Income tax filing due date is getting closer. However, quite a lot of tax filers are still not aware of all the deductions that could be availed of. It is always good to be updated on the latest tax deductions. It helps one in maximizing the tax deductions, hence minimizing the tax to be paid. Let us now look at some of the latest sections available for tax deduction from FY 2012-13 onwards.
Popularly known as RGESS or Rajiv Gandhi Equity Savings Scheme, this section has been introduced in order to push the in-flows into the Indian capital markets. It is also the first time that an equity investment has been allocated a section in the tax deductions page. Equity investments over 1 year are exempt from tax, though. This investment is only for the first time equity investors with income up to Rs. 12 lakh. Maximum investment allowed is Rs. 50,000 with 50 per cent deduction allowed for the invested amount.
Interest on savings bank account will now be exempt up to Rs. 10,000 in a year. However, it does not mean that income below the specified limit should not be declared. Any income generated from the savings bank account should first be declared and then the exemption can be claimed. This section applies to savings deposits in banks, co-operative societies and post office.
For authors of certain specified books, royalty income or copyright fees up to Rs. 3 lakh will be available for deduction. The books can be work of art, literature or scientific nature. The author needs to furnish a certificate in prescribed format.
Royalty income on patents will also be available for deduction up to Rs. 3 lakh. Patents should have been registered on or after 1st April, 2003 under the Patents Act, 1970 (39 of 1970). The author needs to furnish a certificate in prescribed format.
Section 80CCD (1)
Deduction for contribution to notified pension scheme which was previously under one section by name 80CCD has now been divided into two sections. As per section 80CCD(1), employee contribution under notified pension scheme by Central Government or any other employer, is deductible up to 10 per cent of salary, subject to limit of 1 lakh under Section 80C.
Section 80CCD (2)
As per this section, employer contribution under notified pension scheme by Central Government or any other employer is deductible up to 10 per cent of salary, without any upper limit.
Apart from the above mentioned sections, an additional deduction of Rs. 1 lakh (apart from existing 1.5 lakh) on the interest amount would be available for first time home buyers with home loan up to Rs. 25 lakh. This will be available for FY 2013-14 (AY 2014-15) and is welcome news for a lot of middle class first home buyers.
Please note that Section 80CCF (Investment in Infrastructure Bonds) has been removed from the available deductions for FY 2012-13. The information in this article should be useful for both, filing taxes as well as planning taxes for the next fiscal year (AY 2014-15).
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