24 August 2020

Deductions under chapter VI A of income tax act 1961

There are different types of deduction are available under chapter VI A, it is very beneficial to any taxpayers to have a piece of knowledge about this chapter of Income Tax. It can save lots of money and it is not illegal as the benefit is provided by the Income Tax Department as tax-saving benefits. Remember you have to claims these deductions in the income tax return to avail the benefits. Otherwise, you will lose these benefits even if you are eligible. So let's learn this deduction one by one.


If you want to take benefits under this section, you have to consider certain kinds of investment in your portfolio like a life insurance policy, provident fund, PPF, etc.


The contribution of your pension scheme under section 80CCC is also deductible. For any kind of renewal or any sum paid for an existing life insurance policy, it also covered by this section. Remember, prior April-2006, these benefits were not applicable for any of such investments.


This section allows you to claim benefits for your investment in some pensions scheme specified by Central Government. You can invest from your taxable income in schemes such as Atal Pension Yojana or National Pension Scheme, then you are eligible to get this benefit.

Now, remember, you can avail maximum benefit of 1.5 lakh from these three sections altogether.


Under the section, you can claim a deduction for the amount spend in medical insurance premiums. The section allows to avail of a deduction of Rs. 25,000 for self, spouse & dependent child (Max 2 children) and addition Rs. 25,000 for parents. 

In case parents are aged above 60 years then you can claim up to Rs. 50,000 for parents (Rs. 25,000 for self & family + Rs. 50,000 for parents older than 60 years)

If the taxpayer is also older than 60 years then this section allows Rs. 50,000 for self & family + Rs. 50,000 for parents older than 60 years, hence the total allowable deduction will be Rs. 1,00,000 for this case.


In addition to 80D, this section further extends the benefit for medical expenses by allowing taxpayers to claim a deduction for any disabled person, who is fully dependent on the taxpayer. In this case, the expense incurred for his/her maintenance can be claimed under this section with a maximum limit of Rs. 75,000 in case of minor disablement or Rs. 1,25,000 in case of severe disablement.


Under this section, the taxpayers can avail the benefit if he/she spends for some specific deadly disease like cancer, aids, etc. The maximum deduction is Rs. 40,000 for any non-Sr. citizen taxpayer but it can be extended up to Rs. 1,50,000 in case of Sr. citizen. Remember, you must have the certificate of the disease, obtained from hospital in order to claim any deduction under this section.


If the taxpayer donates any sum to a political party, then he/she can claim this amount as a deduction from taxable income under section 80GGC. This section allow the taxpayer to claim 100% of his/her donation to the political party, once the donation is in non-cash form. Any donation in cash is not eligible to get the benefit under this section.


A donation in any charitable institution is also entitled to deduction under section 80G. The claimable amount varies from 50% to 100% depending upon the nature of the institution, its formation, and many other factors. Make sure to know about the institution and the tax benefit it provides, before making any donation to the institution.


This section offer a deduction to students, who have a loan for higher education purpose. He/she can claim 100% of the interest on such loans up to 7 years maximum.


Section 80GG provides the benefit to claim deduction on payments made as house rent. This benefit is not eligible if the taxpayer do not have a rented house. The maximum benefit under this section will be least of the followings three:
    1. 25% of the total income
    2. Rent paid over 10% of income
    3. Maximum Rs. 5,000 per month


This section allows any author of a book other than the textbook, to claim deduction on his/her royalty income. This benefit is limited up to a maximum deduction of Rs. 3,00,000.


Like the previous section this section also offers deduction on royalty income, but this time the benefit is not for authors, rather than a patent holder, who can enjoy the benefit of this section.


Under this section, taxpayers with any physical disability can claim his/her expense for such disability as a deduction for his/her taxable income. This section allows a maximum deduction of  Rs. 1,25,000.


This section allow taxpayers to claim the interest as a deduction, which he/she received on the savings bank account. Under this section the maximum deduction allowed is Rs. 10,000, however, if the taxpayer earn interest from multiple savings accounts, then he/she can claim the aggregate amount of all those interests, subject to the maximum limit of Rs. 10,000.


This section offer the same benefit as the previous section with an extended threshold limit up to Rs. 50,000 but this section is only eligible for Sr. citizen.

Estimated reading time: 4 minutes, 25 seconds. Contains 884 words

12 August 2020

How to file Income tax return online| ITR1 For AY 2020-21

As I writing this article just after the lockdown stage in India, all ITRs are not available in the online portal of Income tax department. Currently you can only file 4 available ITRs ie, ITR1, ITR2, ITR3 & ITR4.

Before filling the ITR1 be sure to choose the right ITR for you. Check this video to be sure.

So let's come to the topic "How to file ITR1 online". Well actually you can only file ITR1 (also called SAHAJ) in an online web form. In case of other ITRs you have to download either Excel or Java return preparing utility and then upload the generated XML file in the online portal (obviously after login).

ITR1 is also called SAHAJ, because of it's simplicity. It has the lowest number of tabs and schedule. So don't be panicked, be comfortable to learn it today. So, lets learn.

Step-1 [Opening the ITR-1 Form]

At first you have to login into the online portal of Income tax department ie, www.Incometaxindiaefiling.gov.in once you are logged in, you can see two links in the dashboard. The first link, named "Filling of Income Tax Return" is what you need to follow to file itr1 online. The second link, named "View Reruns / Forms" is to check previously filled return or acknowledgement, if you want to download or print. So follow the first link and you will find a small firm where your PAN number is already given and you need to fill the Assessment year for which you want to file a return, ITR form Number and submission mode. If you choose ITR1, then you can get two option in the submission mode. You can select Prepare and submit online, which is the only available in case of itr1 and the second option is upload XML. So choose the first option as it is the widows easiest way to file a return and click continue button. You may asked for the filling type to choose . In regular case select original/revised return. If you provided your bank accounts before, you may farther asked to choose a bank account for refund. So, choose as per your preference and continue.

Step-2 [General Information]

Now you can see a form with 9 tabs and three button above & below the form for Submit, Save & Exit respectively. Always remember to save your work, it is a good practice. Now the 1st tab is containing some general instructions. Nothing you have to do with this tab except reading those bunch of texts. So click on the next tab, which is "Part A General information.

In this tab you can see some field pre-filled with your general information you provided at the time of online registration like PAN, Name, Date of birth and many more like this. Check all fields and enter where the information is not given. Remember all fields with red star (*) marks are mandatory rest are optional. Now once you fill all the important information, move to the A20. Section below and choose "Filed u/s 139(1)" for regular return, or choose any other given options as of your case. Do not choose "Filled u/s" if you filling return in response of notice from income tax department, instead choose "Filled in Response to notice u/s" and then select the proper section as per the notice you received. Now in the next field, mention whether you are filling the return without having the liability to fill it but due to the seventh provision of section 139(1). Select No if it is not applicable to you. If you select No, then other fields under it will become disabled otherwise you have to answers those fields. After you finishing with this tab, move to the next tab which is "Computation of income and Tax"

Step-3 [Computation of income and Tax]

Under this tab you should enter your gross salary in three fields. In the first field is "Salary as per section 17(1)". Enter your annual salary here (without any perks or profit in lieu of salary). The second field is "Value of perquisites as per section 17(2)". In this field enter only if you received any kind of perks from your employer like, Rent free accommodation / accommodation at a concessional rate or if your life insurance premium paid by employer. The third field is profit in lieu of salary as per section 17(3). As the name suggests, you have to enter if you received any amount of profit in the way of salary. After this you are allowed to enter any kind of exempted allowances if you receive from your employer. At first select the nature of exempt allowance, if you select “other” then provide the details in the description field and then provide the amount of the exempted allowance. You can click on the add button to enter multiple exempted allowance. Now you can see some fields below will be auto calculated (like net salary , Standard deduction etc.). Move on the “Professional tax u/s 16(iii)”. Enter the accumulated value of P.tax if deducted from your salary, otherwise leave the field blank. 

In ITR1 you can show only one house property income. To do so, scroll down and find the “Type of house property” and select whether the property is self occupied or let out or even if deemed let out (any vacant property which is not self occupied). In case of self occupied property all fields will be disabled except “Interest on borrowed capital” and “arrears/unrealized rent” so you can take the benefit out of this. If you have not taken any loan against your self occupied property , then sadly this benefit is not for you, and if you have no arrears or unrealized rent to put here then you can skip this field too. Remember if you have multiple house property then ITR 1 is not applicable for you, you have to select at least ITR 2 or whichever ITR is applicable for you.

Now after Salary and House property you will find the section of “Income from other sources”. Find the “Nature of Income” and select if you earn anything from other sources like Interest from savings, RD, FD, Family pension or any other. Move to the amount field and enter the amount here. If you have multiple of these, you can add another row by simply clicking on the “Add” button.

By further scrolling down, you will find the section of deductions under Chapter VIA. Here you can claim the deductions, if you made one or more tax saving investments. If you are not sure about those various sections feel free to watch my video on this topic.

After claiming these deductions, you also have a section for “Exempt income” below, where you should show all of your incomes which are exempted by section 10 of Income tax act. Click on “Add”  button if you have multiple.

Below, in part D you can check all the computation for your income tax, everything here will be done automatically except one field, that is “Relief u/s 89”. Enter the relief amount if you want to claim any, but remember to submit form 10E before this. If you want to know more about relief check my video on relief

Now head to the next tab, that is “Tax Details” 

Step-4 [Tax Details]

Under this tab you can provide any tax you have been paid already in the form of TDS, TCS, or Advance tax. The first section is for TDS deducted from Salary. Here you should enter your employer's TAN , Name , Income chargeable under salary and the amount of TDS in respective fields. All this details are available in the Form 16 provided by your employer. 

In the fields below you can fill any kind of other TDS , TCS or Advance tax details, if applicable for you otherwise leave these blank. If you are curious about these find all details in different videos, links are given below:

Once you have done with all of these, lets move the next tab, that is “Tax paid and verification”

Step-5 [Tax paid and verification]

This is the last step of this step by step guide. Under “Tax paid and verification” you will find all your total tax payable vs total tax paid details and the difference will be either in "Amount payable" or in "Refund". Now you have to provide one or more bank account details, such as IFS Code, Bank Name, Account number and you have to select the bank you want to set for refund (if any). You can add multiple bank accounts by simply clicking on the "Add" button.

After entering bank details scroll down and find the "Verification" section. Here enter your name and your father name (if not already entered); Select your capacity, for example if you as an individual filing your own return then choose "self"; Check your PAN number that is already entered; Enter place & date and you are ready for online or offline verification. If you have your Aadhar number linked with your mobile then choose for "I would like to e-verify...." and proceed by clicking "preview and submit" button, so you can verify using your Aadhar OTP.

If you are not ready for e-verify and prefer to offline verification then just select the last option "I don't want to e-verify...." and proceed by clicking "preview and submit" button. Now you have to print the ITR-V form and post it to CPC Income tax at the Bengaluru address after manually signing the document. You have 120 days from the date of filing to reach this document at CPC Bengaluru. Remember you should only use normal or speed post and not any other service like courier.

Thank you for reading this step by step article. Hope you find it helpful. Join my YouTube channel to support me, and to learn more like this.

[Estimated reading time: 8 minutes, 12 seconds. Contains 1643 words]