INCOME TAX ACTS FOR FY:2009/2010

http://niftyprediction.blogspot.com/2009/02/indian-income-tax-act-tax-deductions.html
http://www.v-krishnan-and-company.com/Tax-Rates-in-India.html
Income Tax Slabs 2009/2010 for Men
Income upto 1.6 lacs no income tax
Income : 1.6 lacs to 3 lacs 10 %
Income : 3 lacs to 5 lacs 20 %
Income : above 5 lacs 30 %
Income Tax Slabs 2009/2010 for Women
Income upto 1.9 lacs no income tax
Income : 1.9 lacs to 3 lacs 10 %
Income : 3 lacs to 5 lacs 20 %
Income : above 5 lacs 30 %
Income Tax slabs 2009/2010 for Senior Citizen > 65yrs age
Income upto 2.4 lacs no income tax
Income : 2.4 lacs to 3 lacs 10 %
Income : 3 lacs to 5 lacs 20 %
Income : above 5 lacs 30 %
In addition to the income tax calculated according to the above income tax slabs, a 3% of Education cess will be
charged on the total Income tax paid (not on the total taxable income). If the taxable income exceeds Rs. 10
lacs, a 10% surcharge on the total income tax (not on the total taxable income) is also charged.
Indian Income Tax deductions, Tax exemption limits
Financial year 2008/2009 (will be updated later for 2009/2010)
Income Tax Deductions Maximum deduction allowed
Explaination Remarks
Income Tax deduction - Section 80C Maximum tax deduction
Provident Funds, Life Insurance premia, ELSS, or tax exemption limit:
Bank deposits (>5 yr.), tution fees, principal part of Rs. 1,00,000
EMI on housing loan, etc.
Income Tax deduction - Section 80D Maximum tax deduction or
Premium in health insurance of you, your spouse, tax exemption limit:Rs. 15000
children or dependent parents (tax exemption limitfor senior citizen isRs. 20000)
Income Tax deduction - Section 80DD Maximum tax deduction
Medical treatment (including insurance) of disabled or tax exemption limit:Rs. 50000.(Rs. 75000 if
dependent disability is severe,e.g. >80%)
Income Tax deduction - Section 80E Maximum tax deduction
Interest paid on educational loan taken for higher or tax exemption limit:no limit !
education of you, your spouse or children.
Income Tax deduction - Section 80GG Maximum tax deduction
House rent in excess of 10% of income, if no HRA or tax exemption limit:
is received. Rs. 2000 per month or 25% of your gross salary,
whichever less.
Income Tax deduction - Section 24 Maximum tax deduction
Interest paid on housing loan. or tax exemption limit:Rs. 1,50,000
Income Tax deduction - Section 80G Maximum tax deduction
Donations or tax exemption limit:
100% of donation amount for special funds(see
below), 50% of donation amount for all other
donations.
Indian Income Tax deduction - Section 80C
Section 80C of Indian Income Tax Act is the most popular because it is directly related to tax deductions for
your monthly savings or life insurance. In financial years 2008/2009 and also in 2009/2010 the maximum
income tax deduction allowed under section 80C is 1,00,000. The following is a list of important ways in which
a taxpayer can get benefit of section 80C of Indian Income Tax Act.
Provident Fund (PF): Any contributions to Provident Fund, Voluntary provident Fund (VPF) or savings made
in Public Provident Fund (PPF Account) are eligible for income tax deduction under section 80C of Indian
Income Tax Act.
Life Insurance Premiums: Any Life Insurance premiums (for one or more insurance policies) paid by you for
yourself, your spouse or your children is eligible under income tax deduction under section 80C of Indian
Income Tax Act.
ELSS Equity Linked Saving Schemes: Any investment made in certain Mutual Funds called equity linked
saving schemes qualifies for section 80C deduction. Please note that not all mutual fund investments are eligible
for this deduction. Some examples of ELSS funds are SBI Magnum Tax Gain, HDFC Tax Saver, HDFC Long
term advantage, etc.
ULIP (Unit Linked Insurance Plan): Investments made in certain ULIPs of Unit Trust of India and LIC of
India are eligible for 80C deduction.
Bank Fixed deposits or Term deposits of >5 years: According to a relatively new provision amount saved in
fixed deposits of term at least five years is eligible for income tax deduction under section 80C of Indian
Income Tax Act.
Principal part of EMI on Housing Loan: If you are paying EMI on a housing loan, note that the EMI (equated
monthly installments) consists of two parts - principal part and interest part. The principal part of the EMI on
your housing loan is eligible for income tax deduction under section 80C. Note that the interest part is also
eligible for tax deduction, however not under section 80C but section 24. (read below). If you do not own a
house but pay rent for it, see section 80GG of Indian Income Tax Act below.
Tution Fees: Amount paid as tution fee for the education of two children of the assessee is eligible for
deduction under section 80C of Indian Income Tax Act.
Other 80C deductions: Amount saved in National Saving Certificate (NSC), Infrastructure Bonds or Infra
Bonds, amount paid as stamp duty and registration charges while buying a new home are eligible for income tax
deductions under section 80C of Indian Income Tax Act.
Indian Income Tax deduction - Section 80D
Section 80D of Indian Income Tax Act is especially useful if your employer does not cover your health or
medical expenses. It is a good idea to get medical insurance or health insurance for you, your spouse, dependent
children or dependent parents, as you can claim a deduction of upto Rs. 15000/- per anum for the premia paid
on this insurance. For senior citizen this limit is Rs. 20000. With effect from 1-4-2009, you can claim the total
of the following items for deduction under section 80D.
• Total amount of premium paid for health insurance of family (meaning spouse + children), or Rs. 15,000
whichever less.
• Total amount of premium paid for health insurance of your parents or Rs. 15,000, whichever less.Thus if
you are paying premiums of mediclaim policies for your spouse children and parents you can get a total
tax deduction of upto Rs. 30,000.
Indian Income Tax deduction - Section 80DD
Section 80DD of Indian Income Tax Act provides provision for tax deduction if you incurred medical
expenditure for a dependents who are disabled. Here dependent means spouse, children, brothers, sisters or any
one of them. The maximum tax deduction provided by section 80DD is Rs. 50000 in case of ordinary disability
and Rs. 75000 if the disability is severe. The definition of severe disability is as defined in the official page of
Indian Income tax Act.
Indian Income Tax deduction - Section 24
Whenever you take a housing loan build or buy a new home, the interest payable on this home loan is eligible
for income tax deduction under section 24. Maximum deductible amount, i.e. maximum interest you can claim
for income tax deduction under section 24 is Rs. 1,50,000. In case you are paying interest on money borrowed
for renovation of your home, even this may qualify for tax deduction under section 24 of Indian Income Tax
Act. (see official page or ask in a comment).
Indian Income Tax deduction - Section 80GG
If you pay rent for the house that you are staying in and do not get HRA, any rent you pay in excess of 10
percent of your salary is eligible for income tax deduction under section 80GG of Indian Income Tax Act. The
income tax deduction you can claim is the minimum of the following amounts.
• Rent you pay minus 10% of your salary.
• 25% of your gross total income.
• Rs. 2000/- per month.
Indian Income Tax deduction - Section 80E
Under section 80E of Indian Income Tax Act, any amount of interest paid on educational loan taken for your
higher education or higher education of your husband / wife or children is deductible from your taxable income.
Here higher eduction means - studies for any graduate or post-graduate course in engineering, medicine,
management or for post-graduate course in applied sciences or pure sciences including mathematics and
statistics.
Indian Income Tax deduction - Section 80G
Donations made to funds like Prime Minister's Relief Fund, National Children Foundation, any University or
educational institution of 'national eminence', etc. (see official page for complete list) are deductible from your
taxable income according to section 80G of Indian Income Tax Act. For any other donations you are eligible to
take income tax deduction for 50% of the donation amount. See the offical page of Indian Income Tax Act.
Indian Income Tax deduction - Section 80CCC
Any individual who makes a contribution for any annuity plan of the Life Insurance Corporation of India or any
other insurer is eligible for a deduction of the amount paid or Rs. 10,000, whichever is less. When an individual
or his nominee receives any amount under the following circumstances it will be taxed as the income of the
individual or his nominee, in the year of withdrawal or the year in which the pension is received:
• On the surrender of the annuity plan or
• As pension received from the annuity plan.
INSERT (AY 2007-08)
The limit of investment is proposed to increase from Rs 10,000 to Rs 1,00,000 subject to overall cap of Rs
1,00,000 provided under section 80CCE.
Indian Income Tax deduction - Section 80CCD
The deduction for contributions to a pension scheme of the Central Government is available only to those
individual who have been employed by the central government on or after 1st January 2004, and will be allowed
for any amount deposited in such a pension scheme. But, in this case, deduction of more than 10 per cent of the
employee's salary shall not be allowed.
The contributions to the fund are also made by the Central Government. Deduction will be available for any
contribution which is made by the Central Government or 10 per cent of the employee's salary, whichever is
less.
When the individual or his nominee receives any amount out of the scheme which meets the following
descriptions, it shall be taxed in the hands of the recipient.
• On closure/ opting out of the pension scheme; or
• As pension received from the annuity plan.
The term 'salary' here includes Dearness Allowance (if considered for retirement benefits), but it excludes other
allowances and perquisites.
The aggregate deduction under the Sections 80C, 80CCC and 80CCD cannot exceed Rs 1 lakh as whole
Indian Income Tax deduction - Section 80DDB
An individual, resident in India spending any amount for the medical treatment of specified diseases affecting
him or his spouse, children, parents, brothers and sisters and who are dependant on him, will be eligible for a
deduction of the amount actually spent or Rs 40,000, whichever is less.
Note:- For the complete list of disease specified, refer to Rule 11DD of the Income Tax Rules.
For any amount spent on the treatment of a dependent senior citizen an individual is eligible for a deduction of
the amount spent or Rs 60,000, whichever is less is available.
The individual should furnish a certificate in Form 10-I with the return of income issued by a specialist working
in a government hospital.
If any amount of medical expenditure is borne by the employer or is reimbursed under an insurance scheme, the
eligibility of the deduction is the reduction to that extent. This deduction is also available to Hindu Undivided
Families (HUF).
Indian Income Tax deduction - Section 80U
It is deduction in the case of a person with a disability. An individual who is suffering from a permanent
disability or mental retardation as specified in the persons with disabilities (Equal Opportunities, Protection of
Rights and Full Participation) Act, 1995 or the National Trust for Welfare of Persons with Autism, Cerebral
Palsy, Mental Retardation and Multiple Disabilities Act, 1999, shall be allowed a deduction of Rs 50,000. In
case of severe disability it is Rs. 75,000.
The assessee should furnish a certificate from a medical board constituted by either the Central or the State
Government, along with the return of income for the year for which the deduction is claimed.
Indian Income Tax deduction - Section 80L
Deduction in respect of interest on certain securities, dividends, etc.

Which tax saving options of Section 80C are best for you?
There are numerous tax deduction options under Section 80C mentioned above which you can take benefit of.
Which option is best for you? In planning your tax and savings for the current financial year it is useful to keep
the following in mind.
1) Keep in mind that the total amount of exemption allowed by Section 80C for financial year 2008/2009 (as
well as 2009/2010) is Rs. 1,00,000. For any mount invested or saved in excess of Rs. 1,00,00 you do not get any
further tax relief from Section 80C.
2) If you pay tution fees, or have just bought a home, then you should definitely take benefit of (6) and (7)
deduction options of Section 80C mentioned above. In this case you do not have to do any additional investment
or saving to take benefit of Section 80C.
3) In case you are going to need money in the near future (i.e. next few years, say for e.g. you are planning to
have a baby, buy a house etc.) then go for those tax saving options of Section 80C which have short term
maturity period and are risk-free. For example Fixed Deposits is the best 80C option in this case. As compared
to PPF which typically have a maturity period of 15 years, in fixed deposits you can get your 80C money back
in 5 years. ELSS also has a 3-year lock in period which means you can get your money invested in ELSS after 3
years. However investments in mutual funds involve risk and you must understand the risks before you make
any investments.
4) I personally do not prefer ULIPs as their fees and charges are somewhat hidden and not easy to understand.
So for Section 80C or otherwise, i would prefer ELSS+Life Insurance separately to ULIP alone.

Few examples to illustrate how you can calculate taxes based on these slabs.
Example 1:
Sarla is a salaried employee, her annual income is Rs. 2,40,000. She has made no tax savings investments
during the year.
Let us calculate her income tax liability.
Heads Amounts
Gross Total Income Rs. 240,000
Deductions Nil
Taxable Income Rs. 240,000
Income Tax Calculations Tax
Tax on Income upto Rs 1,90,000 0% Zero
Tax on the remaining Rs 50,000 10% Rs.5,000
Total Income Tax Due Rs.5,000
Educational Cess @ 3% Rs. 150
Total Tax Payable Rs. 5,150
Example 2:
Vinod is a salaried employee. His annual income is Rs. 3,25,000.His home loan interest payment is Rs 1,20,000
and his home loan principal repayment is Rs. 80,000.He has made an investment of Rs. 50,000 in NSC.
Let us calculate Vinod's interest liability.
Heads Amounts
Income from Salary Rs. 325,000
Income from House Property Rs.120,000
(Section 24 Deduction for Home
loan interest repayment)
Gross Total Income Rs. 205,000
Section 80 C Deductions Rs.100,000
NSC Investment Rs. 50,000
Home Loan Principal Repayment Rs.80,000
Total Rs. 130,000
Taxable Income 105,000
Total Tax Due Rs. 0

Example 3:
Ram is a salaried employee who earned Rs.12,00,000. He has bought a health insurance policy for himself
worth Rs 10,000. Ram has also bought ELSS funds for Rs. 80,000 and has also paid a LIC premium of Rs.
20,000.He has also donated Rs. 20,000 to the Prime Minister's Relief Fund.
Let us calculate Ram's tax liability.
Heads Amounts
Gross Total Income Rs. 1,200,000
Section 80 C Deductions Rs.100,000
LIC Premium Rs. 20,000
Home Loan Principal Repayment Rs. 80,000
Total Rs. 100,000
Other Donations Rs. 30,000
Section 80D Health Insuance Rs. 10,000
Premium
Section 80G Donation To A Rs. 20,000
Charity
Total Taxable Income Rs. 1,070,000
Income Tax Calculations Tax
Tax on Income upto Rs 1,60,000 0% Zero
Tax on the next Rs 1,40,000 10% Rs.14,000
(Slab 160,001 to 3,00,000)
Tax on the next Rs 2,00,000 20% Rs.40,000
(Slab Rs. 3,00,001 to Rs. 500,000)
Tax on next Rs. 570,000 30% Rs. 1,71,000
(above 500,001)
Income Tax Due Rs. 2,25,000
Surcharge on total tax 0.00% Rs. Nil
(No Surcharge is payable from
previous year 2009-10 onwards)
Income Tax Due Rs. 2,25,000
Educational Cess @ 3% Rs.6,750
Total Tax Payable Rs.2,31,750

List of some mutual funds eligible for tax deduction under section 80C - ELSS 80C
Baroda Pioneer ELSS '96 – Growth, Bharti AXA Tax Advantage Fund – Growth, Bharti AXA Tax Advantage
Fund – Dividend, Bharti AXA Tax Advantage Fund - Eco Plan – Growth, Bharti AXA Tax Advantage Fund -
Eco Plan – Dividend, Birla Sun Life Tax Plan – Dividend, Birla Sun Life Tax Plan – Growth, Birla Sun Life
Tax Relief 96 – Dividend, Birla Sun Life Tax Relief 96 – Growth, Birla Sun Life Taxplan 98 – Growth, BOB
ELSS '97 – Growth, Canara Robeco Equity - Tax Saver – Growth, DBS Chola Tax Advantage Fund - Series I –
Growth, DBS Chola Tax Advantage Fund - Series I – Dividend, DBS Chola Tax Saver Fund – Dividend, DBS
Chola Tax Saver Fund – Growth, DSP BlackRock Tax Saver Fund – Dividend, DSP BlackRock Tax Saver
Fund – Growth, DWS Tax Saving Fund – Dividend, DWS Tax Saving Fund – Growth, Edelweiss ELSS Fund –
Dividend, Edelweiss ELSS Fund – Growth, Escorts Mutual Fund Unclaimed Dundee Tax Saver Fund – Growth,
Escorts Tax Plan – Dividend, Escorts Tax Plan – Growth, Fidelity Tax Advantage Fund – Growth, Fidelity Tax
Advantage Fund – Dividend, Fortis Tax Advantage Plan (ELSS) – Dividend, Fortis Tax Advantage Plan
(ELSS) – Growth, Franklin India Index Tax Fund - Growth – Growth, Franklin India Taxshield – Growth,
Franklin India Taxshield – Dividend, Franklin India Taxshield 95 – Growth, Franklin India Taxshield 96 –
Growth, Franklin India Taxshield 97 – Growth, Franklin India Taxshield 98 – Growth, Franklin India Taxshield
99 – Growth, HDFC Long Term Advantage Fund – Dividend, HDFC Long Term Advantage Fund – Growth,
HDFC TaxSaver – Growth, HDFC TaxSaver – Dividend, HSBC Tax Saver Equity Fund – Growth, HSBC Tax
Saver Equity Fund – Dividend, ICICI Prudential Tax Plan – Growth, ICICI Prudential Tax Plan – Dividend,
IDFC Tax Advantage (ELSS) Fund – Growth, IDFC Tax Advantage (ELSS) Fund – Dividend, IDFC Tax Saver
(ELSS) Fund – Dividend, IDFC Tax Saver (ELSS) Fund – Growth, ING Optimix Retireinvest Fund Series 1 –
Dividend, ING Optimix Retireinvest Fund Series 1 – Growth, ING Tax Saving Fund – Bonus, ING Tax Saving
Fund – Growth, ING Tax Saving Fund – Dividend, JM Equity Tax Saver Fund - Series 1 – Dividend, JM Equity
Tax Saver Fund - Series 1 – Growth, JM Tax Gain Fund – Growth, JM Tax Gain Fund – Dividend, JPMorgan
India Tax Advantage Fund – Dividend, JPMorgan India Tax Advantage Fund – Growth, Kotak Taxsaver –
Growth, Kotak Taxsaver – Dividend, LIC MF Tax Plan – Dividend, LIC MF Tax Plan – Growth, Lotus India
AGILE Tax Fund – Growth, Lotus India AGILE Tax Fund – Dividend, Lotus India Tax Plan – Dividend, Lotus
India Tax Plan – Growth, Lotus India Tax Plan - Dividend-Quarterly, Principal Personal Taxsaver – Growth,
Principal Tax Savings Fund – Dividend, Quantum Tax Saving Fund – Growth, Quantum Tax Saving Fund –
Dividend, Reliance Tax Saver Fund – Growth, Reliance Tax Saver Fund – Dividend, Sahara Tax Gain –
Growth, Sahara Tax Gain – Dividend, SBI Magnum Tax Gain Scheme 93 – Dividend, SBI Magnum Tax Gain
Scheme 93 – Growth, SBI Tax Advantage Fund - Series 1 – Growth, SBI Tax Advantage Fund - Series 1 –
Dividend, Sundaram BNP Paribas Tax Saver (Open-Ended) – Growth, Sundaram BNP Paribas Tax Saver
(Open-Ended) – Dividend, Sundaram BNP Paribas Tax Saver 97 – Growth, Sundaram BNP Paribas Tax Saver
98 – Growth, Tata Infrastructure Tax Saving Fund – Growth, Tata Infrastructure Tax Saving Fund – Dividend,
Tata Tax Advantage Fund 1 – Growth, Tata Tax Saving Fund – Growth, Taurus Tax Shield – Growth, Taurus
Tax Shield – Dividend, UTI Equity Tax Saving Plan – Growth, UTI Equity Tax Saving Plan – Dividend, UTI
Long Term Advantage Fund – Growth, UTI Long Term Advantage Fund – Dividend, UTI Long Term
Advantage Fund - Series II – Growth, UTI Long Term Advantage Fund - Series II – Dividend