Deductions

 

Max Amount (Rs.)

Standard deduction

40,000

Section 80C

150,000

Section 80CCD(1B) NPS

50,000

Section 80D

75,000

Section 24(b)

200,000

Total

515,000

Total Taxable Income

Rs. 750,000

(Minus) Tax Saving Investments/Spends

Nil

Net Taxable Income

750,000

Tax on Net Taxable Income:

 

20% of Rs. 250,000 (750,000 – 500,000)

Rs. 50,000

(Add) 5% of Rs. 250,000 (500,000 – 250,000)

+ 12,500

Total Tax on Income

62,500

(Add) 4% Cess

+ 1,500

Total Tax Payable in A.Y. 2019-20

Rs. 65,000

 

However, with tax saving:

Total Taxable Income

Rs. 750,000

(Minus) Tax Saving Investments/Spends

- 515,000

Net Taxable Income

235,000

Total Taxable Income

Rs. 15,00,000

(Minus) Tax Saving Investments/Spends

(Rs. 515,000)

Net Taxable Income

9,85,000

Tax on Net Taxable Income:

 

20% of Rs. 485,000 (10,00,000 – 500,000)

Rs. 97,000

(Add) 5% of Rs. 250,000 (500,000 – 250,000)

+ 12,500

Total Tax on Income

109,500

(Add) 4% Cess

+ 4,380

Total Tax Payable in A.Y. 2019-20

Rs. 113,880

Total Taxable Income

Rs. 20,00,000

(Minus) Tax Saving Investments/Spends

Nil

Net Taxable Income

20,00,000

Tax on Net Taxable Income:

 

30% of Rs. 500,000 (15,00,000 – 10,00,000)

Rs. 300,000

20% of Rs. 500,000 (10,00,000 – 500,000)

+ 100,000

(Add) 5% of Rs. 250,000 (500,000 – 300,000!)

+ 10,000

Total Tax on Income

410,000

(Add) 4% Cess

+ 16,400

Total Tax Payable in A.Y. 2019-20

Rs. 426,400

Total Taxable Income

Rs. 20,00,000

(Minus) Tax Saving Investments/Spends

(Rs. 515,000)

Net Taxable Income

14,85,000

Tax on Net Taxable Income:

 

30% of Rs. 500,000 (14,85,000 – 10,00,000)

Rs. 145,500

20% of Rs. 485,000 (10,00,000 – 500,000)

+100,000

(Add) 5% of Rs. 250,000 (500,000 – 250,000)

+ 10,000

Total Tax on Income

255,500

(Add) 4% Cess

+ 10,220

Total Tax Payable in A.Y. 2019-20

Rs. 265,720

SR. NO

INVESTMENTS ELIGIBLE FOR TAX DEDUCTIONS

DESCRIPTION

1

Home Loan Principal Repayment

Applicable to the first house property.

Home loan EMI consists of two major components: Principal and Interest.

Section 80C allows you to claim tax benefits on the principal paid.

2

Life Insurance Premiums

Life insurance premium, includingpayments for unit linked insurance plans, are eligible for tax benefits under section 80C.

 

The limit for claiming the benefits is Rs. 1.5 lakhs, which means if you make no other investments but pay Rs. 2 lakhs towards your life insurance policy, then Rs. 1.5 lakh will be eligible for tax benefits.

3

Five-Year Bank Fixed Deposits

Term deposit with a tenure of at least five years qualifyfor deduction under section 80C.

4

Equity Linked Savings Schemes (ELSS)

Investment in mutual funds, especially the equity-linked savings scheme makes you eligible for tax exemption under this section.

 

ELSS funds provide maximum tax benefit up to Rs. 1.5 lakhs per annum and come with a lock-in period of 3 years.

5

Provident Funds

All contributions made under different types of provident funds like PPF (Public Provident Fund), EPF (Employee Provident Fund) and VPF (Voluntary Provident Fund) are eligible for tax benefits under Section 80C.

6

National Pension Scheme (NPS)

Investment into Tier I account (meant for retirement) of NPS, is eligible for deduction under sec 80C

6

National Savings Certificate (NSC)

Investment made in these certificates, which come with a maturity period of 5 and 10 years, is also eligible for tax benefits up to Rs. 1.5 lakhs.

7

Sukanya Samriddhi Account

Announced by the Indian government in early 2015, this specialaccount allows parents to open an account for their girl child. Parents can deposit money up to Rs. 1.5 lakhs each year and earn an interest of 8.1percenton it.

8

School/College Education Expenses

The amount paid by parents as tuition fees of their children, (at the time of admission or thereafter), is eligible as a deductionunder Section 80C.

 

However, the fees should be paid to a school, college, or university in India only.

9

Pension Funds

You can secure your retirement by investment in pension funds and become eligible for deduction under this section.

10

Senior Citizen Saving Scheme

This scheme is available only for individuals in 60 or above age group. The investment made into thisschememakes you eligible for tax benefits under this section.

11

Post Office Time Deposits

Similar to bank fixed deposits, time deposits held at post office also are eligible for tax benefits under section 80C.

 

Best Tax Saving

Still Better

Okay Option

Invested Money

Exempt

Exempt

Exempt

Interest/Income

Exempt

Exempt

Taxable

Maturity Value

Exempt

Taxable

Taxable

Investment type

EEE

EET

ETT

DESCRIPTION

HEALTH PREMIUM PAID FOR

MAX DEDUCTION
U/S 80D

SELF, SPOUSE AND DEPENDENT CHILDREN

PARENTS

Everyone is below 60 years of age

Rs. 25,000

Rs. 25,000

Rs. 50,000

When your parents have crossed the age of 60

Rs. 25,000

Rs. 50,000 (incl. Expenses)

Rs. 75,000

You and your parents have passed the age of 60

Rs. 50,000

Rs. 50,000 (incl. Expenses)

Rs. 1,00,000

Preventive healthcare expense of up to Rs. 5000 is part of the maximum limit under this section.

Example of Estimating Deduction U/S 80D:

Paramjeet is 37 years old and married to Kiran, both are employed. They have two kids. Paramjeet’s parents are financially independent, but Paramjeet pays their health insurance premiums, as they don’t want to buy a health plan at their age. They are over 70 years of age. Similarly, Kiran has bought a senior citizen health plan for her parents.

Paramjeet and Kiran have paid the following amount of premiums and care expenses in the F.Y. 2018-19:

  • Paramjeet paid:

    • Rs. 18,000 for family floater policy covering him, Kiran and the kids

    • Rs. 4,000 for critical illness health insurance for self

    • Rs. 45,000 for family floater Mediclaim for his senior citizen parents

  • Kiran paid:

    • Rs. 3,500 for critical illness cover for self

    • Rs. 42,000 for Mediclaim cover for her parents

    • Rs. 12,000 on preventive healthcare for the family (not the parents)

Since both Param and Kiran file their separate ITRs, they can claim the following amounts u/s 80D:

Item

Param

Kiran

Family Floater Mediclaim Premium

18,000

 

Critical Illness Health Cover Premium

4000

3500

Premium Paid for Health cover for Senior Citizen Parents

48,000

42,000

Preventive Healthcare expenses (Max. 5000)

 

12,000

Total Applicable Claim

70,000

50,500

Total Taxable Salary Income

Rs. 11,00,000

30% tax bracket

(Minus) Loss from House Property (Rs. 400,000)

200,000

 

Net Taxable Income for the F.Y.

900,000

20% tax bracket

Actual HRA received:

Rs 15,000 x 12

Rs 180,000

Actual rent paid: excess rent paid over 10% of the salary

(Rs 10,000 x 12) – (10% of Rs 30,000 x 12)

84,000

50% of basic salary:

[(Rs 30,000 x 12) x 50%]

180,000

TYPES OF TAX SAVING ACTIVITIES

SECTION

MAX DEDUCTION LIMITS

Expenses on a handicapped dependent

 

80DD

For Disability up to 80%: Rs. 75,000

For severe disabilities (above 80%): Rs.1.25 Lakhs

Treatment of specified illnesses

 

80DDB

Based on Taxpayer’s Age:

Up to 60 years - Rs. 40,000

60 to 80 years - Rs. 60,000

Above 80 years - Rs. 80,000

Education loan interest payment

80E

Actual interest paid

Home loan interest payment for first-time home-owners

80EE

Up to Rs. 50,000 (additional deduction over sec. 24B)

Donations to approved charitable institutes

80G

50% or 100% of the donated amount

Contributions made to a political party by companies and individuals respectively

80GGB

80GGC

Nil. 100% actual contribution made, by other than cash only.

Saving account interest

80TTA

Up to Rs. 10,000

Handicapped tax-payers can claim this deduction

80U

Disability up to 80% - Rs.75,000
Severe disabilities - Rs.1.25 lakhs

Royalty or patent income

80RRB

Up to Rs. 3 lakhs

Received Gift

56(2)

Up to Rs. 50,000

AGE

INCOME TAX SLABS

TAX RATE

MAX. LIABILITY (Rs.)

 

Less than 60 years

Up to 2,50,000

Nil

Nil

2,50,000 to 5,00,000

5%

12,500

5,00,000 to 10,00,000

20%

112,500

More than 10,00,000

30%

112,500 + 30% of (Income – 10 Lakh)

AGE

INCOME TAX SLABS

TAX RATE

MAX LIABILITY (Rs.)

60 years to 80 years

Up to 3,00,000

Nil

Nil

3,00,000 to 5,00,000

5%

10,000

5,00,000 to 10,00,000

20%

110,000

More than 10,00,000

30%

110,000 + 30% of (Income – 10 Lakh)

AGE

INCOME TAX SLAB

TAX RATE

MAX LIABILITY (Rs.)

 

Above 80 year

Up to 2,50,000

Nil

Nil

2,50,000 to 5,00,000

Nil

Nil

5,00,000to 10,00,000

20%

100,000

More than 10,00,000

30%

100,000 + 30% of (Income – 10 Lakh)

TYPES OF TAX SAVING ACTIVITIES

SECTION

MAXDEDUCTION AMOUNT

Investments & Expenses

80C

up to Rs. 1,50,000

80CCC

Additional NPS Investments

80CCD(1B)

up to Rs. 50,000

Expenses on a handicapped dependent

 

80DD

For Disability up to 80% - Rs. 75,000

For severe disabilities –Rs.1.25 lakhs

Treatment of specified illnesses

 

80DDB

Age

Up to 60 years - Rs.40,000 
60 to 80 years – Rs.60,000 
above 80 years – Rs.80,000

Education loan interest payment

80E

Nil. Actual interest paid

Home loan interest payment for first-time home-owners

80EE

Up to Rs.50,000

Donations to approved charitable institutes

80G

50% or 100% of the donated amount

Rent paid by employees not having HRA

80GG

Lesser of the following:

  • 25% of total income

  • Rs.5000 per month

  • Rent paid to exceed 10% of total income

Contributions made to a political party by companies and individuals respectively

80GGB

80GGC

Nil. 100% actual contribution made, by other than cash only.

Saving account interest

80TTA

Up to Rs.10,000

Handicapped tax-payers can claim this deduction

80U

Disability up to 80% - Rs.75,000
Severe disabilities - Rs.1.25 lakhs

Royalty or patent income

80RRB

Up to Rs.3 lakhs

Received Gift

56(2)

Up to Rs. 50,000

 

Appendix 3: Deductions Available to NRIs and PIOs (Person of Indian Origin)

TYPES OF TAX SAVING ACTIVITIES

SECTION

MAX DEDUCTION AMOUNT

Investments & Expenses

80C

up to Rs. 150,000

80CCC

Education loan interest payment

80E

Nil. Actual interest paid

Home loan interest payment for first-time home-owners

80EE

Up to Rs. 50,000

Donations to approved charitable institutes

80G

50% or 100% of the donated amount

Contributions made to a political party by companies and individuals respectively

80GGB

80GGC

Nil. 100% actual contribution made by other than cash only.

Saving account interest

80TTA

Up to Rs. 10,000

Royalty or patent income

80RRB

Up to Rs. 3 lakhs

Received Gift

56(2)

Up to Rs. 50,000