Feb 262013

Section 80CCD – Employer contribution no limit (NPS)

The Income Tax Act has yet another deduction that you can claim and save more of your income from tax deduction. Section 80CCD offers that by contributing a part of your income towards the new pension fund/scheme (notified pension scheme or NPS), you can exempt up to 10% of salary. NPS is a defined contribution based pension system launched by Government of India with effect from Jan 1, 2004. The deduction shall be allowed within the aggregate upper limit of Rs.1,00,000 considering deductions u/s 80C, 80CCC and 80CCD. An assessee or any individual employed under the central government or other employer on or after Jan 1, 2004 is eligible to contribute funds in the pension scheme. To claim benefit under this section, the assessee or individual as mentioned above should have deposited or paid an amount in his account under the new pension scheme notified by the central govearnment. Self employed persons are also eligible to contribute under this section and claim deduction. Employee contribution towards the notified pension scheme is limited to the extent of 10% of salary.

Besides, the employer is also allowed to contribute under this scheme. Section 80ccd states that contribution made by the employer to a notified pension scheme is exempt from tax to the extent of 10% of salary .The best part under this scheme is that from the assessment year 2012-13, the employer’s contribution are not included in the overall limit of Rs.1, 00,000 provided the contribution does not exceed 10 percent of the salary. As per the new budget proposal, the contribution made by an employer towards the pension scheme shall not be counted under the section 80C but under the section 80CCD.Earlier, this contribution was a part of the section 80C deduction under the provisions which a total of Rs.1, 00,000 from the annual income can be made tax-free tax. The maximum limit of Rs.1,00,000 does not apply to the Employer’s contribution  towards NPS.

This scheme will aid further tax savings and both employee and employer can avail benefits under this section. Employee contribution provides tax deduction on their salary; salary includes dearness allowance but excludes all other allowance and basics. Employers can show their contribution as a business expense from the next financial year and enjoy the added advantage of tax reduction for the firm.

Feb 202013

Benefit of Joint Home Loan and its Tax benefit

Buying a house has always been a bit of financial trouble for many. So, banks come to rescue and aid people with a home loan by facilitating the funding. Two earning members can come together to buy a house and share the loan. Joint home loan is the ultimate way out! Earning members of the family; Spouse, siblings, parent & child either can jointly issue a loan from the bank. This will ease off the burden of loan borrowing. Besides, there is an added major advantage to this joint loan borrowing; the co borrowers can share the tax benefits under the Income Tax Act.

Benefits of joint home loan

  • Two earning members will save a part of their income from taxation
  • The debt burden is minimized as there two people will share the loan
  • Both, Principle and interest payable are exempted from tax under the section 80C and section 24 respectively of the Income Tax Act.

 Rules for seeking a joint home loan:

  • A joint home loan can be taken by minimum 2 and maximum 6 members
  • Not all family members are eligible to take joint home loan, generally blood relatives are allowed
  • The lender defines the relationship between co borrowers in order to be eligible to seek the joint loan
  • KYC documents should be submitted that contain identity and address proof of the loan applicants
  • Documents containing the proof of ownership and income proof of borrowers are also required.

 Repayment of joint home loan:

  • Either the EMI can be paid via a joint account that is held by the co borrowers
  • Payment made by means of two different accounts for the same EMI is not allowed. However they can share total no. of installments. The payment should come from come from borrowers jointly.

The maximum tax benefit available to a single person who seeks home loan is however 1, 50,000 for each co borrower. Hence it is advisable to get a break up of tax benefits on stamp paper prior to issuing the loan. The agreement will specify the share of the ownership as well as that of the home loan. This agreement will contain the share of the ownership along with that of the home loan issued by them.

The co-borrowers must decide the ratio in which they will borrow the loan. Supposing the ratio decided is 60:40 then the tax benefits availed by them will be in the same ratio. The former can avail a 60% of tax benefit on the maximum permissible exempted limit; while the latter, 40%.

Now, it is way easier and beneficial to manage the funding for your new home by applying for loan. The income tax benefits, plus the lesser burden on a single person, in terms of loan repayment. Also, it enhances your eligibility as a loan seeker because the income of two people is clubbed; the bank finds it convenient to grant the loan.

Feb 142013

XBRL Filing due date Extended upto 28thFebruary 2013

Filing of Balance Sheet and Profit and Loss Account in Extensible Business Reporting Language (XBRL) mode for the Financial Year Commencing on or after 1-4-2011

GENERAL CIRCULAR NO. 5/2013 [NO. 17/161/2012-CL-V], DATED 12-2-2013

In continuation of the Ministry’s General Circular Nos. 16/2012, dated 6-7-2012, 34/2012, dated 25-10-2012, 39/2012, dated 12-12-2012 and 1/2013 on the subject cited above, it is stated that the time limit to file the financial statements in the XBRL mode without any additional fee/penalty has been extended up to 28th February, 2013 or within 30 days from the due date of AGM of the company, whichever is later.

All other terms and conditions of the General Circular No. 16/2012, dated 6-7-2012 will remain the same.

Feb 142013


Home loan is the amount that the individuals seek from the bank  to purchase a residential property. The bank usually disburses the amount through a cheque to the person who seeks the loan in his name.However, there is some criteria that the bank follows while granting the loan. The loan seeker must pay the amount and the interest to the bank . The home loan is mainly composed of two parts:

  • The principal component
  • The interest component

The loan seeker pays back the principal amount taken from the bank as a loan; as well as he must pay the interest on this principal.The bank grants loan to the individual once the criteria under consideration is fulfilled.The principal amount is exempted from being taxed under the provisions of section 80C. The  interest on this amount is also deductible from the taxable income under the section 24 .The loan seeker can avail of the tax benefits under these two sections of the Income Tax Act.

This means that the part of the income that the individual uses to pay the interest on house loan as an EMI(equated monthly installments) is exempted from taxation.The principal repayment shall be deducted under section 80C only if the loan seeker is staying in the same house for which the loan is issued.Also, if the person is not residing in that house because he/she is working out of  town, in that condition also  the principal repayment deduction will take place.In other conditions, if the house is not occupied by the owner or is under construction , the deduction under 80C is not possible. The maximum limit for deduction under this section is Rs.1,00,000. EPF, PPF, ELSS, LIC and there are other ways of ensuring deduction under the section 80C in order to save tax.

The EMI that the loan seeker pay towards the interest on home loan can also be exempted from taxation under the section 24 b.The principal amount is paid with interest in installments ;the total amount for the interest portion  over the entire year is exempted from tax and  from a deduction under the section 24. This section covers the interest on amount that is borrowed in order to acquire a property, or facilitate its  construction, renovation or repair. However,the penal interest on housing loan is not allowed as a deduction.

Similarly, if the individual chooses to pay this loan by taking a fresh loan, then the fresh loan is allowed as a deduction under section 24 if and only if the fresh loan is wholly and solely used to pay the original loan.There is no limit as to the number of houses under this section; interest payment on as many home loans is allowed but the limit is Rs 1,50,000 only.The interest payment is directly deducted from the income and is set aside from the taxable income. However, this section provides exemption for home loans for self occupied property only.

So, next time you plan to buy a house and need funding ,you need not think twice to take a home loan from the bank. After all  it’s not just an aid to your funding for the house but its also  going to help you save a lot of your income from the tax.

Feb 082013

TRACES- The new online platform for TDS by Income Tax Department

The Income Tax Department has come up to launch a new website for TDS (Tax Deduction at Source). The web address of this new online format is https://www.tdscpc.gov.in TRACES is the name given to this system which stands for TDS Reconciliation Analysis and Correction Enabling System and has been set up by TDS Centralised Processing Cell of the income-tax department. A user friendly interface in an online format; facilitating ease of accessibility to its users. The site covers features that will assist deductors and tax -payers in viewing, downloading, accessing information on the pertaining subject matters.

Register and become a member on this portal.

Users need to register on the website in order to make use of the services offered by the web based portal. This TDS exclusive website will replace the old website TIN NSDL. The previously registered members on the NSDL site can use their login details on the new website as well. And the new users can sign up as a new user. The details regarding the same have been given under the ‘FAQ’ section. Registration onwards, the users can access all the facilities and services available on the site. In case the existing member login fails, the user shall register once as a new user on the portal.

The Functionalities enable the users to the following:

  • Registration of a admin user for a TAN
  • Creation of sub users by admin users
  • View the challan status
  • View annual tax credit statements (form26AS)
  • Download justification reports
  • download Form 16/16A
  • download the NSDL consolidated file
  • Download Consolidated TAN-PAN File
  • Download Justification report
  • PAN verification
  • Brief of deductors’ account
  • Online registration of TAN
  • Online filing of TDS Statements
  • Provide feedback

The annual tax credit deducted for the TDS/TCS amount by the deductors will be viewed by the tax payers. The website is beneficial for both, tax payers as well as tax collectors. The tax payers can view the status and statements whereas the deductors can view and download the related forms, etc. This effort by the concerned department is to aid the deductors and deductees at every possible step and improve the service mechanism as per the feedback of the users.

Feb 042013

Tax Saving Tips – Investments and Deductions Under Section 80C

Your hard earned income is subject to taxation under the Income Tax Act. You can save a part of your income as a tax deduction; thus reducing your total taxable income. Such tax deduction options are available under the various sections of it act. Section 80 c provides that Rs 1 lac per annum can be saved from being taxed by investing in such instruments:

  • Public Provident Fund (PPF)
  • National Savings Certificates (NSC)
  • Contributions to Employees Provident Fund (EPF)
  • Fixed Deposit (FD) with Banks having a lock-in period of five years
  • Equity Linked Savings Scheme (ELSS) of Mutual Funds
  • Unit Linked Insurance Plan (ULIP)
  • Life Insurance Premiums
  • Repayment of Housing Loan (Principal)

It is applicable for individuals irrespective of their tax bracket and annual income. These are the tips under this section that will help you save your tax from your income.


It is the risk free government tool with a lock in period of 15 yrs and is beneficial for those seeking long term investment. You can invest up to Rs 1lac in all at the current rate of 8.8%.  . The interest earned here is not taxed. The minimum investment in PPF is Rs 500 per year and the maximum investment is Rs 1,00,000/- per year. It can be a lump sum investment or can be divided in to a 12 transaction per year. A special benefit that comes along is that in case of insolvency it will not be attached to the assets of the insolvent. PPF can be used for minors as well, who can avail benefit of the same when they turn 18.


Very secure since it is backed by the government. Interest rate for 5-year NSC delivers 8.6% whereas 10-year NSC offers 8.9%. Interest earned is subject to tax and there is no limitation on the amount of investment. NSC is eligible for use as a security in order to derive a loan from the banks. Minimum amount is Rs100.


Employees provident fund is the deduction from the salary (minimum a 12%) made by the employer into a provident fund account. This deduction is mandatory on the earned income as an aid to both private and non pensionable public sector employees. A fraction of your monthly income is deducted and gets accumulated till the time employee attains the retirement age. After the age of 55, the employee can withdraw full amount at any time. Apart from monthly deduction the employee can contribute extra through VPF voluntary contributions.


In a Fixed Deposit Saving Scheme a certain sum of money is deposited in the bank for a specified time period with a fixed rate of interest. For tax free bank deposit under section 80c, lock in period of 5 yrs is a must and premature withdrawal is not allowed. The amount under this FD is deducted from the taxable income and the maximum permissible amount is Rs1 lac. This amount can be undertaken for a loan. A safe investment option beneficial for those who want to lock their money for long. However the interest received on such deposit is taxable.


This market linked investment comes up with a 3 year lock in period. ELSS is your helping hand in saving tax offering high returns. With low expenses, this option ensures a high liquidity and growth in long term. Withdrawing before a 3 year period is not allowed.  Also ELSS returns are not guaranteed as they are market linked investments.


 ULIP is the risk free investment option that lets you flexibly invest wherein part of the premium pay goes toward the sum assured and the balance will be invested in whichever investments you choose depending upon the scheme-equity, debt or a mix of the both. The premium that is paid under these schemes is considered under this section. It can be partly exposed to stock market. ULIP schemes come in insurance cover forms as well as investment options.


This includes the premiums that you pay for the LICs or insurance policies under other private insurance companies. The policies ensuring life of self, spouse or any child are considered. Also, insurance premiums paid for parents, is covered for deduction under 80C. Thus, the total amount for all premiums from all eligible policies can be included as the deduction.


Under section 80c , the principle component that you pay for your home loan is eligible for deduction. The yearly amount that is spent under the repayment of housing loan as the principal can be deducted from the taxable income.