is not subject to tax
    Example:
    • House Rent Allowance – You can claim tax exemption of HRA from
    your Salary income.
    • Gratuity limit of up to Rs 20 lakh.
    What are Income Tax Deductions?
    • Deduction means ‘subtraction’ i.e. an amount that is eligible to
    reduce taxable income.

    Examples:
    • Investments in ELSS Tax saving mutual fund units, PPF, Life insurance
    plans, EPF etc., u/s 80c .
    • Health Insurance premium u/s 80D.
    • Standard Deduction of up to Rs 40,000 (for FY 218-19) from your
    Salary Income.
    • Tax Benefit/relief on Home Loan for payment of Interest is allowed as
    a deduction under Section 24 of the Income Tax Act.
    What is Income Tax Rebate?
    • Income Tax Rebate is allowed to be claimed from the total tax
    payable.
    Examples:
    The rebate us/ 87A of up to Rs 12,500 for FY 2020-21 / AY 2021-22.
    (It is generally provided to reduce the tax burden of the individuals who
    fall under lower income bracket.)
    House Rent Payments
    Section 80C Exemptions  1,50,000/-

    • PPF (Public Provident Fund)


    • EPF (Employees’ Provident Fund)
    • Five-year Bank or Post office Tax saving Deposits
    • NSC (National Savings Certificates)
    • ELSS Mutual Funds (Equity Linked Saving Schemes)
    • Kid’s Tuition Fees
    • SCSS (Post office Senior Citizen Savings Scheme)
    • Principal repayment of Home Loan
    • NPS (National Pension System)
    • Life Insurance Premium

    Section 80CCD

    Employee can contribute to Government notified Pension Schemes (like National Pension
    Scheme – NPS). The contributions can be up to 10% of the salary (salaried individuals) and Rs
    50,000 additional tax benefit u/s 80CCD (1b) was proposed in Budget 2015.
    Section 80D

    Preventive health checkup (Medical checkups) expenses to the extent of Rs 5,000/- per family can
    be claimed as tax deductions. Remember, this is not over and above the individual limits as
    explained above. (Family includes: Self, spouse, parents and dependent children).
    Section 80EE
    • PAYMENT OF INTEREST ON HOUSING LOAN ON OR AFTER
    01.04.1999 MXIMUM OF 2,00000/-

    Section 80EEB
    • INTEREST ON LOAN AVAILED TO PURCHASE ANY
    ELECTRONIC VEHICLE DURING FY 2019-20 ONWARDS -
    RS.1,50,000/-

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