Tax planning for salaried employees- Deductions available based on investment for FY 2018-19

Last Updated at: July 25, 2020
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Tax Planning for Salaried Employees - Deductions available based on investment
According to the amended law, if a person withdraws cash above Rs 20 lakh from their bank account in an FY and has not submitted ITR over the last three financial years, then TDS would be levied at a rate of 2% on the withdrawn sum.

 

Tax planning is important for every salaried individual and here we have outlined the deductions based on investment for the financial year 2018-19.

Get Your Taxes Prepared by Experts

Section Provision Maximum Deduction Who can Claim
24 Interest paid on Housing loan:
Provided the property and loan both should be in the name of the employee. Only Interest is exempt under this section – and Principal repayments can be claimed under Sec 80C below
Note: Construction should have been completed, and certificate of completion should have been received
For self occupied property – Rs. 200000/-
For rented out property – No Max Limit, actual interest paid can be taken as deduction
All assessees
80C Contribution made to any of the following: Deduction is limited to whole of the amount paid subject to a maximum of Upto Rs.1,50,000/- Individual/HUF
1. PPF (Public Provident Fund)
Individual – Assessee, Assessee’s Spouse & Children
2. EPF (Employees’ Provident Fund) – Employee Contribution part
3. 5 years Bank Deposits (FD) or Post office Tax saving Deposits
4. National Savings Certificates (NSC)
5. ELSS Mutual Funds (Equity Linked Saving Schemes)
Children’s Tuition Fees
6. Individual – Paid to any School, college or university in India for full time education of any 2 of his/her children – (Only for recognised and mandatory eduction – but not for commercial institutions)
7. Life Insurance Premium
Paid for You, Your Spouse & your Children
8. Sukanya Samriddhi Account Deposit Scheme
9. SCSS (Post office Senior Citizen Savings Scheme)
10. Repayment of Home Loan (Principal only)
11. Stamp duty charges for purchase of a new house
12. National Pension System
13. NABARD rural Bonds
80CCC Contributions to certain pension funds of LIC or any other insurer (subject to certain conditions) Individual/HUF
80CCD Contribution to pension scheme notified by Central Government up to 10% of salary (subject to certain conditions and limits) Individual
Contribution made by employer shall also be allowed as deduction under section 80CCD(2) while computing total income of the employee. However, amount of deduction could not exceed 10% of salary of the employee

Additional Rs. 50,000 deduction is provided under this section apart from the Max limit of Rs.1,50,000

Individual
80CCF Amount paid or deposited, during the previous years relevant to assessment year 2011-12 or 2012-13, as subscription to notified long-term infrastructure bonds. Up to Rs. 20,000 is deductible. Individual/HUF
80D Amount paid (in any mode other than cash) by an individual or HUF on account of preventive health check-up (subject to limit)
Individual – Assessee, Assessee’s Spouse & Children, Dependent Parents
1. For self, spouse and children
Deduction upto Rs.25,000/-
(Deduction of upto Rs.50,000 in case of either you or your spouse are senior citizens)
2. For parents
Deduction upto Rs.25,000/- (Deduction upto Rs. 50,000/- in case either of your parents are senior citizens)
Individual/HUF
80D Deduction for preventive health check-up incurred in any mode other than cash Maximum to the extent of Rs. 5000/- Individual/HUF
80DD Any expenditure has been incurred for the medical treatment/insurance premium of physically challenged dependant person. Flat Rs. 75,000 can be deducted
(Additional Rs. 50,000 in case of severe disability)
Resident Individual/HUF
80DDB Expenses actually paid for medical treatment of specified diseases and ailments (subject to certain conditions) Below 60Years – Rs. 40,000 senior citizen (60 – 80y ) – upto Rs.60,000 Super Senior Citizen (Above 80Y) – Upto Rs.80,000 or Actual amount spent, whichever is less Resident Individual/HUF
80E Amount of interest paid on education loan taken from banks or recognised charitable institutions. (Only interest can be claimed and not Principal repayments) Actual interest paid Individual
80G Donations to certain approved trusts, charitable institutions etc. [amount of deduction is 50 per cent of net amount donated].

100 per cent of amount donated to National Defence Fund, Prime Minister’s National Relief Fund, National Children’s Fund, Government or approved association for promoting family planning, universities etc

Note: Donations should have been made through digital payments /cheque and Receipt should have been collected along with PAN

50% of Actual Amount or 100% of Actual amount depending on Receiver of donation All assessees
80GG Rent paid in excess of 10% of total income for residential house. subject to maximum of Rs. 5,000 p.m. or 25% of total income, whichever is less) Individuals not receiving any house rent allowance
80GGB Sum contributed to any political party/electoral trust
(Contribution should be made only in other than cash – i.e. through cheque/digital payments)
Total Sum Indian company
80TTA  Interest on deposits in savings bank accounts up to Rs. 10,000 per year Individuals/HUFs (except Senior Citizen)
80TTB Interest on deposit in saving account or fixed deposit upto Rs. 50,000 per year Senior citizen
80U A resident individual who, at any time during the previous year, is certified by the medical authority to be a person with disability Deduction of Rs. 75,000
(Additional Rs. 50,000 if disability is severe)
Resident individuals
80EE First time buyers of house property by taking Housing loan:
1. This deduction would be allowed only if the value of the property purchased is less than Rs. 50 Lakhs and the value of loan taken is less than Rs. 35 Lakhs.
2. The loan should be sanctioned between 1st April 2016 and 31st March 2017.
3. The benefit of this deduction would be available till the time the repayment of the loan continues.
4. This Deduction would be available from Financial Year 2016-17 onwards.
Interest paid on housing loan is already allowed under Sec. 24 above – to the maximum extent of Rs. 2,00,000

Now under this section any excess interest paid above 2 lacs can be claimed to the extent of Rs. 50,000

Resident individuals
87A Tax rebate in case of individual resident in India, whose total income does not exceed Rs. 3,50,000 Quantum of rebate shall be an amount equal to 100% of such income-tax or an amount of Rs. 2,500, whichever is less. Individual
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Tax planning for salaried employees- Deductions available based on investment for FY 2018-19

1218
According to the amended law, if a person withdraws cash above Rs 20 lakh from their bank account in an FY and has not submitted ITR over the last three financial years, then TDS would be levied at a rate of 2% on the withdrawn sum.

 

Tax planning is important for every salaried individual and here we have outlined the deductions based on investment for the financial year 2018-19.

Get Your Taxes Prepared by Experts

Section Provision Maximum Deduction Who can Claim
24 Interest paid on Housing loan:
Provided the property and loan both should be in the name of the employee. Only Interest is exempt under this section – and Principal repayments can be claimed under Sec 80C below
Note: Construction should have been completed, and certificate of completion should have been received
For self occupied property – Rs. 200000/-
For rented out property – No Max Limit, actual interest paid can be taken as deduction
All assessees
80C Contribution made to any of the following: Deduction is limited to whole of the amount paid subject to a maximum of Upto Rs.1,50,000/- Individual/HUF
1. PPF (Public Provident Fund)
Individual – Assessee, Assessee’s Spouse & Children
2. EPF (Employees’ Provident Fund) – Employee Contribution part
3. 5 years Bank Deposits (FD) or Post office Tax saving Deposits
4. National Savings Certificates (NSC)
5. ELSS Mutual Funds (Equity Linked Saving Schemes)
Children’s Tuition Fees
6. Individual – Paid to any School, college or university in India for full time education of any 2 of his/her children – (Only for recognised and mandatory eduction – but not for commercial institutions)
7. Life Insurance Premium
Paid for You, Your Spouse & your Children
8. Sukanya Samriddhi Account Deposit Scheme
9. SCSS (Post office Senior Citizen Savings Scheme)
10. Repayment of Home Loan (Principal only)
11. Stamp duty charges for purchase of a new house
12. National Pension System
13. NABARD rural Bonds
80CCC Contributions to certain pension funds of LIC or any other insurer (subject to certain conditions) Individual/HUF
80CCD Contribution to pension scheme notified by Central Government up to 10% of salary (subject to certain conditions and limits) Individual
Contribution made by employer shall also be allowed as deduction under section 80CCD(2) while computing total income of the employee. However, amount of deduction could not exceed 10% of salary of the employee

Additional Rs. 50,000 deduction is provided under this section apart from the Max limit of Rs.1,50,000

Individual
80CCF Amount paid or deposited, during the previous years relevant to assessment year 2011-12 or 2012-13, as subscription to notified long-term infrastructure bonds. Up to Rs. 20,000 is deductible. Individual/HUF
80D Amount paid (in any mode other than cash) by an individual or HUF on account of preventive health check-up (subject to limit)
Individual – Assessee, Assessee’s Spouse & Children, Dependent Parents
1. For self, spouse and children
Deduction upto Rs.25,000/-
(Deduction of upto Rs.50,000 in case of either you or your spouse are senior citizens)
2. For parents
Deduction upto Rs.25,000/- (Deduction upto Rs. 50,000/- in case either of your parents are senior citizens)
Individual/HUF
80D Deduction for preventive health check-up incurred in any mode other than cash Maximum to the extent of Rs. 5000/- Individual/HUF
80DD Any expenditure has been incurred for the medical treatment/insurance premium of physically challenged dependant person. Flat Rs. 75,000 can be deducted
(Additional Rs. 50,000 in case of severe disability)
Resident Individual/HUF
80DDB Expenses actually paid for medical treatment of specified diseases and ailments (subject to certain conditions) Below 60Years – Rs. 40,000 senior citizen (60 – 80y ) – upto Rs.60,000 Super Senior Citizen (Above 80Y) – Upto Rs.80,000 or Actual amount spent, whichever is less Resident Individual/HUF
80E Amount of interest paid on education loan taken from banks or recognised charitable institutions. (Only interest can be claimed and not Principal repayments) Actual interest paid Individual
80G Donations to certain approved trusts, charitable institutions etc. [amount of deduction is 50 per cent of net amount donated].

100 per cent of amount donated to National Defence Fund, Prime Minister’s National Relief Fund, National Children’s Fund, Government or approved association for promoting family planning, universities etc

Note: Donations should have been made through digital payments /cheque and Receipt should have been collected along with PAN

50% of Actual Amount or 100% of Actual amount depending on Receiver of donation All assessees
80GG Rent paid in excess of 10% of total income for residential house. subject to maximum of Rs. 5,000 p.m. or 25% of total income, whichever is less) Individuals not receiving any house rent allowance
80GGB Sum contributed to any political party/electoral trust
(Contribution should be made only in other than cash – i.e. through cheque/digital payments)
Total Sum Indian company
80TTA  Interest on deposits in savings bank accounts up to Rs. 10,000 per year Individuals/HUFs (except Senior Citizen)
80TTB Interest on deposit in saving account or fixed deposit upto Rs. 50,000 per year Senior citizen
80U A resident individual who, at any time during the previous year, is certified by the medical authority to be a person with disability Deduction of Rs. 75,000
(Additional Rs. 50,000 if disability is severe)
Resident individuals
80EE First time buyers of house property by taking Housing loan:
1. This deduction would be allowed only if the value of the property purchased is less than Rs. 50 Lakhs and the value of loan taken is less than Rs. 35 Lakhs.
2. The loan should be sanctioned between 1st April 2016 and 31st March 2017.
3. The benefit of this deduction would be available till the time the repayment of the loan continues.
4. This Deduction would be available from Financial Year 2016-17 onwards.
Interest paid on housing loan is already allowed under Sec. 24 above – to the maximum extent of Rs. 2,00,000

Now under this section any excess interest paid above 2 lacs can be claimed to the extent of Rs. 50,000

Resident individuals
87A Tax rebate in case of individual resident in India, whose total income does not exceed Rs. 3,50,000 Quantum of rebate shall be an amount equal to 100% of such income-tax or an amount of Rs. 2,500, whichever is less. Individual
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