Tax Deductions for salaried employees

There are several tax deductions are available for individuals to reduce tax burden, which can actually reduce your total taxable income, let’s go through them one by one.

 Tax Deductions under Section 80C:

You can easily reduce your taxable income by investing under section 80C.There are several investments and expenses offered by 80C.The total deduction in this section is sum up to Rs.1.50 lakh only.

Investments which are exempted from total income are as follows:

1.       Life insurance premium for policy (premium paid by individual for him/her,  for spouse and  for child of individual)

2.      Sum paid under a contract for a deferred annuity

3.       Contributions by an employee made under Employees' Provident Fund Scheme

4.      Contribution to Public Provident Fund Account in the name of: individual, his/her spouse and child of individual

5.      Contribution by an employee to an approved superannuation fund

6.      Sukanya Samriddhi Account Scheme

7.      National Savings Certificates

8.       Contribution for participation in unit-linked Insurance Plan of UTI ( in case of an individual, in the name of the individual, his spouse or any child of such individual)

9.       Contribution to notified unit-linked insurance plan of LIC Mutual Fund ( in case of an individual, in the name of the individual, his spouse or any child of such individual)

10.  Contribution by an individual to any pension fund set up by any mutual fund 

11.  Subscription to equity shares or debentures forming part of any approved eligible issue of capital made by a public company or public financial institutions

12.  Term deposits for a fixed period of not less than 5 years with a scheduled bank, 

13.   Subscription to notified bonds issued by the NABARD.

14.   5-year term deposit in an account under the Post Office Time Deposit 

15.  Deposit in an account under the Senior Citizen Savings Scheme Rules

16.  Principal repayment on home loan

17.   stamp duty and registration cost on the house bought

18.  tuition fees paid for up to two children

Tax Deduction under Section 80CCC:

Contributions to certain pension funds of LIC or any other insurer (up to Rs. 1,50,000)

Tax Deduction under Section 80CCD:

Contribution to pension scheme notified by Central Government up to 10% of salary (Basic or Basic+DA)

Contribution made by employer also allowed as deduction, while computing total income of the employee. However, amount of deduction should not be more than 10% of salary of the employee

Note: The combined maximum limit for section 80C, 80CCC and sec 80CCD (1) deduction is Rs 1, 50,000, which can be availed.

Tax Deduction under Section 80CCF:

Amount up to Rs. 20,000, paid or deposited, during the previous years ,as subscription to notified long-term infrastructure bonds. Interest received on these bonds are not exempted.

Tax Deduction under Section 80CCG:

Amount paid for investments in equity in  Rajiv Gandhi Equity Scheme (Up to Lower of – 50% of amount invested in equity shares or Rs 25,000)

Gross total income of the assessee for the relevant assessment year should be less than or equal to ? 10 lakh

Rajiv Gandhi Equity Scheme has been discontinued starting from April 1, 2017. Therefore, no deduction under section 80CCG will be allowed from AY 2018-19.

However, if you have invested in the RGESS scheme in FY 2016-17 (AY 2017-18), then you can claim deduction under Section 80CCG until AY 2019-20.

 

Tax Deduction under Section 80D:

Amount paid (except cash payment) by an individual to medical insurance for himself, his/her spouse and children or parents below 60 years( Rs.25,000) or parents above 60 years (Rs.30,000).

An individual can also make payment to the Central Government health scheme and/or on account of preventive health check-up (subject to limit-Rs.5,000)

Tax Deduction under Section 80DD:

 

Deduction up to Rs.75,000 ( who have 40% disability) and Rs.1.25 lakhs ( for severe disability)can be claimed by individual for spending on medical treatments of your dependents (spouse, parents, children or parents).

Medical treatments also  includes nursing and training and rehabilitation of a dependant

Tax Deduction under Section 80DDB:

Expenses actually paid for medical treatment of specified diseases and ailments subject to certain conditions

Any individual below the age of 60 years: Claim upto Rs 40,000 or lower of actual amount paid for the treatment of certain specified critical diseases. This can also be claimed for his/her dependents.

Senior Citizens above 60 years: Can claim upto Rs 60,000 or lower of actual amount paid

Senior Citizens above 80 years: Can claim Rs 80,000 or lower of actual amount paid

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

Tax Deduction under Section 80 E:

Interest amount paid on loan taken for purchase of residential house property (interest paid up to Rs. 2 lakh on housing loan and up to Rs. 30,000 on home improvement loan is allowable as deduction from taxable income. And the amount above Rs. 2 lakh can be carried forward for eight assessment years)

Tax Deduction under Section 80 EE:

Interest amount paid on loan taken for purchase of residential house property ( Max. Deduction Rs.50,000), if individual buying home for first time (the person must not own any other residential property on the date of sanction of loan). However, to avail the benefit of this section the value of the property must be below Rs.50 lakh and the loan amount should not exceed Rs. 35 lakh. Further, the property must be bought after April 1, 2016.

Tax Deduction under Section 80 G:

Contributions /donations made to trusts, charitable institutions or relief fund subject to deduction up to 50% or 100% under this section

Donations made in cash exceeding Rs.2000 (earlier Rs.10,000) will not be allowed for deduction under this act from F.Y-2017-18

100 per cent of qualifying donations are:

1)     National Defence Fund

2)      Prime Minister's National Relief Fund

3)      Prime Minister's Armenia Earthquake Relief Fund,

4)     Africa (Public Contributions - India) Fund

5)      National Children's Fund (from 1-4-2014)

6)     Government or approved association for promoting family planning, universities and approved educational institutions of national eminence

7)      National Foundation for Communal Harmony

8)     Chief Minister's Earthquake Relief Fund (Maharashtra)

9)      Zila Saksharta Samitis

10)   National or State Blood Transfusion Council

11)  Fund set up by State Government to provide medical relief to the poor,

12)  Army Central Welfare Fund

13)  Indian Naval Benevolent Fund and Air Force Central Welfare Fund

14)  Andhra Pradesh Chief Minister's Cyclone Relief Fund

15)  National Illness Assistance Fund

16)  Chief Minister's Relief Fund or the Lt. Governor's Relief Fund in respect of any State or Union Territor

17)   National Sports Fund

18)   National Cultural Fund

19)   Fund for Technology Development and Application, Indian Olympic Association, etc.

20)  fund set up by State Government of Gujarat exclusively for providing relief to victims of earthquake in Gujarat

21)   National Trust for Welfare of Persons with Autism, Cerebral palsy, Mental retardation and Multiple Disabilities,

22)  the Swachh Bharat Kosh and the Clean Ganga Fund (from assessment year 2015-16)

23)  National Fund for Control of Drug Abuse (from assessment year 2016-17) [subject to certain conditions and limits]

50  per cent of qualifying donations are:

1)     Charitable institutions/donations for renovation or repairs of notified temples

2)     Jawaharlal Nehru Memorial Fund  Prime Minister’s Drought Relief Fund

3)      National Children’s Fund

4)     Indira Gandhi Memorial Trust

5)     The Rajiv Gandhi Foundation Donations to government or local authority for charitable purpose ((excluding family planning)

6)      Authority or corporation having income exempt

7)     Donations for repair/ renovation of notified places of worship

8)     World Vision India

9)     Udavum Karangal

Tax Deduction under Section 80 GG:

Deduction available is the minimum of:

1. Rent paid minus 10% of total income
2. Actual HRA received
3. 50 % of Basic+DA

Note:

1.      This deduction is available for rent paid when HRA is not received. The taxpayer, spouse or minor child should not own residential accommodation at the place of employment.

1. The taxpayer should not have self-occupied residential property in any other place.
2. The taxpayer must be living on rent and paying rent.
3. Those who stay with their parents can also claim HRA benefits by paying rent to their parents (For F.Y-2017-18).

Tax Deduction under Section 80 GGA:

Certain donations for scientific, social or statistical research or rural development programme or for carrying out an eligible project or scheme or National Urban Poverty Eradication Fund

Tax Deduction under Section 80GGC:

Amount paid to any political party (Not allowed in cash)

Tax Deduction under Section 80 TTA:

 Interest on deposits in savings bank accounts  in banks ,post office or Co-operative society engaged in carrying on business of banking (up to Rs. 10,000 per year)

Tax Deduction under Section 80 U:

Deduction up to Rs.75,000 ( who have 40% disability) and Rs.1.25 lakhs ( for severe disability)can be claimed by individual for spending on medical treatments of individual (at any time during the previous year, is certified by the medical authority to be a person with disability)

 

Hope you liked this article and you will now invest to get maximum tax benefit.

 

Regards,

Mayuri.