[I-Tax India]: Some Useful Tips and References for Filing Income Tax Return (India)

1 HRA exemption = minimum of (40% (50% for metros) of Basic+DA or HRA or rent paid - 10% of Basic+DA) ... thumbnail 1 summary
1 HRA exemption = minimum of (40% (50% for metros) of Basic+DA or HRA or rent paid - 10% of Basic+DA)
2 Transport allowance is exempt upto Rs.800/- per month provided the person is in India during the month. For people having permanent physical disability, the exemption is Rs.1,600/- per month
3 Vehicle maintenance exemption can be claimed if you use a car for travel to the workplace. In such case, exemption can be claimed for the petrol and vehicle maintenance amounts. The exemption is available to the tune of Rs.1,200/- per month if the engine capacity is less than 1600cc and Rs.1,600/- per month if the engine capacity is more than 1600cc. In case the amount includes driver's salary, there is an additional exemption of Rs.600/- per month. When this exemption is claimed, transport allowance exemption is not available.
4 Medical bills are exempt for self and dependent family, upto Rs.15,000/- per annum
5 LTA is exempt to the tune of ecomony class airfare for the family to any destination in India, by the shortest route.
LTA can be claimed twice in a block of 4 calendar years. The current block is from 2006 to 2009
6 Gratuity, VRS and some such amounts are exempt up to certain limits. If you get any such payment, please find out the exact limit for you from a tax consultant.
7 Children's Education allowance is exempt upto Rs.100/- per child per month plus Rs.300/- per child per month for hostel expenses (max of 2 children only)
8 There is an exemption for interest on housing loan. If the loan was taken before Apr 1, 1999 exemption is limited to Rs.30,000/- per year. If the loan was taken after Apr 1, 1999 exemption is limited to Rs.1,50,000/- per year if the house is self-occupied; there is no limit if the house is rented out
This exemption is available on accrual basis, which means if interest has accrued, you can claim exemption, irrespective of whether you've paid it or not. If the loan is taken jointly by two individuals both can claim this exemption
9 If you have rented out your house, consider the total income/loss from the house (after deducting property tax and standard maintenance expenses)
10 Medical Insurance (such as Mediclaim) premium is exempt upto Rs.15,000/- per year for self, spouse & dependent children. An additional Rs.15,000/- is exempt towards premium for parents (even if they are not dependent). If the parent(s) are above 65 years of age, an extra Rs.5,000/- can be claimed
11 Deduction in respect of medical treatment of handicapped dependents is limited to Rs.50,000/- per year if the disability is less than 80% and Rs.75,000/- per year if the disability is more than 80%
12 Deduction in respect of medical treatment for specified ailments or diseases for the assesse or dependent can be claimed upto Rs.40,000/- per year. If the person being treated is a senior citizen, the exemption can go up to Rs.60,000/-
13 Interest repayment on education loan (taken for higher education from a university of self & dependents) is completely tax exempt
14 Donations given for certain charities are tax exempt. Some are exempt to the tune of 50%, whereas others are 100%. (Please cross check the applicable category)
15 If you do not get HRA, but have rented a house, an exemption is available. This will be calculated as minimum of (25% of total income or rent paid - 10% of total income or Rs.24,000/- per year)
16 Donations for certain scientific research and rural development are also exempt.
17 Interest earned from all sources is to be included in income. All interest income is fully taxable (except interest from Savings account)
18 If you have a permanent physical disability (including blindness), you can take an exemption of Rs.50,000/- per year
19 Investments up to 1 lac in PF, VFP, PPF, Insurance Premium, Housing loan principal repayment, NSC, ELSS, long term bank Fixed Deposit, Post Office Term Deposit, etc. are deductible from the taxable income under sec 80C. There is no limit on individual items, so all of the 1 lac may be invested in a particular single instrument also. The only exception is PPF where the maximum investment is limited to Rs.70,000/-
20 Surcharge on Income tax is applied at 10% of the tax amount, if the taxable income is more than Rs.10,00,000/-
21 Education cess is calculated at 3% on total tax payable
22 For the current year, Govt. prescribed rate of interest for PF is 8.5%. If the employer pays interest higher than this, the differential interest earned is treated as perquisites
23 Residents of Sikkim are exempt from Income Tax for the current year (Please confirm though; This is not 100% sure)


[Source: Reference material received through email from one Nithyanand Yeswanth]

Disclaimer: Correctness of the matter to be cross verified from other sources too. This is only a sourced presentation and should notbe taken without necessary verification.

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