To study the awareness amongst teaching and non-teaching staff of MGM regarding various tax savings...

© MGM IOM/MBA To study the awareness amongst teaching and non-teaching of MGM staff of tax savings

provisions available.

© MGM IOM/MBA II SEM 2017 Page 1




1 PART-I

1.1 Introduction

1. Executive Summary–brief explanation of the project.

Income Tax Act, 1961 governs the taxation of incomes generated within India and of incomes

generated by Indians overseas. This study aims to study the awareness of various income tax

provisions amongst teaching and non-teaching staff of MGM.

Income Tax Act, 1961 is the guiding baseline for all the content in this report and the tax

saving (investment) provisions provided herein are a result of analysis of options available in

current market. Every individual should know that tax provisions in order to avail all the

incentives provided by the Government of India under different statures are legal.

This project covers the basics of the Income Tax Act, 1961 and broadly presents the

awareness of income tax provisions and tax saving (investment) options provided under these

laws. Any other hideous means to avoid or evade tax is a cognizable offence under the Indian

constitution and all the citizens should refrain from such acts.




1.2 Objectives of the Project.

To study the awareness of tax saving provisions amongst the teaching and non-teaching staff

of MGM.

To study the popularity of any one saving scheme.




2.PART-II

2.1 Industry profile

2.1.1 History

The 19th century saw the establishment of British Rule in India. Following the Mutiny of

1857, the British Government faced an acute financial crisis. To fill up the treasury, the first

Income-tax Act was introduced in February, 1860 by James Wilson, who became British-

India's first Finance Minister. Thenceforth, there were many developments in the field of

taxation. The tax system was modeled largely on the lines of the British system prevailing

then.James Wilson, while introducing the I-T Act in 1860, quoted from Manu for levying

income-tax in the country. The Act received the assent of the Governor General on July 24,

1860, and came into effect immediately. It was divided into 21 parts consisting o f no less

than 259 sections. The salient features of the Act were:

Income was classified under four schedules:

i) Income from landed property;

ii) Income from professions and trade.

iii) Income from securities, annuities and dividends.

iv) Income from salaries and pensions.

Tax was imposed on each of these sources. Exemption limit for the general public was fixed

at Rs. 200 against the exemption limit of Rs. 4,980 to the military and police and Rs. 2,100 for

the naval and marine officers.

Agricultural income was subject to tax. The rate of tax was 2 per cent for incomes ranging

from Rs. 200 to Rs. 499. And for incomes above this, 4 per cent. Of the 4 per cent charge, 1

per cent was to be retained by provincial governments and 3 per cent w as to go to the Central

Government. Compulsory returns were required to be submitted by all who were liable to tax.

Except in Calcutta, the administration of the tax was left in the hands of the land-revenue

officers. And the financial year commenced on August 1, 1860.

This first Act of 1860 yielded about Rs. 1.50 crores of tax revenue. This Act continued for

five years before lapsing in 1865. The income-tax receipts in 1860-61 was 1.1 millions, in

1861-62, 2 millions; in 1862-63, 1.9 millions; in 1863-64, 1.5 millions ; and in 1864-65, 1.3

millions.




After the expiry of the Act, the important events in the history of tax laws in India were as

follows:

1886 - licence tax converted into the I-T Act (Act 11 of 1886);

1916 - graduated rates of taxation on income above Rs. 2,000 introduced;

1917 - super tax introduced;

1918 - I-T Act of 1918 passed;

1919 - Act X of 1919 imposed duty on excess profits;

1920 - Act X of 1919 abolished;

1922 - Indian I-Tax Act, 1922 passed; 1939 - substantial amendments made to the I-T Act,

1922; and

1961 - A new act titled `Income-tax Act, 1961' was drafted and came into force from April 1,

1962. This Act, with numerous amendments made from time to time by various Finance Acts,

is currently in force.

2.1.2 Organizational Structure

Income-Tax Administration

From very imposition of income-tax by British rulers in India in the year 1860, the income-tax

was administered and collected by the Provincial Government till the year 1922. In 1922,

when a separate Income-Tax Act was passed, separate provisions for administration were

made. It was made under which ‗Board of Inland Revenue‘ was provided to perform the duty

of making rules and administering the tax. In 1924, this Board was replaced by ‗Central Board

of Revenue‘12. With the growing complexity of income-tax administration ‗Central Board of

Direct Taxes‘ was constituted under ‗Central Board of Revenue, 1963. ‗Central Board of

Direct Taxes is the apex body in the Administration of income-tax. It works under the Finance

Ministry. It executes all those functions prescribed under the Act as well as entrusted by the

Finance Ministry. It consists of a number of members appointed by the Central Government.

It has certain powers conferred upon it by the Income-Tax Act. The board for proper

administration of the Act may issue such orders, instructions and directions to other income-

tax authorities as it may deem fit. For efficient management of work of assessment and

collection of revenue it may issue general or special orders to be followed by Income-Tax

Authority.

Functional Area:




The Board has divided its functions under0 three subordinate authorities viz. administration,

assessment and judicial for its proper working.

Administration:

Administrative authorities look into the matter of proper administration of Income-Tax Act,

1961.

Assessment:

Assessment authorities make assessment, collects tax revenue.

Appeals:

Judicial authorities hear and dispose of the appeals against judgments of Income-Tax Officers.

Director General (DGIT) or Chief Commissioner (CCIT)

Director General of Income Tax (DGIT) or Chief Commissioner of Income Tax (CCIT) are

appointed by Central Government and perform the functions assigned by the Central Board of

Direct Taxes. They can appoint income-tax authorities below the rank of Assistant

Commissioner. They can exercise powers of a court for making any enquiry or investigation

into concealment.

Commissioner of Income-Tax or Directors of Income-Tax

Commissioner of Income-Tax or Directors of Income-Tax is appointed by the Central

Government. They can appoint, assign jurisdiction and functions to Inspecting Assistant

commissioners and

Income-Tax Officers and can give instructions to them. They have powers like making

enquiry, transferring of cases, search and seizure etc.

Joint Commissioners

Joint Commissioners are also appointed by central government. Their main duty is to detect

tax evasion and supervise subordinate officers. They have powers of making enquiry, call

information, survey,

Commissioners (For Appeals)

The Commissioners of Income-Tax (Appeals) is an appellate authority. It is appointed by the

Central Government for disposal of Appeals. They have powers regarding discovery of

evidence, call for information, inspect registers of companies etc.




Income-Tax Officers

Class-I Income-Tax Officers are appointed by the central government and class-II officers are

appointed by Commissioner of Income-Tax. They perform their functions within the

jurisdiction of Assistant Directors or Assistant Commissioners. They have power of discovery

and production of evidence, search and seizure, survey, make assessment, grant refund etc.

Inspectors of Income-Tax

Inspectors of Income-Tax are appointed by the Commissioner of Income-Tax. They are

subordinate to Income-Tax officer and other higher authorities under whom they work and

perform functions assigned to them by superiors.

2.1.3 Objectives of income taxation

Generally, competitive markets forces tend to attract resources into those activities which best

satisfy the consumers of goods and services. Laissez faire is a policy that implies the absence

of any governmental interference with private decision-making. This has, however, almost

ceased to exist. Micro-economic policies of the governments alter the unrestricted working of

the free-market system in an effort to effect either the allocation of resources among users or

the distribution of income among people.

The power to tax is an important element in such policies and is used not only to achieve re-

distribution of incomes but also for attaining various other social and economic goals.

The basic objective of taxation is to raise money needed to finance government expenditure.

But taxes have other effects too. As a factor affecting the pricing of goods, they determine

what to produce and in what measure. By taxing the affluent sections of society more, they

change the distribution of incomes and wealth. There is a bewildering array of taxes in any

economy, especially in developing countries. Some - such as sales-tax, income-tax and wealth

tax - are visible, and yet others - such as excise, Customs duties, and so on - are invisible (as

they are imposed on raw materials) and are known as indirect taxes. At present, people are

taxed on what they earn, on what they spend, on what they own and even on what they leave

behind for their successors to inherit.

Central taxes such as income-tax tend to be, in aggregate, progressive. Whereas state and local

authorities rely heavily on sales-tax and property tax, which are generally regressive.

Taxation falls in the realm of public finance, the most rapidly developing branch of economic

theory. But traditional economic theories are of little help in dealing with everyday tax

problems of a country. In public-finance treaties, many of the theorie s and concepts are

concerned with evaluating the economic effects of taxes by contrasting the characteristics of

different types of taxes. But in reality, taxes have to be evaluated on a continuous basis so as

to be in tune with the economic system of a country and for dealing with the problems therein.




For example, in the long-term fiscal policy (LTFP) announced by the Government in August

1986, the immediate problems to be tackled were identified as `poverty and unemployment'.

The policy statement spelt out that the ``imperatives of the future lie in strengthening the

growth momentum of the economy and in harnessing the rapid advances in technology in the

world'' so that the Government can effectively tackle the deep-rooted problems of poverty and

unemployment in the country.

In the various plans formulated so far, the emphasis had been on growth, modernization, self-

reliance, social justice and generation of productive employment. Taxes play an important

role in achieving these objectives. Thus, taxation, which started as an exercise to mobilizing

revenue for the Government, has become an important instrument for achieving various

objectives.

The tax system of a country, thus, reflects the social, economic and political aims of the

Government. As a nation's economic goals expand, as its policy objectives change, and as its

industry grows, diversifies or fails to expand, tax policy has to alter.

Direct taxes, in addition to financing federal government expenditure, serve several functions.

They help in resource allocation, encourage or discourage certain kinds of economic and

social behavior, redistribute income and wealth, stimulate and stabilize economic growth and

even help in solving certain specific economic problems such as pollution, shortage of

accommodation, and so on, through the mechanism of tax incentives.

Thus, taxation has developed into an instrument that promotes economic growth, stability and

efficiency and has become a major device through which governments implement their

political thinking and secure the participation of the masses in its policies and progress. A

well-administered tax system is a good weapon against many odds. In such a tax system, it is

the government, and not the taxpayers, which decides the economic sectors to be assisted and

which not to.

It has to be appreciated that nothing is so detrimental to a taxpayer's morale than the belief or

knowledge that other taxpayers are not being required to carry their part of the tax load.

Therefore, tax policies and law have to be framed and administered in a manner that punishes

tax evaders and tax delinquents.




2.2 Some prominent companies in the industry

A few prominent companies in insurance are : Tata AIG General Insurance.

Bajaj Allianz General Insurance.

New India Insurance.

ICICI Prudential Life Insurance.

IFFCO TOKIA General Insurance

2.2.1 LIC (Life insurance Company)

Tax benefits on various LIC insurance policies

LIC has a host of different insurance policies that are suitable for different types of customers.

Listed below are all applicable tax benefits that you get to avail if you own an insurance policy

from the most premiere insurance providers of the country.

All tax exemption for payment of LIC premiums are offered as per section 80C of the Income Tax

Act, 1961.

Tax benefits on Life Insurance policies from LIC (under section 80C) :

Let us look into the tax benefits that are received by customers under section 80C if they purchase

a life insurance policy from LIC.

Premium paid towards life insurance policy in the name of self/spouse/child is eligible for

deduction up to 20% of the actual capital sum assured

Premium paid towards life insurance policy in the name of self/spouse/child is eligible for

deduction up to 10% of the actual capital sum assured




Contribution towards deferred annuity plans to keep a deferred annuity plan for self/spouse/child

is eligible for deduction but only if the contract does not offer cash payment to customer in lieu of

annuity payment made by him or her.

Tax benefits on LIC insurance policies under section 80CCC:

Section 80CCC comes under the umbrella of section 80C and offers tax exemption to customers

who are paying insurance premium from their taxable income towards any annuity plan that

promises them payment of pension in the later year.

Tax benefits under section 80D which are applicable to LIC insurance policies

Almost all health insurance related tax benefits come under the purview of section 80D of the

Income Tax Act. Let us look into each of these deductions in detail.

Up to Rs.25000 is allowed as deduction for customers who have paid money towards government

health insurance scheme or health insurance for self or family or on account of health check-up of

either the policyholder or his/her family

Additional Rs.25000 worth of deduction is allowed in case you have paid premium towards

keeping up the health insurance or health check-up of parents whether dependent or not

In case, for the above two points of exemption, any of the members is above 60 years of age then

the deduction will go up by Rs.5000 and the allowed limit changes to Rs.30,000

In case any of the health check-ups made above are preventive in nature then the maximum limit

allowed is Rs.5000

For HUFs, deduction allowed is up to Rs.25,000 if the amount is paid towards availing health

insurance for any member of the HUF

NOTE: For deduction purposes, the mode of payment for health insurance plays an important

role. The mode of payment can be cash or any other mode for preventive health check-up while

for any other medical issue listed above the payments needs to be made in any mode other than

cash.

Tax benefits on LIC insurance policies under section 80DD:

Section 80DD of the Income Tax Act comes under section 80D and deals with tax exemption for

any person who is depositing a certain amount with LIC for maintenance of a handicapped

person. The limit for this deduction is Rs.50,000. In case, the disability suffered by the

handicapped person is severe, then the limit is increased to Rs.1,00,000. JeevanAadhar plan from

LIC is aimed towards meeting this particular insurance need of customers.

Tax benefits on LIC insurance policies under section 10 (10D):




Any death claims or maturity benefits received by a policyholder are eligible for tax exemption

under section 10 (10D) of the Income Tax Act. Here are a few possibilities that are included under

this.

First and foremost point about application of this tax benefit is that the main insurance policy

should not have been issued under section 80DD or as a keyman policy.

Up to 20% of the actual sum assured is exempt from tax for policies issued on or after 1st April

2013

Up to 10% of the actual sum assured is exempt from tax for policies issued on or after 1st April

2012

These insurance policies should be issued for life protection of a person suffering from severe

disability as referred in section 80U or suffering from an ailment listed in section 80DDB

Listed above are the various tax exemptions that are applicable to insurance policies offered by

LIC to customers in India. However there is a very important point that needs to be kept in mind

while availing insurance and looking for tax benefits to be reaped out of it.

That point is - Maximum deduction allowed as tax benefit is Rs.1,50,000 and includes all other

tax exempted financial products too which fall under section 80C of the Income Tax Act. Also,

the combined maximum limit for deduction under section 80C, 80CCC and 80CCD is Rs.1.5

lakh, currently.




2.3.1 Company profile

LIC Life Insurance is one of the fastest growing sector in India since 2000 as Government

allowed Private players and FDI up to 26% and recently Cabinet approved a proposal to increase

it to 49%. Life Insurance in India was nationalized by incorporating Life Insurance Corporation

(LIC) in 1956. All private life insurance companies at that time were taken over by LIC.

In 1993, the Government of India appointed RN Malhotra Committee to lay down a road map

for privatization of the life insurance sector.[citation needed]

While the committee submitted its report in 1994, it took another six years before the enabling

legislation was passed in the year 2000, legislation amending the Insurance Act of 1938 and

legislating the Insurance Regulatory and Development Authority Act of 2000. The same year the

newly appointed insurance regulator - Insurance Regulatory and Development Authority IRDA—

started issuing licenses to private life insurers.

Income tax is that percentage of income paid to the government by the taxpayers for

the betterment of the public at large. This income is categorized into different groups on the basis

of the amount of income. Each such group is known as a Tax Slab. Tax is charged at different

rates on the range of income falling under different income tax slabs.

The Income Tax Act 1961 is the law that governs the provisions for our income tax.

The income tax rates are usually revised every year during the budget. Various deductions that

are allowed to a taxpayer under Section 80C, Section 80D etc.

2.4 Income tax slabs (FOR AY 2015-16/2016-17)

a) For Men Below 60 Years Of Age ( FOR AY 2015-16/2016-17)

Income Tax Slab Income Tax Rate

Income uptoRs. 2,50,000 Nil

Income between Rs. 2,50,001 - Rs. 500,000 10% of Income exceeding Rs. 2,50,000

Income between Rs. 500,001 - Rs. 10,00,000 20% of Income exceeding Rs. 5,00,000

Income above Rs. 10,00,000 30% of Income exceeding Rs. 10,00,000




b) For Women Below 60 Years Of Age






c) For Senior Citizens (Age 60 years or more but less than 80 years)






d) For Senior Citizens (Age 80 years or more)





e) Hindu Undivided Families (HUF)




Income Tax Slab Income Tax Slab Rate

Up to Rs.2,50,000 Nil

Rs.2,50,000 to Rs.5,00,000 10% Income exceeding Rs. 2,50,000


Over Rs.10,00,000 30% Income exceeding Rs. 10,00,000

f) Legal Entities Registered as Associations of Persons






g) Legal Entities Registered as Bodies of Individuals









2.4.1 Income from Salaries

2.4.2 Incomes termed as Salaries:

Existence of ‗master-servant‘ or ‗employer-employee‘ relationship is absolutely essential for

taxing income under the head ―Salaries‖. Where such relationship does not exist income is taxable

under some other head as in the case of partner of a firm, advocates, chartered accountants, LIC

agents, small saving agents, commission agents, etc. Besides, only those payments which have a

nexus with the employment are taxable under the head ‗Salaries‘.

Salary is chargeable to income-tax on due or paid basis, whichever is earlier.

Any arrears of salary paid in the previous year, if not taxed in any earlier previous year, shall be

taxable in the year of payment.

2.4.3 Advance Salary:

Advance salary is taxable in the year it is received. It is not included in the income of recipient

again when it becomes due. However, loan taken from the employer against salary is not taxable.

2.4.4 Arrears of Salary: Salary arrears are taxable in the year in which it is received.

2.4.5 Bonus:

Bonus is taxable in the year in which it is received.

2.4.6 Pension:

Pension received by the employee is taxable under ‗Salary‘ Benefit of standard deduction is

available to pensioner also. Pension received by a widow after the death of her husband falls

under the head ‗Income from Other Sources.

2.4.7 Profits in lieu of salary: Any compensation due to or received by an employee from his employer or former employer at or

in connection with the termination of his employment or modification of the terms and conditions

relating thereto;

Any payment due to or received by an employee from his employer or former employer or from a

provident or other fund to the extent it does not consist of contributions by the assessee or interest

on such contributions or any sum/bonus received under a Keyman Insurance Policy.




Any amount whether in lump sum or otherwise, due to or received by an assessee from his

employer, either before his joining employment or after cessation of employment.

2.5. Allowances from Salary Incomes

2.5.1 Dearness Allowance/Additional Dearness (DA):

All dearness allowances are fully taxable

2.5.2 City Compensatory Allowance (CCA):

CCA is taxable as it is a personal allowance granted to meet expenses wholly, necessarily and

exclusively incurred in the performance of special duties unless such allowance is related to the

place of his posting or residence.

Certain allowances prescribed under Rule 2BB, granted to the employee either to meet his

personal expenses at the place where the duties of his office of employment are performed by him

or at the place where he ordinarily resides, or to compensate him for increased cost of living are

also exempt.

2.5.3 House Rent Allowance (HRA):

HRA received by an employee residing in his own house or in a house for which no rent is paid

by him is taxable. In case of other employees, HRA is exempt up to a certain limit

2.5.4 Entertainment Allowance:

Entertainment allowance is fully taxable, but a deduction is allowed in certain cases.

2.5.5 Academic Allowance:

Allowance granted for encouraging academic research and other professional pursuits, or for the

books for the purpose, shall be exempt u/s 10(14). Similarly newspaper allowance shall also be

exempt.

2.5.6 Conveyance Allowance:

It is exempt to the extent it is paid and utilized for meeting expenditure on travel for official work.

2.6Income from House Property

2.6.1 Incomes Termed as House Property Income:

The annual value of a house property is taxable as income in the hands of the owner of the

property. House property consists of any building or land, or its part or attached area, of which the




assesse is the owner. The part or attached area may be in the form of a courtyard or compound

forming part of the building. But such land is to be distinguished from an open plot of land, which

is not charged under this head but under the head ‗Income from Other Sources‘ or ‗Business

Income‘, as the case may be. Besides, house property includes flats, shops, office space, factory

sheds, agricultural land and farm houses.

However, following incomes shall be taxable under the head ‗Income from House Property'.

1. Income from letting of any farm house agricultural land appurtenant thereto for any purpose

other than agriculture shall not be deemed as agricultural income, but taxable as income from

house property.

2. Any arrears of rent, not taxed u/s 23, received in a subsequent year, shall be taxable in the year.

Even if the house property is situated outside India it is taxable in India if the owner-assesse is

resident in India.

2.6.2 Incomes Excluded from House Property Income:

The following incomes are excluded from the charge of income tax under this head:

Annual value of house property used for business purposes

Income of rent received from vacant land.

Income from house property in the immediate vicinity of agricultural land and used as a store

house, dwelling house etc. by the cultivators

2.7 Annual Value:

Income from house property is taxable on the basis of annual value. Even if the property is not

let-out, notional rent receivable is taxable as its annual value.

The annual value of any property is the sum which the property might reasonably be expected to

fetch if the property is let from year to year.

In determining reasonable rent factors such as actual rent paid by the tenant, tenant‘s obligation

undertaken by owner, owners‘ obligations undertaken by the tenant, location of the property,

annual rateable value of the property fixed by municipalities, rents of similar properties in

neighbourhood and rent which the property is likely to fetch having regard to demand and supply

are to be considered.

2.7.1 Annual Value of Let-out Property:

Where the property or any part thereof is let out, the annual value of such property or part shall be

the reasonable rent for that property or part or the actual rent received or receivable, whichever is

higher.




2.8 Deductions from House Property Income:

2.8.1 Deduction of House Tax/Local Taxes paid:

In case of a let-out property, the local taxes such as municipal tax, water and sewage tax, fire tax,

and education cess levied by a local authority are deductible while computing the annual value of

the year in which such taxes are actually paid by the owner.

2.9 Other than self-occupied properties

Repairs and collection charges: Standard deduction of 30% of the net annual value of the

property.

2.10 Interest on Borrowed Capital:

Interest payable in India on borrowed capital, where the property has been acquired constructed,

repaired, renovated or reconstructed with such borrowed capital, is allowable (without any limit)

as a deduction (on accrual basis). Furthermore, interest payable for the period prior to the

previous year in which such property has been acquired or constructed shall be deducted in five

equal annual instalments commencing from the previous year in which the house was acquired or

constructed.

2.11 Amounts not deductible from House Property Income:

Any interest chargeable under the Act payable out of India on which tax has not been paid or

deducted at source and in respect of which there is no person who may be treated as an agent.

Expenditures not specified as specifically deductible. For instance, no deduction can be claimed

in respect of expenses on electricity, water supply, salary of liftman, etc.

2.12 Self Occupied Properties

No deduction is allowed under section 24(1) by way of repairs, insurance premium, etc. in respect

of self-occupied property whose annual value has been taken to be nil under section 23(2) (a) or

23(2) (b) of the act. However, a maximum deduction of Rs. 30,000 by way of interest on

borrowed capital for acquiring, constructing, repairing, renewing or reconstructing the property is

available in respect of such properties.

In case of self-occupied property acquired or constructed with capital borrowed on or after

1.4.1999 and the acquisition or construction of the house property is made within 3 years from the




end of the financial year in which capital was borrowed the maximum deduction for interest shall

be Rs. 1,50,000. For this purpose, the assessee shall furnish a certificate from the person

extending the loan that such interest was payable in respect of loan for acquisition or construction

of the house, or as refinance loan for repayment of an earlier loan for such purpose.

The deduction for interest u/s 24(1) is allowable as under:

i. Self-occupied property: deduction is restricted to a maximum of Rs. 1,50,000 for property

acquired or constructed with funds furrowed on or after 1.4.1999 within 3 years from the end of

the financial year in which the funds are borrowed. In other cases, the deduction is allowable up

to Rs. 30,000.

ii. Let out property or part there of: all eligible interests are allowed.

It is, therefore, suggested that a property for self, residence may be acquired with borrowed funds,

so that the annual interest accrual on borrowings remains less than Rs. 1,50,000. The net loss on

this account can be set off against income from other properties and even against other incomes.

If buying a property for letting it out on rent, raise borrowings from other family members or

outsiders. The rental income can be safely passed off to the other family members by way of

interest. If the interest claim exceeds the annual value, loss can be set off against other incomes

too.

At the time of purchase of new house property, the same should be acquired in the name(s) of

different family members. Alternatively, each property may be acquired in joint names. This is

particularly advantageous in case of rented property for division of rental income among various

family members. However, each co-owner must invest out of his own funds (or borrowings) in

the ratio of his ownership in the property.

2.13 DEDUCTIONS FROM TAXABLE INCOME Deduction under section 80C

Deduction under section 80CCC

Deduction under section 80D

Deduction under section 80DD

Deduction under section 80DDB

Deduction under section 80E

Deduction under section 80G

Deduction under section 80GG

Deduction under section 80GGA

Deduction under section 80CCE

Budget 2016-17 has been presented in Parliament. The Finance Minister has kept the Personal

Income Tax slab rates unchanged for the Financial Year 2016-17 (Assessment Year 2017-2018).




He has proposed to introduce or extend the Tax Deduction limits under few Sections of the

Income Tax Act.

Let us understand all the important sections and new proposals with respect to Income Tax

Deductions FY 2016-17. This list can help you in planning your taxes.

Income Tax Deductions FY 2016-17

Section 80c

The maximum tax exemption limit under Section 80C has been retained as Rs 1.5 Lakh only. The

various investment avenues or expenses that can be claimed as tax deductions under section 80c

are as below;




• 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

• SukanyaSamriddhi Account Deposit Scheme

Section 80CCC

Contribution to annuity plan of LIC (Life Insurance Corporation of India) or any other Life

Insurance Company for receiving pension from the fund is considered for tax benefit. The

maximum allowable Tax deduction under this section is Rs 1.5 Lakh.

Section 80CCD

Employee can contribute to Government notified Pension Schemes (like National Pension

Scheme – NPS). The contributions can be upto 10% of the salary (or) Gross Income and Rs

50,000 additional tax benefit u/s 80CCD (1b) was proposed in Budget 2015.

To claim this deduction, the employee has to contribute to Govt recognized Pension schemes like

NPS. The 10% of salary limit is applicable for salaried individuals and Gross income is applicable

for non-salaried. The definition of Salary is only ‗Dearness Allowance.‘ If your employer also

contributes to Pension Scheme, the whole contribution amount (10% of salary) can be claimed as

tax deduction under Section 80CCD (2).

Kindly note that the Total Deduction under section 80C, 80CCC and 80CCD(1) together cannot

exceed Rs 1,50,000 for the financial year 2016-17. The additional tax deduction of Rs 50,000 u/s

80CCD (1b) is over and above this Rs 1.5 Lakh limit.




Section 80D

Deduction u/s 80D on health insurance premium is Rs 25,000. For Senior Citizens it is Rs 30,000.

For very senior citizen above the age of 80 years who are not eligible to take health insurance,

deduction is allowed for Rs 30,000 toward medical expenditure.

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, dependent children and parents).

http://www.relakhs.com/wp-content/uploads/2016/03/Section-80D-Health-insurance-premium-Income-Tax-Deductions-FY-2016-17-pic.jpg




Section 80DD

You can claim up to Rs 75,000 for spending on medical treatments of your dependents (spouse,

parents, kids or siblings) who have 40% disability. The tax deduction limit of uptoRs 1.25 lakh in

case of severe disability can be availed.

To claim this deduction, you have to submit Form no 10-IA.

Section 80DDB

An individual (less than 60 years of age) can claim uptoRs 40,000 for the treatment of specified

critical ailments. This can also be claimed on behalf of the dependents. The tax deduction limit

under this section for Senior Citizens is Rs 60,000 and for very Senior Citizens (above 80 years)

the limit is Rs 80,000.

To claim Tax deductions under Section 80DDB, it is mandatory for an individual to obtain

‗Doctor Certificate‘ or ‗Prescription‘ from a specialist working in a Govt or Private hospital.

For the purposes of section 80DDB, the following shall be the eligible diseases or ailments:

• Neurological Diseases where the disability level has been certified to be of 40% and above;

(a) Dementia(b) Dystonia Musculorum Deformans(c) Motor Neuron Disease(d) Ataxia




(e) Chorea(f) Hemiballismus(g) Aphasia(h) Parkinson‘s Disease• Malignant Cancers

• Full Blown Acquired Immuno-Deficiency Syndrome (AIDS) • Chronic Renal failure

• Hematological disorders• Hemophilia• Thalassaemia

Section 24 (B)

The interest component of home loans is allowed as deduction under Section 24B for up to Rs 2

lakh in case of a self-occupied house. If your property is a let-out one then the entire interest

amount can be claimed as tax deduction. (Read: Understanding Tax Implications of Income from

house property)

Section 80EE

This is a new proposal which has been made in Budget 2016-17. First time Home Buyers can

claim an additional Tax deduction of up to Rs 50,000 on home loan interest payments u/s 80EE.

The below criteria has to be met for claiming tax deduction under section 80EE.

• The home loan should have been sanctioned in FY 2016-17.

• Loan amount should be less than Rs 35 Lakh.

• The value of the house should not be more than Rs 50 Lakh

• The home buyer should not have any other existing residential house in his name.

Section 80U

This is similar to Section 80DD. Tax deduction is allowed for the tax assessee who is physically

and mentally challenged.

Section 80GG

As per the budget 2016 proposal, the Tax Deduction amount under 80GG has been increased

from Rs 24,000 per annum to Rs 60,000 per annum. Section 80GG is applicable for all those

individuals who do not own a residential house & do not receive HRA (House Rent Allowance).

The extent of tax deduction will be limited to the least amount of the following;

• Rent paid minus 10 percent the adjusted total income.

• Rs 5,000 per month.

• 25 % of the total income.




Section 80G

Contributions made to certain relief funds and charitable institutions can be claimed as a

deduction under Section 80G of the Income Tax Act. This deduction can only be claimed when

the contribution has been made via cheque or draft or in cash. But deduction is not allowed for

donations made in cash exceeding Rs 10,000. In-kind contributions such as food material, clothes,

medicines etc do not qualify for deduction under section 80G.

Section 80E

If you take any loan for higher studies (after completing Senior Secondary Exam), tax deduction

can be claimed under Section 80E for interest that you pay towards your Education Loan. This

loan should have been taken for higher education for you, your spouse or your children or for a

student for whom you are a legal guardian. Principal Repayment on educational loan cannot be

claimed as tax deduction.

There is no limit on the amount of interest you can claim as deduction under section 80E. The

deduction is available for a maximum of 8 years or till the interest is paid, whichever is earlier.

Section 87A Rebate

If you are earning below Rs 5 lakh, you can save an additional Rs 3,000 in taxes. Tax rebate

under Section 87A has been raised from Rs 2,000 to Rs 5,000 for FY 2016-17 (AY 2017-18).

In case if your tax liability is less than Rs 5,000 for FY 2016-17, the rebate u/s 87A will be

restricted up to income tax liability only.

Section 80 TTA

Deduction from gross total income of an individual or HUF, up to a maximum of Rs. 10,000/-, in

respect of interest on deposits in savings account with a bank, co-operative society or post office

can be claimed under this section. Section 80TTA deduction is not available on interest income

from fixed deposits.

© MGM IOM/MBA To study the awareness amongst teaching and non-teaching of MGM staff

of tax savings provisions available.


3.PART-IV

Research Methodology

3.1.1 Data collection

The research problem having been formulated in clear cut terms, we will be required to

prepare a research design decisions, regarding what, where, when, how much, by what

means, concerning an enquiry or a research study constitute a research design.‖ A research

design is the arrangement of conditions for collection and analysis of data in a manner that

aims to continue relevance to the research purpose with economy in procedure.

3.1.2 Research design

1) It is simply the framework or plan for a study.

2) For the study that is for conducting the research I selected the descriptive research design.

3.1.3 Type of data

1. Primary Data:The Primary data are those which are collected a fresh and for the first

time and thus happens to be original in character.

For the study: Questionnaire method is used for collection the data while conducting the

research.

1. Secondary Data: The Secondary data, on the other hand are those, which have been

collected by someone else and which have already been through statistical process.

For the study: Internet is used for collecting secondary data while conducting the research.

Methods of data collection

a) The task of data collection begins after we defined the research problem or objectives. While

deciding about the method of data collection to be used for the study, the researcher should

keep in mind two types of data i.e. Primary and Secondary.

b) Primary data: In this study, Primary data is taken from Questionnaire

c) Secondary data: In this study secondary data is taken from Magazines, Internet.

d) I collected data with the help of questionnaire.




e) There can be two kinds of Questionnaire, structured and unstructured Questionnaire.

Questionnaire was structured Questionnaires as the questions were framed in advance and we

had to stick to it before asking questions.

3.1.4 Sampling method

Random sampling:

A simple random sample is a subset of a statistical population in which each member of the

subset has an equal probability of being chosen. An example of a simple random sample

would be the names of 100 employees being chosen out of a hat from a company of 2500

employees. In this case, the population is all 2500 employees, and the sample is random

because each employee has an equal chance of being chosen.

3.1.5 Sample size, sample area, sample unit

Sample size:100

Sample area: MGM campus.

1) MGM-IOM

2) MGM‘s JNEC

3) MGM Junior college

4) MGM Medical college

Sample unit: Teaching and Non-Teaching staff of MGM




4. PART-V

4.1 Data Analysis and Interpretation

Data analysis is an important element of any research activity. The primary data

collected is in a raw forming which needs further processing to give meaningful results. The

data collected from the respondents was classified and tabulated. Proper statistical tools were

then applied to this data to achieve relevant conclusions. The various charts given below

depict the data on different parameters.

1) a) Are you aware of tax saving schemes?

Yes No

100 0

1) b) Job description Teaching staff Non-teaching staff

Job description Respondents

Teaching 89

Non-Teaching 11

Interpretation- From the above data, 89% of the total respondents are teaching staff and

11% are Non-teaching staff of MGM




2) a) Do you come under Tax paying slab

Respondents %

Yes 71 71%

No 29 29%

Interpretation- From the above data, 71% of the total respondents comes under tax

paying slab and 29% don‘t come under tax paying slab.

b) Up to Rs 2.5 lakh

Rs 2.5-5 lakh

Rs5-Rs 10 lakh

Above Rs 10 lakh

Upto Rs 2.5 lakh Rs 2.5-5 lakh Rs 5-10 lakh Above Rs ₹ 10 lakh

32 40 21 7

71%

29%

Yes No




68%

32%

Yes No

Interpretation- From the above data, 30% of staff comes under Rs 2.5 lakh slab, 40% comes

under Rs 2.5-5 lakh slab, 21% comes under Rs 5-10 lakh and 7% comes under 10 lakh and

above.

3) Q3. Are you regular tax payer?

Respondents %

Yes 65 65%

No 32 35%

Interpretation- From the

above data, 65% staff pays

tax regularly and 35% staff

doesn‘t pay tax regularly.

32

40

21

7

Upto Rs 2.5lakh Rs 2.5-5lakh Rs 5-10 lakh Above Rs 10 lakh

Income tax slabs




4) Are you aware of several investments offered under section 80C, 80CCC and 80CCD.

Yes No

A Employee Provident Fund 78 22

B Pension/ Annuity Schemes 69 31

C Life insurance premium 71 29

D Tax Saving mutual fund (ELSS) 37 63

E Home loan principal payment 42 58

F Sukanya Samriddhi Account 21 79

G Tuition fees of children 42 58

H PPF Account Contribution 38 62

I National Saving Certificate 42 58

J Tax-saving fixed Deposit 54 46

K Post office time deposits 71 29

Inference-

Employee provident fund (EPF) is a popular Tax saving provisions known to the respondents

78%.

Post office deposit, Life insurance premium and Pension/ Annuity schemes is the next very

popular Tax saving provisions and respondents are aware of it (71%).

Tax saving mutual fund, National saving certificate, Home loan principal, SukanyaSamriddhi

account are less used schemes and less respondents are aware of it.

78 69 71

37 42

21

42 38 42

54

22 31 29

63 58

79

58 62 58

46

0102030405060708090

yes

No




5) Are you aware of tax saving provisions under unit-linked insurance plan (ULIP)

Respondents %

Yes 65 65%

No 35 35%

Interpretation- From the above data, 65% of staff is aware of tax saving provisions under

unit-linked insurance plan (ULIP) and 35% are not aware.

Inference- Unit-linked insurance plan (ULIP) is another popular tax saving provisions that

the respondents 65% are aware of. But there is a scope where awareness amongst the

remaining 35% can be created.

6) Are you aware of tax saving provisions under Unit linked insurance plan of mutual

fund?

Respondents %

Yes 50 50%

No 50 50%

65

35

Yes No




Interpretation- From the above data, 50% of staff is aware of tax saving provisions under

Unit linked insurance plan of mutual fund and 50% are not aware

Inference- There is a huge scope of creating awareness amongst the employees regarding tax

saving schemes under ULIP of mutual fund.

7) Are you aware of tax saving provisions contribution to notified pension fund set up by

mutual fund or UTI? Respondents %

Yes 40 40%

No 60 60%

50 50

Yes No

40

60

Yes No




Interpretation- From the above data, 40%of staff is aware of tax saving provisions

contribution to notified pension fund set up by mutual fund or UTI and 60% are not aware.

Inference- As maximum people are of UTI mutual fund, they are missing the benefits under

this scheme and hence huge scope to create awareness.

8) Are you aware of tax saving provisions towards any sum paid as subscription to

notified home loan amount scheme of the national housing bank?

Respondents %

Yes 44 44%

No 56 56%

Interpretation- From the above data, 44%of staff is aware tax saving provisions towards any

sum paid as subscription to notified home loan amount scheme of the national housing bank

and 56% staff are not aware.

9) Are you aware of tax saving provisions amount deposited as term deposit for a period

of 5years or more in accordance with a scheme framed by government? Respondents %

Yes 48 48%

No 52 52%

44

56

Yes No




Interpretation- From the above data, 48%of staff is of tax saving provisions amount

deposited as term deposit for a period of 5years or more in accordance with a scheme framed

by government and 58% are not aware of it.

10) Are you aware of tax saving provisions contribution towards 15 years public

provident fund?

Respondents %

Yes 55 55%

No 45 45%

48

52

Yes No

55

45

Yes No




Interpretation- From the above data, 55% of staff is aware of tax saving provisions

contribution towards 15 years public provident fund and 45% are not aware.

Inference- PPF account is one of the very popular tax saving scheme that MGM staff is

aware of.




5. PART-VI

5.1 Findings

Tax saving mutual fund, National saving certificate, Home loan principal,

SukanyaSamriddhi account are less used schemes and less respondents are aware of it.

Employee provident fund (EPF) is a popular Tax saving provisions known to the

respondents 78%.

Post office deposit, Life insurance premium and Pension/ Annuity schemes is the next very

popular Tax saving provisions and respondents are aware of it (71%).

All the teaching and Non-teaching staff are aware of the tax saving schemes but the

popularity of the schemes varies.

ULIP (unit linked insurance plan) is another popular tax saving provison that the

respondents 65% are aware of. But there is a scope where awareness amongst the


Unit-linked insurance plan (ULIP) is another popular tax saving provisions that the

respondents 65% are aware of. But there is a scope where awareness amongst the


As maximum people are of UTI mutual fund, they are missing the benefits under this

scheme and hence huge scope to create awareness.

According to the survey 100% teaching and non-taching staff are aware of the tax saving

schemes.

5.2 Suggestions.

Mutual fund a lesser known Tax saving scheme needs awareness.

Housing loan, PPF, EPF, Post office, Pension scheme, LIC premium are key popular Tax

saving schemes.

5Years scheme framed by government are not very popular 48% are aware. Hence you

should make certain advertisements such that these schemes are known to all.




6 Bibliography

6.1 Books:

T. N. Manoharan (2007), Direct Tax Laws (7th

edition), Snowwhite Publications P.Ltd., New

Delhi.

Dr. Vinod K. Singhania (2007), Students Guide to Income Tax, Taxman Publications, New

Delhi

Income Tax Ready Reckoner – A.Y. 2007-08, TaxMann Publications, New Delhi

6.2 Websites:

(2017. February, 15) Tax Provisions. Retrieved from

http://in.taxes.yahoo.com/taxcentre/ninstax.html

(2017,march 02) Tax Provisions. Retrieved from

http://in.biz.yahoo.com/taxcentre/section80.html

(2017, February , 03) Various. Retrieved from http://www.bajajcapital.com/financial-

planning/tax-planning

(2016, March, 15) Income Tax in India History. Retrieved from www.hindunewspaper.com

(2017, march, 9) Income Tax Department. Retrieved from

http://www.incometaxindia.gov.in/Pages/default.aspx




Annexure: Questionnaire

To study the awareness amongst teaching and non-teaching of MGM staff of tax

savings provisions available.

Name:

_______________________________________________________________________

Age: ____

1) Job description (Tick ✔) Teaching staff Non-teaching staff

2) Do you come under Tax paying slab? Yes No

Upto Rs. 2.5 lakh

Rs. 2.5-5 lakh

Rs. 5-Rs 10 lakh

Above Rs. 10 lakh

3) Are you regular tax payer?

Yes No

4) Are you aware of several exemptions offered under section 80C, 80CCC and 80CCD.

(Tick ✔)

Yes No

Employee Provident Fund

Pension/ Annuity Schemes

Life insurance premium

Tax Saving mutual fund (ELSS)

Home loan principal payment

SukanyaSamriddhi Account

Tuition fees of children

PPF Account Contribution

National Saving Certificate

Tax-saving fixed Deposit




Post office time deposits

5) Are you aware of tax saving provisions under unit-linked insurance plan (ULIP)

Yes No

6) Are you aware of tax saving provisions under Unit linked insurance plan of mutual

fund?

Yes No

7) Are you aware of tax saving provisions contribution to notified pension fund set up by

mutual fund or UTI?

Yes No

8) Are you aware of tax saving provisions towards any sum paid as subscrip tion to

notified home loan amount scheme of the national housing bank?

Yes No

9) Are you aware of tax saving provisions amount deposited as term deposit for a period

of 5years or more in accordance with a scheme framed by government?

Yes No

10) Are you aware of tax saving provisions contribution towards 15 years public

provident fund?

Yes No

Date post:	09-Apr-2017
Category:	Leadership & Management
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To study the awareness amongst teaching and non-teaching staff of MGM regarding various tax savings...

Leadership & Management