Income tax acts are important to know whether you work at a job or own a business. However, due to the need to address so many issues, over the years there have been many income tax acts and keeping track of them is important. Additionally knowing the names of the acts is not important you also need to know about the features of these acts for instance understanding income tax rebate under the 87 a rebate for ay 2020 21. See more. So here we take an attempt at introducing to you the most important of income tax acts:
● Section 87 is a provision of the Income Tax Act which allows deduction from income for payments made to the Government or other institutions for providing relief to poor and distressed persons. The amount that can be claimed as a rebate under this section is up to 10% of gross total income earned in the previous year before deduction of taxes, cesses and surcharges. The taxpayer must have filed their return by March 31st, 2020 to claim this rebate.
● Section 80C of the Income Tax Act allows for a deduction on investments. These include savings bank interest, public provident fund (PPF), tax-saving mutual funds, recurring deposits and fixed deposits with banks, post office schemes and certain life insurance policies.
● Section 80D – Tax deduction on medical expenditure. Section 80D of the Income Tax Act allows for a deduction on expenses incurred towards medical treatment of self or dependent relative. The limit is set at Rs 30,000 per annum under section 80D of the Income tax act. Any amount above this limit will not be allowed as a deduction from taxable income
● Section 80E – Tax deduction on interest paid on home loans. Home loan interest paid by an individual is eligible for deduction under Section 80E of the Income Tax Act. The amount of interest paid cannot exceed Rs 1 lakh per annum and is subject to a maximum deduction limit of Rs 2 lakhs in the case of self-occupied houses.
● Section 80EE provides relief to senior citizens by allowing them to claim a tax rebate on payments made towards pension schemes or annuity schemes offered by insurance companies or retirement fund managers. This relief can be availed only once during an assessment year.
● Section 80GGA – Tax deduction on donations to charitable institutions or funds. Any donation made to charitable institutions or funds is eligible for a tax rebate under Section 80GGA of the Income Tax Act. The maximum limit for donations is Rs 10,000 per annum and has no upper limit on donations made to medical research organisations or trusts working towards curing cancer or any other disease.
● Section 206C (1) h- if you want to extend the TCS provisions to the person who sells the goods then you need to utilize section 206c 1h of income tax act. A seller whose turnover is above Rs 10 crore is required to collect tax when he receives more than Rs 50 lakh from one buyer, who is not a registered dealer. The seller can collect the tax in two ways:
He can collect it himself and deposit it with the Government. In this case, he has to pay an interest of 1% per month on the tax collected and refunded by him.
He can appoint a dealer to collect tax on his behalf and the dealer will make all the payments. If he fails to do so within two months, then he will have to pay an interest of 1% per month on the amount which is due from him but not paid by him.