Page 254 - DCOM508_CORPORATE_TAX_PLANNING

Unit 10: Tax Consideration in Specific Managerial Decisions

5. Housing/Education Loans. Notes

6. Charity/Religious trusts.

Example: Table 10.5 mentioned below shows some of the examples and maximum
deductions that you can include while restructuring your salary.
Table 10.5: Examples of Investments and Deductions Available

Example of Investments Deductions available
Amount Your Sections When, where and how much of deductions
numbers
(in `)
Insurance 20,000 80C ` 1 lakh in specified instruments like life

Premium insurance and ELSS
Public provident 70,000 80CCC Pension plans of Life insurance companies;
fund 80 C limit stands reduced by 80CCC
investment
Investment in 10,000 80D ` 10,000 deduction on mediclaim, ` 15,000 for
ELSS senior citizens
Medical Insurance 10,000 80DD ` 50,000 reduced from total income of a
Premiums person with a handicapped dependent
Donations 5,000 80DDB ` 40,000 and ` 60,000 (sr. citizen) deduction
for expenditure on treatments of special
diseases
Other deductions 0 80E Interest on education loan – entire amount
tax deductible
80G Donations (all donations don’t qualify for
100% deduction)
80GG Deduction according to formula for rent
paid for housing
` 1,15,000 – Total 80U ` 50,000 deduction from total income for
Deductions handicapped persons

Source: http://www.slideshare.net/vikramsankhala/tax-planning-for-salaried-individuals

Therefore to conclude you can say that first thing that you need to perform is to confi gure your
salary to minimise the tax liability. It reduces the need for tax savings investments and then opt
for the most effective tax saving plans to reduce your tax liability to zero or minimal.

Task List down any ten investments which are covered under section 80 C. Compare and
identify the best amongst them.

Self Assessment

Fill in the blanks:

13. Remuneration planning refers to …………………. of the employees’ tax liability.
14. Under sections 10(13A) of Income Tax Act, 1961 ………………….. is defined as an amount

received by an employee paid by his/ her employer as a rent of his/her house.
15. Tax exemption up to ....................................... per year is available for the medical expenses
reimbursed by the employer against production of vouchers or bills for such payments.
16. …………………. as the process of redesigning your salary in such a way that it results in
minimisation of total tax liability.

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