Deductions Under Chapter Vi A

Section 80C 
1)  Life Insurance Premium 
2)  Mutual Fund  
3)  EPF ( Employee Contribution to PF (Normally 12% Of Basic + Da ) 
4)  PPF(Public Provident Funds) 
5)  NSC (National Saving Certificates) 
6)  KVP/IVP (Kisan Vikas Patra) 
7)  FD>5Yrs  
8)  Tuition Fees Of Children 
9)  Housing Loan: (Principal Interest Repaid only) 
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Section 80D
1) Medical Insurance
( Family 25000 + Parents 25000)
( If Senior Citizen Then 30000)
(Included In Above 5000 For Medical Lab Test)
Maximum Deduction is 150000 for Section 80C
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Section 80G 
Certain Donations have
100% Deduction like Pm Relief Fund
50% Deduction like Temple/NGO
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Section 80TTA
1) Saving Bank Interest
Maximum 10000 Deduction

Interest Earned on Both Savings and FD
Total Interest Earned whether FD or Savings is Income from Other Sources
80TTA Deduction is only for Interest on Savings Max 10000
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Q1
What is the PGBP Income of a proprietorship (Individual) as per Section 44AD in following case ?

   
Turnover 5000000
Interest Income on FD 18000
Interest Income on Savings 4000
Mutual Fund Saving 15000
Life Insurance Premium 40000
Medical Insurance  
Self 14000
Wife 11000

Answer

Income Tax Computation

   
TURNOVER 5000000
   
PROFIT AND GAIN OF BUSINESS AND PROFESSION 400000
(MINIMUM 8% OF TURNOVER)  
INCOME FROM OTHER SOURCES 22000
GROSS TOTAL INCOME 422000
Less  
DEDUCTIONS  
80C 55000
80D

25000

80TTA 4000
TOTAL DEDUCTIONS 84000
   
NET TOTAL INCOME

338000

TAX 4400
REBATE 2500
NET TAX 1900
CESS 76
TAX+ CESS 1976
   
   

 

Q2
Suppose in last question,person wants to pay 10000 tax What should be his PGBP Income 

Answer

   
TURNOVER 5000000
   
Profit and  Gains of Business and Professions 479308
Income from Other Sources 22000
Gross Total income 501308
Less  
Deduction Under 80C 55000
Deduction Under 80D 25000
Deduction Under 80TTA 4000
Net Total income 442308
   
Tax 9615
Rebate 0
Net Tax 9615
Cess @ 4% 385
Net Tax+Cess 10000

 

Note:-

We can use goal seek formula for the same in excel.

Learn Goal seek Here

 

  1. Practical Income Tax
  2. Income Tax for Small Business

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CA Maninder Singh
CA Maninder Singh is a Chartered Accountant for the past 10 years. He also provides Accounts Tax GST Training in Delhi and Pune.