CURRENT TAX RATES & OPTIONS TO SAVE TAX

CURRENT TAX RATES

No income tax is applicable on all income up to Rs. 1,60,000 per year. (Rs. 1,90,000 for women and Rs. 2,40,000 for senior citizens of 65 and above and must be resident of india)

From 1,60,001 to 5,00,000 : 10% of amount greater than Rs. 1,60,000 (Lower limit changes appropriately for women and senior citizens)

From 5,00,001 to 8,00,000 : 20% of amount greater than Rs. 5,00,000 + 34,000 ( Rs. 31,000 for women and Rs. 26,000 for senior citizens)

Above 8,00,000 : 30% of amount greater than Rs. 8,00,000 + 94,000 ( Rs. 91,000 for women and Rs. 86,000 for senior citizens)

OPTIONS TO SAVE TAXES

Section 80C provides the following deductions if invested during the financial year. The total limit under this section is Rs. 100,000 (Rupees One lac) which can be any combination of the below:

• ·         Contribution to Provident Fund or Public Provident Fund (PPF)
• ·         Payment of Life Insurance Premium or investment in Pension Plans
• ·         Investment in Equity Linked Savings schemes (ELSS) of mutual funds
• ·         Investment in National Savings Certificates (interest of past NSCs is reinvested every year and can be added to the Section 80 limit)

·         Tax saving Fixed Deposits provided by banks for a tenure of 5 years. Interest is also taxable.

·         Payments towards principal repayment of housing loans. Also any registration fee or stamp duty paid.

·         Payments towards tuition fees for children to any school or college or university or similar institution. (Only for 2 children) or towards coaching fee of various competitive exams.

·         Post office investments The investment can be from any source and not necessarily from income chargeable to tax.

From April, 1 2010, a maximum of Rs. 20,000 is deductible under section 80CCF provided that amount is invested in infrastructure bonds. This is above the 80C exemption of Rs.100,000/=

Section 80D: Medical Insurance Premiums: Health insurance, popularly known as Mediclaim Policies, provides a deduction of upto Rs. 35,000.00 (Rs. 15,000.00 for premium payments towards policies on self, spouse and children and (read as in addition to) Rs. 15,000.00 for premium payment towards non-senior citizen dependent parents or Rs. 20,000.00 for premium payment towards senior citizen dependent). This deduction is in addition to Rs. 1,00,000 savings under IT deductions clause 80C