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CA Vishnu Ram
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  1. CA Sanjiv Kumar Enlightened Chartered Accountant

    Starting a business in India? The government provides several tax benefits to encourage startups and ease their financial burden. Below is a simple breakdown of key tax advantages available to eligible startups. 1. Tax Holiday (Section 80-IAC) – 100% Profit Deduction Who can claim? DPIIT-recognizedRead more

    Starting a business in India? The government provides several tax benefits to encourage startups and ease their financial burden. Below is a simple breakdown of key tax advantages available to eligible startups.

    1. Tax Holiday (Section 80-IAC) – 100% Profit Deduction

    • Who can claim? DPIIT-recognized startups registered as a Private Limited Company or LLP.
    • What’s the benefit?
      • 100% tax exemption on profits for three consecutive years within the first ten years of incorporation.
      • Previously, only startups incorporated until March 31, 2024, could avail of this benefit. Now, this has been extended to March 31, 2030.

    2. Exemption from Angel Tax (Section 56(2)(viib))

    • What’s Angel Tax? If a startup raises funds from an investor at a price higher than the fair market value (FMV), the extra amount is taxed as “Income from Other Sources.”
    • Who is exempt? DPIIT-recognized startups with total share capital & premium not exceeding ₹25 crore.
    • What’s the benefit? Startups don’t have to pay tax on funds received from Indian investors above FMV.

    3. Carry Forward of Losses (Section 79)

    • Who can benefit? Startups that incur losses within the first seven years of incorporation.
    • What’s the condition? Even if there’s a change in shareholding, the losses can still be set off as long as at least 51% of original shareholders remain.

    4. Lower Corporate Tax Rate

    • For regular domestic companies: 22% corporate tax (if no other exemptions are claimed).
    • For new manufacturing startups (set up after October 1, 2019, and starting operations before March 31, 2024): 15% tax rate.

    5. Other Benefits

    ✅ Self-Certification for Compliance: Startups can self-certify compliance with labor & environmental laws for 3-5 years.
    ✅ Faster Patent & Trademark Registration: Startups get a 50% rebate on trademark fees and 80% rebate on patent filing fees.

    Final Thoughts

    These tax benefits help startups reduce costs, improve cash flow, and grow faster. However, startups must ensure they meet eligibility conditions and file the necessary documents on time to claim these benefits.

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CA Sanjiv Kumar
Enlightened
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  1. CA Vishnu Ram Enlightened

    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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CA Sanjiv Kumar
Enlightened
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  1. CA Vishnu Ram Enlightened

    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.

    Read:How an Individual can get deduction of donation made to political parties?

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CA Sanjiv Kumar
Enlightened
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  1. CA Vishnu Ram Enlightened

    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.

    Read: Can I claim a deduction of rent paid in both section 80GG and 10(13a) HRA?

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CA Sanjiv Kumar
Enlightened
Asked: In:

  1. CA Vishnu Ram Enlightened

    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.

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CA Sanjiv Kumar
Enlightened
Asked: In:

  1. CA Vishnu Ram Enlightened

    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.

    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?

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CA Sanjiv Kumar
Enlightened
Asked: In:

  1. CA Vishnu Ram Enlightened

    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.
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CA Sanjiv Kumar
Enlightened
Asked: In:

  1. CA Vishnu Ram Enlightened

    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
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CA Sanjiv Kumar
Enlightened
Asked: In:

  1. CA Vishnu Ram Enlightened

    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

    1. Keep All Premium Receipts:

      • Make sure to collect and safely store your premium payment receipts or bank statements as proof of payment.

    2. 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.

    3. 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)

    Total Deduction Claimed:

    • ₹20,000 (for self, spouse, and children) + ₹40,000 (for parents) = ₹60,000

    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?

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