DECLARATION

I, the undersigned Vinit Gaikwad, declare that the Project Report titled as, “The study on Tax-
saving strategies among salaried individual and professionals ”, submitted by me for partial
fulfilment of Master of Business Administration(MBA) is the original record of the project
work carried out by me during the period from 7th June 2018 to 10th August 2018,the same
has not formed the basis for the award of any degree, diploma, association, fellowship, titles –
in or for any other Statutory University or Autonomous Institutions functioning in India or
abroad imparting higher education in Management.

Date: _________ Sign: -----------

Place: Pune
 ACKNOWLEDGEMENT

I am overwhelmed in all humbleness and gratefulness to acknowledge all those who have
helped me to put the ideas, well above the level of simplicity and into something concrete. I
express gratitude towards H & R BLOCK India Pvt Ltd for providing me the opportunity to
complete my training. I would like sincere thanks to our project guide Prof. Siddharth
Dhongde and Institution Director for allowing me to pursue my training in best manner.

I owe a great debt to my guide Mrs Aishwarya Pardeshi, H&R Block India who provided
wholesome direction and support to me at every stage of this work. Her wisdom, knowledge
and commitment to the highest standards inspired and motivated me.

I hope the project report would be of good help for the society.

Date: _________ Sign: -----------

Place: Pune
 Executive summary

“To study the Tax-saving strategies among salaried individual and professionals”, this
involved me to understand the various deductions available to an individual under the chapter
VI-A of Income Tax Act, 1961.

The present law of income tax is contained in the income tax year 1961 as amended up to
date almost every year. This act contains nearly sections. The provisions regarding
computation of total income, procedure for assessment, appeal, penalties, prosecution, refund
powers of Income Tax authorities etc. are governed by this Act. Every year the parliament
passes a finance act. This finance act introduces amendment of direct tax laws. The rates of
income tax for a current assessment year, rates for reduction of tax at source and advance
payment tax for the said financial year are fixed by this Finance Act.

The most important reason behind the topic is Income Tax is one of the most important aspect
of life. This project helped me in enhancing my knowledge of Income Tax deduction
available in India. At the same time this study will helpful for the society as this report
simplifies a procedure of investment for salaried individual and professionals.

In the analysis the respondents were divided into different sub-group such as income group,
age group, etc. We evaluated this information and calculated preferences of tax-saving
instrument and their knowledge regarding the deductions and exemptions.
 Table of Contents

Chapter Title of the Chapter Page No.

No.

1. Introduction & Objective of the Study

2. Organizational Profile & overview

3. Literature Review

4. Research methodology
a) Questionnaire (Primary Data)

5. Data analysis & interpretation

6. Findings & conclusions

7. Suggestion & contribution

8. References
 Chapter I:
Introduction & Objectives of Study
 Introduction

We all know that the best way to remember things is to experience them. Experience of
working in real life situation gives an added advantage, as it prepares the person to face the
future situations. Summer internship program gives the management students a chance to
enhance their skills and apply their knowledge in actual circumstances.

Understanding of concepts is worthless if it is only on paper, so Summer Internship Project

helps management students to actually implement those learning.

• To understand what investments individual can do and what other factors they can
consider in order to save taxes.
• To understand the exemptions and allowances which can be used for saving the taxes.

Objectives of the Project

• To understand the Indian Tax System for salaried persons.
• To study the use and impact of various tax- saving instruments for Individual
Assesses.
• To learn various ways to reduce Individual Income Tax Liability

Scope of the project

• This project is aimed at studying the tax provision and providing tax planning for
salaried individuals (resident).
• Making individuals aware of the productive investment which helps them to reduce
their tax liability.
 Introduction of the Study

Why this Topic? What is Significance of it?

Tax Planning can be understood as the activity undertaken by the assesse to reduce the tax
liability by making optimum use of all permissible allowances, deductions, concessions,
exemptions, rebates, exclusions and so forth, available under the statute.

Put simply, it is an arrangement of an assessee’s business or financial dealings, in such a way

that complete tax benefit can be availed by legitimate means, i.e. making use of all beneficial
provisions and relaxations provided in the tax law, so that the incidence of the tax is
minimum. This ensures savings of taxes along with conformity to the legal obligations and
requirements. Therefore, it is permitted by law.

Tax planning is a very important part of financial planning and in this report you will find all
the information you need to save tax. Not doing any tax planning results in higher tax outgo
from your pocket which, in turn, reduces the money left to invest for financial goals. Proper
tax planning not only helps in saving tax but, if linked to future goals, can also provide ways
to achieve those goals. Investing in Public Provident Fund (PPF) every year, for instance,
helps in not only saving tax but also accumulate a corpus that can be used for your retirement
or children’s education. Efficient tax planning allows a taxpayer to make use of various
deductions and exemptions available to minimise tax liability. At present, the Income-tax (I-
T) Act allows various deductions for the taxpayers under Section 80C to 80U.

The primary objectives of tax planning should be the following:

• Reduction in overall tax liability
• Economic stability
• Growth of economy
• Litigation minimization
• Productive investment.
 Chapter II:
Organizational Profile & overview
 H & R Block (India) Pvt. Ltd.

Mission
We believe in our people. We take care of our clients. We deliver for our shareholders. We do
the right thing.

Vision
Our vision reflects the opportunity we see to execute our purpose successfully for our clients:
to be the leading global consumer tax company bringing tax and related solutions to clients
year-round. We are about consumer tax in the global market with access anywhere, anyway,
anytime.

Values
Our values are the bedrock for how we act, wherever we operate in the world. They are
embedded in this simple statement: We Do the Right Thing. This means we believe in our
people; we take care of our clients; and we deliver for our shareholders.

• Client Focused. We are passionate about helping clients. Their success is a key
measure of our success.
• Integrity. We are honest and ethical in everything we do.
• Excellence. We take pride in doing our best in everything we do. We embrace change
to learn and grow. Integrity. We are honest and ethical in everything we do.
• Respect. We treat each other with respect and dignity, recognizing that innovation
springs from unique perspectives.
• Teamwork. Everyone's collaboration and full participation make us stronger and
allow us to serve clients better.
 Composition of Board

Rohan Parikh Vaibhav Sankhla

(Managing Director) (Director Strategy)

Vishal Sankhla Bala Patil Shivgauri Rajan

(Manager-OA) (Manager- IT and DIY) (Senior Manager-HR)

Geetika M Manojjit B Dilbag Singh

(Manager- Finance) (Manager- Marketing) (Facilities Manager)

Functional Overview

Expert Tax Preparation Process

Register, set up your profile and upload form16,
Dedicated tax experts calls client to discuss their taxes,
Tax experts then prepares and shares the tax summary,
Review and e-file for free, verify ITRV to complete.

Income Tax Preparation by Tax Experts

An online facility where a tax expert prepares and files client’s income tax
return( ITR-1 and ITR-2)
Tax vault to securely access client’s documents anytime, anywhere
100% data confidentiality & information security
Service fee based on client’s tax complexity
Submission of client’s signed ITR-V to CPC Bengaluru and detailed guidance on how
to e-verify their ITR
Year-round support to assist individual clients.

Major Services Offered

Online Income Tax E-filing for ITR-1 and ITR-2
In person Income Tax Filings
NRI Tax E-filing
US Tax Filing services from India
Tax Consultation and assistance in scrutiny proceedings
PAN Card Application
Refund Assistance from Income Tax Department
Business Tax Services: ITR 4 and 4s Filing
The Company, through its subsidiaries, provides tax preparation and other services.
The Company provides assisted income tax return preparation, digital do-it-yourself
(DIY) tax solutions and other services and products related to income tax return.
 Literature Review

WHAT IS SALARY?
Salary is the remuneration received by or accruing to an individual, periodically, for service
rendered as a result of an express or implied contract. The actual receipt of salary in the
previous year is not material as far as its taxability is concerned. The existence of employer-
employee relationship is the sine-qua-non for taxing a particular receipt under the head
“salaries”. For instance, the salary received by a partner from his partnership firm carrying on
a business is not chargeable as “Salaries” but as “Profits & Gains from Business or
Profession”. Similarly, salary received by a person as MP or MLA is taxable as “Income from
other sources”, but if a person received salary as Minister of State/ Central Government, the
same shall be charged to tax under the head “Salaries”. Pension received by an assesses from
his former employer is taxable as “Salaries” whereas pension received on his death by
members of his family (Family Pension) is taxed as “Income from other sources”.
WHAT DOES SALARY INCLUDE?
Section 17(1) of the Income tax Act gives an inclusive and not exhaustive definition of
“Salaries” including therein (i) Wages (ii) Annuity or pension (iii) Gratuity (iv) Fees,
Commission, perquisites or profits in lieu of salary (v) Advance of Salary (vi) Amount
transferred from unrecognized provident fund to recognized provident fund (vii) Contribution
of employer to a Recognized Provident Fund in excess of the prescribed limit (viii) Leave
Encashment (ix) Compensation as a result of variation in Service contract etc. (x)
Contribution made by the Central Government to the account of an employee under a notified
pension scheme.
DEDUCTION FROM SALARY INCOME
The following deductions from salary income are admissible as per Section 16 of the Income-
tax Act. Professional/Employment tax levied by the State Govt. Entertainment Allowance-
Deduction in respect of this is available to a government employee to the extent of Rs. 5000/-
or 20% of his salary or actual amount received, whichever is less. It is to be noted that no
standard deduction is available from salary income w.e.f. 01.04.2006 i.e. A.Y.2006-07
onwards.
PERQUISITES
“Perquisite” may be defined as any casual emolument or benefit attached to an office or
position in addition to salary or wages. “Perquisite” is defined in the section 17(2) of the
Income tax Act as including: Value of rent-free/concessional rent accommodation provided
by the employer. Any sum paid by employer in respect of an obligation which was actually
payable by the assesse.
Value of any benefit/amenity granted free or at concessional rate to specified employees etc.
The value of any specified security or sweat equity shares allotted or transferred, directly or
indirectly, by the employer, or former employer, free of cost or at concessional rate to the
assess. The amount of any contribution to an approved superannuation fund by the employer
in respect of the assess, to the extent it exceeds one lakh rupees; and the value of any other
fringe benefit or amenity as may be prescribed

PERQUISITES EXEMPT FROM INCOME TAX

Some instances of perquisites exempt from tax are given below:

• Provision of medical facilities (Proviso to Sec. 17(2)): Value of medical treatment in

any hospital maintained by the Government or any local authority or approved by the
Chief Commissioner of Income-tax. Besides, any sum paid by the employer towards
medical reimbursement other than as discussed above is exempt up to Rs.15,000/-.
• Perquisites allowed outside India by the Government to a citizen of India for
rendering services outside India (Sec. 10(7)).
• Rent free official residence provided to a Judge of High Court or Supreme Court or an
Official of Parliament, Union Minister or Leader of Opposition in Parliament.
• No perquisite shall arise if interest free/concessional loans are made available for
medical treatment of specified diseases in Rule 3A or where the loan is petty not
exceeding in the aggregate Rs.20,000/-
• No perquisite shall arise in relation to expenses on telephones including a mobile
phone incurred on behalf of the employee by the employer.

Allowances:-
Type of Allowance Amount exempt
(i) Special Compensatory Allowance for hilly
areas or high altitude allowance or climate
allowance.

OVERVIEW OF INCOME FROM HOUSE PROPERTY

INTRODUCTION
When an assesse earns any income from a house property, it is taxed under the head ‘Income
from house property’ as per the Income Tax Act.
Total of income thus obtained from all the house properties owned will be treated as income
from house property and added to the total income. If the income under the head house
property is negative (loss) one can offset that loss against the other taxable income including
salary. But Budget 2017 has put a cap of Rs. 2 lakh on the house property loss which can be
adjusted against income from other heads in a financial year. So it means that starting 2017-
18 one will be able to offset maximum Rs. 2 lakh house property loss against the other
income and balance can be carried forward to next 8 assessment years to be adjusted against
income under the same head.

(i) GROSS ANNUAL VALUE (GAV) is the highest of

1. Rent received or receivable
2. Fair Market Value.
3. Municipal valuation.
(If however, the Rent Control Act is applicable, the GAV is the standard rent or rent received,
whichever is higher).
(ii) NET VALUE (NAV)
Net Annual Value (NAV) is calculated as:
NAV = GAV – Municipal Taxes Paid
(iii) ANNUAL VALUE is the NAV less the deductions available u/s 24.

DEDUCTIONS U/S 24:

To calculate the actual taxable income from house property, the following two deductions are
allowed under section 24 of the Income Tax Act.
i) Standard Deduction which is 30% of the NAV is allowed as a deduction towards repairs,
rent collection, etc. irrespective of the actual expenditure incurred. This deduction is not
allowed if the Gross Annual Value is nil.

ii) Interest on home loan is allowed as a deduction under section 24.

Owner/Deemed owner:
The person who is entitled to receive the income is called owner of the property, while the
person who receives financial benefits from the property but is not registered as its owner is
called deemed owner of the property. Income from house property is taxable for the person
who actually receives monetary benefits from the property but may or may not be the
registered owner of the property.

Tax Deduction for Home Loan Interest

• The maximum tax deduction that one can get on interest payment of home loan taken
for a self-occupied property is Rs. 2 lakhs.
• In case the property for which the home loan has been taken is not self-occupied i.e.
rented or deemed to be rented, no maximum limit for tax deduction has been
prescribed and the taxpayer can take deduction of the whole interest amount u/s 24.
However, if the owner has not occupied the property himself due to his employment,
business or profession carried on at any other place, which has forced him to reside at
 any other place, then the amount of tax deduction available u/s 24 stays limited to Rs
2 lakhs only.
• Tax deduction of interest on home loan u/s 24 is deductible on payable basis, i.e. on
accrual basis. Hence, deduction u/s 24 should be claimed on yearly basis even if no
payment has been made during the year as compared to section 80C (deduction on
principal repayment) where deduction is allowed only on payment basis.
• The tax benefit under section 24 is reduced from Rs 2 lakhs to Rs 30,000, if the
property is not acquired or construction is not completed within 3 years from the end
of Financial Year in which the loan was taken. However, the limit of 3 years has been
increased to 5 years from Financial Year 2016-17 and onwards.

Pre-construction interest

Deduction on pre-construction interest is allowed when you have taken a loan for purchase or
construction of a house property. However, if the loan is taken for repairs or reconstruction
then deduction is not allowed. The deduction for this interest is allowed in 5 equal
installments starting from the year in which the house is purchased or the construction is
completed.

Though pre-construction interest is allowed to be claimed as tax deducted in 5 equal yearly

installments, which can be claimed beginning the year in which the construction of property
is completed, the total amount that can be claimed in a year is subject to a threshold of Rs
2,00,000 in case of a self-occupied house property.

Section 80EE: Deduction for First Time Home Buyers

Just like the deduction u/s 24, deductions under section 80EE is also available on the interest
paid on home loan by taxpayer or assesse. However, unlike section 24, this deduction is only
available to first time home buyers. It was first introduced in the Union Budget for Financial
Year 2013-14 as a means to help home buyers in the lower income group through tax reliefs.

At that time, the amount of tax benefit given by this section was Rs 1 lakh, which was
available to be claimed only once by the first time home buyer.

Revised Deduction Limit

The government reintroduced section 80EE in the Union Budget 2016-17. The quantum of
deduction has been changed to Rs 50,000 for interest paid on home loan. This deduction is
available over and above the deduction of section 24 and section 80C which are Rs 2,00,000
and Rs 1,50,000 respectively.
Conditions Necessary for Claiming Deduction u/s 80EE:

• The deduction would be available to be claimed from Financial Year 2016 onwards.
• The deduction can be availed on home loans sanctioned between 1st April 2016 and
31st March 2017 only
• The value of property for which the loan has been taken should be less than Rs 50
lakh
• The home loan amount should not exceed Rs 35 lakh
• The tax benefit here can be claimed till the time repayment of loan continues
• Deduction is only applicable on home loan paid for first house property
• The property in question can be either self-occupied or non-self-occupied
• If one claim deduction under this section then the same will not be eligible to claim
the deduction u/s 24 again for the same amount of interest
Eligibility for Claiming Section 80EE Deductions:

The eligibility of the home loan borrower depends on the following points:
• The deductions under this section can be claimed only by individual taxpayers on
properties purchased either singly or jointly.
• There are a few types of assesses which are not allowed to claim this deduction like
Hindu Undivided Families (HUFs), companies, trusts, Association of Persons (AOP)
etc.
• Section 80EE is applicable on a per person basis instead of a per property basis. So,
suppose you have purchased property jointly with your spouse and you both are
paying the instalments of loan, then you both can individually claim this deduction
• It is not necessary to reside in the property for which you want to claim this
deduction. So, borrowers staying in a rented accommodation can also claim this
deduction
How to Claim Section 80EE Tax Deductions:

One can claim this deduction for the Financial Year 2016-17 while filing return by filing the
applicable I-T return form and specifying the amount of interest paid in appropriate place.
One will also need a document from the lender specifying the interest and principal amount
that is paid. In addition, one will have to furnish a document from the lender stating the
interest and principal amounts on home loan as well as the amount paid till date.
EXEMPTED INCOMES UNDER SECTION 10
INTRODUTION
Income tax act provides multiple tax exemptions to every individual. A lot of such
exemptions fall under section 10 of income tax act. Following are the tax exemptions
provided under section 10:

1. Agricultural Income
Income received from agriculture is totally exempt from tax if it is the only source of income
in the financial year. However, if it is accompanied by income from other sources, it is
taxable.
2. Gratuity
Gratuity amount received by a government employee is totally exempt from tax. For others
covered under payment of gratuity act, it is exempt to the least of the following:
a) (15/26) * (Last drawn Salary) * (No.of years of completed service (Round off)).

b) Actual amount received.

c) Rs 10,00,000

For those not covered under gratuity act, it is exempt to the least of:
a) (1/2) * (Average salary per month) * (No.of years of completed service (Not Round off)).

b) Actual amount received.

c) Rs 10, 00,000

3. Leave Encashment
For a government employee, leave encashment upon retirement or leaving the job is tax free
under section 10. For a non-government employee, it is exempt up to least of the following:
a) Leave credit (Leave allowed (30 days max.) – Leaves taken) * Average salary per month
b) 10 months * Average salary per month
c) Actual leave encashment received
d) Rs 3,00,000
4. Provident Fund
Provident Fund Payments received from Provident Fund (PF) are exempt as part of section
10. However, PF withdrawal is taxable for less than 5 years of service. Also, EPF balance can
be withdrawn only subject to few conditions
DEDUCTIONS UNDER CHAPTER- VI A
INTRODUCTION:
The Income Tax Act provides that on determination of the gross total income of an assesses
after considering income from all the heads, certain deductions there from may be allowed.
These deductions detailed in chapter VIA of the Income Tax Act must be distinguished from
the exemptions provides in Section 10 of the Act. While the former are to be reduced from
the gross total income, the latter do not form part of the income at all.

Deductions under chapter VI A are as follows:

Deductions under section 80C, 80CCC &80CCD (1)
The total limit under this section is Rs 2 lakh from financial year 2015-16 Assessment Year
2016-17. Before FY 2015-16 the limit was Rs. 1.5 Lakh. Under this heading many small
savings schemes like NSC, PPF and other pension plans. Payment of life insurance premiums
and investment in specified government infrastructure bonds are also eligible for deduction
under Section 80C.
Besides these investments, the payments towards the principal amount of your home loan are
also eligible for an income deduction. Education expense of children is increasing by the day.
Under this section, there is provision that makes payments towards the education fees for
children eligible for an income deduction.
1. Public Provident Fund (PPF):
Among all the assured returns small saving schemes, Public Provident Fund (PPF) is one of
the best. Current rate of interest is 7.60% tax-free (Compounded Yearly) and the normal
maturity period is 15 years. Minimum amount of contribution is Rs 500 and maximum is Rs
1,50,000. A point worth noting is that interest rate is assured but not fixed.
2. Life Insurance Premiums:
Any amount that you pay towards life insurance premium for yourself, your spouse or your
children can also be included in Section 80C deduction. Please note that life insurance
premium paid by you for your parents (father / mother / both) or your in-laws is not eligible
for deduction under section 80C. If you are paying premium for more than one insurance
policy, all the premiums can be included. It is not necessary to have the insurance policy from
Life Insurance Corporation (LIC) – even insurance bought from private players can be
considered here.
3. Equity Linked Savings Scheme (ELSS):
There are some mutual fund (MF) schemes specially created for offering you tax savings, and
these are called Equity Linked Savings Scheme, or ELSS. The investments that you make in
ELSS are eligible for deduction under Sec 80C.
4. Home Loan Principal Repayment:
The Equated Monthly Installment (EMI) that you pay every month to repay your home loan
consists of two components – Principal and Interest. The principal component of the EMI
qualifies for deduction u/s 80C. Even the interest component can save you significant income
tax – but that would be under Section 24 of the Income Tax Act
5. Stamp Duty and Registration Charges for a home:
The amount you pay as stamp duty when you buy a house and the amount you pay for the
registration of the documents of the house can be claimed as deduction under section 80C in
the year of purchase of the house.
6. Sukanya Samriddhi Scheme:
Sukanya Samriddhi Scheme is one of the best investment options available today.
Parents/guardians can open account in the name of a girl child till she attains the age of 10
years Maximum of two accounts can be opened by natural or legal guardian for 2 different
girls. Account can be opened at public sector banks and post offices. Rate of interest currently
being offered is 8.4%, compounded annually.
7. National Savings Certificate (NSC):
NSC is a time-tested tax saving instrument with a maturity period of 5 and 10 Years.
Presently, the interest is paid @ 7.90% compounded annually on 5 year NSC. While the
minimum investment amount is Rs 100, there is no maximum amount. Premature
withdrawals are permitted only in specific circumstances such as death of the holder.
Investments in NSC are eligible for a deduction of upto Rs 1,50,000 p.a. under Section 80C.
Furthermore, the accrued interest which is deemed to be reinvested qualifies for deduction
under Section 80C. However, the interest income is chargeable to tax in the year in which it
accrues.
8. Pension Funds – Section 80CCC:
This section – Sec 80CCC – stipulates that an investment in pension funds is eligible for
deduction from your income. Section 80CCC investment limit is clubbed with the limit of
Section 80C – it means that the total deduction available for 80CCC and 80C is Rs. 1.50
Lakh. This also means that your investment in pension funds upto Rs. 1.50 Lakh can be
claimed as deduction u/s 80CCC. However, as mentioned earlier, the total deduction u/s 80C
and 80CCC cannot exceed Rs. 1.50 Lakh.
9. 5-Yr bank fixed deposits (FDs):
Tax-saving fixed deposits (FDs) of scheduled banks with tenure of 5 years are also entitled
for section 80C deduction.
10. Senior Citizen Savings Scheme 2004 (SCSS):
A recent addition to section 80C list, Senior Citizen Savings Scheme (SCSS) is the most
lucrative scheme among all the small savings schemes but is meant only for senior citizens.
Interest rate offered is 8.4% per annum which is paid on quarterly basis. Please note that the
interest is payable quarterly instead of compounded quarterly. Thus, unclaimed interest on
these deposits won’t earn any further interest. Interest income is taxable and taxes will be
deducted at source if it is more than Rs 10,000 p.a. Maturity amount is exempt from tax.

11. 5-Yr Post office time deposit (POTD) scheme:

POTDs are similar to bank fixed deposits. Although available for varying time duration like
one year, wear, three year and five year, only 5-Yr post-office time deposit (POTD) – which
currently offers 7.7% rate of interest – qualifies for tax saving under section 80C. Interest is
compounded quarterly but paid annually. The Interest is entirely taxable.
12. NABARD rural bonds:
There are two types of Bonds issued by NABARD (National Bank for Agriculture and Rural
Development): NABARD Rural Bonds and Bhavishya Nirman Bonds (BNB). Out of these
two, only NABARD Rural Bonds qualify under section 80C.
13. Unit linked Insurance Plan:
ULIP stands for Unit linked Saving Schemes. ULIPs cover Life insurance with benefits of
equity investments. They have attracted the attention of investors and tax-savers not only
because they help us save tax but they also perform well to give decent returns in the long-
term.

Deductions other than above mentioned sections

1. Section 80CCD (2): Deduction in respect of Contribution to Pension Account (by
Employer) Deduction available for the amount paid or deposited by the employer of the
assess in a pension scheme notified or as may be notified by the Central Government subject
to a maximum of 10% of salary in the financial year.
2. Section 80CCD: Additional Contribution to New Pension Scheme (NPS)
A deduction of up to Rs. 50,000 is available over and above the limit of Rs. 1.50 lakh in
respect of contributions made to NPS under Section 80CCD (1).
3. Section 80CCG: Rajiv Gandhi Equity Saving Scheme:
Amount invested by resident individuals, whose gross total income does not exceed Rs. 12
lakhs, in listed shares or listed units in accordance with notified scheme for a lock-in period
of 3 years (Subject to certain conditions). Deduction of 50 % of total investment subject to
maximum of Rs. 25,000 in 3 consecutive assessment years, beginning with the assessment
year relevant to the previous year in which the listed shares or list units of equity oriented
funds are first acquired.
4. Section 80D:
Deduction in respect of Medical Insurance: Deduction is available up to Rs. 30,000/-
(enhanced from Rs. 20,000 w.e.f. 01.04.2015) for senior citizens and up to Rs. 25,000/-
(enhanced from Rs. 15,000 w.e.f. 01.04.2015) in other cases for insurance of self, spouse and
dependent children. Additionally, a deduction for insurance of parents (father or mother or
both) is available to the extent of Rs. 30,000/- (enhanced from Rs. 20,000 w.e.f. 01.04.2015)
if parents are senior Citizen and Rs. 25,000/- (enhanced from Rs. 15,000 w.e.f. 01.04.2015) in
other cases. Therefore, the maximum deduction available under this section is to the extent of
Rs. 60,000/-. From AY 2013-14, within the existing limit a deduction of up to Rs. 5,000 for
preventive health check-up is available.
5. Section 80E: Deduction in respect of Interest on Loan for Higher Studies:
Deduction is applicable for the interest which assess is paying for education loan. The
deduction is also available for the purpose of higher education of a relative w.e.f. A.Y. 2008-
09.
6. Section 80G: Deduction in respect of Various Donations:
The various donations specified in Sec. 80G are eligible for deduction upto either 100% or
50% with or without restriction as provided in Sec. 80G
7. Section 80GG: Deduction in respect of House Rent Paid:
Under section 80GG, you can claim least of the following as tax benefit:

a) Rs. 60,000 per year (i.e. Rs. 5,000 per month)

b) An amount equal to the total rent paid minus 10% of the total income
c) 25% of adjusted total income of employee
So, the least of the above mentioned amount is available as tax deduction irrespective of
whether the house is furnished or semi-furnished.

Income Tax deduction under section 80GG is a less known and less claimed deduction. The
main reason behind this is that most of the employers give HRA as part of the salary to their
employees.

8. Section 80GGA:
Deduction in respect of certain donations for scientific research or rural
development 9. Section 80GGC:
Deduction in respect of contributions given by any person to political parties . Maximum
deduction allowed under section 80GGC is 100%. It means that your whole contribution is
fully eligible for tax deduction. To be eligible for tax deduction, the contribution should not
be made in the form of cash. Donation made in any other form is eligible for deduction.

10. Section 80 TTA: Deduction on Saving Bank Account Interest:

Deduction from gross total income of an individual or HUF, up to a maximum of Rs.
10,000/-, in respect of interest on deposits in savings account ( not time deposits ) with a
bank, co-operative society or post office, is allowable w.e.f. 01.04.2012 (Assessment Year
2013-14).
11. Deductions Allowable under Section 24 of Income Tax Act :
Tax Benefit on payment of interest on housing loan is allowed as a deduction under section
24 of the Income Tax Act. Section 24 of the Income Tax Act states that the amount of interest
on housing loan whether accrued or paid, shall be deducted from the income from house
property. Here, the loan must have been taken for the purpose of purchase or construction or
repair or renewal or reconstruction of a residential house property.
 Chapter IV:
Research Methodology
Data Collection Methodology:

We have collected the primary data of 102 peoples (Salaried Individuals) which gives the
rough idea about the Tax Literacy. This project aims towards the tax saving strategies for the
salaried individual, so the primary data were collected with the help of the questionnaire
which includes the basic questions such as Age of an individual, Educational qualification,
Sex, Residential Status, Occupation, Type of Employment, etc.

Some taxation related questions were also asked in questionnaire which helped us understand
the tax literacy amoung the respondent. Questions were asked regarding the deductions which
salaried individual gets under section 80C, questions were also asked regarding the National
Pension Scheme (NPS), deductions for donations made u/s 80G, deduction for Medical
Insurance and Mediclaims u/s 80D, etc.

We have also ckecked wheather the respondents are able to compute their Tax Liability by
giving them a simple problem in the questionnaire.

Respondents were also checked with the knowledge of the difference between the
Assessment Year and Financial Year. Also, u/s 87A the regulations regarding the Rebate on
Income Tax has also been changed from AY 2018-19, so the respondents were also checked
with the literacy regarding the same.
 Chapter V:
Data Analysis & Interpretation
Question: What is the Source of e-filing.

Interpretation:
Among the data of 102 respondents, from the above pie chart we can clearly see that about
45% of people taxes the help from Tax preparer such as H&R Block, Cleartax,
Taxwaale.com, etc.
Approximately, only 19% of the people file the taxes at their own which is much lower as
compare to the others.
Question: What are your Preferences for the Instruments to save the Taxes

Interpretation:
From the above bar chart we can clearly state that LIC is the favourite tax savings instrument
among salaried individual with about 76% preference to the same.
LIC is followed by the Contribution towards the Public Provident Fund (PPF) with 48%
preference for the same
Moderate preference is given for the investment towards the Tax saving Mutual Funds and
Principle towards the repayment of housing loan with with 31% and 29% preference
respectively.
Preference towards the National Saving Certificate (NSC) and Children tution fees were
lowest with approximately 16% and 21% investment respectively.
Question: Do you Know about National Pension Scheme (NPS) in which
you can claim additional 50k as a deduction?

Interpretation:
From the above pie chart it is clear that almost 61% people don’t have any idea about the
National Pension Scheme (NPS) in which they can claim extra deduction of Rs. 50,000 over
and above the limit of section 80C.
Question: Do you know under section 80G, you can take benefit given to
the charitable trust?

Interpretation:
From the above pie chart it is clear that about 49% of people have the idea about the section
80G under which they can claim the deduction on the donations made to the NGO’s,
Charitable trusts, Chief Minister Relief fund, Prime Minister Relief fund, etc.
Question: As per section 80D, do you know that you can get benefit upto
Rs.25,000 ?

Interpretation:
From the above pie chart, we can say that good number of people know about the deduction
which they can claim under section 80D, around 67% people knows that they can get
deduction for the medical insurance and mediclaim for Self, Spouse and their children.
Question: As per section 80E, do you know that you get benefit on interest
paid on Education Loan ?

Interpretation:
From the above pie chart we can see that very less number of people know that they can get
tax deduction for the loan taken for the purpose of childrens education. Only 37% people
know that they can get such deduction.
Question: If you are filing Income Tax for FY 17-18, then what will be the
Assessment Year for the same.

Interpretation:
It can be seen from the pie chart that around 78% people knows that for the Financial Year
(FY) 2017-18, Assessement Year (AY) is taken as 2018-19.
Still around 22% people don’t have an idea about the Assessment Year (AY).
Question: A tax payer is eligible for Rebate u/s 87A for FY 17-18, if his/her
income is less than…

Interpretation:
From the above pie chart, it is seen that only 47% of the people knows that they can get the
Rebate under section 87A of Rs. 2,500 if their gross annual income is less that Rs. 3,50,000.
Question: If a person if having a Taxable Income of Rs. 5,60,000 , what will
be his Tax Liability… (Including 3% Education Cess)

Interpretation:
From the above pie chart we can interpret that approximately only 37% of the people knows
how to calculate their taxes. Remaining 63% people failed to calculate their tax liability at
their own, which is one of the big concern today.