INCOME TAX REBATES ​FOR FY 2021-22   ( AY 2022-23 )

& POPULAR TAX SAVING SCHEMES

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The Article on " TAX PLANNING FOR FY 2021-22 CONTAINS 5 PARTS  
​
PART I: MAJOR CHANGES IN TAX RULES FOR FY 2021-22   CLICK HERE 

PART 2: TAX RATES  / SLABS FOR FY 2021-22     CLICK HERE    

PART 3: INCOME TAX REBATES  AND POPULAR TAX SAVING SCHEMES    
​                                      READ THIS PART BELOW ​         
PART 4: ESTIMATE YOUR INCOME TAX/ADVANCE TAX FOR FY 2021-22  CLICK HERE   
                      :                                                                  
PART 5: TAX ON RETIREMENT BENEFITS    CLICK HERE    

         FOR INCOME TAX NEWS     CLICK HERE 
 HOW  TO PAY INCOME TAX ONLINE  ?  CLICK HERE 
  READ  OUR ARTICLE "    TDS ON SALARY , PENSION AND  PERQUISITES " 

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AMAZON  India : SHOP for today's  DEALS

 As FM has  not announced  any changes to TAX  Structure  for  Fy 2022-23    , the rebates   enumerated  below is valid for FY 2022-23 ( AY 2023-24 )  also 

INCOME TAX REBATE FOR FY 2021-22

SPECIAL NOTE  DATED 11.01.2022 :  If you opt for old tax regime , you can avail various rebates on the tax payable for the year fy 21-22 . There are 12 tax rebates which you can avail without making any new investment in the current financial year . Further you may be having committed payments this year for which you are eligible for tax rebates ( For example PF Contribution , Insurance premium etc . ) .

Along with such rebates , there are various tax saving instruments which you can buy and save on taxes . You may also save taxes by claiming certain expenses like tuition fees paid , health insurance .

Before opting for old or new tax regime , check whether you are eligible for any of such rebates which do not involve any fresh investment or for which you have committed payment . If you are eligible for such rebates , then you can check how much tax you may save using these rebates and whether old or new tax regime is better for you .

  For the Financial year 2021-22   , just like FY 20-21  , We have  two options to chose  from for making payment of income tax which involves   two sets of Income tax rate slabs   with two different sets   of Tax rebates associated with each of the option . The first one  , Simplified optional Individual tax  regime ,  introduced with lower income tax rates  for the persons  who are ready to  forgo many tax rebates .   If you chose the new regime   ,  the newly  introduced   section 115 BAC of the IT Act  will be effective for you  .  The second option  is to utilize  the  tax  regime prevalent in Fy 2019-20  wherein  all tax slabs and tax rebates  that were available in FY 2019-20  will  continue to be operative  . 

TAX REBATES YOU HAVE TO FORGO IN NEW TAX REGIME

If you opt for   income tax option under section 115bac  of Income tax act   , you have to forgo the  following tax rebates that are available  under the old  regime  for FY 2019-20 

1. Standard Deduction of   Rs 50,000 allowed for salaried persons / pensioners   .

2. Cumulative deduction   of  Rs 1.5 lakhs allowed under Section 80C, 80CCC, and Section 80 CCD for savings/investments, premium for annuity / pension fund   

3. Deductions allowed for Rs 50,000 / 1,50,000  under  Section  80 EE / 80 EEA for the Interest on Housing loans  with certain conditions 

4. Deduction allowed under 80 E  for interest on education loan taken for pursuing Higher Education  . 
 
5. Deductions allowed for Rs 2.00 lakhs under  Section  24   for the Interest on Housing loans 

6.  Deductions allowed for  Rs 1,50,000  under  Section  80 EEB for the Interest on loans  taken for purchase of electric vehicles  . 

7. Interest on savings bank accounts allowed  up to  Rs 10,000   under Section 80TTA    and for senior citizens only if they have not claimed  under section 80TTB

8. Interest  received by a senior citizen on deposits with banks /  co-operative societies / post office     up to Rs 50,000  under section 80 TTB   .  

​9. Deduction allowed  for  Health insurance Policies under 80 D  up to  Rs. 50,000/- for senior citizens and up to Rs. 25,000/-  for   others   . 

TAX REBATES YOU CAN STILL AVAIL IN NEW TAX REGIME

REBATES THAT CAN  BE USED IN NEW TAX REGIME ALSO 

1. Rebate under section 87 A for the Resident Indians with below taxable income of Rs 5.00 lakhs 

​2.  CONVEYANCE ALLOWANCE , LFC , TRANSFER    :   Income  Tax department amended  rules in June  2020  and permitted conveyance allowance , travel allowance , LFC / LTC   and transfer allowance   etc to be    to be under exemption   category of newly  115BAC   as per Gazette  notification dated  26.06.2020 . 
​ Accordingly following   allowances are  also  exempted   under the new tax regime  :

a) any allowance granted to meet the cost of travel on tour or on transfer;
(b) any allowance, whether, granted on tour or for the period of journey in connection with transfer, to meet the ordinary daily charges incurred by an employee on account of absence from his normal place of duty;
(c) any allowance granted to meet the expenditure incurred on conveyance in performance of duties of an office or employment of profit  

To view Gazette Notification  , CLICK HERE 

TAX REBATES YOU GET WITH NO FRESH INVESTMENTS

TAX REBATES THAT DO NOT INVOLVE ​ANY FRESH  INVESTMENTS 

Without investing your money in any scheme ,you can claim Tax Deduction /rebate in FY 2020-21 by utilizing the following Tax provisions: 

 All below listed rebates  are available only if you opt for old regime except no  1 which is available both in old and new regimes  .
​
1. Rebate under section 87 A for the Resident Indians with below taxable income of  Rs 5.00 lakhs   ( Availble  both in old and new regimes ) 
2. Standard Deduction of Rs 50,000 for  Salaried persons / pensioners 
3. Health Insurance premium paid between Rs 25,000 to Rs 1.00 lakh under section 80D 
4. Interest on Education Loan paid under section 80E
​5. Deductions allowed Rs 50,000/1,50,000 under Section 80EE/80 EEA for the Interest on Housing loans with certain conditions . 
​6. Deductions allowed Rs 2.00 lakhs under  Section 24 for the Interest on Housing loans  .
​7. Deductions allowed Rs 1,50,000 under Section  80 EEB for the Interest on loans  taken for purchase of electric vehicles ​.
8. Interest on savings bank accounts are exempted by tax up to an amount of Rs 10,000 under Section 80TTA  and for senior citizens only if they have not claimed  under section 80TTB . 
​9. Interest  received by a senior citizen on deposits with banks /  co-operative societies / post office is exempted  up to Rs 50,000  under section 80 TTB  ​. 
10. Rent paid in excess of 10% of total income for furnished/unfurnished residential accommodation (subject to maximum of Rs. 5,000 p.m. or 25% of total income, whichever is less)  subject to certain conditions under  section 80GG 
11. Donations made to certain organizations under sections 80G & 80 GGA,80 GGB  
12. Total tuition fee paid by a parent for maximum of two children is eligible for tax exemption under 80C .​
​
You may check details of the above rebates below and can utilize while submitting IT Returns 

REBATE UNDER SECTION 87A OF INCOME TAX ACT

SECTION 87A - An assessee, being an individual resident in India, whose total income does not exceed Five hundred thousand rupees, shall be entitled to a deduction, from the amount of income-tax on his total income with which he is chargeable for  assessment year 2022-23 of an amount equal to hundred per cent of such income-tax or an amount of  Twelve thousand and five hundred rupees, whichever is less.  
The above section is applicable only for residents whose total taxable income for the year is less or equal to Rs 5,00,000.Hence to obtain the above rebate ,you may use other tax rebates under various sections like 80C , 80D  , 80E etc to see that  your taxable income becomes less than Rs 5,00,000    . The rebate under the section is availble whether you opt for section 115 bac or not  . 

​To estimate your current taxable income , CLICK HERE 

DEDUCTION UNDER SECTION 80D OF INCOME TAX ACT AVAILABLE UNDER OLD REGIME

Deduction allowed on Health insurance Policies under 80 D is Rs. 50,000/- for senior citizens and up to Rs. 25,000/-  for others .For senior citizens, if no insurance amount is paid ,hospital expenditure up to Rs 50,000 is allowed .An assessee can claim additional Rs 50,000 for his/her parents if they are senior citizens and Rs 25,000 in other cases .
In case  there is no insurance premium is paid for the senior citizens , medical expenditure incurred on behalf  of them can be claimed. Overall claim cannot exceed Rs 1,00,000 . All payments should have been made in any mode other than cash .Cost of preventive health check up up to Rs 5,000  can be claimed within the overall limit and it could have been made in cash also . ​  

 To know about Health insurance Policies , CLICK HERE  and 
For List of Health Insurance Companies in India  , CLICK HERE 

 DO YOU KNOW ? :  Senior citizens can  claim  Tax Rebate    under section 80D  even without   having paid health insurance premium . 

Under section 80D  , senior citizens can claim  tax rebate up to Rs 50,000   against payment of health insurance premium . But they also can claim up to Rs 50,000 , even when they don't have health insurance , against their  medical bills , provide amount has been paid   by cheques / on-line payment / cards etc  .  Cash payment  only  on the bills will not be accepted  . However payment of Rs 5,000  for health check will  be accepted , even if paid in cash .  

Further sons / daughters  also can claim tax rebates in their income tax returns   for the medical bill payment of their senior citizen parents , provided parents do not have health insurance .  

Tuition Fee Exemption in income Tax 2021-22

TAX REBATE UNDER 80C FOR TUITION FEE PAID AVAILABLE UNDER OLD REGIME

UTILISE TUITION FEE PAID FOR REBATE UNDER 80C

DO YOU KNOW ? :   Parents  can  claim  Tax Rebate    under section 80c   for the tuition fees  paid for  their wards  to educational institutions 

Total tuition fee paid by a parent for maximum of two children is eligible for tax exemption under 80C .
"Tuition fees (excluding development fees, donations, etc.) paid by an individual to any university, college, school or other educational institution situated in India, for full time education of any 2 of his/her children" is eligible  to be deducted under 80C .
Tuition fees paid for self or spouse is NOT eligible under 80C .  
Fees paid to  educational institutions situated outside India are not eligible .  Only University, college, school or other educational institution must be situated in India though it can be affiliated to any foreign institutes. Tuition fee Paid for children for full time courses  only is eligible. Obviously fees paid for coaching classes will not be eligible . 
​
Pre-nursery, play school and nursery class fees is also covered under section 80C (circular 9/2008 & 8/2007).
If both husband and wife are tax payers ,both can utilise  the  deduction separately for the individual payments made by them . 

Not allowable Expenses:- 
1. Development fees or donation not eligible. 
2. Transport charges, hostel charges, Mess charges, library fees, scooter/cycle/car stand charges incurred for education are not allowed. 
3. Late fees is not eligible for deduction. 
4. Term Fees is not eligible for deduction.

---

OTHER TAX REBATES / DEDUCTIONS AVAILABLE UNDER OLD REGIME

    1. Standard Deduction of   Rs 50,000 allowed for salaried persons / pensioners.

2. Cumulative deduction allowed under Section 80C, 80CCC, and Section 80 CCD for savings/investments, premium for annuity / pension fund is Rs. 1.5 lakh.Now under Section 80CCD, a deduction of upto Rs. 50,000  is allowed over and above the limit of Rs. 1.50 lakh under Section 80C  in respect of contributions made to NPS 

3. Deductions allowed Rs 50,000 / 1,50,000  under  Section  80 EE / 80 EEA for the Interest on Housing loans  with certain conditions 

4. Deduction allowed under 80 E  for interest on education loan taken for pursuing Higher Education  . 
 
'higher education'  means  any course of study pursued after passing the Senior Secondary Examination or its equivalent from any school, Board or university recognised by the Central Government or State Government or local authority or by any other authority authorized by the Central Government or State Government or local authority to do so.

5. Deductions allowed Rs 2.00 lakhs under  Section  24   for the Interest on Housing loans 

6.  Deductions allowed Rs 1,50,000  under Section 80 EEB for the Interest on loans  taken for purchase of electric vehicles. 

7. Interest on savings bank accounts are exempted by tax up to an amount of Rs 10,000   under Section 80TTA    and for senior citizens only if they have not claimed  under section 80TTB

8. Interest  received by a senior citizen on deposits with banks /  co-operative societies / post office   is exempted  up to Rs 50,000  under section 80 TTB   . 

​If you need  any clarifications  or you want  to   know various rebates available under various sections of IT Act ,  CLICK HERE    AND  GO TO   TAX CHARTS /  TABLES AND CLICK ON DEDUCTIONS 

11 POPULAR INSTRUMENTS FOR REBATES UNDER SECTION 80C DEDUCTION LIST

  The below  mentioned instruments can be used only if you  opt for Old tax regime 

1. Premium paid on a Life Insurance policy for self or spouse or child (Tax benefits come with riders .To see the riders ,go to section)

2. Contribution made under Employee’s Provident Fund Scheme Amount paid towards PPF for self/spouse, any child  .  

3. Contribution to a recognised Provident Fund

4. Sum deposited in Post Office Savings Bank Account(10 year/15 years)

5. Subscription to any notified securities/notified deposits schemes like ELSS  ( For  details ,  go to the end of the page   )

6. Amount invested in any notified savings certificate, Unit Linked Savings certificates.

7. Investments in Unit Linked Insurance Plan of LIC Mutual Fund

8. Payments made in installments or part payment for purchasing or constructing a house property.(conditions Apply )  

9.Tuition fees paid to any Indian school,college, university or other educational institutions ( Conditions Apply )

10. Contribution made to  Sukanya  samriddhi account 

11. Tax saver Fixed Deposits issued by Commercial Banks 

INSTRUMENTS QUALIFYING UNDER  80CCC, 80CCG AND  80D   AVAILABLE UNDER OLD REGIME 

Instruments qualifying under 80CCC

Payment of premium for annuity plan of LIC or any other insurer.

Instruments qualifying under 80 CCG

Listed Equity shares or listed units of a fund in accordance with Rajiv Gandhi Equity Savings Scheme  Subject to following conditions :
​
Resident Individual  being a  new retail investor  with not more than 10.00 lakhs income and investing with a lock in period of 3 years  
​Instruments qualifying under 80 D

​Health Insurance policies

POPULAR TAX SAVING SCHEMES

For the current interest rate on various SMALL SAVINGS Instruments ,visit our page " NEWS ON INTEREST RATES "

Array of products   from   
1. Guaranteed return schemes like PPF  AND NSC 
2. Insurance schemes   which cover life   risks  with units linked to market  or otherwise
3. Equity linked  mutual funds  which have high risk  and return probabilities like ELSS   
are   available for the investors to utilize the rebates  on income tax  offered by the government . 

PPF is  a fixed income long term investment  while NSC is fixed return  medium term  investment . Insurance policies which cover life risk are available  in unit linked market related schemes  and otherwise also.On the other hand ELSS is totally market related mutual fund which carry all the risks of an equity market and   have given good returns 
Details of Each scheme is given below : 

PUBLIC  PROVIDENT FUNDS 

SALIENT FEATURES :

• Ideal investment option for both salaried as well as self employed classes.
• Non-Resident Indians (NRIs) are not eligible.
• Investment up to INR. 1,50,000 per annum qualifies for IT Rebate under section 80 C of IT Act.
• The rate of interest varies quarter to quarter  as per announcements made by Government .
• Loan facility available from 3rd financial year up to 5th financial year. The rate of interest charged on loan taken by the subscriber of a PPF account on or after 01.12.2011 shall be 2% p.a. However, the rate of interest of 1% p.a. shall continue to be charged on the loans already taken or taken up to 30.11.2011.
• Withdrawal permitted from 6th financial year.
• Free from court attachment.
• An individual cannot invest on behalf of HUF (Hindu Undivided Family) or Association of persons.
• Public Provident Fund(Individual account on his behalf or on behalf of minor of whom he is the guardian)INR. 500/- in a financial year INR. 1,50,000/- in a financial year
• The public provident fund is established by the central government.
•  One can voluntarily open an account with any nationalized bank,selected authorized private bank or post office. 
• SAFE , SECURE , TAX EFFICIENT   AND  LIMITED LIQUIDITY AVAILABLE  FROM 3RD YEAR  BY WAY OF LOAN FACILITY

NATIONAL SAVINGS CERTIFICATES
SOURCE OF INFORMATION  INDIA POST 
NSC VIII Issue

• Scheme specially designed for Government employees, Businessmen and other salaried classes who are Income Tax assesses.
• No maximum limit for investment.
• No Tax deduction at source.
• Certificates can be kept as collateral security to get loan from banks.
• Investment up to INR 1,00,000/- per annum qualifies for IT Rebate under section 80C of Income Tax Act.
• Trust and HUF cannot invest.

NSC IX Issue

• No maximum limit for investment.
• Minimum INR. 100/- No maximum limit available in denominations of INR. 100/-, 500/-, 1000/-, 5000/- & INR. 10,000/-.
• A single holder type certificate can be purchased by an adult for himself or on behalf of a minor or to a minor.


• Buy National Savings Certificates (NSCs) every month for Five years – Re-invest on maturity and relax - On retirement it will fetch you monthly pension as the NSC matures.

NSCS ARE AVAILABLE ONLY IN POST OFFICES  ALL OVER INDIA 


LIFE INSURANCE POLICIES
Life insurance policies   are    the financial instruments which cover Life Risks of the insured along with Tax relief .  Various  types of life insurance policies are available   with wide ranging terms  . Some are unit linked policies whose Net Asset value depends up on the  equity market and hence carry market risks .   For full details on Life Insurance   and tips for purchasing such policies , please go the page LIFE INSURANCE   

​Under 80 C  of Income tax  Act , life insurance premium paid  on life insurance policies  is  one of the eligible instruments for total tax exemption up to Rs 1,50,000 only  .    However  be cautious and confirm with policy issuers whether the contribution made to the particular policy is eligible for such exemption . The reason is there are riders for contributions made to be eligible for exemption . 

As per Income tax law , 
Quote ;  " 
  Life Insurance premium is part of gross qualifying amount for the purpose of deduction under section  80 C . Payment of premium which is in excess of 10 percent  ( if policy is issued on or after 1-4-2013 , 15 % in case of insurance on life of person with disability referred to in section 80U  or suffering from disease or ailment specified in section 80 DDB/ rule 11DD )  of actual capital sum assured shall not be included in gross qualifying amount . The value of any premiums agreed to be returned or of any benefit by way of bonus or otherwise , over the sum actually assured , which is to be or may be received under the policy by any person , shall not be taken in to account for the purpose of calculating the actual capital sum assured .The limit of 10 per cent will be applicable only in the case of policies issued on or after 1-4-2012. In respect of policies issued prior to 1-4-2012, the old limit of 20 per cent of actual sum assured will be applicable.
With effect from 1-4-2013, 'actual capital sum assured' in relation to a life insurance policy shall mean the minimum amount assured under the policy on happening of the insured event at any time during the term of the policy, not taking into account--
 (i)  the value of any premium agreed to be returned; or
(ii) any benefit by way of bonus or otherwise over and above the sum actually assured, which is to be or may be received under the policy by any person. " unquote "  

 For full page  of Income tax website   relevant to  the above rule  , CLICK HERE   

Hence premiere paid   one time premium policies may not be eligible to qualify for exemption  as  the insured amount may not be ten times the premium .   Further amount received under those policies may be treated as  Taxable Income and tax calculated .  Hence double check  with insurance companies before purchasing   as selling agents may not reveal you correctly . 

EQUITY LINKED SAVING SCHEME   (  ELSS  )  

Is another popular scheme under which investors  can  invest in stock market mutual fund   while enjoying tax benefits under 80C of Income Tax act . 

TAX SAVING FIXED DEPOSITS ISSUED BY COMMERCIAL BANKS  :

Key highlights of Tax Saver FDs:

• Deposits are opened for   a period  of 5 years.
• Maximum  tax deduction up to Rs.1, 50,000.
• Deduction is available to individuals, members of Hindu undivided family (HUF), senior citizens and NRIs.
• The interest earned from tax saver fixed deposits is taxable. Tax will deducted at source.
• Premature withdrawal is not allowed .
•  No  loan against tax saver fixed deposits.
• Tax saver deposits can be opened both singly and jointly. In case of a joint account, tax benefit will be availed by first holder of the deposit as per the section 80C of the Income Tax Act, 1961.

WHAT IS AN ELSS SCHEME ?

Subscription to certain  notified securities/notified deposits schemes   are eligible instruments under  section  80C for claiming deductions from  taxable income . One such popular investment is  tax saving mutual funds or Equity Linked Savings Scheme (ELSS).  In this  equity diversified fund , investors enjoy the benefits of capital appreciation as well as tax benefits. With  recent positive movements in equity market , more interest is being generated in the public on the scheme . 


ELSS is basically an equity based diversified Mutual Fund with a lock in period of 3 years .It has got same risk and reward function of any other  equity based mutual fund .While under national saving certificate , funds are locked in a period of 6 years ,  ELSS  has lock in period of 3 years only .One who is willing to take  market risk , ELSS is a good option as investment  is tax free under 80C    as also all the returns . Some ELSS funds have been reported   giving good tax free returns over a long period of time . One has to carefully study the past performance of the fund  as well as fund manager's performance before investing.As returns or principal is not  guaranteed and classified as high risk investment,Risk averse  persons  may avoid such investment .  
Persons interested  in investing in ELSS may understand Mutual Funds and go to the websites of Mutual fund Issuers 

 For Tax on Retirement  Benefits CLICK HERE 

The Article on  " TAX PLANNING FOR FY 2021-22 "  CONTAINS   5 PARTS 

PART I  : MAJOR CHANGES IN TAX RULES FOR FY 2021-22        CLICK HERE 

PART 2 : TAX RATES  / SLABS FOR FY 2020-21       CLICK HERE 

PART 3 :   TAX REBATES    FOR FY 2020-21     READ THE ABOVE  PART  ​    

PART 4 :   ESTIMATE YOUR INCOME TAX / ADVANCE TAX FOR FY 2021-22   CLICK HERE 
                      :                                                                  
PART 5 : TAX ON RETIREMENT BENEFITS       CLICK HERE    

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BHIM APP                                                                                             AADHAR    

e-INSURANCE   Account ( eIA  )

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TO READ OUR   POPULAR ARTICLE ON FINANCIAL PLANNING FOR YOUNG  ,CLICK HERE                                                                               

                                                                       
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TOOL  TO AVOID  MARKET HICCUPS      
      
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THIS ARTICLE CARRIES INFORMATION ON VARIOUS TAX  PROVISIONS  WHICH ARE GENERALLY  USEFUL .  YET IT DOES NOT CARRY ALL THE PROVISIONS  AND HENCE YOU ARE  ADVISED TO GO THROUGH INCOME TAX DEPARTMENT WEBSITES  FOR AUTHENTIC COMPLETE INFORMATION , ESPECIALLY FOR THOSE WHO HAVE GOT MULTIPLE STREAMS OF INCOME  OR COMPLEX INVESTMENTS . YOU MAY ALSO CONSULT A QUALIFIED TAX CONSULTANT / CHARTERED  ACCOUNTANT  FOR ANY  CLARIFICATION.    READERS ARE ALSO WELCOME TO SEND FEEDBACK  , FORM AVAILABLE BELOW .   WE   ARE OPEN FOR CORRECTION  IF  NEEDED