Archive for Rebate

Following deduction will be available from salary for ITax Rebate 1) Mileage 2)Compensation under voluntary retirement scheme; 3)Amount of gratuity received on retirement or death; 4)Amount received on commutation of pension

August 15, 2009 · Filed under ADVANCE TAX, eTDS, HRA, Income Tax, ITR 2009-10, Loan, payment of Bonus, payment of DA, Pension, Rebate, Running Staff, salary, Salary Income, SERVICE TAX CHANGES IN BUDGET 2009, Tax Rebate, Tuition Fee

SALARY,ALLOWANCES,PERKS DIRECT TAX CODE

Dear Friends,

When I first read the Direct Tax code , Like other people I first read the New Tax Rate and published the same for you and all other website in www discuss benefits from direct tax code but now we will discuss here what have taken back from us. Remember as per Govt Statement tax revenue will Increase after implementation of new Direct Tax Code. In This post we will cover the salaried Class.

Under the Code, the salary will now include, inter-alia, the following:-

  1. the value of rent free, or concessional, accommodation provided by the employer irrespective of whether the employer is a Government or any other person; (earlier nominal value for Govt Employees)(read earlier rules here:valuation of rent free accommodation)
  2. the value of any leave travel concession;(earlier exempted up to 2 journey in four year block)(read earlier rules here: LTC Exemption
  3. the amount received on encashment of unavailed earned leave on retirement or otherwise;(earlier exempted for 30 days for each year of service or maxi 3.00 Lakhs) (read earlier rules here:leave encashment )
  4. medical reimbursement; and 
  5. the value of free or concessional medical treatment paid for, or provided by,the employer.(read earlier rules here:valuation of medical facility)
  6. The value of rent-free accommodation will be determined for all employees in the same manner as is presently determined in the case of employees in the private sector. The new regime of comprehensive taxation of perquisites across employees in all sectors of the economy will improve both the horizontal and vertical equity of the tax system.

Download Direct Tax code 2009 Download Direct tax code discussion paper Read Direct tax code Online

DOWNLAOD NEW TAX RATES OF INDIVIDUAL

Further the following deduction will be available from salary income

  1. amount of professional tax paid;
  2. transport allowance to the extent prescribed;
  3. prescribed special allowance or benefit to meet expenses wholly and exclusively incurred in the performance of duties, to the extent actually incurred;
  4. compensation under voluntary retirement scheme;
  5. amount of gratuity received on retirement or death;
  6. amount received on commutation of pension; and
  7. pension received by gallantry awardees.

Further Item at Sr No 4,5,6 would  be available to the extent the amounts are paid to, or deposited in a Retirement Benefits Account. The amounts received from an approved superannuation fund, hitherto exempt from income tax, will henceforth also be treated in the same manner.

So there will be no exemption for House rent Allowance (HRA) (read HRA present rule) Further exemption for following allowances has also not been provided in new Direct tax code as compare to present tax provisions.

  1. entertainment allowance
  2. children education allowance
  3. children Hostel allowance
  4. HRA (house rent allowance)

The list is not exhaustive but we can say that other than deduction prescribed above no deduction from salary income is allowed. Further EET regime has been now fully introduced for all type of savings scheme which we discuss in separate post.

E: exempt at the time of Investment

E:Interest ,bonuses ,increments during the period of investment will not be taxed at all

T:full amount received at the time of Maturity is taxable in the hands of assesses.

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TUITION FEES PAID FOR CHILDREN U/S 80C

February 9, 2009 · Filed under 80C, Income Tax, Rebate, Tuition Fee

 

Today we will discuss important points regarding deduction available for payment of tuition fees .we try to cover each and every aspect on the issue ,if any left ,or you have different opinion than of us ,please record in comments.
Relevant part of the section 80c is reproduced here under.
"(xvii) as tuition fees (excluding any payment towards any development fees or donation or payment of similar nature), whether at the time of admission or thereafter,
(a) to any university, college, school or other educational institution situated within India;
(b) for the purpose of full-time education of any of the persons specified in sub-section (4) "
"(4) The persons referred to in sub-section (2) shall be the following, namely:

(a) ………………….
b) …………………..

c) for the purposes of clause (xvii) of that sub-section, in the case of an individual, any two children of such individual."
on the basic of above following points are to be noted .

  1. Deduction for tuition Fees is available up to Rs.100000 /-
  2. The limit of one lac as above is total limit u/s 80C for all type of savings ,plus section 80CCC(pension policy) plus u/s 80CCD(Contributory Pension Plan).Means the aggregate amount of deduction under above referred sections can not exceed Rs. 1,00,000.
  3. The deduction is available to Individual Assessee and not for HUF.
  4. The Deduction is available for any two children.
  5. This the only clause u/s 80 C where assessee can not claim tax benefit for expenditure done on himself.Means if assessee has paid tuition fess for his studies ,he will not be eligible.
  6. Deduction is not available for tuition fees paid for studies of spouse.
  7. The deduction is available for Full Time courses only,so no deduction for part time or distance learning courses.(This is my opinion but point is not very clear)
  8. The fees should be paid to university, college, school or other educational institution,so no rebate for private tuitions.
  9. Tuition fees paid for coaching courses for admission in professional courses or any other type of courses are not covered as that fees is not paid for FULL time education.
  10. The centre mention above in point 8 must be situated in India,so location should be in India though it can be affiliated to any foreign institutes.
  11. In This section tuition fees has a wide meaning than normal parlance ,means here tuition fees means total fees paid minus any payment towards any development fees or donation or payment of similar nature.so admission fees is also allowed.
  12. In My Opinion Transport charges ,hostel charges,Mess charges ,library fees ,scooter/cycle/car stand charges is not allowed.
  13. Building fund or any donation etc not allowed.

Questions which are commonly asked regarding tuition fees eligibility u/s 80C given hereunder.

Que:Can Mother claim the benefit of tuition fees paid for his son/daughter.
Ans:Assessee means both mother and father both can take the benefit u/s 80 C for amount paid by them respectively.

Ques:If a couple have four children,can they both claim fees for two children each?
Ans:Yes ,husband and wife both have a separate limit of two children each ,so they can claim deduction for 2 children each.

Ques:If a Couple has one child and paid a fees of 200000 rs can they both claim tuition fess 100000 each ?
Ans. :yes ,they both can claim deduction for 100000 each subject to they have actually paid same amount .If husband has paid 1.50lac and wife has paid 50000 then husband can claim 100000 and wife can claim 50000.

Ques:Ram has paid tuition fees for his child 2000/- in February 2008 relates to period march to june 2008 ,how much amount he can claim deduction in assessment year 2008-09?
Ans: He can claim full 2000 rs in assessment year 2008-09 , as this deduction is available on the basis of payment and it may or may not be related to the period in which it has been paid.

Ques: Is Late fees paid with tuition fees is eligible for deduction ?
Ans:No,late fees is not eligible for deduction.

Ques:is tuition fees admissible for pre nursery class also?

Ans: pre-nursery ,play school and nursery class fees is also covered under section 80C (circular 9/2008 & 8/2007)

Ques:Ram has paid rs 36000 (rs 8000 admission fees, rs 5000 development fees rs 5000 caution money, rs 12000 annual charges and rs 6000 @rs 2000 per month for april-june 2008 fees) in dec 2008. how much he can claim reimbursement as well rebates/deductions in 2008-09 and 2009-10.
Ans:As explained above in the article, tuition fees meaning is wide in income tax as generally perceived ,so in my opinion admission fees rs 8000 ,12000 annual charges and 6000 fees is covered for claim u/s 80C .Development fees is not allowed and caution money,as it is refundable amount ,hence not allowed.You can claim the tuition fees on payment basis whether relates to this financial year ,old or coming financial year.

Ques:Are there any particular educational courses for which income tax exemption is given?
Ans:No specific course defined in the Income tax act ,but course should be in India and a full time course.


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