Thursday, January 17, 2013

Guidelines For Filling Form C

Guidelines For Filling Form C

Exemptions in respect of Allowances

1. House Rent Allowance – u/s 10 (13A) - Original rent receipts from the landlord to be kept along with Form C. Employee who is residing in his own accommodation is not eligible for the deduction. The amount of exemption will be restricted to least of the following :

  • The actual HRA received or

  • Excess of rent paid over 10% of salary (Basic + DA + ADA)

  • 50% of salary (Basic + DA + ADA) if accommodation is located at Kolkata, New Delhi, Mumbai & Chennai, otherwise deduction would be 40% of salary (Basic + DA + ADA)

Relationship of the owner of the employee should be noted in the Form C.

Employee should submit PAN of Landlord if the rent for the year exceedsForm C Rs 180,000/-

2. Medical allowance - Employees can claim a deduction on amounts spent on Medical treatment incurred during the financial year up to Rs 15,000/- on self, spouse, children, and in case of parents, brothers and sisters of the employee, if they are wholly or mainly dependent on the employee.

3. Children Education Allowance - u/s 10 (14) - Education Allowance is exempted to the extent of Rs. 100 per child per month up to a maximum of two children.

Deductions from Gross Total Income

Deductions in respect of Investments made (Section 80 C)

Gross qualifying amount under this section is the aggregate of the following details given subject to Maximum of Rs. 100,000 /-

Life Insurance Premium ( JEEVAN DHARA/JEEVAN AKSHAY) :

  • The policy should be in the name of the employee, spouse, children or jointly.

  • In case the amount of premium paid during the year on any insurance policy other than a contract for deferred annuity exceeds twenty percent of the actual capital sum assured, an amount of only twenty percent of the actual capital sum assured should be reckoned for the purpose of calculation of rebate.

  • The actual capital sum assured will not include any premiums agreed to be returned and any benefit such as bonus etc. received over and above the sum actually assured.

  • Original payments receipts should be verified and a copy to be retained for records except in the case of salary saving scheme.

National Saving Certificate :

  • The certificate should be in the name of the employee or jointly with spouse or minor children.

  • Original certificates to be verified and copy to be retained for records.

  • Accrued interest on NSC VIII issue is also deemed as reinvestment in NSC. The factor to be applied per thousand is as under:

NSC's Purchased

2006 – 2007121
2007 – 2008112
2008 – 2009103
2009 – 201096
2010 – 201188
2011 – 201282

Public Provident Fund :

  • The account should be in the name of the employee or spouse or minor children.

  • Original receipts/Pass book to be verified and a copy to be retained for records.

Fixed Deposit :

  • Fixed deposit should be with scheduled bank & for the term of minimum of 5 years and above.

  • The Fixed Deposit should be in the name of the employee in case of the single holder type term deposit.

  • In the case of joint holder type deposit, the deduction from income under section 80C of the Act shall be available only to the first holder of the deposit.

  • Original FD receipt to be verified and a copy to be retained for records.

ULIP, 1971 of UTI/LIC Mutual Fund (Dhanaraksha) :

  • The policy should be in the name of the employee, spouse, children or jointly.

  • Original receipts regarding premium paid to be verified and a copy retained for records.

Equity Linked Savings Scheme :

  • The investment should be only in the name of the employee.

  • Original receipts for the payment made should be verified and a copy to be retained for records.

Any amount paid as subscription made to Home loan account scheme of the National housing bank (NHB).

Principal Repayment of Housing Loan :

  1. The deduction will be allowable in respect of payments made during the year for the purchase or construction of residential house. The following payments are eligible for the purpose of rebate :

  • Repayment of amount borrowed by the employee from Central or any State Government or any Bank including any co-operative bank or LIC or NHB or institutions engaged in the business of providing long term finance for construction or purchase of residential house in India or any public limited company or co-operative society engaged in the business of financing the construction of houses or the Employer.

  • Stamp duty, registration fee and other expenses for the purpose of transfer of such house property to the employee.

2. The payments made towards the following are not eligible for rebate:

  • The admission fee, cost of share and initial deposit to become a shareholder or member of the society.

  • The cost of addition or alteration to, or renovation or repair of, house property which is carried out after the issue of the completion certificate or after the house property or part thereof is occupied by the employee or any other person on his behalf.

  • Any expenditure in respect of which deduction is allowable u/s 24 of the Act ( i.e. interest on loan borrowed for the purchase or construction of house property ).

3. The house has to be completed before 31st March of the respective financial year. The house completion certificate should be annexed alongwith the Form C. The same can be from Municipal Corporation or Architect or Society Share Certificate. If jointly owned, the first name of the property should be of the employee.

4.Housing loan interest for the period up to the date of completion of the acquisition or construction can be claimed in five equal installments from the year in which construction / acquisition is completed

Tuition fees

  • Tuition fees paid to school, college, university or other educational institutes situated in INDIA for full time education. This does not include donation / development fees or payment of similar nature such as bus fees, exam fees, library fees-deposit, private tuition fees etc.

  • Original tuition fee receipts are required to be verified and copy to be retained for records.

Contribution to Pension Fund of LIC or other insurance co. or to the Pension scheme of central government maximum up to Rs. 100,000 /-.

Section 80CCE – The aggregate amount of deduction u/s 80C, 80CCC & 80CCD will be up to the limit of Rs. 100,000 only.

Long term Infrastructure Bonds Rs 20,000/- (Section 80CCF)

Please note that from FY 2012-13 the investment made under this section is not allowed as deduction

Rajiv Gandhi Equity Savings Scheme, 2012 (Section 80CCG)

It is applicable to resident Individual, being a new retail investor, who acquires listed equity shares as per the notified Equity Savings Scheme.

  • Amount of deduction allowed is 50% of amount invested is such equity shares, maximum up to Rs. 25,000 /-

  • The deduction will be allowed only for 1 assessment year with a lock-in period of 3 years and for those individuals only whose gross total income for the relevant assessment year is not exceeding Rs. 10 Lakhs

  • If any of the conditions is violated, the amount of deduction will be deemed as income for the year in which the violation has occurred.

  • The amount invested by any employee can be claimed during the filing of personal Income tax returns. The same will not be considered in Form B / C

Medical Insurance Premium (Section 80D)

  • The premium should be paid by any mode other than cash by the employee on his health or on the health of his spouse or dependent parents or dependent children.

  • This insurance scheme should be in accordance with a scheme framed by the General Insurance Corporation of India and approved by the Central Government. In the case of a scheme framed by any other insurer, it should be approved by Insurance Regulatory and Development Authority.

  • Deduction is restricted to the actual insurance premium paid for insurance of Self, Spouse and dependent children or Rs 15,000, (Rs. 20000 in case any person insured is Senior Citizen) whichever is lower.

  • For insurance on health of any parent or parents- Maximum Rs 15,000 (Rs 20000 in case any person insured is a Senior Citizen)

  • Original receipt regarding the payment should be verified and a copy of the receipt retained on record.

Medical treatment of handicapped dependents (Section 80DD)

  • Deductions in respect of :-

  1. any expenditure incurred on medical treatment (including nursing), training and rehabilitation of a dependant, being a person with disability; or

  2. An amount paid or deposited by the employee under any scheme framed in this behalf by the LIC or any other insurer and approved by the Board.

  • The term “dependent” means - the spouse, children, parents, brothers and sisters of the individual or any of them.

  • The term “disability” means - blindness, low vision, leprosy-cured, hearing impairment, locomotor disability, mental retardation and mental illness.

  • The term “person with disability” means - a person suffering from not less than forty percent of any disability aforementioned as certified by a medical authority, being a hospital or institution notified by the Government.

  • The term “severe disability” means - a person with eighty percent or more of one or more of the aforementioned disabilities.

  • Original certificate certifying the disability, obtained from a hospital or institution notified by the government for this purpose should be verified and a copy of it to be retained for records.

  • A flat deduction of Rs 50,000 or Rs 1,00,000 (for persons with severe disability), on the basis of a declaration by employee certifying the actual amount of expenditure on account of medical treatment including nursing, training and rehabilitation of the aforesaid dependant and receipt/acknowledgment of the amount paid or deposited in the specified schemes of LIC or any other insurer.

Medical treatment, etc. for specified disease or ailment (Section 80DDB):

  • Deduction of actual expenditure incurred by the assesse for self or dependent for the medical treatment of diseases or ailments prescribed in rule 11DD (1) of the Income tax rules, 1962. The specified diseases are Neurological diseases, Cancer, Full blown AIDS, Chronic Renal failure, Hemophilia and Thalassemia.

  • The assesse is required to furnish a certificate in prescribed Form No. 10I from a neurologist; an oncologist, an urologist, a hematologist, an immunologist or such other specialist as may be prescribed, working in a Government Hospital.

  • The term dependent means the spouse, children, parents, brothers and sisters of the individual or any of them dependent mainly on such individual for his support or maintenance.

  • Copies of the bills and medical certificate as aforementioned should be kept along with Form C after verifying with the originals.

  • Actual expenditure restricted to a maximum of Rs. 40,000 is allowed as a deduction. Where the expenditure is incurred in respect of a dependent parent who is a senior citizen, an increased limit of Rs. 60,000 will be applicable.

Deduction in respect of interest on repayment of loan taken for higher education (Section 80E)

  • Loan taken from any financial institution or an approved charitable institution.

  • Loan should be for pursuing higher education for SELF ( full time studies for any graduate or post graduate course in engineering , medicine, management, science , mathematics & statistics ).

  • Deduction starts from the year from which employee start paying interest.

  • Tax benefit available for maximum of 8 years or till loan is fully repaid, whichever is earlier. Amount must be paid out of his income chargeable to tax.

  • Certificate from financial institute or charitable trust, showing repayment of loan amount, principal amount & interest amount during the year.

Deduction in respect of person with disability for Self (Section 80U)

  • The deduction can be availed by an employee, being a person with disability, on basis of the certificate from a medical authority.

  • A flat deduction of Rs. 50,000 is allowed in case of a person with disability and a deduction of Rs. 100,000 is allowed in the case of person with severe disability.

  • The terms – person with disability, medical authority and severe disability will have the same meaning as given for the purposes of Section 80DD above.

  • Original certificate certifying the disability, obtained from a hospital or institution notified by the government for this purpose should be verified and a copy of it to be retained for records.

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