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Income Tax Deductions for salaried person

The Income Tax Act 1961 provides that after determination of gross total income of an assessee, certain deductions there from may be allowed. These deductions detailed in chapter VIA of the said Act which must be distinguished from the exemptions provides in Section 10 of the Act. While the former are to be reduced from the gross total income, the latter do not form part of the income at all.

The assessee surrendered tenancy right on 13.9.2005 for a sum of Rs. 1.67 crores after deducting the legal fees , the net consideration came to Rs. 1.66 crores which was also the amount of net capital gain. As per provisions of Sec. 54F, the assessee was supposed to construct the residential house within three years or purchase within two years , to save himself from the liability of paying capital gain tax.

It is not disputed that the assessee is not in possession of plot on which a residential building is in existence. The assessee has allegedly utilized the Long Term Capital Gain arising from the sale of shares towards the construction of a new residential house after demolition of old building on the plot-in-question. The assessee has claimed exemption u/s.54F on the ground that the assessee has invested Long Term Capital Gains arising from sale of shares towards construction of a new house within the prescribed period as mentioned in the Act.

While investing more amount for tax saving Consider the impact of inflation on your needs. After your first few working years, as income goes up, it is wise to invest beyond one’s tax saving investments to achieve your goals. Also, evaluate the life cover requirement, while planning for your taxes. We are giving below a brief on some of the Popular allowance / Exemption and deductions, benefit of which can be taken by the salaried taxpayers to reduce their tax burden.
Maximising your tax saving

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