“NEW RETAIL INVESTOR CAN CLAIM DEDUCTION U/S 80CCG UP TO RS. 25,000/-”

TAX TALK-07.01.2013-THE HITAVADA

TAX TALK  

BY CA. NARESH JAKHOTIA

Chartered Accountant

“NEW RETAIL INVESTOR CAN CLAIM DEDUCTION U/S 80CCG UP TO RS. 25,000/-”

Query 1]

I am a Central Government employee & my date of birth is 11-03-1953. I am Retiring on 31-03-2013 on superannuation. My query is that as I am completing 60 Years on 11-03-2013,

am I eligible for exemption limit of Income-tax of Rs. 2,50,000/- being a senior citizen during the year 2012-2013? Please specify. [K. S. Ikhar, Pratap Nagar, Nagpur-p_ikhar@rediffmail.com]

Opinion:

Senior citizen shall be entitled for the basic exemption limit of Rs. 2.50 Lacs for the F.Y. 2012-2013. A senior citizen is a person who has completed the age of 60 years at any time during the previous year. Since you will be completing the age of 60 years during the F.Y. 2012-13, you are certainly entitled to the basic exemption limit of Rs. 2.50 Lacs for the financial Year 2012-13.

Query 2]

I have shifted from Nagpur (Maharashtra) to Bangalore (Karnataka) and my address in the PAN is of Chimur (Chandrapur District). I am still filing my Income tax return from Nagpur office (Salary circle) physically through my friends as I am a pensioner of Maharashtra Govt. Now, can I submit my I-T return physically (I do not want do e-filing) in Bangalore income tax office and with the same PAN card? [n_premkumar@hotmail.com]

Opinion:

You can file your income tax return manually in Banglore. Advisably, you should get the address changed in the PAN data base. For this, you have to make an application in “Request for New PAN Card or/and Changes or Correction in PAN data”. The form can be downloaded from the websites of UTI Technology Services Ltd (UTITSL), National Securities Depository Ltd (NSDL), or the I-T department [www.utitsl.co.in, www.tin-nsdl.com or www.incometaxindia.gov.in]. You need to tick the address box at the left margin of the form. The form can be submitted in Bangalore itself at PAN application centers of UTITSL and NSDL, the addresses of which are available at the above mentioned website.

Query 3]

My daughter has got a job recently as Asst Professor. It is the beginning of her career. How much percentage of income, she should invest & save in PF, PPF, FD's, medical, insurance, LIC, mutual funds? Kindly guide so that she can take informed decision. [Narendra-np_anand7@rediffmail.com]

Opinion:

As far as saving is concerned, earlier the start, better the miracle of interest compounding. The importance of saving cannot be overruled at any point of time. Make hay while the sun shines and the money saved is money earned hold true at all the time. The other reason that you should start saving early is that you will need to save less money. 

As far as the investment from the income tax perspective is concerned, tax payer can invest
a] Rs. 1 Lacs in the PF/PPF/LIC/ELSS depending upon the returns and risk appetite of the individual investor. The investment of Rs. 1 Lacs will be eligible for deduction u/s 80C.
b] Rs. 15,000/- investment can be done on the Mediclaim policy to have deduction u/s 80D.

c] Further, a new retail individual investor who has not opened a demat account and has not made any transaction in the derivative segment so far or who has opened a demat account but has not made any transaction in the equity segment or the derivative segment, can further have the benefit of deduction u/s 80CCG up to a maximum of Rs. 25,000/- on investment of Rs. 50,000/- The deduction is available only if the income of assessee doesn’t exceed Rs. 10 Lacs & the investment is done in “Eligible Securities”. The detailed scheme titled “RAJIV GANDHI EQUITY SAVING SCHEME (RGESS)” as notified recently can be accessed at www.nareshjakhotia.blogspot.com.

Query 4]

Whether the businessmen are still eligible for deduction towards the rent payment of residential house property or it is available only to the salaries assessee who receives Rent allowance from their company? [Kishore Wadattiwar, Chandrapur]

Opinion:

Any individual (whether salaried or businessmen) can claim deduction from its income towards rent payment of a residential accommodation u/s. 80GG of the Income Tax Act.
The condition precedent to claiming deduction under this section is:-
a] He has to prepare a declaration in Form No.10BA.
b] He or his minor child, spouse or HUF of which he is a member, should not be owner of a house at the place where he ordinarily resides or performs his duties; or he should not be owner of any house at any other place, the income therefrom is to be determined under section 23(2) (a) or, as the case may be, under section 23(4) (a) (i.e., income from self-occupied house property).
Amount of deduction – The deduction admissible shall be the lower of the following: -
(i) house rent incurred in excess of 10% of “Total Income”; or
(ii) Amount at 25% of “total income”; or
(iii) Rs. 2000 per month.
Note:

1.      The term “Total income” means total income after allowing all deductions expect the one provided under this section itself.

2.      In case of salried assessee who is in receipt of HRA from the employer, no deduction u/s 80GG is admissible. However, they can claim deduction u/s 10(13A) of the Income Tax Act-1961.