Deduction under Section 80CCG: Investment made under an Equity Savings Scheme
This deduction is allowed to a Resident Individual assessee who has invested for the first time in listed equity shares or listed units of an equity oriented fund.
The individual should be a new retail investor, i.e. have invested for the first time and the Gross Total Income should be less than Rs. 12,00,000 in the year in which investment has been made.
The maximum amount of deduction shall be lower of the following:
- 50% of the amount invested
Deduction shall be allowed for three subsequent years starting from the Financial Year in which investment was made. For example, if X acquired government approved equity shares of LMN Ltd in Financial Year 2015-16, he can claim deduction under this section in Assessment Years 2016-17, 2017-18 and 2018-19.
There should be a ‘lock-in’ period of 3 years from the date of acquisition which means that if the investor transfers the said securities within 3 years of acquisition, he cannot claim deduction under this section. Also, any previously claimed deduction under this section shall be taxable in the year of transfer.
No deduction shall be allowed under this section in Assessment Years beginning from 1st April 2018. Only the individuals who have invested the amount in said securities in the Financial Year 2016-17 (Assessment Year 2017-18) can claim deduction up-to Assessment Year 2019-20.
- The investment should be done in schemes approved by the Central Government for this deduction.
- ‘Equity oriented fund’ implies such funds in which more than 65% of the total proceeds have been invested in the equity shares of the domestic company.
Deduction under Section 80E: Interest on Loan for Higher Education
This deduction is allowed only to an Individual for the amount of interest paid on education loan, i.e. any course pursued after passing Class 12th or equivalent. The deduction cannot be claimed for repayment of principal amount of loan.
The loan can be taken for education of either self or spouse or children (including any person of whom such individual is a legal guardian).
The loan should be taken only from financial institutions or any approved charitable institution as notified by Central Government.
Deduction shall be allowed for the entire amount of interest. This means there is no bar as to maximum amount of deduction that can be claimed. Although it is allowed only for 8 assessment years starting from the year in which first payment of interest is done.
For instance, X takes a loan from an approved charitable institution amounting to Rs. 40,000 repayable in 10 annual equal instalments at an interest rate of 10% p.a. in Financial Year 2015-16 so that his wife can pursue a Master’s degree in Commerce.
He pays back Rs. 8,000 in Financial Year 2016-17 (Rs. 4,000 towards principal amount and Rs. 4,000 towards interest).
Under Section 80E, he can claim deduction of Rs. 4,000 (interest part of Rs. 8,000) in Financial Year 2016-17 (Assessment Year 2017-18).
|Year||Financial Year||Outstanding Loan||Interest||Payment||80E Deduction|
Deduction under Section 80D: Medical Insurance Premium
Deduction shall be allowed only to an Individual assessee or Hindu Undivided Family (HUF) if the payment has been made towards the following:
- Medical Insurance (for both- new policies purchased and existing policies renewed)
- Central Government Health Scheme (CGHS) or such other scheme as may be notified by Central Government in this behalf
- Preventive health check-up
It should be noted that assessee like companies and firms are outside the purview of this section.
The deduction is allowed for Spouse, Dependent Children and Parents subject to following:
An individual is eligible to claim a deduction under this section for self and family (spouse and dependent children) up-to a maximum of Rs. 25,000. In case, individual is a senior citizen or a very senior citizen, the maximum limit shall be Rs. 30,000.
An individual is eligible to claim a deduction under this section for parents (dependent or independent) up to maximum of Rs. 25,000. In case parents are senior citizens, the individual can claim deduction up-to Rs. 30,000. This shall be allowed over and above the deduction claimed for insurance of self and family.
Generally, in case of very senior citizens, insurance policies are not issued. So here, deduction against expenditure incurred towards their treatment can be claimed up-to a maximum of Rs. 30,000.
Expenses incurred for preventive health check up shall be allowed in aggregation for self, family and parents to a maximum of Rs. 5,000 with effect from Assessment Year 2016-17.
Hindu Undivided Family (HUF) can claim deduction in the same manner. HUF can take the policy in the name of any of its members.
Deduction is allowed only if payment has been made otherwise than in cash, i.e. through normal banking channels or debit/ credit card. Although there is no such restriction for payment made for preventive health check-up.
So, the maximum amount of deduction that can be claimed under this section is Rs. 65,000
[Rs. 30,000 for self and family (in case of senior citizens); Rs. 30,000 for senior citizen parents and Rs. 5,000 for Preventive health check up]
For example, Mr X, aged 50 years makes the following payments:
|Policy in name of||Age (in years)||Type of policy||Mode of Payment||Amount (Rs.)||Deduction under Section 80D (Rs.)|
|Mr X||50||Renewal of existing policy||Bank transfer||20,000||20,000|
|Independent Son, Mr Y||24||New policy taken||Debit Card||12,000||Not allowed for independent children|
|Mother, Mrs Z||72||Renewal of existing policy||Cash||28,000||Not allowed because of cash payment|
|Wife, Mrs X||47||Preventive health check up||Bank Transfer||2,000||4,000|
|Father, Mr Z||77||Cash||2,000|
- Senior citizen means Resident Individuals aged above 60 years but less than 80 years. Very senior citizen means Resident Individuals above the age of 80 years.
- The insurance policy covered under this section shall be in accordance with the scheme by:
- the General Insurance Corporation of India and approved by Central Government in this behalf
- any other established insurer and approved by Insurance Regulatory and Development Authority (IRDA)
- This is valid only till Assessment Year 2018-19. The limits have been changed from Assessment Year 2019-20.
Recommendations made by the GST Council in its 22nd Meeting held today under Chairmanship of the Union Minister of Finance and Corporate Affairs, Shri Arun Jaitley in the national capital.
The GST Council, in its 22nd Meeting which was held today in the national capital under Chairmanship of the Union Minister of Finance and Corporate Affairs, Shri Arun Jaitley has recommended the following facilitative changes to ease the burden of compliance on small and medium businesses:
- The composition scheme shall be made available to taxpayers having annual aggregate turnover of up to Rs. 1 crore as compared to the current turnover threshold of Rs. 75 lacs. This threshold of turnover for special category States, except Jammu & Kashmir and Uttarakhand, shall be increased to Rs. 75 lacs from Rs. 50 lacs.The turnover threshold for Jammu & Kashmir and Uttarakhand shall be Rs. 1 crore. The facility of availing composition under the increased threshold shall be available to both migrated and new taxpayers up to 31.03.2018. The option once exercised shall become operational from the first day of the month immediately succeeding the month in which the option to avail the composition scheme is exercised. New entrants to this scheme shall have to file the return in FORM GSTR-4 only for that portion of the quarter from when the scheme becomes operational and shall file returns as a normal taxpayer for the preceding tax period. The increase in the turnover threshold will make it possible for greater number of taxpayers to avail the benefit of easier compliance under the composition scheme and is expected to greatly benefit the MSME sector.
- Persons who are otherwise eligible for composition scheme but are providing any exempt service (such as extending deposits to banks for which interest is being received) were being considered ineligible for the said scheme. It has been decided that such persons who are otherwise eligible for availing the composition scheme and are providing any exempt service, shall be eligible for the composition scheme.
- A Group of Ministers (GoM) shall be constituted to examine measures to make the composition scheme more attractive.
Relief for Small and Medium Enterprises
- Presently, anyone making inter-state taxable supplies, except inter-State job worker, is compulsorily required to register, irrespective of turnover. It has now been decided to exempt those service providers whose annual aggregate turnover is less than Rs. 20 lacs (Rs. 10 lacs in special category states except J & K) from obtaining registration even if they are making inter-State taxable supplies of services. This measure is expected to significantly reduce the compliance cost of small service providers.
- To facilitate the ease of payment and return filing for small and medium businesses with annual aggregate turnover up to Rs. 1.5 crores, it has been decided that such taxpayers shall be required to file quarterly returns in FORM GSTR-1,2 & 3 and pay taxesonly on a quarterly basis, starting from the Third Quarter of this Financial Year i.e. October-December, 2017. The registered buyers from such small taxpayers would be eligible to avail ITC on a monthly basis. The due dates for filing the quarterly returns for such taxpayers shall be announced in due course. Meanwhile, all taxpayers will be required to file FORM GSTR-3B on a monthly basis till December, 2017. All taxpayers are also required to file FORM GSTR-1, 2 & 3 for the months of July, August and September, 2017. Due dates for filing the returns for the month of July, 2017 have already been announced. The due dates for the months of August and September, 2017 will be announced in due course.
- The reverse charge mechanism under sub-section (4) of section 9 of the CGST Act, 2017 and under sub-section (4) of section 5 of the IGST Act, 2017 shall be suspended till 31.03.2018 and will be reviewed by a committee of experts. This will benefit small businesses and substantially reduce compliance costs.
- The requirement to pay GST on advances received is also proving to be burdensome for small dealers and manufacturers. In order to mitigate their inconvenience on this account, it has been decided that taxpayers having annual aggregate turnover up to Rs. 1.5 crores shall not be required to pay GST at the time of receipt of advances on account of supply of goods. The GST on such supplies shall be payable only when the supply of goods is made.
- It has come to light that Goods Transport Agencies (GTAs) are not willing to provide services to unregistered persons. In order to remove the hardship being faced by small unregistered businesses on this account, the services provided by a GTA to an unregistered person shall be exempted from GST.
Other Facilitation Measures
- After assessing the readiness of the trade, industry and Government departments, it has been decided that registration and operationalization of TDS/TCS provisions shall be postponed till 31.03.2018.
- The e-way bill system shall be introduced in a staggered manner with effect from 01.01.2018 and shall be rolled out nationwide with effect from 01.04.2018. This isin order to give trade and industry more time to acclimatize itself with the GST regime.
- The last date for filing the return in FORM GSTR-4 by a taxpayer under composition scheme for the quarter July-September, 2017 shall be extended to 15.11.2017. Also, the last date for filing the return in FORM GSTR-6 by an input service distributor for the months of July, August and September, 2017 shall be extended to 15.11.2017.
- Invoice Rules are being modified to provide relief to certain classes of registered persons.
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