you can save up to Rs 44,000 Tax a year

From the point of retail investors the budget is good; he has given tremendous relief for income tax.

Salaried professionals: A male earning up to Rs 5 lakh a year will save Rs 44,000 by way of income tax. Now, he will pay only Rs 55,000 by way of income tax, which means that the effective tax rate is down to only 11 per cent. That means more money of up to Rs 44,000 per annum is available for investment.

For women, the difference is Rs 43,500 per annum. For senior citizens it is up to Rs 39,500 per annum. That will be a great saving for working professionals.

Also, if you buy medical insurance for your parents, you get an additional relief of Rs 15,000.

Short term capital tax: People will be forced to hold on to their shares for at least a year because short term capital gain has become 15 per cent. That is a positive disincentive to sell within in one year. If there is less selling pressure, the stock market will be forced to improve.

Stock market advice: One thing bothering everyone is this Rs 60,000 crore that will cost the exchequer. If banks are not reimbursed by the Finance Minister, than they (the banks) will take a hit and therefore banking stocks may fall. We have to wait and watch.

Wait and watch. Ultimately the stock markets will be driven by global trends. If markets fall in US, Asia etc, it will affect us. Investors must be cautious.



Senior citizens: Reverse mortgage loan scheme -- if you have a house, you can give your house (mortgage your house to the bank while still living in it) and take a loan. The money you receive will not be taxable. It can become your regular income.


Consumers gain: Two-wheelers, small cars, tea and coffee and other small things, will get cheaper.



Last words: No googlys! But I did not expect him to give so much relief on the personal income tax. It was a substantial relief to the middle class, to both the self-employed and to professionals.

Source : MoneyControl

Capital Gains 2008-09

Deductions under Capital Gains

You should provide data in this section if you have sold any of the following Capital assets -

-House property
-Securities (Equity stock, Debentures, Mutual Fund Investments, Zero coupon Bonds)
-Others – Agricultural land, Gold, Silver


Ascertain the type of Gain/Loss
The period of holding of your property determines the type of capital gain/ loss you have made.

Type of Asset Short Term Long Term
House property Held for less than 3 years Held for more than 3 years
Securities Held for less than 1 year Held for more than 1 year
Others Held for less than 1 year Held for more than 1 year


Computation of Gain/ Loss

a.Net Sales Value = (Sales Price less the cost incurred for sale)
b.Purchase price = (Purchase Price plus any other expenses incurred for purchase- indexed by the year of expense)
c.Profit / Loss (a-b)

Courtesy - Popular Sites

Deductions for AY 2008-09

Deductions under House Property

You are required to enter data in this section only if you owned a house property which was used for residential purposes, for any part of the year.

Self Occupied Property – if you have stayed in the property for the whole or any part of the year and for the rest of the year it was not available to be let out then it would be treated as self occupied property.

Let out property - If you have let out the property or have made the property available for rent for any part of the year then it would be treated as a let out property.

Deductions Available
1. If your property is not let out for the entire period for which it was available to be let out, you are entitled to a deduction for the period for which it was vacant.
2. If you have paid any amount as interest towards repayment of loan taken for the property then you are entitled to a deduction to a maximum amount of Rs 1.50 lakhs.

Deductions for AY 2008-09

Deductions under Salary

You are entitled to deduction upto an overall limit of Rs. 1 lakh for any amount that you have invested by making purchases in any of the schemes mentioned below during the corresponding financial year (FY) which starts from April 1 and ends on March 31:

Please note that if you have already provided the deduction details to your employer and the employer has already considered the same in computing the tax you MUST NOT ENTER THE SAME DATA AGAIN in the deductions list.
1. Your contribution towards Provident Fund which is deducted from you salary to a maximum limit of 12% of your basic salary.
2. Purchase of National Savings Certificates.
3. Any amount that you have paid towards life insurance premium for yourself and your immediate family.
4. Any amount that you have invested in Public Provident Fund.
5. Any amount that you have invested in Unit Link Insurance Policy.
6. Any principal amount that you have paid towards repayment of loan taken for a purchase of a property, construction of which is completed and has been handed over to you.
7. Any amount paid towards tuition fees of your children – maximum of Rs. 100 per month per child is allowed.
8. Any investments in schemes or funds which provide deduction under 80C.
9. Any amount paid towards any insurance policy which is governed under section 80CCC. This has a limit of Rs. 10000 per policy per annum.
10. Amount paid as donation to any charitable organization who qualify for deduction under section 80G. Please check whether the amount donated by you qualifies 50 percent or 100 percent. Dependent on the same you would be able to claim deductions. For example, if the organization qualifies for 50 percent of the amount donated and you have donated an amount of Rs. 1000 then you would qualify for a deduction of Rs 500 while if the organization qualifies for a 100 percent deduction then you would be entitled to the full amount of Rs1000.
11. If you have spent any amount for medical treatment for dependent children you are entitled to deduction for all expenses incurred by you on such treatment.

Income Tax Deductions

Donations For Charity

Under section 80-G of the Income Tax Act, there are following relief in case of Donations:

Donation to certain funds, approved education institutions of national importance, charitable institutions.
The deduction will be 50% of the amount.

Deduction may be 100% if donation is given to Prime Minister Relief Funds, National Foundation for Communal Harmony, Blood Transfusion Council, The Africa Fund, Earth-quake Relief Fund.

In Case of Physically Handicapped Persons
A person who is suffering from permanent physical disability or mental retardation is entitled to deduction upto Rs. 40,000.

Handicapped must be certified by a physician, surgeon or a psychiatrist who is working in a government hospital.

Under section 80DD and 80U of Income Tax Act, physical disability must be one of the following:
Permanent or more than 50% disability in limb
Permanent or more than 60% disability in 2 or more limb
Permanent loss of voice
Permanent blindness
Mental Retardation in which mental intelligence is less than 50% of normal required intelligence
In Case of Treatment of Handicapped Dependents
All the person who are dependent on physically handicapped person comes under this category. There is provision of deduction in tax against expenditure on medical treatment, training & rehabilitation of handicapped dependents or amount paid in an approved scheme of LIC or UTI.

In Case of Repayment of Loan Taken For Higher Education u/s 80E
There is deduction in income tax in respect of repayment of loan taken by a student from a bank or any other financial institutions for higher education in India or worldwide.

In Case of Contribution To Pension Fund
Under section 80CCC there is a provision of deduction to an individual for any amount paid to keep in force annuity plan of the LIC for receiving pension from a fund set up by that corporation, as per section 10(23AAB) of Income Tax Act,1961. The amount received by assessee or his nominee will be taxable. There will be no rebate under section 88 to the persons whose deduction under this section has been approved.

In Case of Amount Paid as House Rent
Under section 80GG of the Income Tax Act there is a provision of deduction in tax on amount paid by a person (not a salaried person getting housing allowance) for residential accommodation. Deduction in tax will be measured under following parameters :-
The excess of actual rent paid over 10% of the total income (excluding long term capital gain & income, as per section 115A or 115D of Income Tax Act, 1961)
Deduction will not be allowed to an assessee who owns an residential accommodation at a place where he is temporarily residing
Deduction will not be allowed to an assessee who owns an residential accommodation at any place and has also claimed for deduction in respect of self occupied property

In Case of Remuneration Received in Foreign Currency by Employer
Under section 80RR an individual resident of India who is an author or writer or photographer or TV/ film cameraman or TV/ film director or musician or actor or sport person or other such artist whose source of income is foreign income and brings income to India according to foreign exchange regulation, then he is entitled to get a deduction of amount equal to 75% of such income as it is brought in India in convertible foreign exchange. This amount will be deducted from his taxable income within the period 6 months or period allowed by Chief Commissioner of Income Tax Department. It is necessary to show the documents in favor of your claim.

In Case of Remuneration Received For Services Rendered Outside India
Under section 80RRA of the income tax act, an individual who is getting remuneration in a foreign currency from an employer for his service in outside of India, will get a deduction of 75% of such income brought into India. This amount will be deducted from his taxable income within the period 6 months or period allowed by Chief Commissioner of Income Tax Department. It is necessary to show the documents in favor of your claim.

Case of Certain Investment
Under section of 80L of the Income Tax Act, there are few investment which is a matter of deduction in taxable amount. Here an assessee will get a deduction of amount upto Rs.12,000 - 15,000 from income on certain specified investments in government securities, UTI mutual funds, bonds and other tax saving schemes. An assessee will be entitled for deduction from his taxable income if he is getting interest or dividend on certain
Investments are as follows:

Investment in Securities of central or state government
Investment in National Saving Schemes
Investment in Debentures or Bonds of an institution/ authority/ public sector company/ cooperative society or other such organization notified by central government.
Investment in under National Deposit Schemes as notified by Central Government
Investment in under other schemes which are notified by central government like national saving schemes, time deposit schemes, recurring deposit schemes.
Investment in under monthly income scheme of the post office
Investment in units of UTI and Mutual Funds (under Section 10(23D) of the Income Tax Act)
Investment in with banking institutions
Investment in financial institution working for Industrial Development of India
Investment in an public company limited working for providing long term financing of housing accommodation
Investment in such authorities which are working for planning & development of cities and villages
Investment in co-operative societies

Interest on Securities
One of the most important deductions available to individuals and Hindu Undivided Families (HUFs) is the deduction for interest income in some cases. This deduction is limited to a maximum of Rs 9,000 a year, and is not available to firms or companies.

The interest incomes eligible for a deduction are:

-Interest on bank and co-operative bank accounts and deposits.
-Interest on National Savings Certificates -- VI, VII and VIII issues.
-Interest on some post office deposits and accounts.
-Interest on debentures/bonds issued by co-operative societies, some notified institutions like state electricity boards, IRCI, IFCI, and some public sector companies. Before investing, check whether you are eligible for a -Deduction on the interest income under Section 80L.
-Interest on deposits under the National Deposit Scheme.
-Interest on deposits under National Savings Scheme.
-Interest on deposits with financial corporations like IDBI and ICICI.
-Interest on deposits with public companies providing long-term finance for construction or purchase of houses.