DEAR DOCTORS, ITS TIME TO REMEMBER SECTION 80C AND SECTION 88 OF INCOME-TAX ACT.

The new Section 80C of the Income Tax Act proposed in Union Budget gives you a bigger tax break than what the current regime offers.

* Deduction in respect of Life Insurance Premia, Contribution to Provident Fund, etc.
* Rs 1 lakh can be invested under this section without any individual sub-limits except in the case of Rs 10,000 in pension funds.

SCHEMES ELIGIBLE FOR SECTION 80 C BENEFITS ------

* PPF
* ELSS - Mutual Funds
* NSC
* KVP
* Life Insurance
* Senior Citizen Saving Scheme 2004
* Post Office Time Deposit Account

Following benefits will continue -- :

* Interest paid on housing loan for self-occupied house property.
* Medical insurance premium. (Additional deduction of Rs 15000 u/s 80D to an individual paying medical insurance premium for his/her parent(s)
* Specified expenditure on disabled dependant.
* Expenses for medical treatment for self or dependant or member of an HUF.
* Deduction in respect of interest on loans for pursuing higher studies - Section 80E.
* Deduction to person with disability.


Section 88
Upto 31 March 2005, rebates were available on the tax payable under three sections.

According to the section, 30 per cent or 20 per cent or 15 per cent of the amount invested in certain schemes (schemes referred in Section 80C) was available as a rebate on the tax payable.

* 30 per cent of the amount invested was available as rebate only if the salary income of the individual was less than Rs. 1 lakh and if it constituted 90 per cent or more of the assessee's gross total income.
* 20 per cent of the amount invested was available as rebate if the gross total income of the individual was less than Rs 1.5 lakh and the case did not fall under the above mentioned case.
* If gross total income was more than Rs. 1.5 lakh but less than Rs 5 lakh of the individual, a rebate of 15 per cent of the amount invested was available.
* If gross total income was more than Rs 5 lakh of the individual, then there is no rebate.

Section 10(33)
Dividends from mutual funds are fully exempt from income tax under Section 10(33). Equity funds (schemes that invest 50 per cent of their funds in equity) are also exempt from dividend tax. This means that unlike companies, they do not have to pay tax at the rate of 10.2 per cent on the dividend that they distribute.