Some Help About Section 80C of IT ACT

What to Check before investing for Section 80C
or
How to Make Best Use of Section 80C

Most of the Income Tax payee try to save tax by saving under Section
80C of the Income Tax Act. However, it is important to know the
Section in toto so that one can make best use of the options available
for exemption under income tax Act. One important point to note here
is that one can not only save tax by undertaking the specified
investments, but some expenditure which you normally incur can also
give you the tax exemptions. Here are some tips for you : -

(1) Always Check YOUR FORCED SAVINGS / EXPENDITURE ELIGIBLE FOR
DEDUCTION :

(A) Home Loan :

There is a provision that the payment made for repayment of the
principal amount (not interest payment) of the Home Loan is eligible
for a deduction under Section 80C if you have taken a home loan and you
fulfill certain conditions.

(B) Payment towards Education Fee of the children :

Most of the young couples and middle aged income tax payee incur quite
high payments towards the education fees of their children. The
expenditure incurred on education fees is also eligible for a
deduction under Income Tax Act, Thus, if you are incurring
expnediture towards educatin fee of your children, please check whether
these are eligible for deduction under the IT Act.

(C) Payment towards Provident Fund :

Salaried income tax payee are usually have a forced saving which are
eligible for deduction under section 80C. A fixed percentage of
basic salary (ranges from 8.33% 12%) is deducted by your employer
towards the Employees Provident Fund (EPF). Some employers allow
higher deduction towards EPF. Thus, you should first of all check the
total amount that is expected to be deducted towards EPF during the
financial year. The total amount deducted from your salary will be
eligible for investments under Section 80C.

(D) Interest on National Saving Certificates :

In case you have purchased NSCs during some earlier years, then the
accrued interest as per the tables released by authorities is eligible
for deductions under Section 80C.



(2) Always Check the Lock-In Period of the Investments

Tax saving investments have a minimum lock-in period i.e. the period
during which withdrawals are usually not allowed. If the same are
withdrawn, these will be taxable in the year of withdrawal. For
example, National Savings Certificates (NSC) have a lock-in period of
six years, Public Provident Fund (PPF) has a lock-in of 15 years,
Equity Linked Saving Schemes (ELSS) have a lock-in period of three
years. Insurance policies have even greater period of lock in.



(3) Always Check Whether the investment you intend to make will meet
your goals :

You are saving every year and while saving you normally have some goal
in mind, e.g. to meet the expenditure on education of children,
purchase of a vehicle or house or marriage of your children.
Therefore, you should always look at the investments from the angle
whether it will meet your specific requirements on maturity. You should
also try to diversify your savings in different instruments.

For instance, if you have already invested a fair portion of your money
in equity (shares and mutual funds that invest in shares), avoid an
ELSS. Opting for an ELSS means a huge portion of your investments will
be in equity and that may not be what you want.

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PSBs score over pvt peers in interest income growth

Public sector banks' (PSBs) growth in net interest income (NII) vis-à-vis private banks has been higher during the fourth quarter ending March 2010 as compared with the corresponding period of the previous year, according to a study of 24 PSBs and 12 private banks.Despite higher NII, net profit of the PSBs declined 4.8% during the quarter. However, the fee-based income growth of PSBs, at 14.2%, was marginally higher than that of their private peers, at 14%.The fee-based income of the PSBs increased to Rs 46,460 crore from Rs 40,690 crore.When compared to January-March 2009, NII of the PSBs rose 37.8%, where as private banks registered a 20% increase in their NII. An analyst from the market said, "Healthy credit offtake in non-food credit helped the PSBs to increase the net interest income significantly during the fourth quarter."Among the PSBs, Oriental Bank of Commerce has seen significant increase in NII to Rs 989 crore against Rs 460 crore. "The bank's profit has come out of core operation," said the bank's chairman TY Prabhu. While interest income of the bank rose 14.4% during January-March 2010, total interest expended dropped 10.2% during the same period.However, the highest NII margin was recorded by SBI, at Rs 6,721 crore, among the PSBs, followed by PNB (Rs 2,498 crore) and Bank of Baroda (Rs 1,745 crore), Uco Bank's (Rs 744 crore), Andhra Bank (Rs 656 crore).The rise in NII of private sector banks was comparatively lower during the same period. Among the 12 private sector banks, four banks-IndusInd Bank, Dhanlaxmi Bank, ING Vysya Bank and YES Bank-showed more than 50% increase in NII during the fourth quarter.HDFC Bank had the highest NII of Rs 2,351 crore during the period, followed by ICICI Bank and Axis Bank (Rs 1,460 crore). However, NII of ICICI Bank fell marginally by 4.9% from Rs 2,139 crore to Rs 2,035 crore.

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4 banks to get Rs 1,500-cr fund infusion soon

Four state-run banks -Vijaya Bank, Central Bank of India, UCO Bank and United Bank of India- are likely to get Rs 1,500 crore as part of their recapitalisation package soon, according to sources. The fund infusion will enable these banks to maintain comfortable level of capital to risk-weighted asset ratio for supporting credit requirement of the productive sectors. Of the total, Vijaya Bank will get Rs 700 crore, UCO Bank Rs 300 crore, Central Bank and United Bank of India Rs 250 crore each, sources said, adding the government has already made a provision for subscription to tier-I instrument for capitalisation of these bank in the budget. During the past fiscal, the government had provided Rs 1,200-crore capital support to Central Bank of India, UCO Bank and United Bank of India to meet their capital requirement. UCO Bank and Central Bank of India got Rs 450 crore each while United Bank of India, which recently got listed, received a financial assistance of Rs 300 crore. The government plans to provide financial support of Rs 15,000 crore to the public sector banks during the current fiscal. The Cabinet has already approved capital infusion plan that will increase the lending capacity of the banks by Rs 1.85 lakh crore. The exact amount, the mode of capitalisation and other terms would be decided in consultation with the banks at the time of infusion. The Rs 15,000-crore fund infusion for tier I capital instruments of PSBs would enable them to expand their credit growth by about Rs 1,85,000 crore. This additional availability of credit is likely to benefit employment oriented sectors, especially agriculture, micro and small enterprises and entrepreneurs.

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RBI to decide 'Indian-ness' of banks now

The Reserve Bank of India will decide on the ‘Indian-ness’ of the country’s leading private sector banks as the government deliberates a solution for them without relaxing the provisions of the new foreign direct invesment policy. After over a year of discussions, the government has finally asked the central bank to suggest a framework for deciding on the ownership and control of such banks. The new norms will be based on parameters such as voting rights and the power to appoint directors, a senior government official said. “We need to recognize that the structure of each bank is different and accordingly redefine the concept of ownership and control for the banking sector,” he said. The move will give reprieve to seven private sector lenders including ICICI Bank, HDFC Bank, ING Vysya, Development Credit Bank, Federal Bank, IndusInd Bank and YES Bank that have been branded as foreign banks under the current norms. The long-standing issue, with its roots in Press Note 2 of 2009, was discussed at a recent meeting of the finance ministry, department of industrial policy and promotion and the RBI. Press Note 2 provides for a framework for calculation of total foreign investment in Indian companies, which is based on ownership and control of such firms. It has stated that all types of overseas ownership will be counted as foreign investment. Further, any company with over 50% overseas investment would be considered foreign owned. It defines control as the power to appoint majority of directors on the board of a company. More importantly, all downstream investments by a foreign-owned company would be considered as foreign investment and be subject to sectoral caps and restrictions. After these norms had come out, the banks had taken up the issue with the RBI and had sought clarifications on their exact status and investments. The central bank too had written to the finance ministry and pointed out that ownership and control may not be limited to just equity holding and power to appoint directors. Analysts welcomed the move but have cautioned that it would have to be carefully thought out. There is no straight jacketed approach. The formula would have to be based after a careful review of the interplay of voting rights and economic ownership of banks,” said Nimai Vijay, associate director, PricewaterhouseCoopers.

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Govt homes in on heads for 3 institutions

Govt homes in on heads for 3 institutions

UCO Bank Chairman and Managing Director SK Goel is set to take over as the new chairman of India Infrastructure Finance Company (IIFCL).

Sources close to the development said the appointment of Goel, whose term at the Kolkata-headquartered bank was due to end in a couple of months, had been approved by the government and a notification was expected shortly.

He will replace SS Kohli, whose extended term at the infrastructure finance company came to an end last month. The financial institution’s Executive Director Pradeep Kumar is currently officiating as the chairman and managing director.

The sources also said at least two other appointments were being finalised by the government. RV Verma, executive director at National Housing Bank, is the frontrunner for the post of chairman at the refinance and housing finance regulatory agency.

The government has started the process of appointment afresh due to problems in the first round. For a year, Central Bank of India Chairman and Managing Director S Sridhar has been officiating as NHB chairman.

In addition, sources said a notification regarding the appointment of IDBI Bank Chairman and Managing Director Yogesh Agarwal as the pension regulator was expected soon. Agarwal’s appointment has been approved by the government.

The sources said that SC Gupta, the former chairman and managing director of United Bank of India was set to move to the Board for Industrial and Financial Reconstruction as a member. Canara Bank Chairman and Managing Director AC Mahajan, who also retires this year, is likely to be appointed as a vigilance commissioner. Of the two vigilance commissioners, one post is reserved for a former banker.

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