Save Tax

The IT Act 1961 is loaded with big dollops of taxpaying/tax saving information. Ways to save tax have always been an interesting consideration for tax payers all across the world and the Indian tax payer is no exception.Since tax saved is money saved, we hold that to be completely justified. While some of the tax-saving avenues are well-treated by the tax payers in the nation, there are some roads to tax saving which are lesser known.

In India, you can enjoy a tax deduction if you have contributions to make to a political party. The IT Act says that any amount of money that is donated to an acknowledged political party can be lawfully claimed for deduction, under Section 80GGC (For corporate it is 80 GGB).This deduction was launched in April 2010, and the same applies to any contributions made to electoral trusts as well.

There is no set upper limit for the deduction amount, but it can exclusively be claimed only if the contribution goes into the party funds.

It is interesting to note here that deduction on donations does not come into play if you are donating money to an individual. It is only applicable if you are donating it to specific organizations.

Simply stated the Loan to Value (LTV) is the ratio of the amount that you wish to borrow for a home to the actual value of the home. The LTV can be calculated from the actual worth of the home, the mortgage being taken and the down payment that has been made prior to the loan.

For example - the value of a house is Rs 40,00,000/- and a down payment of Rs 400,000/- has been made a loan of the balance amount that is Rs 36,00,000 is being sought. In this case the LTV comes to be Rs 36,00,000/- of the actual value of Rs 40,00,000/- which works out to 90 per cent. Thus the LTV is 90 per cent.

On the issue of LTV the RBI has made the following statement on February 03, 2012 vide their circular "RBI/2011-12/383 DBOD.No.BP.BC. 78 /08.12.001/2011-12" -- "In this connection, it has been brought to our notice that banks adopt different practices for deciding the value of the house property while sanctioning housing loans.

Some banks include stamp duty, registration and other documentation charges in the cost of the house property. This overstates the realizable value of the property as stamp duty, registration and other documentation charges are not realizable and consequently the margin stipulated gets diluted.Accordingly, banks should not include these charges in the cost of the housing property they finance so that the effectiveness of LTV norms is not diluted."

For example, Section 80G of the IT Act says that if you are donating funds to a charitable organization, you are entitled to get a deduction of 50 per cent-100 per cent for that.

However, note that there exists a ceiling here -- the percentage of deduction is restricted to 10 per cent of the donor's (gross) total income. Also, only donations in cash are taken into consideration for the purpose and not donations in kind.

Needless to say that the amount of tax you can save is dependent on the amount that you contribute.You would require a proof to claim this deduction and that's a stamped receipt of the amount donated, from the party or the organization to which you have made the contribution.

The Indian taxman has a heart of gold and it is seen nowhere better than this. Section 80 U of the IT Act says that if a taxpayer happens to suffer from any of the listed disabilities (see below), he is entitled to a tax deduction of Rs 75,000.

If the tax payer has a disabled dependent (spouse/parents/children/siblings) to support, Sec 80DD allows him to claim the same.

Disability list includes low vision, blindness, hearing disability, leprosy, loco-motor impediment, mental illness and mental retardation.

This deduction is obtainable only if the disability is at least 40 per centFor severe impairments, 80 per cent or above, the deductible amount becomes more – 1 lakhThe disabled must be fully dependent for upkeep on the taxpayer and must not be claiming deduction for it independently under Sec 80 U

Proof required to claim this deduction will be a disability certificate from a CMO of a government aided hospital or a civil surgeon.