As per the budget document, the government of India compiles the data about the taxes which are foregone on account of incentive schemes given under Income Tax Act. For example, had the government withdrawn deductions u/s 80C of the Income Tax Act (towards Provident FUND
, LICpremium, tuition fee, etc) for the FINANCIAL year ending March 2013, they would have got an additional tax of Rs.28,000 crores!. Likewise they have given a list of incentives given to Individual tax payers. Please look at the taxes foregone by the government.
INVESTMENT u/s 80C – Every individual taxpayer can claim up to Rs.1,00,000 (from FY 2014-15 it is increased to Rs.1,50,000) per year towards principal repayment of housing loan, insurance premium, tuition fee paid, INVESTMENT in specified fixed deposits, ELSS Mutual FUND etc. On account of this, total amount of taxes which government has foregone is Rs.28181 Cr for the 2013-14.
Mediclaim Insurance u/s 80D – Every individual taxpayer can claim up to Rs.15,000 (plus additional Rs.20,000 for senior citizens) towards payment of premium on Mediclaim policy. On Mediclaim deduction u/s 80D, the tax foregone is Rs.928 Cr.
Education Loan u/s 80E – Under this section, Interest on Loan taken for Higher education of self, spouse and the children can be deducted from the total taxable income. On Education loan deduction u/s 80E, the tax foregone is Rs.286 Cr
Donation u/s 80G – Under this section, the donation made by the taxpayer will be reduced from the taxable income (subject to the conditions and restrictions). On account of this deduction, the tax foregone is Rs. 353 Cr
Rent paid by self-employed people u/s 80 GG – Under this section, those individuals (such as SELF EMPLOYED) who are paying rent for their residence but not getting House Rent Allowance can claim deduction to the tune of Rs.2000 per month. On account of this deduction, the tax foregone by the government is Rs.137 Cr
Interest on savings bank account u/s 80TTA – Under this section, Interest earned up to Rs.10,000 per year from Savings Bank account is exempt. The total amount foregone by the government on account of this exemption is Rs.689 Cr
Higher exemption limit for senior citizens – The basic exemption limit for individual tax payers is Rs.250000 per year. However, for senior citizens (over 60 years) the basic exemption limit is Rs.300000 per year. The taxes foregone by the government on account of additional Rs.50000 per individual is Rs.1424 Cr. Similarly, for very senior citizens (over 80 years), the basic exemption is Rs.500000 per year.On account of this, the taxes foregone is Rs.371 Cr per year.
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