Taxiwiser TaxiWiser

FY 2012-13
Head of Income
Income from salary Income from house property

Description of Income
Income received as salary , gratuity , pension and perquisites Income arising from letting out property ( rental income )

Profits & gains from business Profit arising from business including professional income like CA , doctors etc or profession Income from capital gains Income from other sources Gains from sale of capital assets ( gains from sale of shares / property ) Income not falling any of the above heads ( lottery winning , interest income etc )

Gross Total Income

Sum total of all the above heads of income Exemptions for Salaried class
1) House Rent Allowance ( HRA ) Exempted least of following : a) Actual HRA received b) 50% of basic salary in metro city or 40% of basic salary in non-metro city c) Rent paid - 10% of salary 2) Transport allowance (from Home to office and back): Max Rs 800 per month 3) Education allowance : Rs 100 per month per child; maximum upto 2 children 4) Professional tax : Actual deducted

Section
24 b

Deductions from Income Deduction Maximum eligible amount

Self Property Interest on housing loan Let Out Property Rs 1,00,000 Rs 1,00,000 Rs 30,000 if loan taken before Apr 1999 Rs 1,50,000 if loan taken wef Apr 1999 Not Applicable

80 C 80 CCC 80 CCD

Investment in specified list Investment in pension plans

Investment in central Govt. Pension Plan 10% of basic salary 1. Rs 15,000 for age 60 /Rs 20,000 for Medical insurance premium + Preventive age 60 & above. Same for parents. Health Checkup expense 2. Maximum eligible amount for Preventive Health Checkup is Rs. 5000
Note : Combined benefit u/s 80CCE ( 80C , 80CCC & 80CCD ) is Rs 1 Lac

80 D

Power of Life Insurance in Tax Planning

Tax deduction for premium paid u/s 80C* Growth during accumulation is tax free Tax free maturity u/s 10(10D)**

Section 80 D - Health Insurance Premium

Health insurance premium for self , spouse , dependent children / parents In case of HUF for any member of HUF 2 Conditions applicable for 80D If age <60 then max limit is Rs 15,000 If age 60 or above then max limit is Rs 20,000 Additional deductions for parents : If parents age is <60 then max limit is Rs 15,000 If parents age is 60 or above then max limit is Rs 20,000

EXEMPT EXEMPT EXEMPT

* Maximum limit of Rs 1,00,000 u/s 80C ** Subject to annual premium payable for any of the years during the term of the policy does not exceed ten per cent of the actual capital sum assured

Summary - Deductions
Deduction u/s u/s 80 C ( individual ) u/s 80 C ( HUF ) u/s 80 D ( Self )* u/s 80D ( Parents )** Total Deduction Maximum Limit 1,00,000 1,00,000 15,000 15,000 2,30,000 or Total Deduction**
* If age of life insured is 60 or above then Rs 20,000 ** If age of parents is above 60 then total deduction is Rs 2,35,000

Tax Slabs & Rates for 2012-13

STATUS
Male / HUF / Female

Income Tax
NIL 10% 20% 30%

Up to Rs. 2,00,000 Rs. 2,00,001 Rs. 5,00, 000 Rs. 5,00,001 Rs. 10,00, 000 Rs. 10,00, 001 and above

Senior Citizen - Age 60 to 80 ( Male or Female ) Upto Rs. 2,50,000 NIL Rs. 2,50,001 Rs. 5,00, 000 10% Rs. 5,00,001 Rs. 10,00, 000 20% Rs. 10,00, 001 and above 30% Very Senior Citizen - Above Age 80 ( Male or Female ) Upto Rs. 5,00,000 NIL Rs. 5,00,001 Rs. 10,00, 000 20% Rs. 10,00, 001 and above 30%

2,35,000

Add 2% Education Cess & 1% Higher education cess on the tax amount

Steps to compute Tax

Step 1 Step 2 Step 3 Step 4 Step 5 Step 6 Step 7 Step 8 Step 9 Total income from all sources Less exempted income Gross total income Less deductions Total taxable income Compute tax as per slabs Add 2% Education cess on tax amount Add 1% Higher education cess on tax amount Final tax payable

Case Study
Female age Maritial status Nature of work Salary income Investments made 1) PPF 2) Health insurance 3) School fees for brother 4) BSLI Dream Life plan 26 years Married Salaried Rs 5,00,000 Rs 40,000 Rs 20,000 Rs 20,000 Rs 30,000

Step by step approach to calculate tax

Step 1 - Get total income from all sources Step 2 - Less exemptions Step 3 - Gross total income Step 4 - Less deductions

Step 5 - Net Taxable income Step 6 - Calculate tax as per slabs

Step 7 - Add 2% Education Cess Step 8 - Add 1% Higher Education Cess Step 9 - Final Tax payable

Total Income Less Exemptions Gross Total Income Less Deductions u/s 80C Life Insurance School Fees PF/PPF Total u/s 80C u/s 80D Health Insurance Total u/s 80D Total Deductions Net Taxable Income Tax Payable as per Slab first 2,00,000 2,00,001 to 5,00,000 5,00,001 to 10,00,000 10,00,001 & above Total Tax Add 2% Educ cess Add 1% Higher Edu cess Total Tax Liability

A B C (A-B)

5,00,000 5,00,000

30,000 40,000 70,000 15,000 15,000 85,000

E F ( D+E ) G ( C-F ) 0% 10% 20% 30% H I J K ( H+I+J )

85,000 415,000

0 21500 0 0 21500 430 215 23175

23175

Disclaimer: It would be pertinent to note that the amendments in Union Budget 2012 shall be effective after the Finance Bill 2012 gets enacted. Tax benefit are subject to changes in tax laws. Please consult your tax advisor for exact tax calculation. For internal use only. TRA/4/11-12/5176