you can save up to Rs 44,000 Tax a year

From the point of retail investors the budget is good; he has given tremendous relief for income tax.

Salaried professionals: A male earning up to Rs 5 lakh a year will save Rs 44,000 by way of income tax. Now, he will pay only Rs 55,000 by way of income tax, which means that the effective tax rate is down to only 11 per cent. That means more money of up to Rs 44,000 per annum is available for investment.

For women, the difference is Rs 43,500 per annum. For senior citizens it is up to Rs 39,500 per annum. That will be a great saving for working professionals.

Also, if you buy medical insurance for your parents, you get an additional relief of Rs 15,000.

Short term capital tax: People will be forced to hold on to their shares for at least a year because short term capital gain has become 15 per cent. That is a positive disincentive to sell within in one year. If there is less selling pressure, the stock market will be forced to improve.

Stock market advice: One thing bothering everyone is this Rs 60,000 crore that will cost the exchequer. If banks are not reimbursed by the Finance Minister, than they (the banks) will take a hit and therefore banking stocks may fall. We have to wait and watch.

Wait and watch. Ultimately the stock markets will be driven by global trends. If markets fall in US, Asia etc, it will affect us. Investors must be cautious.



Senior citizens: Reverse mortgage loan scheme -- if you have a house, you can give your house (mortgage your house to the bank while still living in it) and take a loan. The money you receive will not be taxable. It can become your regular income.


Consumers gain: Two-wheelers, small cars, tea and coffee and other small things, will get cheaper.



Last words: No googlys! But I did not expect him to give so much relief on the personal income tax. It was a substantial relief to the middle class, to both the self-employed and to professionals.

Source : MoneyControl

Deduction For AY 2008-09

1. House Propery

You would be allowed a deduction on the investments up to the amount of long term Capital gain on House property if you have a long term capital gain as computed above and have made investments in either of the following:
a)Purchase of a new house property or
b)Invested the sale proceeds in Capital Account scheme 1988 or
c)Invested in NABARD bonds or
d)Invested in NHAI bonds or
e)Invested in SIDBI bonds

2. Securities and others

You would be allowed a deduction on the investments, restricted to the amount of long term Capital gains if you have a long term Capital gain as computed above and have made investments in either of the following:

a) Purchase of a new house property – deduction restricted to (cost of new house X Long term capital gains on securities / Net consideration ) OR
b) Investment of the sale proceeds in Capital Account scheme 1988 or
c) Invested the sale proceeds in NABARD bonds or
d) Invested the sale proceeds in NHAI bonds or
e)Invested the sales proceeds in SIDBI bonds

Courtesy - Popular Sites

Capital Gains 2008-09

Deductions under Capital Gains

You should provide data in this section if you have sold any of the following Capital assets -

-House property
-Securities (Equity stock, Debentures, Mutual Fund Investments, Zero coupon Bonds)
-Others – Agricultural land, Gold, Silver


Ascertain the type of Gain/Loss
The period of holding of your property determines the type of capital gain/ loss you have made.

Type of Asset Short Term Long Term
House property Held for less than 3 years Held for more than 3 years
Securities Held for less than 1 year Held for more than 1 year
Others Held for less than 1 year Held for more than 1 year


Computation of Gain/ Loss

a.Net Sales Value = (Sales Price less the cost incurred for sale)
b.Purchase price = (Purchase Price plus any other expenses incurred for purchase- indexed by the year of expense)
c.Profit / Loss (a-b)

Courtesy - Popular Sites

Deductions for AY 2008-09

Deductions under House Property

You are required to enter data in this section only if you owned a house property which was used for residential purposes, for any part of the year.

Self Occupied Property – if you have stayed in the property for the whole or any part of the year and for the rest of the year it was not available to be let out then it would be treated as self occupied property.

Let out property - If you have let out the property or have made the property available for rent for any part of the year then it would be treated as a let out property.

Deductions Available
1. If your property is not let out for the entire period for which it was available to be let out, you are entitled to a deduction for the period for which it was vacant.
2. If you have paid any amount as interest towards repayment of loan taken for the property then you are entitled to a deduction to a maximum amount of Rs 1.50 lakhs.

Deductions for AY 2008-09

Deductions under Salary

You are entitled to deduction upto an overall limit of Rs. 1 lakh for any amount that you have invested by making purchases in any of the schemes mentioned below during the corresponding financial year (FY) which starts from April 1 and ends on March 31:

Please note that if you have already provided the deduction details to your employer and the employer has already considered the same in computing the tax you MUST NOT ENTER THE SAME DATA AGAIN in the deductions list.
1. Your contribution towards Provident Fund which is deducted from you salary to a maximum limit of 12% of your basic salary.
2. Purchase of National Savings Certificates.
3. Any amount that you have paid towards life insurance premium for yourself and your immediate family.
4. Any amount that you have invested in Public Provident Fund.
5. Any amount that you have invested in Unit Link Insurance Policy.
6. Any principal amount that you have paid towards repayment of loan taken for a purchase of a property, construction of which is completed and has been handed over to you.
7. Any amount paid towards tuition fees of your children – maximum of Rs. 100 per month per child is allowed.
8. Any investments in schemes or funds which provide deduction under 80C.
9. Any amount paid towards any insurance policy which is governed under section 80CCC. This has a limit of Rs. 10000 per policy per annum.
10. Amount paid as donation to any charitable organization who qualify for deduction under section 80G. Please check whether the amount donated by you qualifies 50 percent or 100 percent. Dependent on the same you would be able to claim deductions. For example, if the organization qualifies for 50 percent of the amount donated and you have donated an amount of Rs. 1000 then you would qualify for a deduction of Rs 500 while if the organization qualifies for a 100 percent deduction then you would be entitled to the full amount of Rs1000.
11. If you have spent any amount for medical treatment for dependent children you are entitled to deduction for all expenses incurred by you on such treatment.