FAQ:

GENERAL

Q 1: Why declaration for proposed investment is to be given?

A : The employer is required to deduct tax on the amount payable at the
average rate of tax. Tax is calculated based on the declaration to be given by
the people so that benefit under the various provisions of the Income Tax Act
can be given from tax deduction.

Q 2: What is the impact in case the declaration is not given?

A : The tax shall be calculated without giving any benefits available under the
Act.

Q 3: Do I have to submit proofs of investment now?

A : The investment proofs are required to be submitted in month of January.
The cutoff date for submission of investment proof will be informed later.

Q4: How do we account for the salary from the more than one employer
received during the year?

A : The employee is required to furnish the details of the income under the
head salary due or received from the former employer to the company (present
employer) together with the detail of tax deducted at source in the prescribed
form (Form No.12B). The current employer will deduct the tax after
considering the salary received from the previous employer.

A5: How do we compute the exemption from House Rent Allowance (HRA)?

A: Least of the following three amounts are exempt from tax.

• Amount equal to 50% of the salary where the assessee is staying in metro
and 40% in case of non metro cities.
• Actual HRA received
• Amount of rent actually paid in excess of 10% of the salary.

(Salary means Basic, DA and commission on fixed percentage on turnover)

SECTION ‘A”

Q 1 : What is the meaning of ‘Metro?’

A : Delhi, Mumbai, Kolkata and Chennai are the only 4 ‘Metro’. Other cities
like Guragaon, NOIDA, Ghaziabad and Faridabad are not considered as
Metro.
SECTION ‘B’ [ Sec.80C & 80CCC]

Q 1 : What is the total amount eligible under Section 80C?

A : A maximum of Rs. 1.5 lac is eligible for deduction under various heads of
Section 80C. There is no individual limit within the various heads of this
Section.

Public Provident Fund

Q 2: Where can I deposit Public Provident Fund and what is the duration of
Public Provident Fund?
A : One can open an account with any Post Office or certain designated
branches of nationalized banks (SBI, PNB etc.). PPF is opened for 15 years,
which can be further renewed for 5 years.

Life Insurance Premium (premium for self, spouse or any child)

Q 3: Can I deposit Life Insurance Premium with Private Insurance

Companies?
A : Yes, one can deposit Life Insurance Premium with Private Insurance
companies recognized by IRDA. The premium should be at least 10% of the
sum assured.

Subscription to NSC- VIII Issue

Q 4 : What is the duration of NSC and where it can be obtained?

A : NSC can be obtained from Post Office and presently the duration is for 6
years.

Children education expenses

Q5 : Is there any limit to children education expenses?

A : No. only tuition fee paid to any university, college or other educational
institution situated with in India, for the purpose of full time education will
qualify as a deduction.

Approved Mutual Fund

Q6: Can we make any investment in Mutual Fund?

A : Investment can be made in an approved tax saving Mutual Fund.
Investment on Fixed Deposit

Q 7: Can I make investment in any Fixed Deposit for 5 years to avail this
benefit?
A : No, the investment should be made in Fixed Deposit as per the notified
Scheme. The fact that the investment has been made under the notified
scheme should be mentioned on the Fixed Deposit Receipt.

Q 8: Are investments in fixed deposits for 5 years with any company / PSU
eligible for the deduction?
A : No, investment should be made only with a scheduled bank.

Repayment of Principal Amount on Housing Loan

Q 9: What documents are required to be given to avail this benefit?

A : Certificate/provisional certificate of repayment of loan from financial
institution giving breakup of principal and interest should be given for the
concerned financial year.

Q 10 : Whether Stamp Duty and Registration Fee incurred towards purchase

of House Property are eligible for this benefit?
A : Yes

Q 11: Which expenses are not allowed?

A : The following expenses are not allowed:
v Admission fee, cost of share and initial deposit
v Cost of addition and alteration or repairs of the property
v Any payment relating to commercial property.

Sukanya Samridhi Scheme

Q 12: Which proofs are required to be submitted?

A : Photocopy of Receipts / Statement provided by the scheduled bank /
Post office.
Q 13: What is the maximum and minimum limit for the Investment in
Sukanya Samridhi Scheme?
A : Deposits receipts for a minimum amount of INR 1,000 to maximum
amount of INR 1,50,000 in the current year only (April 2016 to March 2017)
for the girl child prosperity scheme.
Only one person contributing to Sukanya Samriddhi Account can claim tax
exemptions under the scheme. That means either of the parents or legal
guardian can claim tax benefits against Sukanya Samriddhi Account
contributions.
 Notified Pension Scheme (NPS)

Q 14: Which proofs are required to be submitted?

A: Photocopy (including the identity page) of stamped challan or NPS
passbook.
Q 15: In which section we can get the benefit of NPS?
A: Contribution up to INR 50,000/- u/s 80CCD in National Pension scheme
(Additional benefit of 50000 under section 80C) .

Section 80CCC

Q 16: What is Section 80CCC and how can I get the benefit under this section?
A: Section 80CCC of Income Tax Act deals with the deductions and income in
respect of contributions to certain Pension funds by an individual
assesses Payment of premium for annuity plan of LIC or any other insurer.
Deduction is available up to a maximum of Rs. 1,50,000.
Note: The limit of Section 80CCC will be part of the overall limit prescribed under
Section 80CCE i.e. 80C

Section “C” [Other Deductions]

Mediclaim (Section 80D)

Q1: What is the amount eligible for deduction under this section?
A : Mediclaim- for Self, Spouse, Dependent Children up to Rs. 25,000 ( Rs
30,000 in case the coverage is for parents who are senior citizen) in additional
to that the an individual can claim for Rs. 25000 in case of dependent parents
covered under policy. It can be done through different Insurance companies.
The aggregate payment on account of preventive health check-up of self,
Spouse, dependent children, father and mother cannot exceed INR 5000

Q2: What documents are required to be given as a proof of Mediclaim?

A : The premium receipt or certificate of insurance issued by the insurance
company. The receipt should be in the name of the person who is claiming the
deduction.

Expenditure on Handicapped / Disable (Dependent) (80DD)

Q3: When the deduction under this section shall be available?

A : This deduction is available when assesses has incurred any expenditure for
medical treatment, training and rehabilitation of a dependent being a person
with disability or has paid or deposited any amount under a notified scheme
with any life insurance companies for maintenance of a dependent being a
person with disability.

Q 4: What is the meaning of dependent?

A : Dependent means spouse, children, parents, brothers, and sisters of the
individual.

Q5: What is the quantum of deduction that is available?

A : Deduction is available for Rs. 75,000 (Rs. 1,25,000 incase of severe
disability).

Q 6 : What is the meaning of disability?

A : Disability shall have meaning assigned to it in Person with Disability (Equal
Opportunities, Protection of Rights and Full Participation) Act 1995 and
includes “autism” “cerebral palsy” and “multiple disability” as referred to in
National Trust for Welfare of Persons with Autism, Cerebral Palsy, Mental
Retardation and Multiple Disabilities Act, 1999.

Q 7: What is the meaning of person with severe disability?

A: A person with severe disability means a person with 80% of one or more
disability.

Q 8 : What are the diseases covered under this Section?

A : Blindness, low vision, leperprosy-cured, hearing impairment, locomotors
disability, mental retardation and mental illness, autism, cerebral palsy.

Q 9: What are the pre conditions for getting this deduction?

A: The assesse is required to furnish a certificate from medical authority in
Form 101A.

Section 80DDB

Q 10: When is deduction under this section is available?

A: The deduction under the section is available when the assesses has actually
paid any amount for medical treatment for specified disease or ailment for
himself or dependent.

Q 11: What is the meaning of dependent?

A: Dependent means spouse, children, parents, brothers, and sisters of the
individual.

Q 12: What is the quantum of deduction that is available?

A: Amount actually paid or Rs.40,000 (Rs.60,000 where payment is made for
the dependent who is senior citizen), whichever is less.
Now from the Financial Year 2016-17 the limit of deduction for “very senior
citizen” up to 80,000 for the expenditure incurred in respect of the medical
treatment.

Q 13: What are the diseases covered under this Section?

A 13: The following diseases are covered:

Ø Dementia
Ø Dystonia Musculorum Deformans
Ø Motor Neuron Disease
Ø Ataxia
Ø Chorea
Ø Hemiballismus
Ø Aphasia
Ø Parkinsons Diseases
Ø Malignant Cancers
Ø Full Blown Acquired Immune-Deficiency Syndrome (AIDS)
Ø Chronic Renal Failure
Ø Hematological disorders – Hemophilia & Thalassemia.

Q 14: What are the pre conditions for getting this deduction?
A : The assesse should furnish a certificate in the prescribed Form from a
neurologist, an oncologist, an urologist, a hematologist, an immunologist or
such other specialist, as may be prescribed, working in a Government hospital.

Interest on Education Loan

Q 15: What is the amount of deduction available?

A: Any amount paid by way of interest on loan from any financial institution or
any approved charitable institution for the purpose of pursuing higher
education for the self (also for spouse and children as per Budget 2007)

Q 16: What is the meaning of higher education?

A: “Higher education” means full-time 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.

Permanent Physical Disability (Sec. 80U)

Q 17: When this deduction is available?

A: When the individual has a disability.
Q18 : What is the quantum of deduction that is available?
A : Rs.75,000 (Rs. 1,25,000 for person with severe disability).

Q 19: What is the meaning of Disability?

A : Disability shall have meaning assigned to it as per the person with disability
(Equal Opportunities, Protection of Rights and Full Participation Act 1995 and
includes “autism”, “cerebral palsy” and “multiple disability” as referred to in
National Trust for Welfare of Persons with Autism, Cerebral Palsy, Mental
retardation and Multiple Disabilities Act, 1999.

Q 20 : What is the meaning person with severe disability?

A : A person with severe disability means a person with 80% of one or more
disability.

Q 21: What are the diseases covered under this Section?

A : Blindness, low vision, lepeprosy-cured, hearing impairment, locomotors
disability, mental retardation, mental illness, autism, cerebral palsy and
mental retardation.

Q 22: What are the pre conditions for getting this deduction?
A : The person is required to furnish a certificate from prescribed medical
authority under prescribed Form.
Q 23: When I can get the benefit of NPS Scheme?
A : Under this scheme, subscribers invest in a fund chosen by them and at the time of
retirement they get a lump sum amount depending on the performance of that fund. The
returns from NPS are not guaranteed; they are market-linked. NPS was introduced in
2004 for the new government employees but from 2009, it was extended to all on a
voluntary basis.

Deduction under Section 80CCG - in respect of investment made under an

equity savings scheme.
Q 24: What is the Condition to get the benefit of Deduction Under Section
80CCG?
A: Tax Benefits of Rajiv Gandhi Equity Savings Scheme (RGESS) under section
80CCG has been withdrawn. However, if you have claimed this deduction in
current FY 2016-17, you can claim the deduction for the next two Financial
Years too.

Withdrawal of Deduction - If the person, after claiming the aforesaid

deduction, fails to satisfy the above conditions, the deduction originally
allowed shall be deemed to be the income of the year in which default is
committed.

Q 25: What is the quantum of deduction that is available?

A: Amount of deduction -The amount of deduction is 50% of amount invested in
equity shares or listed units of equity oriented mutual fund. However, the
amount of deduction under this provision cannot exceed INR 25,000. The
person shall be eligible to claim deduction under this Section for three financial
years beginning with the financial year in which the listed equity shares or
listed units of equity oriented fund were first acquired

Section ‘D’ [Income from House Property]

Q 1 : Under what circumstances interest is allowed as an adjustment against

salary income?

A : The employer is allowed, under Section 192 (2B) of Income Tax Act, to
make adjustment of the loss under the head .Income from House Property”.
When any house property has been acquired, constructed, repaired,
reconstructed with borrowed capital amount of any interest payable on such
borrowed capital is allowed as a deduction for computation of Income/Loss
under the head Income from House Property.

Q 2 : Is it necessary that the house should be complete to avail the benefit of

interest?
A : Yes.

Q 3: What proof of completion of house is necessary?

A : Completion certificate from the builder in case of builder’s flat, otherwise
a certificate from the architect or municipality can be considered as a proof of
completion of house.

Q 4 : What is the quantum of deduction that is available?

A : In case of self-occupied house or a house which could not be occupied by
the owner due to the reason of the fact that owing to his employment carried
on any other place and he has to reside at that other place in a house not
belonging to him. The maximum possible deduction on account of interest is
30,000 per annum. However, in case a higher deduction of up to Rs. 2,00,000 is
allowable provided all the following conditions are fulfilled;

• Interest is payable on a loan taken by the employee.

• The loan is taken for the acquisition or construction of a property.
• The loan has taken on or after 01st April 1999.

Q 5 : What is the treatment of interest paid prior to the completion of

construction of the house?
A : Entire interest paid for the year in which the house is completed shall be
eligible for deduction subject to maximum of Rs. 2,00,000 or 30,000 as stated
above. Interest paid up to the end of year prior to the year in which the house
is completed shall be eligible for deduction in 5 equal yearly installments
within the overall limit of Rs. 2,00,000 or Rs. 30,000 as the case may be.
Q 6: What are the documents required to be given?
A : A declaration may be given in form 12C (the forms have been deleted
however, this form may be used for giving declaration).

Q 6: What is the maximum benefit under this section?

A : Tax benefit on loan repayment of second house will be restricted to Rs 2
lakh per annum only (even if you have multiple house the limit is still going to
be Rs 2 Lakh only and the ceiling limit is not per house property)..