LIC Pradhan Mantri Vaya Vandhana Yojana extended:
Pradhan Mantri Vaya Vandhana Yojana is a government backed pension scheme
for senior citizens offering 8% returns. This scheme has now been extended till
March 2020. Also the investment limit has been doubled from Rs 7.5 lakhs to Rs
15 lakhs. This is good scheme for senior citizens in lower tax bracket. But
remember Senior Citizen Savings Scheme still offers higher interest rate but
with shorter lock-in.
Overall this is a good Budget from Senior Citizens perspective and has
provided much needed relief
🙏🙏
Brig Narinder Dhand,
http://signals-parivaar.blogspot.in
We have added few other provision of TAX saving below with Explanations..
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1. Section
80C
Deductions on
Investments
Under section 80C, a
deduction of Rs 1,50,000 can be claimed from your total income. In simple terms,
you can reduce up to Rs 1,50,000 from your total taxable income through section
80C. This deduction is allowed to an Individual or a HUF. A maximum of Rs 1,
50,000 can be claimed for the FY 2018-19.
If
you have paid excess taxes, but have invested in LIC, PPF, Mediclaim, incurred
towards tuition fees etc.and have missed claiming a deduction of the same under
80C, you can file your Income Tax
Return, claim these deductions and get a refund of
excess taxes paid
2. Section
80CCC - Deduction for Premium Paid for Annuity
Plan of LIC or Other Insurer
This section provides a deduction to an individual
for any amount paid or deposited in any annuity plan of LIC or any other
insurer. The plan must be for receiving a pension from a fund referred to in
Section 10(23AAB). Pension received from the annuity or amount received upon
surrender of the annuity, including interest or bonus accrued on the annuity, is
taxable in the year of receipt.
STANDARD DEDUCTION OF Rs 40000/-
Budget 2018 though did not change the broad tax slabs but made some changes in the tax exemptions. One of them was the reintroduction of Standard Deduction for salaried and pensioners. From FY 2018-19 (AY 2019-20) all salaried and pensioners would be eligible for the standard deduction of Rs 40,000. However, as they say, the devil lies in details. With the introduction of the standard deduction, the finance minister has removed two popular tax deductions which were available for salaried: Transport Allowance of Rs 19,200 and Medical Reimbursement of Rs 15,000. So, the net impact of the standard deduction for salaried would only be Rs 5,800 (40,000 – 19,200 – 15,000). However, as pensioners did not have these allowances standard deduction for them is really good news.
Standard Deduction Impact:
The table below shows the impact of standard deduction on salaried who used to receive tax-free transport allowance and medical reimbursement till this year. *****************
As you can see in the above example the NET impact would be only Rs 5,800 extra tax exemption over the last year.
CBDT issues clarification regarding the applicability of standard deduction to pension received from a former employer.
As per the amended Section 16 of the Income-tax Act, 1961, a taxpayer having income chargeable under the head “Salaries” shall be allowed a deduction of Rs 40,000/- or the amount of salary, whichever is less, for computing his taxable income.
It is clarified that a taxpayer who is in receipt of a pension from his former employer shall be entitled to claim a deduction of Rs 40,000/- or the amount of pension, whichever is less, under Section 16 of the Act.
Standard Deduction for salaried was abolished in Budget 2005. Until then salaried individuals could claim Rs 30,000 or 40% of salary whichever is less for gross salary up to Rs 5 lakh. For salary of more than Rs 5 Lakh, the standard deduction was fixed at Rs 20,000.
Many salaried had this question what proof would be required to claim standard deduction? The answer is there is NO proof or declaration is required for the standard deduction. It's more in the lines of transport allowance where no proof was required. An added advantage with the abolition of medical reimbursement there would be one lesser proof to submit to an employer!
Standard Deduction for Family Pension?
The rules for standard deduction is clear for Pensioners but what happens after the death of pensioner? After the death of the pensioner, the legal heir (Spouse, children below the age of 25 years, unmarried daughter and dependent parents in certain cases) continue to receive a pension. This is referred to as
“Family Pension”. Also in case of a normal pension, the income is part of salary in ITR, however in the case of a family pension, the income is considered from other sources. So the above standard deduction of Rs 40,000 proposed in Budget 2018 would not be applicable to family pension.
