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 :
|
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.
|
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)
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.
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