What is section 80TTB

Section 80TTB is a provision of the Income Tax Act that provides tax exemption on interest income to senior citizens (aged 60 years or above). If you have a savings account, fixed or recurring deposit in a bank, post office or cooperative institution, then up to Rs 50,000 can be claimed as deduction on the interest earned on it, but this benefit is available only in the old tax system.

If you choose the new tax system, then the exemption under this section will not be available. Therefore, it is important to choose the right tax system while filing returns, especially if your income is related to interest.

Experts’ advice Tax experts say that senior citizens should remain in the old tax system so that they can avail the benefits of 80TTB. These exemptions are not available if you choose the new tax system. No relief in the new tax system If you choose the new tax system, then you will not get the exemption of 80TTA and 80TTB. Therefore, before filing the return, you should think about which tax system is good for you.

In how many days does the refund come

If you file your income tax return correctly and on time, and also e-verify it, then usually you get your refund within 5 to 10 days. Some people even get their refund in a single day! But if there is any mistake in the return, or documents have to be verified, then it can take 4 to 5 weeks for the refund to arrive. That is why filing quickly and correctly is of utmost importance.

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Now let us see what are the tax benefits on investing in NPS:-

Tax benefit on investment in Tier-I account under old tax regime

-Tax benefit u/s 80CCD(1) u/s 80CCD(1) up to a maximum of Rs 1.5 lakh in Tier-I account in NPS or 10% of annual salary (basic salary plus DA) for salaried/salaried individuals and non-salaried/self-employed For a maximum of 20% of the gross total income, whichever is less, the benefit of tax exemption ie deduction is available on the investment. For example, if your salary (basic salary plus DA) is 20 lakhs and you contribute 2 lakhs to NPS. But you can get exemption under 80CCD(1) only up to a maximum annual investment of Rs 1.5 lakh.

One more thing 80C (Life Insurance, PPF, NSC, Senior Citizen Savings Scheme, SSY, Bank / Post Office FD, NPS, ULIP, Term Plan, ELSS, Repayment of principal amount of home loan, tuition fees of two children …..etc) , 80CCC (Annuity/Pension Plan) and 80CCD(1) tax exemption can be availed only on annual investment up to a maximum of Rs 1.5 Lakhs.

Tax benefit under 80CCD (1b)

Under 80CCD (1b), investment of Rs 50,000 in NPS Tier-I account is tax exempt in addition to the limit / limit of 80CCD (1). Overall, you can get tax exemption on investment up to a maximum of Rs 2 lakh in NPS in a financial year. Even if you have invested up to a limit of Rs 1.5 lakh annually under 80C and 80CCC, you can still get a separate tax exemption on investment of Rs 50,000 in NPS under 80CCD (1b).

Tax benefit under 80CCD (2)

Under 80CCD (2), there is also a provision for tax exemption on the contribution made by the employer to the NPS for the employee. But the tax exemption will be available only on the contribution of 10 percent of basic salary plus DA for private employees and up to 14 percent of basic salary plus DA for government employees. Deduction under 80CCD(2) is available only to salaried individuals.

Tax benefit on investment in Tier-II account

For central government employees, a provision has been made for tax exemption under 80C on the maximum investment amount of Rs 1.5 lakh in Tier-II account. Provided the lock-in period of the investment is at least 3 years.

Tax benefits under the new tax regime

In the new tax regime, there is a provision of tax benefit under 80CCD(2) only. This means deduction is available on the contribution made by the employer to the NPS for the employee. But this benefit will be available to the private employee only on the amount contributed by the employer up to 10% of his basic salary. While for government employees, on the contribution of 14% of the basic salary plus DA from the employer.

Tax treatment on NPS

NPS is also in EEE ie exempt-exempt-exempt category like PPF (PPF), EPF (EPF) and SSY (SSY). Means where there is no tax on deposit, no withdrawal and no interest received. Means there is tax exemption on maximum 60% withdrawal. In NPS, only 60% of the total maturity amount is allowed to be withdrawn. The remaining 40% of the maturity amount has to be invested in an annuity/pension plan.

Tax on annuity

Although the amount invested in annuity is tax-free, there is no tax exemption on regular income/pension received as returns under annuity. This means that the regular amount received as a return is added to the annual income of the investor and the taxpayer has to pay tax according to the tax slab.

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Many schemes are being run by the government for the benefit of the people. People get the benefit of these schemes on different occasions. At the same time, many schemes are being run by the government for investment. Through these schemes, people get a chance to make safe investments and also earn interest. And today we are going to tell you about one such scheme.

PPF scheme

Actually, the Public Provident Fund (PPF) scheme is being run by the government. This scheme comes under the Central Government. On the other hand, if someone is looking for a safe investment for the long term, then investment can be made in this scheme. Along with this, people also get tax benefit on PPF scheme.

Investment Amount

Under the PPF scheme, people can invest up to Rs 1.5 lakh every year. Along with this, this scheme runs for 15 years. This scheme matures only after 15 years and people get maturity amount along with interest on the amount invested. At the same time, under this scheme, people have to invest a minimum of Rs 500 every year.

Interest

People get interest in PPF scheme. On the other hand, one special thing about the PPF scheme is that the interest rate given on this scheme is reviewed every 3 months. On the other hand, if the central government feels it, then the interest rate can also be changed. At present, 7.1 percent interest is being given to the people by the government on this scheme.

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Now the government has changed the rules for claiming tax benefits under this section. Now a certificate like TDS will be necessary for this. You will have to download this certificate from the e-filing portal of the Income Tax Department. Let us know about this in detail.

What is the new provision?

As per the new provision of section 80G, the donation certificate will be considered as proof of donation. It has to be downloaded from the income tax portal. Earlier, this certificate was not required to claim tax benefits on donations. This rule was applicable till the financial year 2020-21. Then the tax benefit could be claimed with the help of a receipt issued by the institution to which the donation is being made. After that the government changed this rule.

Must download donation certificate

The Income Tax Department has made the rules for availing other benefits including claiming tax benefits online. Now the process of claiming tax-benefit on donations under section 80G has also been made online. Now the donations received by charitable institutions are matched against the claims made by the taxpayers.

For this, it is necessary for the Charitable Institution or NGO to put the statement of all the donations received in a financial year on the website of the Income Tax Department. Apart from this, it is necessary to issue a separate certificate to the person doing the charity.

Donation statement has to be filed before May 31

The charity receiving institution or NGO has to file the statement of donation in Form 10BD. It is required to be filed electronically on the e-filing portal of the Income Tax Department. It is necessary to file the statement of donation for the institution or NGO before 31st May of every financial year.

understand with the help of example

We can understand this easily with the help of an example. Suppose you donate Rs 1 lakh to a recognized organization on August 1, 2022. This donation is done in the financial year 2022-23. The company receiving the donation will have to submit its statement on the website of the Income Tax Department by May 31, 2023.

When you file your income tax return for the financial year 2022-23, you will have to give complete information about the donation certificate. The Income Tax Department will match the information given by you with the statement of donation filed by the institution. Your claim of tax benefit will be approved only after matching it.

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By investing in PPF, people can save a significant amount and can also get good returns. Today we are going to tell you about the PPF scheme in detail.

PPF Scheme

Public Provident Fund is a scheme run by the Central Government. In this, there is a guarantee of the government and interest is also earned at a fixed rate. At present, interest is being given at the rate of 7.1 percent in the PPF scheme. At the same time, investment is made in this scheme for a long period.

PPF Investment

Investors can invest in PPF scheme for 15 years. However, there is also a limit to invest in this scheme. The limit of this investment should also be kept in mind. Actually, an investor can currently invest Rs 1.5 lakh in a financial year in the PPF scheme.

Tax Benefit

In such a situation, if investing in PPF scheme, then keep in mind that at present Rs 1.5 lakh is invested in this scheme in a financial year and according to the current rate, interest will be earned at the rate of 7.1 per cent on an investment. . At the same time, tax benefit is also available on this investment.

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Any Indian citizen can invest in this for their daughter below the age of 10 years. The government has recently increased the interest rates of some small savings schemes for the January-March 2023 quarter. Although the interest rates of PPF and Sukanya Samriddhi Yojana have not been increased for this quarter. So far 7.6 percent interest is being given on Sukanya Yojana. Tax exemption is also available in this scheme.

Under this scheme, the account of only two daughters of the same family can be opened. But if twin daughters are born in a family, then under this scheme three accounts can be opened for daughters instead of two.

Know what are the rules

You can deposit a minimum of Rs 250 and a maximum of Rs 1.50 lakh in this scheme. If nothing is deposited in a financial year, then a fine of Rs 50 will be imposed. The scheme will mature when the daughter turns 21. However, your investment in this scheme will be locked at least till the girl child turns 18. Even after 18 years, 50% of the total money can be withdrawn. Which she can use for graduation or further studies. After this, all the money can be withdrawn only when she is 21 years old.

Tax benefit

Apart from earning excellent returns in this government scheme, you can also save tax. In this, income tax benefit of Rs 1.5 lakh is available under section 80C of the Income Tax Act 1961. Not only this, the returns and maturity amount are exempted from tax. This means that you get tax free returns. In such a situation, this scheme can prove to be very beneficial in terms of investment.

Mathematics of 5th date will be beneficial

As per the rules of Sukanya Samriddhi Yojana, interest is available only on the minimum balance available between 5th and last date of every month. This means that if you do not invest in it before 5th of the month or till 5th of the month then you will not get interest for that month. The interest on this is calculated on a monthly basis, but the entire interest is credited on the last day of the financial year i.e. 31st March. The compounding of interest in both these schemes is done on an annual basis. This is the reason why depositing money before the 5th of every month can be beneficial.

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Today we are going to tell you about such a great scheme. National Savings Certificate or NSC is a popular option. As a low-risk investment, it comes with many advantages. National Savings Certificate (NSC) is a fixed income investment scheme that you can open at any post office branch. This scheme is an initiative of the Government of India.

National Savings Certificate

It is a savings bond that encourages customers to invest mainly in small to middle income investors and those who are eligible for income tax exemption. Anyone looking for a safe investment avenue to earn steady interest while saving on tax can invest in NSC. NSC offers guaranteed interest and complete capital protection.

Tax Benefit

However, like most fixed income schemes, they cannot provide inflation-beating returns like tax benefit mutual funds and the National Pension System. The government has made NSC easily accessible to potential investors by making them available at post office branches spread across the country. National Savings Certificate (NSC) NSC is a medium term savings scheme with a maturity period of 5 years.

Interest

The scheme currently offers an annual interest rate of 7 percent compounded half-yearly but is payable at maturity. Unlike PPF, it does not limit the maximum investment as there is no limit on the maximum investment. Although the minimum investment in this scheme is 1000 rupees.

The minimum investment amount can be increased with denominations of Rs.100. There is no limit on the number of accounts opened under this scheme. The deposit amount is eligible for tax exemption under section 80C of the Income Tax Act, 1961.

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For most employees, House Rent Allowance (HRA) is a common component of their salary structure. Although it is a part of the salary, HRA, unlike basic salary, is not fully taxable. Subject to certain conditions, a part of HRAgets exempted under Section 10 (13A) of the Income-tax Act, 1961.

The amount of HRA exemption is deductible from the total income before arriving at a taxable income. This helps the employee save tax. Remember, the HRA received is fully taxable if an employee is living in his own house or if he does not pay any rent.

Who can avail HRA?
The tax benefit is available only to a salaried individual who has the HRA component as part of his salary structure and is staying in a rented accommodation. Self-employed professionals cannot avail the deduction.

Click here to use our HRA Calculator 

How much is exempted?
The exemption for HRA benefit is the minimum of:
i) Actual HRA received

1. ii) 50% of salary if living in metro cities, or 40% for non-metro cities; and
   iii) Excess of rent paid annually over 10% of annual salaryFor calculation purpose, the salary considered is ‘basic salary’. In case ‘Dearness Allowance (DA)’ (if it forms a part of retirementbenefits) and ‘commission received on the basis of sales turnover’ is applicable, they too are added to compute the minimum HRA exemption available.The tax benefit is available to the person only for the period in which the rented house is occupied.Example of HRA calculation
   Let’s say an individual, with a monthly basic salary of Rs 15,000, receives HRA of Rs 7,000 and pays Rs 8,400 rent for an accommodation in a metro city. The tax rate applicable to the individual is 20 percent of his income.

   To avail HRA benefit, the least of the following amount (yearly) is exempted, rest is taxable:
   i) Actual HRA received = Rs 84,000
   ii) 50% of salary (metro city) = Rs 90,000 (50% of Rs 1,80,000)
   iii) Excess of rent paid annually over 10% of annual salary = Rs 82,800 (Rs 1,00,800 – (10% of Rs 1,80,000))

   It shows that of Rs 84,000 actually received as HRA, Rs 82,800 gets tax exemption and only the balance of Rs 1,200 gets added to the employee’s income, on which a tax of Rs 240 ( 20 per cent slab ) gets payable.

   Documents
   HRA exemptions can be availed only on submission of rent receipts or the rent agreement with the house owner.

   It is mandatory for the employee to report the Pan Card of the ‘landlord’ to the employer if the rent paid is more than Rs 1,00,000 annually.

   Special cases
   There could be special scenarios in claiming HRA tax benefit, such as:

   Paying rent to family members
   The rented premises must not be owned by the person claiming the tax exemption. So if you stay with your parents and pay rent to them then you can claim that for tax deductions as HRA. However, you cannot pay rent to your spouse. As, in the view of the relationship, you are supposed to take the accommodation together. Thus, these transactions can invite the scrutiny from the Income -tax Department.
   
   
   
   Even if you are renting the house from your parents, make sure you have documentary evidence as proof that financial transactions regarding your tenancy takes place between you and your parent. So keep a record of banking transactions and rent receipts because your claim can get rejected by the tax department if they are not convinced by the authenticity of the transactions. Recently, there has been an instance in which the HRA claim of a salaried taxpayer was rejected by the Mumbai income tax appellate tribunal because the claim for HRA did not appear genuine to the tax officials.

   Also Read: For tax relief, you need proof of rent paid to kin

   Also Read: 10 things to do so that HRA claim does not get rejected

   2. Own a house, but staying in a different city
   One can avail the simultaneous benefit of deduction available for the home loan against ‘interest paid’ and ‘principal repayment’ and HRA in case your own home is rented out or you work in another city.

   Individuals who don’t get HRA but pay rent
   There may be some employees who might not have HRA component in their salary structure. Also, a non-salaried individual might be paying rent. For them, Section 80 (GG) of the Income-tax Act offers help.

   An individual paying rent for a furnished/unfurnished accommodation can claim the deduction for the rent paid under Section 80 (GG) of the I-T Act, provided he is not paid HRA as a part of his salary by furnishing Form 10B.

   How much
   The least of the following is available for exemption from tax under Section 80GG:
   (i) Rent paid in excess of 10% of total income
   (ii) 25% of the total of the total income*
   (iii) Rs 5,000 per month

   *Under this section, the total income is calculated as gross total income minus long-term capital gains, the short-term capital where Securities Transaction Tax (STT) has been paid and deductions available under Sections 80C to 80U, except Section 80GG.

   Conditions
   While claiming a tax deduction, one must remember that the individual himself or his/her spouse, or minor child, or as a member of the Hindu Undivided Family (HUF) must not own any accommodation. Also, if the individual owns any residential property at any place and earns rent from it then no deduction is allowed.

   One can avail the simultaneous benefit of deduction available for the home loan against ‘interest paid’ and ‘principal repayment’ and HRA in case your own home is rented out or you work in another city. However, the same is not available in case of Section 80GG.

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