According to the Finance Bill 2017, there are certain amendments to Deductions. It is quite important for taxpayers to understand these amendments for better tax saving and tax planning purposes. Let’s find out what these amendments are all about: -
How to Rationalise deduction with respect to contribution to Pension Scheme under section 80CCD?
- Under Section 80CCD (1) the contribution made to the National Pension Scheme (NPS) by an employee up to an extent of 10% of his salary in the previous year or to any other taxpayer up to the extent of 10% of his Gross Total Income in the previous year.
- Under Section 80CCD (2) there can be an additional deduction for the employee up to an extent of 10% of his salary with relation to the contribution made by the employer.
- Therefore, salaried people can claim a total deduction of 20% of their salary (employee & employer) contribution and non-salaried people can claim up to 10% of their Gross Total Income.
- To rationalize this deduction, these days, non-salaried individuals can claim deduction under section 80CCD (1), which is up to 20% of their Gross Total Income.
- However, the entire deduction under section 80C, 80CCC and 80CCD (1) comes up to Rs 1,50,000 in aggregate.
How is deduction removed under Section 80CCG with respect to the investments under Equity Saving Scheme?
AY 2018-19 onwards the deductions under Section 80CCG is phased out. Moreover, the taxpayers who have claimed deduction under the above-mentioned section for AY 2017-18 and earlier are eligible for claiming deduction up to AY 2019-20.
What are restrictions on deductions under Section 80G?
Under Section 80G talks about no deduction should be allowed, if under this section donations exceeds an amount of Rs 10,000 paid in cash.
As per the Government’s recent vision of a cashless economy, there is an amendment made to the section 80G of IT act, under which no deduction will be allowed, if the donation amount exceeds Rs. 2000 paid in cash.
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