INCOMETAX EXEMPTION SECTIONS AND THEIR LIMITS

Section 80c

Under Section 80C, the maximum tax exemption limit is Rs 1.5 Lakhs per annum. The various investments that can be claimed as tax deductions under section 80c are listed below;

PPF (Public Provident Fund)
EPF (Employees’ Provident Fund)
5 years Bank or Post office Tax saving Deposits
National Savings Certificates (NSC)
ELSS Mutual Funds (Equity Linked Saving Schemes)
Children’s Tuition Fees
Life Insurance Premium
Sukanya Samriddhi Account Deposit Scheme
SCSS (Post office Senior Citizen Savings Scheme)
Repayment of Home Loan (Principal only)
National Pension System
NABARD rural Bonds
Stamp duty charges for purchase of a new house

Section 80CCC

Contribution to annuity plan of LIC (Life Insurance Corporation of India) or any other Life Insurance Company for receiving pension from the fund is considered for tax benefit. The maximum allowable Tax deduction under this section is Rs 1.5 Lakh.

Section 80CCD

Employees can contribute to National Pension Scheme (NPS). The maximum contributions can be up to 10% of the salary (Basic+DA) for salaried or gross income in case of self employed. From 2017-18 and additional tax deduction of up to Rs 50,000 u/s 80CCD (1b) is allowed for excess employee contributions and this is over and above the limit of Rs 1.5 Lakhs.

The definition of Salary is ‘Basic + Dearness Allowance + any other bonus’. If the employer also contributes to Pension Scheme, the entire employer contribution (maximum 10% of the salary) can be claimed as a tax deduction under Section 80CCD (2). This is over and above the limit of Rs.1.5 Lakhs.

It is to be kindly noted that the total deductions under sections 80C, 80CCD (1) and 80CCC put together cannot exceed Rs 1,50,000 for the financial year 2017-18.

Contributions to ‘Atal Pension Yojana‘ are eligible for Tax Deduction under section 80CCD.

Section 80D

upto Rs. 25,000 can be deducted towards medical insurance of self and dependents (spouse & children).

Additionally, a deduction of up to Rs. 25,000 towards medical insurance premium of parents (father/mother/both) is available.

Section 80DD

Up to Rs 75,000 can be claimed for spending on medical treatments of your dependents (spouse, parents, children or siblings) who have 40% disability. The upto Rs 1.25 lakhs can be deducted in case of severe disability (80%).

To claim this deduction, you have to submit Form no 10-IA. (Medical Certificate from a specialist doctor)

Section 80U

This is similar to Section 80DD. Tax deduction is allowed for the tax assessee who is physically and mentally challenged.

Section 80DDB

Any individual below the age of 60 years can claim upto Rs 40,000 for the treatment of certain specified critical diseases. This can also be claimed for his/her dependents.

It is mandatory for an individual to obtain a Medical Certificate from a specialist doctor in a Hospital, to claim Tax deductions under Section 80DDB

Section 24: Income Tax Benefit for Interest paid on Home Loan

Income tax benefit on payment of Interest paid on home loan is allowed for deduction under Section 24. The maximum deduction allowed under this Section for a self-occupied house property is upto Rs. 2 Lakhs.

In case, the home Loan has been taken for the property which is not self-occupied, there is no maximum limit prescribed and the entire interest paid is fully exempted.

If the taxpayer has availed a home loan for repair works or reconstruction, a maximum deduction of upto Rs 30,000 per financial year is permitted.

Section 80E

If you take any loan for higher studies (after completing Senior Secondary Exam), tax deduction can be claimed under Section 80E for interest that you pay towards your Education Loan. This loan should have been taken for higher education for you, your spouse or your children or for a student for whom you are a legal guardian. Principal Repayment on educational loan cannot be claimed as tax deduction.

There is no limit on the amount of interest you can claim as deduction under section 80E. The deduction is available for a maximum of 8 years or till the interest is paid, whichever is earlier.

Section 80EE

In Budget 2017-2018, a new proposal has been made in which, first time home buyers are eligible for an additional tax deduction of up to Rs 50,000 on home loan interest payments under section 80EE. For claiming tax deductions under this new section 80EE, the following criteria have to be met.

The home loan should have been availed or sanctioned in FY 2017-2018.The Loan amount should be less than Rs 35 Lakhs
The value of the home should not be more than Rs 50 Lakhs
The buyer should not possess any other residential house under his/her name.

Section 80G

Contributions made to certain relief funds and charitable institutions can be claimed as a deduction under Section 80G of the Income Tax Act. This deduction can only be claimed when the contribution has been made via cheque or draft or in cash. In-kind contributions such as food material, clothes, medicines etc do not qualify for deduction under section 80G.

Section 80 TTA & new Section 80TTB

The Interest income earned on Fixed Deposits & Recurring Deposits (Banks / Post office schemes) will be exempt till Rs 50,000 (FY 2017-18 limit is up to Rs 10,000). This deduction can be claimed under new Section 80TTB. However, no deductions under existing 80TTA can be claimed (the limit for FY 2017-18 & FY 2018-19 u/s 80TTA is Rs 10,000).

Section 80TTA of Income Tax Act offers deductions on interest income earned from savings bank deposit of up to Rs 10,000. From FY 2018-19, this benefit will not be available for late Income Tax filers.

Section 80GG

The Tax Deduction amount under 80GG is Rs 60,000 per annum. Section 80GG is applicable for all those individuals who do not own a residential house & do not receive HRA (House Rent Allowance).

The extent of tax deduction will be limited to the least amount of the following;

Rent paid minus 10 percent the adjusted total income.
Rs 5,000 per month.
25 % of the total income.

Rebate under Section 87A

Tax rebate of Rs 2,500 for individuals with income of up to Rs 3.5 Lakh has been proposed in Budget 2017-18 and the same will be continued for FY 2018-19 / AY 2019-20 as well.

Section-16(ii) : Entertainment Allowance to Government Employees

Some employees are required to incur expenditure on the entertainment (tea etc.) of customers, clients etc. who come to meet them in connection with their official or business work. In case employee is given a fixed amount every month to meet this type of expenditure then it is fully added in salary and out of Gross Total Salary, a deduction u/s 16(u) shall be allowed only to govt. employees. This means that in case this allowance is given to employees working in private sector, it is fully taxable.

But in case any amount is reimbursed against any expenditure incurred by employee, it shall be fully exempted.

Deduction uls 16(ii) admissible to govt. employees shall be an amount equal to least of following :

Statutory Limit of ` 5,000 (maximum).
1/5th of Basic Salary.
Actual amount of entertainment allowance received during the previous year.

Section-16(iii) : Tax on Employement

In case any amount of Professional Tax is paid by the Employee or by his Employer on his behalf, it is fully allowed as Deduction.

HRA Exemption – Section 10(13A)

A deduction from such HRA is allowed under section 10(13A), which is least of the following: –

· Actual HRA received

· 40% of salary (50% of the salary if the rented property is in Metro City i.e. Mumbai, Delhi, Chennai or Kolkata)

· Actual rent paid less 10% of salary

CONDITIONS TO BE SATISFIED FOR CLAIMING HRA DEDUCTION

· This deduction is allowed only when an employee actually pay rent for his residence purpose. If no rent is paid for any period then no deduction is allowed for that period. Rent receipts may be asked as proof by the income tax officer. No documents are required to be attached at time of filing ITR.

· If there is any change in the amount of salary, rent or HRA or city of residence from metro to non-metro or vice versa during the year then such deduction is calculated on monthly basis.

· Even if rent is paid to any family members, HRA is allowed. There is no legal requirement but it is advisable to pay such rent on monthly basis and through bank transfer.
Also keep in mind that such rent paid to a family member is taxable in hands of such member. However he/she gets standard 30% deduction, so you will be in benefit. (Considering the slabs in which you and family member falls)

· There is no requirement that employee should not own a house property. If the employee resides in a rented property, he can claim exemption even if he owns a house property in the same or different city.