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MB0012 – Taxation Management-Set-2

MB0012 – Taxation Management-Set-2

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Published by Pankaj Chourey

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Published by: Pankaj Chourey on Jun 14, 2011
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 Sikkim Manipal University - MBA - MF0012 Taxation Management
===========================================================
 Semester: 3 - Assignment Set: 2=======================================================
===========================================================
PANKAJ CHOUREY Reg. No. 521036344 Page 1 of 15
Question
01:-
Prepare a ready reckoner of various tax savings investment options coveringSection C to U. According you what are the 5 best investment options under these sections.
 
Answer:
1.
 
Deductions in respect of life insurance premium, deferred annuity, contributions toprovident fund, subscription to certain equity shares or debentures, etc. [Section80c] :-
In computing the total income of an assessee, being an individual or a HinduUndivided Family, there shall be deducted in accordance with and subject to theprovisions of this Section, the whole of the amount paid or deposited for the currentyear as does not exceed Rs. 1 lacs.
2.
 
Deduction in respect of contribution to certain pension funds [Section 80ccc]
1) Deduction is permissible, under this Section, only to an individual assessee.2) It is allowed in respect of nay amount paid or deposited in the previous year by suchindividual to effect or keep in force a contract for any annuity plan of life InsuranceCorporation of India or any other insurer for receiving pension fund from the fund setup by LIC/or any other insurer referred to in Section 10(23AAB)3) The amount is paid out of his income chargeable to tax.Quantum of deduction: The whole of the amount paid or deposited (excluding interestor bonus accrued or credited to the assessee
s account, (if any) or Rs. 1,00,000whichever is less.
3.
 
Deduction in respect of contribution to pension scheme of central government orany other employer [Section 80CCD] :-
The deduction under this Section is allowedto an assessee who is an individual and who is employed by the CentralGovernment or any other employer. The deduction is allowed on account of:1.
 
any amount not exceeding 10% of salary of the previous year paid or depositedby the employee in his account under the notified pension scheme2.
 
any amount contributed by the employer (i.e. central Government or any otheremployer) to such pension scheme not exceeding 10% of the salary of theemployee.
4.
 
Section 80D: Deduction in respect of medical insurance premiumConditions
 
 Sikkim Manipal University - MBA - MF0012 Taxation Management
===========================================================
 Semester: 3 - Assignment Set: 2=======================================================
===========================================================
PANKAJ CHOUREY Reg. No. 521036344 Page 2 of 15
1. Payment shall be on account of insurance premium in respect of Medical Insurance(Not Life Insurance).2. Payment shall be made by cheque.3. Payment shall be out of income chargeable to tax.4. Insurance scheme shall be framed by GIC and approved by the Central Governmentfrom A.Y. 2002-03 the amount deposited in any scheme of any other insurer who isapproved by the Insurance Regulatory & Development Authority shall also be eligiblefor deduction.5. Deduction can be claimed only by individual (in respect of policy taken on his Healthof his/her spouse, dependent parents, dependent children) and by the HUF (on thehealth of any member of such family).Quantum of deduction: The actual premium/premia paid during the tear, or Rs. 15,000whichever is less.
5.
 
Section 80DD: Deduction in respect of maintenance including medical treatment ofhandicapped dependentsQuantum of deduction: Rs. 50,000 irrespective of the amount deposited and Rs. 75,000where such dependant is a person with severe disability.Conditions1. The assessee is either an individual who is resident in India or a Hindu UndividedFamily who is resident in India.2. i) The assessee has during the previous year incurred any expenditure for themedical treatment (including nursing), training and rehabilitation of a handicappeddependant.ORii) He has paid or deposited any amount under a scheme framed in this behalf by theLife Insurance Corporation or Unit Trust of India, which is approved by the Board.3. The scheme mentioned under (2)(ii) above fulfills two additional conditions:i) The scheme provides for payment of annuity or lump sum amount for the benefit of ahandicapped dependent in the event of the death of the individual or the member ofthe Hindu Undivided Family in whose name subscription to the scheme has beenmade.
 
 Sikkim Manipal University - MBA - MF0012 Taxation Management
===========================================================
 Semester: 3 - Assignment Set: 2=======================================================
===========================================================
PANKAJ CHOUREY Reg. No. 521036344 Page 3 of 15
ii) The assessee nominates either the handicapped dependent or any other person or atrust to receive the payment on his behalf for the benefit of the handicappeddependent.
Question.2:- Write short notes on (a) Profit in lieu of salary (b) Sec 80D?
Answer:
A:-Profits in Lieu of Salary [Section 17(3)]Section 17(3) defines „profit in lieu of salary
to include:1. The amount of compensation due to or received by an assessee from his employer orformer employer at or in connection witha) Termination of employment; orb) Modification of the terms and conditions of employment.2. Any payment due to or received by the assessee from his employer or formeremployer or from provident or any other fund or any sum received under a key maninsurance policy including the sum allocated by way of bonus on such policy (It doesnot include exempt payments from superannuation fund, gratuity, commuted pension,retrenchment compensation, house rent allowance, employee
s contribution to PF andinterest thereon).3. Any amount due to or received whether in lumpsum or otherwise, by any assesseefrom any person before his joining any employment with that person or after cessationof his employment with that person.B:- Section 80D:Deduction in respect of medical insurance premiumConditions1. Payment shall be on account of insurance premium in respect of Medical Insurance(Not Life Insurance).2. Payment shall be made by cheque.3. Payment shall be out of income chargeable to tax.4. Insurance scheme shall be framed by GIC and approved by the Central Governmentfrom A.Y. 2002-03 the amount deposited in any scheme of any other insurer who isapproved by the Insurance Regulatory & Development Authority shall also be eligiblefor deduction.

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