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What is NIFTY 50
NIFTY 50
The NIFTY 50 index is National Stock Exchange of India's benchmark broad based stock market index
for the Indian equity market. It represents the weighted average of 50
Indian company stocks in 12 sectors and is one of the two main stock
indices used in India, the other being the BSE sensex.
Nifty is owned and managed by India Index Services and Products (IISL), which is a wholly owned subsidiary of the NSE Strategic Investment Corporation Limited. IISL had a marketing and licensing agreement with Standard & Poor's for co-branding equity indices until 2013. The Nifty 50 was launched 1st April 1996, and is one of the many stock indices of Nifty.
NIFTY 50 Index has shaped up as a largest single financial product in India, with an ecosystem comprising: exchange traded funds (onshore and offshore), exchange-traded futures and options (at NSE in India and at SGX and CME abroad), other index funds and OTC derivatives (mostly offshore). NIFTY 50 is the world’s most actively traded contract. WFE, IOMA and FIA surveys endorse NSE’s leadership position.
The NIFTY 50 covers 12 sectors (as on Oct 7, 2017) of the Indian economy and offers investment managers exposure to the Indian market in one portfolio. During 2008-12, NIFTY 50 Index share of NSE market capitalisation fell from 65% to 29% due to the rise of sectoral indices like NIFTY Bank, NIFTY IT, NIFTY Pharma, NIFTY SERV SECTOR, NIFTY Next 50, etc.
The NIFTY 50 index is a free float market capitalisation weighted index. The index was initially calculated on full market capitalisation methodology. From June 26, 2009, the computation was changed to free float methodology. The base period for the CNX Nifty index is November 3, 1995, which marked the completion of one year of operations of National Stock Exchange Equity Market Segment. The base value of the index has been set at 1000 and a base capital of Rs 2.06 trillion.
Sector Representation:
Top constituents by weightage:
Index Methodology:Eligibility Criteria for Selection of Constituent Stocks- Market impact cost is the best measure of the liquidity of a stock. It accurately reflects the costs faced when actually trading an index. For a stock to qualify for possible inclusion into the NIFTY50, have traded at an average impact cost of 0.50% or less during thelast six months for 90% of the observations, for the basket size of Rs. 100 Million.
- The company should have a listing history of 6 months.
- Companies that are allowed to trade in F&O segment are only eligible to be constituent of the index
- A company which comes out with an IPO will be eligible for inclusion in the index, if it fulfills the normal eligibility criteria for the index for a 3 month period instead of a 6 month period.
Index Re-Balancing:Index is re-balanced on semi-annual basis. The cut-off date is January 31 and July 31 of each year, i.e. For semi-annual review of indices, average data for six months ending the cut-off date is considered. Four weeks prior notice is given to market from the date of change.Index Governance:A professional team at IISL manages NIFTY 50 Index. There is a three-tier governance structure comprising the Board of Directors of IISL, the Index Policy Committee and the Index Maintenance Sub-Committee.Major falls:
Following are some of the notable single-day falls of the NIFTY 50 Index -
All Time High:
- All time intraday high was 11,171.50 on January 29, 2018
- All Time Closing High was 11,130.40 on January 29, 2018
Disclaimer: All information contained herewith is provided for reference purpose only.All information has taken from Wikipedia and www.nseindia.com. Also Please make sure you have understated the stock market risk before investment.
What is SENSEX
Sensex is one of the large-cap indexes associated with Bombay
stock exchanges of the country namely (BSE) This is just statistical aggregate on how a change in the stock market can be measured.
What is Sensex?
The S&P BSE SENSEX (S&P Bombay Stock Exchange Sensitive Index), also called the BSE 30 or simply the SENSEX, is a free-float market-weighted stock market index of 30 well-established and financially sound companies listed on Bombay Stock Exchange. The 30 component companies which are some of the largest and most actively traded stocks, are representative of various industrial sectors of the Indian economy. Published since 1 January 1986, the S&P BSE SENSEX is regarded as the pulse of the domestic stock markets in India. The base value of the S&P BSE SENSEX is taken as 100 on 1 April 1979 and its base year as 1978–79.
As of 25th September 2017, the full market capitalisation of S&P BSE SENSEX was about ₹54,637.0878 billion (US$837 billion) (37% of GDP) while its free-float market capitalisation was ₹30,094.2286 billion (US$461 billion). During 2008-12, Sensex 30 Index share of BSE market capitalisation fell from 49% to 25% due to the rise of sectoral indices like BSE PSU, Bankex, BSE-Teck, etc.
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The market capitalization of a company is arrived at by the product of the price of its stock and number of shares issued by the company.
This figure is multiplied by the free-float factor to determine the free-float market capitalization. The free float factor is derived from the information each company submits regarding the free floating shares. Every company has to give the information on a quarterly basis in a format given by BSE.
The free float market capitalization of all companies is summed up.
The free float market capitalisation is then divided by an index divisor to get the Sensex value. This divisor adjusts for changes in stocks and other corporate actions. The divisor is the value of the Sensex Index in the base year.
Suppose the index has two companies – X and Y.
Company X has 500 shares out of which 300 are free floating or available for general public to buy and sell. The price of each share is Rs.80.
Company Y has 1000 shares out of which 700 are free floating. The price of each share is Rs. 100
Market capital of Company X = 40000
Market capital of Company Y = 100000
Free-float factor for Company X = 0.60
Free-float factor for Company Y = 0.70
Total free float market capital of the index = (40000*0.60) + (100000*0.70) = 94000
Let us assume the base year index was 5000.
Value of Index = (94000 x 100)/5000 = 1880
So the Value of the Index is 1880.
What is Sensex?
The S&P BSE SENSEX (S&P Bombay Stock Exchange Sensitive Index), also called the BSE 30 or simply the SENSEX, is a free-float market-weighted stock market index of 30 well-established and financially sound companies listed on Bombay Stock Exchange. The 30 component companies which are some of the largest and most actively traded stocks, are representative of various industrial sectors of the Indian economy. Published since 1 January 1986, the S&P BSE SENSEX is regarded as the pulse of the domestic stock markets in India. The base value of the S&P BSE SENSEX is taken as 100 on 1 April 1979 and its base year as 1978–79.
As of 25th September 2017, the full market capitalisation of S&P BSE SENSEX was about ₹54,637.0878 billion (US$837 billion) (37% of GDP) while its free-float market capitalisation was ₹30,094.2286 billion (US$461 billion). During 2008-12, Sensex 30 Index share of BSE market capitalisation fell from 49% to 25% due to the rise of sectoral indices like BSE PSU, Bankex, BSE-Teck, etc.
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Calculation
The BSE has some reviews and modifies its composition to be sure it reflects current market conditions. The index is calculated based on a free float capitalisation method, a variation of the market capitalisation method. Instead of using a company's outstanding shares it uses its float, or shares that are readily available for trading. Free Floating capital implies total capitalization less Directors shareholding. As per free float capitalisation methodology, the level of index at any point of time reflects the free float market value of 30 component stocks relative to a base period. The market capitalisation of a company is determined by multiplying the price of its stock by the number of shares issued by corporate actions, replacement of scrips.What is meant by free float market capitalization?
Free float stands for the shares that are open for trading. All shares may not be free floating. Some may be pledged, some may be in the hands of the persons or bodies having controlling interest/promoters, some shares may be government holdings etc. Such locked-in shares are not considered free floating.
What is Market capitalization?
Market capitalization is the combined worth of all the stocks of different companies within the stock exchange.The market capitalization of a company is arrived at by the product of the price of its stock and number of shares issued by the company.
This figure is multiplied by the free-float factor to determine the free-float market capitalization. The free float factor is derived from the information each company submits regarding the free floating shares. Every company has to give the information on a quarterly basis in a format given by BSE.
The free float market capitalization of all companies is summed up.
The free float market capitalisation is then divided by an index divisor to get the Sensex value. This divisor adjusts for changes in stocks and other corporate actions. The divisor is the value of the Sensex Index in the base year.
How Sensex Works – example
Company X has 500 shares out of which 300 are free floating or available for general public to buy and sell. The price of each share is Rs.80.
Company Y has 1000 shares out of which 700 are free floating. The price of each share is Rs. 100
Market capital of Company X = 40000
Market capital of Company Y = 100000
Free-float factor for Company X = 0.60
Free-float factor for Company Y = 0.70
Total free float market capital of the index = (40000*0.60) + (100000*0.70) = 94000
Let us assume the base year index was 5000.
Value of Index = (94000 x 100)/5000 = 1880
So the Value of the Index is 1880.
Constituents
As of 18 December 2017, SENSEX constitutes of 31 stocks (Tata Motors has two stocks in the list):
Milestones
The following are some timeline on the rise of the SENSEX through Indian stock market history.- 1000, 25 July 1990 – On 25 July 1990, the SENSEX touched the four-digit figure for the first time and closed at 1,001 in the wake of a good monsoon and excellent corporate results.
- 2000, 15 January 1992 – On 15 January 1992, the SENSEX crossed the 2,000 mark and closed at 2,020 followed by the liberal economic policy initiatives undertaken by the then finance minister and Former Prime Minister of India Dr Manmohan Singh.
- 3000, 29 February 1992 – On 29 February 1992, the SENSEX surged past the 3,000 mark in the wake of the market-friendly Budget announced by Manmohan Singh.
- 4000, 30 March 1992 – On 30 March 1992, the SENSEX crossed the 4,000 mark and closed at 4,091 on the expectations of a liberal export-import policy. It was then that the Harshad Mehta scam hit the markets and SENSEX witnessed unabated selling.
- 5000, 11 October 1999 – On 11 October 1999, the SENSEX crossed the 5,000 mark, as the Bharatiya Janata Party-led coalition won the majority in the 13th Lok Sabha election.
- 6000, 11 February 2000 – On 11 February 2000, the information technology boom helped the SENSEX to cross the 6,000 mark and hit an all-time high of 6,006 points. This record would stand for nearly four years, until 2 January 2004, when the SENSEX closed at 6,026.59 points.
- 7000, 21 June 2005 – On 20 June 2005, the news of the settlement between the Ambani brothers boosted investor sentiments and the scrips of RIL, Reliance Energy, Reliance Capital and IPCL made huge gains. This helped the SENSEX crossed 7,000 points for the first time.
- 8000, 8 September 2005 – On 8 September 2005, the Bombay Stock Exchange's benchmark 30-share index – the SENSEX – crossed the 8,000 level following brisk buying by foreign and domestic funds in early trading.
- 9000, 9 December 2005 – The SENSEX on 28 November 2005 crossed 9,000 and touched a peak of 9,000.32 points during mid-session at the Bombay Stock Exchange on the back of frantic buying spree by foreign institutional investors and well supported by local operators as well as retail investors. However, it was on 9 December 2005 that the SENSEX first closed at over 9,000 points.
- 10,000, 7 February 2006 – The SENSEX on 6 February 2006 touched 10,003 points during mid-session. The SENSEX finally closed above the 10,000 mark on 7 February 2006.
- 20,000, 11 December 2007 – The SENSEX on 29 October 2007 crossed the 20,000 mark for the first time during intra-day trading, but closed at 19,977.67 points. However, it was on 11 December 2007 that it finally closed at a figure above 20,000 points on the back of aggressive buying by funds.
- 21,000, 5 November 2010 – The SENSEX on 8 January 2008 crossed the 21,000 mark for the first time, reaching an intra-day peak of 21,078 points, before closing at 20,873. However, it was not until 5 November 2010 that the SENSEX closed at 21,004.96, for its first close above 21,000 points. This record would stand for nearly three years, until 30 October 2013, when the SENSEX closed at 21,033.97 points.
- 19 February 2013 – SENSEX becomes S&P SENSEX as BSE ties up with Standard and Poor's to use the S&P brand for Sensex and other indices.
- 13 March 2014 - The SENSEX closes higher than the Hang Seng Index, to become the major Asian stock market index with the highest value, for the first time ever.
- 36,000, 23 January 2018 - The SENSEX closed at 36,139.98, for its first close above the 36,000 level.
Record values
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| Disclaimer : All information has taken from https://en.wikipedia.org and www.tflguide.com. Also Please make sure you have understated the stock market risk before investment. This has given for information purpose only. |
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How to save tax on the sale of a house
How to save tax on the sale of a house
Several provisions in the Income Tax Act, enable you to reduce or avoid paying tax on the gains accrued from the sale of a house
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Is this a Long Term Capital Asset or Short Term?
What are the Tax Rates
STCG are included in your taxable income and taxed at
applicable tax rates basis your slab.
LTCG are taxed at 20% with indexation
LTCG are taxed at 20% with indexation
Indexation benefits
You are entitled to avail of indexation benefit on long-term capital gains. If you bought a property in 1994-95 at Rs 20 lakhs and sold it in 2015-16 for Rs 1 crore, your long-term capital gain will not be Rs 80 lakh. Instead, it will be calculated as follows:Capital gain = Selling price – Indexed cost of acquisition.
Indexed cost of acquisition = Purchase price x (Index in year of sale/Index in year of purchase).
Now, the index in 1994-95 stood at 259 and in 2015-16 at 1,081.
Hence, your indexed cost of acquisition will be = 20 x (1081/259) = 83.48
Your long-term capital gain will be = 100 – 83.48 = 16.52 lakh.
Reinvesting in a property
Under Section 54 of the Income Tax Act, you don’t have to pay any tax on long-term capital gains, if you invest your gain in another property. However, there are a few preconditions.- Firstly, this benefit is available only to an individual or an HUF (Hindu United Family).
- Secondly, your gain must be invested in another residential property and not in some other asset.
- Thirdly, you must invest in the second property, either one year before or within two years of the sale of the first property. If you are constructing a new house, its construction must be completed within three years from the date of sale of the first property.
- Lastly, the government has now restricted this exemption to only one residential property.
“You can’t avail of the exemption
under Section 54, if you sell your house after holding it for less than
three years,” cautions Jatin Khemani, managing director of New Delhi-based
Stalwart Advisors. Moreover, the amount that is eligible for exemption
will be the lower of the two – the capital gain arising from sale of the
first property, or the amount invested in the second property.
If you avail of the benefit under Section 54, you can’t sell the second house within three years from the date of its purchase or from the date of completion of its construction. “If you sell the house in less than three years, then, the amount claimed as exemption under Section 54 will be deducted from the cost of acquisition of the new house,” explains Manish Saluja, a New Delhi-based certified financial planner.
See Also: Long-term capital gains tax: Exemption on buying multiple houses
In order to widen the scope of this clause, the government, in its Finance Bill 2017, proposed that such investments can be done in any bond redeemable after three years, which has been notified by the central government in this behalf. Such investments will also be eligible for exemption. However, this amendment will take effect from April 1, 2018 and will, accordingly, apply in relation to the assessment year 2018-19 and subsequent years
If you avail of the benefit under Section 54, you can’t sell the second house within three years from the date of its purchase or from the date of completion of its construction. “If you sell the house in less than three years, then, the amount claimed as exemption under Section 54 will be deducted from the cost of acquisition of the new house,” explains Manish Saluja, a New Delhi-based certified financial planner.
See Also: Long-term capital gains tax: Exemption on buying multiple houses
By Investing in Capital Gains Account Scheme
Finding a suitable seller, arranging the requisite funds and getting the paperwork in place for a new property is a time consuming process. Fortunately, the Income Tax agrees with these limitations. If you have not been able to invest your capital gains until the date of filing of income tax return (usually 31st July) of the financial year in which you have sold your property, you are allowed to deposit your gains in a PSU bank or other banks as per the Capital Gains Account Scheme, 1988. And in your return claim this as an exemption from your capital gains, you don’t have to pay tax on it. However, you must invest this money you have deposited within the period specified by the bank, if you fail to do so, your deposit shall be treated as capital gains.Invest in specified bonds
Section 54EC also provides for exemption on capital gains tax, if the amount is invested in the bonds of Rural Electrification Corporation (REC) or the National Highways Authority of India (NHAI). The investment must be made within six months of sale of the property. One can invest up to Rs 50 lakhs in these bonds, which have a tenure of three years.In order to widen the scope of this clause, the government, in its Finance Bill 2017, proposed that such investments can be done in any bond redeemable after three years, which has been notified by the central government in this behalf. Such investments will also be eligible for exemption. However, this amendment will take effect from April 1, 2018 and will, accordingly, apply in relation to the assessment year 2018-19 and subsequent years
Disclaimer: All Information has taken from Cleartax.in and housing.com
For Tax Calculation please take advise from Tax Consultant.NuEdge Corporate will not provide any Tax Consultancy.This has given for information purpose only.
All Investments Option under section 80C of Income Tax Act.
What is u/s 80c of Income Tax Act?
The most
widely used option to save income tax is section 80C of the Income Tax Act. As
per this section, if an individual or Hindu Undivided Families (HUFs) invests
in or spends on specified avenues then up to Rs 1.5 lakh, as per the current
laws, of this investment/expenditure can be claimed as a deduction from gross
total income before calculating tax payable on it in a financial year. The
deduction can be claimed only from income in the financial year in which the
specified investment/expend
By
claiming this deduction, a person can reduce his/her gross taxable income and
thereby the total tax payable by him/her. For example, if your gross total
earnings say, for a financial year is Rs 6.5 lakh and if you invest Rs 1.5 lakh
in notified schemes which allows you to claim this tax benefit, then your net
taxable income will come down to Rs 5 lakh and you would have to pay tax on this
amount.
Apart
from investment in specified avenues, certain specified expenditures also
qualify as deductions from gross total income under section 80C.
Here's a
list of different investments and expenditures which can be claimed as
deduction by the taxpayer under section 80C for the current financial year,
i.e., FY17-18.
Employees'
Provident Fund (PF) & Voluntary Provident Fund (VPF)
A part of
your salary is deducted monthly as your contribution towards EPF. The total
amount deducted annually can be claimed by you as deduction while computing
your total taxable income. However, you must check with your employer how much
interest is earned on the corpus during the financial year. Interest earned
above the limit of 9.5 per cent is taxable in the hands of the employee.
Similarly, if the contribution by your employer is more than 12 per cent of
your salary, then the excess is taxable in your hands.
An employee
can increase this contribution if he is willing to get a less take-home salary.
This additional contribution is called VPF and is also eligible for deduction
under Section 80C. The rules for both EPF and VPF are the same.
If you
don't want to get into the dilemma of choosing and buying the most appropriate
investment option to avail tax benefits, then you can simply increase your VPF
so that the EPF and VPF contributions total up to Rs 150000. The interest
earned and maturity amount is tax exempt. The government is yet to announce the
interest rate on EPF for the FY 2017-18
Public
Provident Fund (PPF)
PPF is a scheme provided by the government and the investment in it is eligible
for deduction under Section 80C. You can invest as low as Rs 500 and as high as
Rs 1.5 lakh in a financial year. The interest on PPF is currently tax-free
(compounded yearly) and the maturity period is 15 years. A point worth noting
is that the interest rate is assured but not fixed. The rate is subject to
revision every quarter. Government has reduced the interest rate by 0.2 per
cent. The interest rate effective for January-March 2018 quarter is 7.6 per
cent.
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 the 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 (registered under Insurance
Regulatory and Development Authority of India or IRDAI) are be considered here.
Equity
Linked Savings Scheme (ELSS)
There are some mutual fund (MF) schemes specially created to offer you tax
savings and these are called Equity Linked Savings Scheme (ELSS). The
investments that you make in ELSS are eligible for deduction under Section 80C.
ELSS has the potential of earning higher returns compared to other tax-saving
investments as it is equity-linked, but this means that it comes with higher
risk. There is no limit on the amount that can be invested in any of these
schemes, but the tax benefit is available only for Rs 1.5 lakh.
ELSS comes with a lock-in period of 3 years and it is the lowest among all the options available under section 80C.
ELSS comes with a lock-in period of 3 years and it is the lowest among all the options available under section 80C.
Sukanya
Samriddhi Account
In this scheme, you can open an account on behalf of your minor daughter till
the age of 10. Any amount deposited in this account would be eligible for
deduction under Section 80C. Further, this account can be opened for a maximum
of two girls and in case of twins this facility will be extended to the third
child as well. There are other conditions attached to this investment.
The
amount has to be deposited in this account for 15 years. The account will be
mature after 21 years, which means that you don't have to deposit anything
between the 16th and 21st year.
The minimum annual deposit is Rs 1000, which can go up to Rs 150000.
The minimum annual deposit is Rs 1000, which can go up to Rs 150000.
Interest
rate on new deposits is subject to revision every quarter. The government has
revised the interest on the scheme to 8.1 per cent for the quarter January-March
2018.
National
Savings Certificate (NSC)
NSC is a tax-saving instrument with a maturity period of five years. A person can purchase an NSC for as low as Rs 100 with no limit on the investment amount. Any investments in NSC are eligible for deduction under Section 80C. This interest is compounded half yearly and is taxable. However, this being a cumulative scheme (i.e., interest is not paid to the investor but instead accumulates in the account), each year's interest is considered reinvested in the NSC. Since it is deemed reinvested, it qualifies for a fresh deduction under Section 80C, thereby making it tax-free. Only the final year's interest, when the NSC matures, does not receive a tax deduction as it does not get reinvested, but is paid back to the investor along with the interest of the previous years and the capital amount. The interest on new issue of these certificates is revised quarterly by the government.
So in a
nutshell, the interest earned every year, except the last one, is tax-free.
Currently, it is offering the interest rate of 7.6 per cent.
Five-year
Bank Fixed Deposits (FDs)
Any term deposit with a tenure of at least five years with a scheduled bank
also qualifies for deduction under section 80C and the interest earned on it is
taxable. However, while investing for FY 2017-18, one must keep in mind that
the interest rates have come down drastically as compared to previous years
Senior
Citizen Savings Scheme 2004 (SCSS)
This scheme, as the name suggests, is meant only for senior citizens.
Any individual in the 60 or above age group can open an account under this scheme. An individual above 55 but less than 60, and having retired under a Voluntary Retirement Scheme or a Special Voluntary Retirement Scheme, can also open an account under this scheme, but such an account must be opened within three months of the retirement date.
Any individual in the 60 or above age group can open an account under this scheme. An individual above 55 but less than 60, and having retired under a Voluntary Retirement Scheme or a Special Voluntary Retirement Scheme, can also open an account under this scheme, but such an account must be opened within three months of the retirement date.
If you
are a retired defence personnel, then there is a bad news for you. As per the
new rules effective from October 3, 2017, retired defence personnel can invest
only if he is 50 years of age. Earlier, retired defence personnel could invest
in this scheme irrespective of age, provided they met other specified
conditions.
Any investment in this account would be eligible
as deduction under Section 80C subject to the limit under this section. The
current annual rate of interest offered under this scheme is 8.3 per cent
payable quarterly. Please note the interest is payable quarterly instead of
compounded quarterly. Thus, unclaimed interest on these deposits won't earn any
further interest and also the interest earned is subject to tax. Interest on
this scheme is also reset every quarter by the government for new accounts
opened under the scheme.
Five-year
Post Office Time Deposit (POTD) Scheme
POTDs are similar to bank fixed deposits. They are available for different time
durations like one, two, three and five years but only five-year POTD qualifies
for tax-saving under section 80C. The interest on these is compounded
quarterly, but paid annually. The interest rate is reviewed by the government
every quarter. Currently, they are offering 6.9 per cent a year as decided by
the government for January-March.
Please note that the interest earned is entirely taxable.
Home Loan Principal Repayment
he
equated monthly installment (EMI) that you pay to repay your home loan consists
of two components - Principal and Interest. The principal qualifies for
deduction under Section 80C. Even the interest can save you significant income
tax, but that would be under Section 24 and section 80EE of the Income Tax Act.
So if you
have an outstanding home loan in your name, then the repayment of the principal
amount made by you in a financial year can be claimed as deduction under
Section 80C and you need not invest in other tax-saving products only to avail
tax benefits, if the Section 80C limit is fully utilised in home loan repayment.
Further,
any payment made to development authorities like Delhi Development Authority
(DDA) in order to purchase a house (which has been allotted to you in a scheme
made in this regard) also qualifies as deduction under section 80C.
NABARD
Rural Bonds
The bonds issued by NABARD (National Bank for Agriculture and Rural
Development) also qualify for deduction under section 80C. However, the
availability of these bonds for investment depends on the government notifying
the same. In recent years, these have not been available for section 80C
investment.
Unit
linked Insurance Plan (Ulip)
An insurance product which covers life insurance and also provides the benefits
of equity investments, Ulips offer life cover, tax-saving and also help you
grow your money over the long-term. However, unlike PF or ELSS, higher charges
are associated with investment in ULIPs due to the life cover element. Also,
there are certain conditions associated with ULIPs as it is a life insurance
policy as compared to other tax savers
Payment
of Tuition Fees
Paying your kids' school fees is an expenditure which can't be ignored. Now
imagine that the amount paid by you as tuition fees (excluding development fee
of donation amount), whether at the time of admission or thereafter, is
eligible as deduction to you and will help you save tax.
Please
note that the fees should be paid to a school, college, or university in India
only.
Contributions
to National Pension System (NPS)
Any contribution made by an individual (whether employed or not) to the
National Pension Scheme is also allowed as deduction to the individual under
section 80CCD. Also note that the combined deduction under section 80C and
80CCD cannot exceed Rs 1.5 lakh.
However,
if one contributes an additional Rs 50,000 to NPS (over and above the combined
limit of Rs 1.5 lakh) it can be claimed as deduction under section 80CCD(1B)
i.e. total deduction that can be claimed for contributions to NPS is Rs 1.5
lakh plus Rs 50,000 under two different sections of the Income Tax Act.
Any
contributions made to the APY scheme are also eligible for tax deduction under
section 80CCD. Therefore, additional NPS and APY contributions can offer you
maximum tax deduction of Rs 50,000.
Points to remember about claiming deduction under section
80C are as follows.
Investments/expenditures under section 80C cannot be claimed
as a deduction from the capital gains portion, if any, of your income. This
means that if your income comprises only of capital gains then you cannot use
Section 80C to save tax on that income.
Amount of tax saved by using section 80C depends on the tax
slab in which the income was falling. For example, if the income deducted from
gross total income before tax calculation was in the 30% plus 3% cess bracket
then that would the amount of tax saved.
Let us say, if your gross total income for the year is say,
Rs 12 lakh, then by taking a deduction of Rs 1.5 lakh under section 80C, you
reduce your net taxable income to Rs 10.5 lakh. This would bring down your tax
liability by Rs 46,350.
If a
person's income is already below the minimum exemption limit, currently at Rs
2.5 lakh for individuals below 60 years of age, then he/she would not be saving
any tax via investments/expenditures under section 80C as his income is not
liable for any tax.
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