In recent updates, the method to compute income from futures and options (F&O) trading (treated as speculative business income) has shifted from the traditional mark-to-market approach to a turnover-based method. Here's how it works: Step 1: Determine Your Turnover Turnover Calculation:For FRead more
In recent updates, the method to compute income from futures and options (F&O) trading (treated as speculative business income) has shifted from the traditional mark-to-market approach to a turnover-based method. Here’s how it works:
Step 1: Determine Your Turnover
Turnover Calculation: For F&O trading, the turnover is now defined as the aggregate sale consideration of all contracts you traded during the financial year.
This means you add up the sale prices of all the futures and options contracts sold (closed positions) during the year.
Even if the positions are not delivered (i.e., contracts are closed out), the sale consideration is included in your turnover.
Step 2: Deduct the Purchase Cost
Purchase Cost: From the total turnover, subtract the total cost of acquiring these contracts (the purchase price paid when entering the contracts).
Step 3: Deduct Direct Expenses
Direct Trading Expenses: Deduct all direct expenses incurred in trading, such as:
Brokerage fees
Transaction charges
Clearing and settlement fees
Any other costs directly attributable to the trading activity
Step 4: Arrive at Your Net Profit or Loss
Net Speculative Business Income: The result after these deductions is your net profit (or loss) from F&O trading. This figure is treated as speculative business income and is taxed at your applicable business income slab rates.
Summary Table
Calculation Step
Description
Formula
Turnover
Sum of sale consideration of all F&O contracts traded
Total Sale Consideration
Less: Purchase Cost
Total cost incurred to buy the contracts
Sum of Purchase Prices
Less: Direct Expenses
Expenses directly related to trading (brokerage, transaction fees, etc.)
Total Direct Expenses
Net Income
This is the taxable speculative business income from F&O trading
Turnover – Purchase Cost – Direct Expenses
Key Points to Remember
Revised Method:
The revised approach focuses on the actual sale consideration (turnover) rather than solely relying on the mark-to-market adjustments.
Business Expense Approach:
This method is similar to computing turnover in a typical business: you start with gross sales (in this case, sale consideration) and then deduct the cost of goods sold (purchase cost) and other direct expenses to arrive at net profit.
Taxation:
The resulting net profit or loss is considered speculative business income and is subject to tax according to the applicable slab rates for business income.
When it comes to intra-day trading (buying and selling shares on the same day), the Income Tax Act does not treat the profits as capital gains. Instead, such trading is classified as speculative business income. This means the traditional capital gains computation method doesn’t apply. Key Points NoRead more
When it comes to intra-day trading (buying and selling shares on the same day), the Income Tax Act does not treat the profits as capital gains. Instead, such trading is classified as speculative business income. This means the traditional capital gains computation method doesn’t apply.
Key Points
Not Capital Gains: Intra-day transactions are considered speculative because the shares are not actually delivered; they are bought and sold within the same day. Thus, the profits or losses from these transactions are treated as business income.
Calculation as Speculative Business Income: To compute your net income from intra-day trading, follow these steps:
Calculate Turnover: Sum up the sale consideration of all intra-day trades (i.e., the total amount received from selling shares).
Deduct Purchase Cost: Subtract the total purchase cost of those trades (i.e., the total amount paid to buy the shares).
Deduct Direct Trading Expenses: Also deduct any brokerage fees, transaction charges, and other direct expenses incurred while trading.
Net Speculative Business Income: The resulting amount is your net profit (or loss) from intra-day trading, which will be taxed as business income according to your applicable slab rates.
Example Calculation
Step
Description
Calculation
Turnover
Sum of sale prices for all trades
e.g., ₹500,000
Less: Purchase Cost
Sum of buying prices for all trades
e.g., ₹480,000
Less: Trading Expenses
Total expenses (brokerage, transaction charges, etc.)
e.g., ₹10,000
Net Income
Final profit (or loss) from intra-day trading
₹500,000 – ₹480,000 – ₹10,000 = ₹10,000
Additional Considerations
Set-Off & Carry Forward of Losses: Losses from speculative transactions can only be set off against speculative income and can be carried forward for one year.
Record-Keeping: It’s important to maintain detailed records (trade confirmations, brokerage statements, etc.) for each transaction to substantiate your calculations.
Under Section 80D of the Income Tax Act, you can claim a deduction on the premiums paid for medical insurance. Here’s how it works: 1. Who Is Eligible? Self, Spouse, and Dependent Children: For individuals below 60 years, you can claim a deduction of up to ₹25,000 on the premium paid. If you or anyRead more
Under Section 80D of the Income Tax Act, you can claim a deduction on the premiums paid for medical insurance. Here’s how it works:
1. Who Is Eligible?
Self, Spouse, and Dependent Children:
For individuals below 60 years, you can claim a deduction of up to ₹25,000 on the premium paid.
If you or any of these insured persons are senior citizens (60 years and above), the limit increases to ₹50,000.
Parents:
If you pay the premium for your parents, you can claim an additional deduction:
Up to ₹25,000 if your parents are below 60 years.
Up to ₹50,000 if your parents are senior citizens.
Preventive Health Check-Up:
You can also include expenses for preventive health check-ups (up to ₹5,000) within these limits.
2. Steps to Claim the Deduction
Keep All Premium Receipts:
Make sure to collect and safely store your premium payment receipts or bank statements as proof of payment.
Report in Your Income Tax Return (ITR):
When filing your ITR (using ITR-1, ITR-2, etc.), enter the details of the medical insurance premiums paid in the appropriate section (usually under “Deductions under Chapter VI-A”).
Include the amount paid for self, spouse, children, and parents separately, if applicable.
Verify Your Documentation:
Ensure that your insurance policy is active and that the premiums are actually paid in the relevant financial year.
Retain the documents in case of any future inquiries by the tax authorities.
3. Example Scenario
Let’s say you are below 60 years old and have paid the following in a financial year:
Premium for Self, Spouse, and Children: ₹20,000
Premium for Parents (who are senior citizens): ₹40,000
Preventive Health Check-Up Expenses: ₹5,000 (included within the above limits)
This amount is fully deductible from your taxable income, thereby reducing your tax liability.
Final Thoughts
Claiming a deduction on your medical insurance premium is a straightforward way to reduce your tax liability. Ensure you have the proper documentation and correctly report these amounts when filing your ITR.
In general, the Income Tax Act does not allow a blanket deduction for all medical expenses incurred on the health of a senior citizen. However, there are specific provisions that provide relief in certain cases: 1. Health Insurance Premium (Section 80D) What It Covers: You can claim a deduction forRead more
In general, the Income Tax Act does not allow a blanket deduction for all medical expenses incurred on the health of a senior citizen. However, there are specific provisions that provide relief in certain cases:
1. Health Insurance Premium (Section 80D)
What It Covers:
You can claim a deduction for the premium paid on health insurance for a senior citizen.
Deduction Limit:
Up to ₹50,000 is deductible if the insured person is a senior citizen.
Note:
This benefit is for the insurance premium, not the actual medical expenses incurred.
2. Medical Treatment for Specified Diseases (Section 80DDB)
What It Covers:
If a senior citizen is receiving treatment for certain specified diseases (such as cancer, chronic renal failure, Parkinson’s disease, etc.), you can claim a deduction for the actual medical expenditure incurred.
Deduction Limit:
For senior citizens, the maximum deduction available under Section 80DDB is ₹1,00,000.
Conditions:
Proper documentation (like prescriptions and medical bills) is required to support the claim.
Key Takeaways
General medical expenses (like hospital bills or doctor’s fees) incurred by a senior citizen are not deductible unless they are related to the treatment of specified diseases under Section 80DDB.
Health insurance premiums paid for a senior citizen are deductible under Section 80D, with a limit of up to ₹50,000.
Always ensure you have the required receipts and documents to support any deduction claims
The Income Tax Act offers benefits for electric vehicle (EV) purchases—but the benefits vary depending on whether you’re an individual or a business. For Individuals Under Section 80EEB, if you take a loan to purchase an electric vehicle, you can claim a deduction on the interest paid on that loan.Read more
The Income Tax Act offers benefits for electric vehicle (EV) purchases—but the benefits vary depending on whether you’re an individual or a business.
For Individuals
Under Section 80EEB, if you take a loan to purchase an electric vehicle, you can claim a deduction on the interest paid on that loan. The maximum deduction allowed is ₹1,50,000. This benefit helps lower the effective cost of borrowing and encourages the use of environmentally friendly vehicles.
For Businesses
If a business purchases an electric vehicle for commercial use, the EV is treated as a fixed asset and is eligible for depreciation under Section 32. In addition, the government may offer accelerated or additional depreciation benefits (for example, an extra 15% of the purchase cost) to promote green investments. This means you can reduce your taxable income by writing off a larger portion of the asset’s cost in the early years.
Quick Comparison
Category
Relevant Section
Benefit
Notes
Individuals
Section 80EEB
Deduction on interest paid on EV loan up to ₹1,50,000
Benefit applies only to the interest portion, not the purchase price.
Businesses
Section 32
Standard depreciation on the EV, plus additional depreciation (e.g., extra 15%) on green investments
EV used for business purposes qualifies as a fixed asset.
Key Points to Remember
Section 80EEB: Only available for interest on loans taken for purchasing an EV—direct purchase cost isn’t deductible.
Depreciation: For business use, claim depreciation as per normal provisions plus any additional rates offered for green investments.
Always keep proper documentation (loan agreements, interest receipts, purchase invoices) to support your claims.
These benefits are subject to updates with each budget, so it’s wise to check the latest notifications or consult a tax professional.
Under Section 80G of the Income Tax Act, the deduction you can claim for donations to charitable trusts depends on two main factors: 1. Type of Trust or Institution 100% Deduction:Some charitable trusts are eligible for a 100% deduction. This means you can claim the entire amount donated as a deductRead more
Under Section 80G of the Income Tax Act, the deduction you can claim for donations to charitable trusts depends on two main factors:
1. Type of Trust or Institution
100% Deduction: Some charitable trusts are eligible for a 100% deduction. This means you can claim the entire amount donated as a deduction.
50% Deduction: Other institutions may be eligible for only a 50% deduction, so you can claim half the donated amount.
2. Mode of Donation
Non-Cash Donations (e.g., cheque, digital transfer):
The full percentage (100% or 50%) is allowed as a deduction, without any overall cap.
Cash Donations:
If you donate in cash, the deduction is capped at 10% of your Adjusted Gross Total Income for that year.
Example Scenarios
Scenario 1: You donate ₹10,000 via bank transfer to a trust eligible for 100% deduction. Deduction Allowed: ₹10,000
Scenario 2: You donate ₹10,000 via bank transfer to a trust eligible for 50% deduction. Deduction Allowed: ₹5,000
Scenario 3: You make a cash donation of ₹10,000 to any eligible trust. Deduction Allowed: Limited to 10% of your Adjusted Gross Total Income (even if the trust qualifies for 100% or 50% deduction).
Key Points to Remember
Approval is Essential: The trust must be approved under Section 80G for you to claim the deduction.
Documentation: Always obtain a valid receipt or certificate from the trust as proof of donation.
Choose Non-Cash Methods: To maximize your deduction, it’s preferable to donate via non-cash modes (like cheque or online transfer) since these are not subject to the 10% limit on cash donations.
While donations made to the PM CARE Fund qualify for a 100% deduction under Section 80G of the Income Tax Act, you must have proper documentation to claim the benefit. Key Points: Eligibility for Deduction:Donations to the PM CARE Fund are eligible for deduction under Section 80G if they are made thRead more
While donations made to the PM CARE Fund qualify for a 100% deduction under Section 80G of the Income Tax Act, you must have proper documentation to claim the benefit.
Key Points:
Eligibility for Deduction: Donations to the PM CARE Fund are eligible for deduction under Section 80G if they are made through eligible modes (like cheque, online transfer, etc.) and the fund is registered for this benefit.
Importance of Receipts: To claim the deduction, the Income Tax Department requires you to provide proof of donation, typically in the form of an official receipt or certificate issued by the PM CARE Fund.
No Receipt, No Deduction: If you do not have a receipt, you may not be able to claim the deduction on your tax return. The receipt serves as the evidence that the donation was made and is crucial for the tax audit process.
What You Can Do:
Contact the PM CARE Fund: Try to obtain a duplicate receipt or certificate from the PM CARE Fund if possible.
Maintain Alternative Proof: If you made the donation online or via cheque, keep your bank statements or cheque details as supporting evidence. However, note that these may not always be accepted in place of an official receipt.
Final Thought: While the donation itself is eligible for a deduction under Section 80G, lacking the official receipt may result in disallowance of the deduction. It’s always best to secure and retain proper documentation when making such donations.
Yes, you may be able to get a deduction on rent paid even if you're self-employed and don't receive House Rent Allowance (HRA). However, the way you claim this deduction depends on how the rent is used: 1. For Your Residential Rent (Personal Use) – Section 80GG Who Can Claim: Individuals (salaried oRead more
Yes, you may be able to get a deduction on rent paid even if you’re self-employed and don’t receive House Rent Allowance (HRA). However, the way you claim this deduction depends on how the rent is used:
1. For Your Residential Rent (Personal Use) – Section 80GG
Who Can Claim:
Individuals (salaried or self-employed) who do not receive any HRA and do not own a residential property in the city where they live.
What It Offers:
You can claim a deduction on the rent paid under Section 80GG.
How the Deduction Works:
The deduction amount is the least of the following:
₹5,000 per month (i.e., up to ₹60,000 per year),
25% of your total income, or
The actual rent paid minus 10% of your total income.
Important Conditions:
You must not own any residential property at your place of work.
You should not be receiving HRA from any employer.
2. For Business-Related Rent (Office/Workplace)
Claim as a Business Expense:
If you are renting office space or a workspace solely for your business, the rent expense is typically allowed as a business expense.
This expense can be fully deducted while computing your taxable business income, provided it is wholly and exclusively incurred for business purposes.
Final Thoughts
Section 80GG helps self-employed individuals or any taxpayers who don’t receive HRA to get some relief on their residential rent.
If you’re renting for business purposes, you can deduct the rent as a business expense.
It’s important to maintain proper documentation (rental receipts, lease agreements, etc.) to support your claim.
By understanding these options, you can ensure that you make the most of the tax benefits available, even if you’re self-employed and not receiving HRA.
Procedure for Claiming Deduction on Donations by a Company (Section 80GGB) 1. Ensure Eligibility Applicable Provision: Companies (and other entities like firms, LLPs, etc.) can claim the deduction under Section 80GGB. Recipient Requirements: The donation must be made to a politically registered partRead more
Procedure for Claiming Deduction on Donations by a Company (Section 80GGB)
1. Ensure Eligibility
Applicable Provision:
Companies (and other entities like firms, LLPs, etc.) can claim the deduction under Section 80GGB.
Recipient Requirements:
The donation must be made to a politically registered party (registered under Section 29A of the Representation of the People Act, 1951) or an electoral trust.
Mode of Donation:
The donation must be made via non-cash methods (e.g., bank transfer, cheque, UPI, or digital payment).
2. Maintain Proper Documentation
Proof of Donation:
Keep a copy of the donation receipt or certificate provided by the political party.
Retain bank statements, cheque copies, or digital transaction details showing the payment.
Certificate:
The political party should issue a certificate indicating that the donation has been received and is eligible for deduction under Section 80GGB.
3. Claiming the Deduction
Filing the Return:
When filing the company’s Income Tax Return (ITR), report the total donation amount under Section 80GGB.
Supporting Documents:
Although the certificate and proofs should be maintained by the company, ensure they are available in case the tax authorities require verification.
4. Additional Tips
Non-Cash Requirement:
Remember, cash donations are not eligible for this deduction.
Timely Filing:
Ensure that the donation is accounted for in the financial year in which it was made and reported on the ITR.
Consultation:
If in doubt, consult a tax professional to ensure that all conditions are met and that the proper procedure is followed.
By following these steps, a company can effectively claim a 100% deduction on donations made to eligible political parties under Section 80GGB, thereby reducing its taxable income.
Did you know? If you donate to a political party, you can claim a 100% tax deduction on the donated amount! Let’s break it down in simple terms. 1. Who Can Claim the Deduction? ✅ Only Individual Taxpayers (both salaried and self-employed).❌ Not available to companies, firms, or any other artificialRead more
Did you know? If you donate to a political party, you can claim a 100% tax deduction on the donated amount! Let’s break it down in simple terms.
1. Who Can Claim the Deduction?
✅ Only Individual Taxpayers (both salaried and self-employed). ❌ Not available to companies, firms, or any other artificial entities (they can claim under Section 80GGB).
2. How Much Deduction Can You Claim?
👉 100% of the donated amount is deductible – there’s no upper limit on the deduction! 👉 However, cash donations are not allowed.
3. What Are the Conditions for Claiming Deduction?
🔹 The donation must be made to a registered political party or an electoral trust. 🔹 The donation must be made through non-cash modes (bank transfer, cheque, UPI, digital wallets, etc.). 🔹 Political parties must be registered under Section 29A of the Representation of the People Act, 1951.
4. How to Claim the Deduction?
📌 While filing your Income Tax Return (ITR-1 or ITR-2), enter the total donation amount under Section 80GGC. 📌 Maintain proof of payment, such as a bank statement, digital receipt, or acknowledgement from the political party.
Example Calculation
Let’s say your taxable income is ₹8,00,000 and you donate ₹50,000 to a political party via bank transfer. ✅ Your taxable income after deduction = ₹8,00,000 – ₹50,000 = ₹7,50,000 ✅ You save tax on ₹50,000, reducing your tax liability.
Final Thoughts
💡 If you plan to donate to a political party, go cashless to claim the tax benefit. Ensure the party is registered, and always keep proof of donation.
How to calculate capital gain on future and options trading?
In recent updates, the method to compute income from futures and options (F&O) trading (treated as speculative business income) has shifted from the traditional mark-to-market approach to a turnover-based method. Here's how it works: Step 1: Determine Your Turnover Turnover Calculation:For FRead more
In recent updates, the method to compute income from futures and options (F&O) trading (treated as speculative business income) has shifted from the traditional mark-to-market approach to a turnover-based method. Here’s how it works:
Step 1: Determine Your Turnover
For F&O trading, the turnover is now defined as the aggregate sale consideration of all contracts you traded during the financial year.
Step 2: Deduct the Purchase Cost
From the total turnover, subtract the total cost of acquiring these contracts (the purchase price paid when entering the contracts).
Step 3: Deduct Direct Expenses
Deduct all direct expenses incurred in trading, such as:
Step 4: Arrive at Your Net Profit or Loss
The result after these deductions is your net profit (or loss) from F&O trading. This figure is treated as speculative business income and is taxed at your applicable business income slab rates.
Summary Table
Key Points to Remember
Read: How to calculate capital gain on intra-day trading of shares?
See lessHow to calculate capital gain on Intra day trading of shares?
When it comes to intra-day trading (buying and selling shares on the same day), the Income Tax Act does not treat the profits as capital gains. Instead, such trading is classified as speculative business income. This means the traditional capital gains computation method doesn’t apply. Key Points NoRead more
When it comes to intra-day trading (buying and selling shares on the same day), the Income Tax Act does not treat the profits as capital gains. Instead, such trading is classified as speculative business income. This means the traditional capital gains computation method doesn’t apply.
Key Points
Not Capital Gains:
Intra-day transactions are considered speculative because the shares are not actually delivered; they are bought and sold within the same day. Thus, the profits or losses from these transactions are treated as business income.
Calculation as Speculative Business Income:
To compute your net income from intra-day trading, follow these steps:
Calculate Turnover:
Sum up the sale consideration of all intra-day trades (i.e., the total amount received from selling shares).
Deduct Purchase Cost:
Subtract the total purchase cost of those trades (i.e., the total amount paid to buy the shares).
Deduct Direct Trading Expenses:
Also deduct any brokerage fees, transaction charges, and other direct expenses incurred while trading.
Net Speculative Business Income:
The resulting amount is your net profit (or loss) from intra-day trading, which will be taxed as business income according to your applicable slab rates.
Example Calculation
Additional Considerations
Set-Off & Carry Forward of Losses:
Losses from speculative transactions can only be set off against speculative income and can be carried forward for one year.
Record-Keeping:
It’s important to maintain detailed records (trade confirmations, brokerage statements, etc.) for each transaction to substantiate your calculations.
Read: How to calculate capital gain on future and options trading?
See lessHow to get deduction of medical insurance premium under income tax act?
Under Section 80D of the Income Tax Act, you can claim a deduction on the premiums paid for medical insurance. Here’s how it works: 1. Who Is Eligible? Self, Spouse, and Dependent Children: For individuals below 60 years, you can claim a deduction of up to ₹25,000 on the premium paid. If you or anyRead more
Under Section 80D of the Income Tax Act, you can claim a deduction on the premiums paid for medical insurance. Here’s how it works:
1. Who Is Eligible?
Self, Spouse, and Dependent Children:
Parents:
Preventive Health Check-Up:
2. Steps to Claim the Deduction
Keep All Premium Receipts:
Report in Your Income Tax Return (ITR):
Verify Your Documentation:
3. Example Scenario
Let’s say you are below 60 years old and have paid the following in a financial year:
Total Deduction Claimed:
This amount is fully deductible from your taxable income, thereby reducing your tax liability.
Final Thoughts
Claiming a deduction on your medical insurance premium is a straightforward way to reduce your tax liability. Ensure you have the proper documentation and correctly report these amounts when filing your ITR.
Read: Can we get deduction of medical expenditure incurred on the health of senior citizens under the income tax act?
See lessCan we get deduction of medical expenditure incurred on the health of senior citizen under income tax act?
In general, the Income Tax Act does not allow a blanket deduction for all medical expenses incurred on the health of a senior citizen. However, there are specific provisions that provide relief in certain cases: 1. Health Insurance Premium (Section 80D) What It Covers: You can claim a deduction forRead more
In general, the Income Tax Act does not allow a blanket deduction for all medical expenses incurred on the health of a senior citizen. However, there are specific provisions that provide relief in certain cases:
1. Health Insurance Premium (Section 80D)
2. Medical Treatment for Specified Diseases (Section 80DDB)
Key Takeaways
- General medical expenses (like hospital bills or doctor’s fees) incurred by a senior citizen are not deductible unless they are related to the treatment of specified diseases under Section 80DDB.
- Health insurance premiums paid for a senior citizen are deductible under Section 80D, with a limit of up to ₹50,000.
- Always ensure you have the required receipts and documents to support any deduction claims
See lessHow much deduction is allowed on purchase of electrical vehicle under income tax act?
The Income Tax Act offers benefits for electric vehicle (EV) purchases—but the benefits vary depending on whether you’re an individual or a business. For Individuals Under Section 80EEB, if you take a loan to purchase an electric vehicle, you can claim a deduction on the interest paid on that loan.Read more
The Income Tax Act offers benefits for electric vehicle (EV) purchases—but the benefits vary depending on whether you’re an individual or a business.
For Individuals
Under Section 80EEB, if you take a loan to purchase an electric vehicle, you can claim a deduction on the interest paid on that loan. The maximum deduction allowed is ₹1,50,000. This benefit helps lower the effective cost of borrowing and encourages the use of environmentally friendly vehicles.
For Businesses
If a business purchases an electric vehicle for commercial use, the EV is treated as a fixed asset and is eligible for depreciation under Section 32. In addition, the government may offer accelerated or additional depreciation benefits (for example, an extra 15% of the purchase cost) to promote green investments. This means you can reduce your taxable income by writing off a larger portion of the asset’s cost in the early years.
Quick Comparison
Key Points to Remember
- Section 80EEB: Only available for interest on loans taken for purchasing an EV—direct purchase cost isn’t deductible.
- Depreciation: For business use, claim depreciation as per normal provisions plus any additional rates offered for green investments.
- Always keep proper documentation (loan agreements, interest receipts, purchase invoices) to support your claims.
- These benefits are subject to updates with each budget, so it’s wise to check the latest notifications or consult a tax professional.
See lessHow much deduction is allowed for donations made to charitable trust under income tax act?
Under Section 80G of the Income Tax Act, the deduction you can claim for donations to charitable trusts depends on two main factors: 1. Type of Trust or Institution 100% Deduction:Some charitable trusts are eligible for a 100% deduction. This means you can claim the entire amount donated as a deductRead more
Under Section 80G of the Income Tax Act, the deduction you can claim for donations to charitable trusts depends on two main factors:
1. Type of Trust or Institution
100% Deduction:
Some charitable trusts are eligible for a 100% deduction. This means you can claim the entire amount donated as a deduction.
50% Deduction:
Other institutions may be eligible for only a 50% deduction, so you can claim half the donated amount.
2. Mode of Donation
Non-Cash Donations (e.g., cheque, digital transfer):
Cash Donations:
Example Scenarios
Scenario 1:
You donate ₹10,000 via bank transfer to a trust eligible for 100% deduction.
Deduction Allowed: ₹10,000
Scenario 2:
You donate ₹10,000 via bank transfer to a trust eligible for 50% deduction.
Deduction Allowed: ₹5,000
Scenario 3:
You make a cash donation of ₹10,000 to any eligible trust.
Deduction Allowed: Limited to 10% of your Adjusted Gross Total Income (even if the trust qualifies for 100% or 50% deduction).
Key Points to Remember
Approval is Essential:
The trust must be approved under Section 80G for you to claim the deduction.
Documentation:
Always obtain a valid receipt or certificate from the trust as proof of donation.
Choose Non-Cash Methods:
To maximize your deduction, it’s preferable to donate via non-cash modes (like cheque or online transfer) since these are not subject to the 10% limit on cash donations.
Read More:I have made donation to the PM care fund but don’t have any receipt, whether deduction under section 80 G is allowed under income tax act?
See lessI have made donation to the PM care fund but don’t have any receipt, whether deduction under section 80 G is allowed under income tax act?
While donations made to the PM CARE Fund qualify for a 100% deduction under Section 80G of the Income Tax Act, you must have proper documentation to claim the benefit. Key Points: Eligibility for Deduction:Donations to the PM CARE Fund are eligible for deduction under Section 80G if they are made thRead more
While donations made to the PM CARE Fund qualify for a 100% deduction under Section 80G of the Income Tax Act, you must have proper documentation to claim the benefit.
Key Points:
Eligibility for Deduction:
Donations to the PM CARE Fund are eligible for deduction under Section 80G if they are made through eligible modes (like cheque, online transfer, etc.) and the fund is registered for this benefit.
Importance of Receipts:
To claim the deduction, the Income Tax Department requires you to provide proof of donation, typically in the form of an official receipt or certificate issued by the PM CARE Fund.
No Receipt, No Deduction:
If you do not have a receipt, you may not be able to claim the deduction on your tax return. The receipt serves as the evidence that the donation was made and is crucial for the tax audit process.
What You Can Do:
Try to obtain a duplicate receipt or certificate from the PM CARE Fund if possible.
If you made the donation online or via cheque, keep your bank statements or cheque details as supporting evidence. However, note that these may not always be accepted in place of an official receipt.
Final Thought:
See lessWhile the donation itself is eligible for a deduction under Section 80G, lacking the official receipt may result in disallowance of the deduction. It’s always best to secure and retain proper documentation when making such donations.
Can I get deduction of rent paid even if I am not getting any HRA as I am self employed?
Yes, you may be able to get a deduction on rent paid even if you're self-employed and don't receive House Rent Allowance (HRA). However, the way you claim this deduction depends on how the rent is used: 1. For Your Residential Rent (Personal Use) – Section 80GG Who Can Claim: Individuals (salaried oRead more
Yes, you may be able to get a deduction on rent paid even if you’re self-employed and don’t receive House Rent Allowance (HRA). However, the way you claim this deduction depends on how the rent is used:
1. For Your Residential Rent (Personal Use) – Section 80GG
Who Can Claim:
What It Offers:
How the Deduction Works:
Important Conditions:
2. For Business-Related Rent (Office/Workplace)
Final Thoughts
By understanding these options, you can ensure that you make the most of the tax benefits available, even if you’re self-employed and not receiving HRA.
Read: Can I claim a deduction of rent paid in both section 80GG and 10(13a) HRA?
See lessWhat is the procedure for getting deduction of donation made to political parties by a company?
Procedure for Claiming Deduction on Donations by a Company (Section 80GGB) 1. Ensure Eligibility Applicable Provision: Companies (and other entities like firms, LLPs, etc.) can claim the deduction under Section 80GGB. Recipient Requirements: The donation must be made to a politically registered partRead more
Procedure for Claiming Deduction on Donations by a Company (Section 80GGB)
1. Ensure Eligibility
2. Maintain Proper Documentation
3. Claiming the Deduction
4. Additional Tips
By following these steps, a company can effectively claim a 100% deduction on donations made to eligible political parties under Section 80GGB, thereby reducing its taxable income.
Read:How an Individual can get deduction of donation made to political parties?
See lessHow an Individual can get deduction of donation made to political parties?
Did you know? If you donate to a political party, you can claim a 100% tax deduction on the donated amount! Let’s break it down in simple terms. 1. Who Can Claim the Deduction? ✅ Only Individual Taxpayers (both salaried and self-employed).❌ Not available to companies, firms, or any other artificialRead more
Did you know? If you donate to a political party, you can claim a 100% tax deduction on the donated amount! Let’s break it down in simple terms.
1. Who Can Claim the Deduction?
✅ Only Individual Taxpayers (both salaried and self-employed).
❌ Not available to companies, firms, or any other artificial entities (they can claim under Section 80GGB).
2. How Much Deduction Can You Claim?
👉 100% of the donated amount is deductible – there’s no upper limit on the deduction!
👉 However, cash donations are not allowed.
3. What Are the Conditions for Claiming Deduction?
🔹 The donation must be made to a registered political party or an electoral trust.
🔹 The donation must be made through non-cash modes (bank transfer, cheque, UPI, digital wallets, etc.).
🔹 Political parties must be registered under Section 29A of the Representation of the People Act, 1951.
4. How to Claim the Deduction?
📌 While filing your Income Tax Return (ITR-1 or ITR-2), enter the total donation amount under Section 80GGC.
📌 Maintain proof of payment, such as a bank statement, digital receipt, or acknowledgement from the political party.
Example Calculation
Let’s say your taxable income is ₹8,00,000 and you donate ₹50,000 to a political party via bank transfer.
✅ Your taxable income after deduction = ₹8,00,000 – ₹50,000 = ₹7,50,000
✅ You save tax on ₹50,000, reducing your tax liability.
Final Thoughts
💡 If you plan to donate to a political party, go cashless to claim the tax benefit. Ensure the party is registered, and always keep proof of donation.
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