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Income Tax Deductions for Salaried Employees FY 2019-20

income-tax-deductions-for-salaried-employees-fy-2019-20

Income Tax Deductions for Salaried Employees FY 2019-20: Every Individual, more particularly salaried individuals, are deeply interested in saving tax through various available options under the Income Tax Laws. 

One must do proper tax planning in advance at the beginning of the year to maximize the tax benefits. The tax savins financial instruments not only reduces and save taxes but also provide a return on the investment that one must select carefully. 

In this article, a list of all the income tax deductions for salaried individuals for FY 2019-20 available Under Chapter VI-A of the Income Tax Act, 1961 is discussed. 

The list of income tax deductions for salaried individuals for FY 2019-20 also discusses the terms and conditions and the investment details for making informed decisions.


    Introduction

    Every Individual, be it a salaried person or a professional or a businessman, wants to save tax on his income. One can save taxes and maximizes returns through proper tax planning and through judicious selection of investment products. The income tax law allows for certain income tax deductions which can be claimed to save tax.

    Many income tax deductions are added, modify the existing income tax deductions and remove certain existing income tax deductions every year by amending the Income Tax Act, 1961 at the time of presenting the Union Budget. The Interim Budget, 2019 and the Union Budget 2019 have prescribed the below-mentioned income tax deductions for FY 2019-20 (AY 2020-21). 

    How do income tax deductions work

    The investments made in the eligible instruments are reduced from the Gross Total Income of the taxpayers. It thus reduces the income of the taxpayers and if the income gets reduced, the tax will automatically get reduced. For FY 2019-20, if the income is reduced below Rs. 5,00,000 then no tax is payable on the income. This is the benefit of making investments in tax savings instruments.

    Remember, the income tax deductions are not limited to investments only. It is even available for certain payments or expenditures like, insurance premium, mediclaim insurance premium, medical expenditure, interest on home loan, etc. which will be discussed in this article.

    By doing proper tax planning and judiciously selecting the investment products one can substantially reduce the tax liability and also earns good returns and accumulate wealth.

    The list of income tax deductions mentioned in this article is not only confined to salaried individuals but can be claimed by any other persons as indicated or mentioned in the provisions below.

    Scheme of Income Tax Deduction

    A brief note on the scheme of income tax deduction under chapter VI-A: The Income Tax Act, 1961 is divided into various chapters based on different topics viz -

    Chapter-I is titled as 'Preliminary' which contains section 1 to section 3, 

    Chapter-II titled 'Basis of Charge' and contains section 4 to section 9A, and so on. 

    Similarly, Chapter VI-A is titled as 'Deductions to be made in computing total income' and contains sections 80A to 80VV.

    Chapter VI-A is divided into four parts-

    Parts of Chapter VI-A
    Headings
    Sections covered
    Part-A
    General
    Section 80A to Section 80B
    Part-B
    Deductions in respect of certain payments
    Section 80C to Section 80GGC
    Part-C
    Deductions in respect of certain incomes
    Section 80H to Section 80TTB
    Part-D
    Other deductions
    Section 80U to Section 80VV

    After determining the 'Gross Total Income', deductions u/c VI-A is claimed therefrom to derive the 'Total Income'. 

    'Gross Total Income' (or GTI) is the aggregate of all the income under the following five heads of income and after adding the clubbing of income and after adjustment of 'set-off of losses'.

    The statutory definition of 'Gross Total Income' is contained in section 80B(5) of the Income Tax Act, 1961 according to which  "gross total income" means the total income computed in accordance with the provisions of this Act, before making any deduction under this Chapter.

    The statutory definition of 'Total Income' is contained in section 2(45) of the Income Tax Act, 1961 according to which "total income" means the total amount of income referred to in section 5, computed in the manner laid down in this Act.

    Tax is payable on the 'Total Income' so derived after claiming the deductions u/c VI-A. Total Income is also called 'Taxable Income'.

    Total Income is rounded off to nearest multiple of Rs. 10. (Section 288A)
    Income under the five heads of Income
    Amount (in Rs.)
    (A) Income from Salary
    Rs. xxx
    (B)  Income from House Property
    Rs. xxx
    (C)  Income from Business or Profession
    Rs. xxx
    (D) Income from Capital Gains
    Rs. xxx
    (E)  Income from Other Sources
    Rs. xxx
    (F)  Aggregate Income of five heads  [(A)+(B)+(C)+(D)+(E)]
    Rs. xxx
    (G) Add: Clubbing of Income
    Rs. xxx
    (H) Less: Set-off of losses
    (-) Rs. xxx
    (I)    Gross Total Income [(F)+(G)-(H)]
    Rs. xxx
    (J)    Less: Deduction u/c VI-A (Sec. 80C, 80D, 80G, etc.)
    (-) Rs. xxx
    (K) Total Income [(I)-(J)]
    Rs. xxx

    Basic rules for Income Tax Deduction

    Some of the basic rules for income tax deduction u/c VI-A are discussed below-

    1. The income tax provisions allow deductions specified in sections 80C to 80U while computing the total income of an assessee. [Section 80A(1)]

    2. The deduction u/c VI-A shall be allowed if the conditions specified in the provisions are complied with.

    3. The deduction amount cannot exceed the 'Gross Total Income'. There cannot be a negative income after claiming the deductions. If the deduction amount is more than the 'Gross Total Income' then the deduction amount will be limited to the Gross Total Income. [Section 80A(2)]

    For example, if the Gross Total Income of an assessee is Rs. 3,00,000 but his investment in PPF and Life insurance premium payment is Rs. 3,50,000. He can claim a total deduction of Rs. 3,00,000 only under chapter VI-A which is limited to his gross total income.

    4. Deductions u/c VI-A will be allowed only if the taxpayer claims the same in his return of income or ITR. The deduction will not be allowed if the taxpayer fails to claim the deduction even if he has invested in the eligible products.

    5. To claim the deduction u/s VI-A, filing of return of income or ITR is mandatory.

    6. Where a deduction is allowed under chapter VI-A, the same will not be allowed under any other provision of the Act. In other words, no double deduction is allowed.

    7. The taxpayer should keep in possession of all the relevant evidence to claim the deduction from the income.

    8. The deduction under chapter VI-A is available on payment basis only. Thus, only if the sum is paid during the previous year, a deduction u/s VI-A can be claimed.

    9. The term "contribution" to any fund, wherever it is applicable like Public Provident Fund, etc., shall not include any sums as repayment of loan. [Section 80C(8)(ii)]

    10. In case of small savings schemes, when the deposit is made by cheque or draft by the subscriber, the date of realization of the amount will be treated as the date of deposit. The scheme includes Public Provident Fund, Senior Citizen Savings Scheme, Post Office Time Deposits.

    11. Please note that deduction under chapter VI-A is not available for the following nature of incomes-

    (a) Any Long Term Capital Gains chargeable to tax under section 112 or 112A.
    Budget 2018 has introduced a new section 112A under which long term capital gains arising from the transfer of equity shares and units of equity-oriented mutual funds are chargeable to tax in excess of Rs. 1,00,000. However, deduction under chapter VI-A is not available from such income also.

    (b) Short Term Capital Gains arising from the sale of listed equity shares on a recognized stock exchange and units of mutual funds or units of business trusts and on which STT is paid on transfer or redemption and chargeable to tax under section 111A of the Income Tax Act, 1961.


    With effect from the assessment year 2017-18, any transaction that takes place on a recognized stock exchange located in International Financial Service Centre (IFSC) like Gujarat's GIFT City and consideration paid or payable is in foreign currency comes under the purview of section 111A, even if STT is not paid.
    Note: Although in the above two cases (a) and (b) where income is chargeable to tax u/s 111A or u/s 112 or u/s 112A,  the benefit of basic exemption amount is available. However, the benefit of the basic exemption limit is only available to a resident Individual and resident HUF. The benefit of the basic exemption limit from such incomes is not available to a non-resident.

    (c) Any exempt income, like dividend income from domestic companies on which DDT is paid under section 115-O, which is not included in computing the Total Income.

    (d) Special Income of the following nature are not entitled to deduction under chapter VI-A:

    Section
    Nature of Income
    115A
    Income from dividends, royalty and technical service fees in the case of foreign companies.
    115AB
    Income from units purchased in foreign currency or capital gains arising from their transfer of an Offshore Fund.
    115AC
    Income from bonds or Global Depository Receipts purchased in foreign currency or capital gains arising from their transfer to a non-resident.
    115ACA
    Income from Global Depository Receipts purchased in foreign currency or capital gains arising from their transfer to a resident individual.
    115AD
    Income from securities or capital gains arising from their transfer to Foreign Institutional Investors.
    115BB
    Income from winnings from lotteries, crossword puzzles, races including horse races, card games and other games of any sort or gambling or betting of any form or nature whatsoever
    115BBA
    Income of non-resident sportsmen or sports associations
    115BBD
    Dividend income received from foreign companies
    115D
    Investment income or income by way of long-term capital gains or both of a non-resident Indian

    Income Tax Deductions for Salaried Employees for FY 2019-20

    Deduction under section 80C:

    This is one of the most widely used income tax deduction provision by a taxpayer. It includes a wide list of investment products.  

    Income Tax Deduction u/s 80C: Available to
    Individual
    HUF

    Maximum amount of Income Tax Deduction u/s 80C is limited to:
    Rs. 1,50,000

    Sl. No.
    List of Investment Products available for income tax deduction u/s 80C
    1
    Contribution of Employees Provident Fund (EPF)
    2
    Contribution to Public Provident Fund (PPF)
    3
    Payment of Life Insurance Premium
    4
    5-year Tax Savings Fixed Deposits
    5
    Deposit in Senior Citizen Savings Scheme (SCSS)
    6
    Deposit in Sukanya Samriddhi Account Deposit Scheme
    7
    Purchase of NSC (National Savings Certificates)
    8
    Purchase of Mutual Funds ELSS (Equity Linked Saving Schemes)
    9
    Children’s School Tuition Fees
    10
    Principal amount on repayment of Home Loan
    11
    Contribution to a Pension Fund
    12
    Deposit in Post Office Time Deposit Rules, 1981
    13
    Deposit in Tax Savings Term Deposits of National Housing Bank
    14
    Subscription to NABARD Rural Bonds
    15
    Subscription to a non-commutable deferred annuity plan
    16
    Deduction for Deferred annuity
    17
    Contribution towards an approved superannuation fund
    18
    Contribution to ULIP-71
    19
    Contribution to ULIP of LIC Mutual Fund
    20
    Subscription to Public Deposit Scheme of HUDCO
    21
    Subscription to any eligible issue of equity share capital or debentures
    22
    Deduction for the cost of residential house property
    23
    Amount deposited by a Central Government employee a specified pension scheme

    1. Deduction for Contribution to EPF: An Individual can claim an income tax deduction for his contribution to the Statutory Provident Fund and Recognised Provident Fund during a financial year.

    Please note that contribution(s) during a financial year is allowed as deduction u/s 80C and not the accumulated balance as on the last day of the previous year.

    The employee's contribution to EPF during the year is allowed as a deduction and not the employer's contribution.

    Contribution to EPF
    Available to
    Individuals only
    Available for contribution to
    Statutory Provident Fund
    Recognized Provident Fund

    2. Deduction for Contribution to PPF: An Individual or HUF can claim an income tax deduction for his contribution to the Public Provident Fund (PPF) during a financial year. 

    Please note that contribution(s) during a financial year is allowed as deduction u/s 80C and not the accumulated balance as on the last day of the previous year. The interest income on a PPF account is exempt from tax.

    The exemption shall be available to an individual or HUF if deposited into an account held in the name of the below-mentioned persons.

    Contribution to PPF
    Available to
    Individuals and HUF only
    Available for contribution to
    Public Provident Fund
    Available if the contribution is made into an account held in the name of:
    In case of an Individual:
    Self, Spouse, Any child
    In case of HUF:
    Any member of the HUF

    Notes: The followings are noteworthy for a PPF account-
    1. Effective from 13-05-2005, a HUF cannot open a PPF account.
    2. The maximum amount of contribution in a PPF account in a financial year is limited to Rs. 1,50,000 including an account of taxpayers' minor child.
    3. One person can have only one PPF account.
    4. A non-resident cannot open a PPF account. But if the account is opened when the taxpayer was resident, he can continue to contribute to the PPF account.

    3. Deduction for payment of life insurance premium:

    Income Tax Act, 1961 allows a deduction for payment of any sum to effect or to keep in force a life insurance policy under the following noted circumstances-

    1. Payment basis: Such a sum must have been paid in the previous year by the taxpayer.

    2. On whose life: Such a sum must have been paid for a life insurance policy taken on the life of:

    (i) in the case of an individual, self, spouse and any child of such individual, and

    (ii) in the case of a Hindu undivided family, any member thereof.

    3. Restriction of deduction: Though the whole amount of sum paid for a life insurance policy will be allowed as a deduction, however, in the following circumstances, the sum will be allowed with restrictions-

    (i) If the life insurance policy is issued on or before 31.03.2012 and the sum payable on such policy is more than 20 percent of the capital sum assured, then the amount of deduction will be restricted to 20 percent of capital sum assured, and

    (ii) If the life insurance policy is issued on or after 01.04.2012 and the sum payable on such policy is more than 10 percent of the capital sum assured, then the amount of deduction will be restricted to 10 percent of capital sum assured.

    (iii) If the life insurance policy is issued on the life of a person with disability or severe disability or suffering from specified disease or ailment and the policy is issued on or after 01.04.2013 and the sum payable on such policy is more than 15 percent of the capital sum assured, then the amount of deduction will be restricted to 15 percent of capital sum assured.

    4. Early termination: If the life insurance policy is surrendered or terminated or lapsed-

    (i) in case of any single premium policy, within 2 years after the date of commencement of insurance; or

    (ii) in any other case, before premiums have been paid for 2 years; or

    (iii) in case of unit-linked insurance plan (ULIP) policies, before contributions have been paid for five years;

    then, 

    (a) no deduction for payment of any sum shall be allowed for the year in which policy is terminated, and

    (b) the deduction so allowed in an earlier year(s) shall be deemed to be the income of the taxpayer in the year of termination.

    Notes: The followings are noteworthy for a life insurance policy-
    1. It is very important to hold a single premium paid policy for a minimum period of 2 years, else the deduction allowed in the earlier year(s) will become the income of the current year in which policy is surrendered. If the policy is terminated after 2 years, there will be no rollback of the deduction allowed in the earlier year(s).
    2. In case where the policy is not a single premium policy and a ULIP, which covers policies where premiums are paid monthly/quarterly or annually, the premium must be paid for 2 years else the deduction allowed in the earlier year(s) will become the income of the current year in which policy is surrendered. If the policy is surrendered or terminated after 2 years, there will be no rollback of the deduction allowed in the earlier year(s).
    3. In case of a ULIP policy, the minimum period of premium contribution is 5 years. If the premium is not contributed for 5 years then any deduction allowed in the earlier year(s) will become the income of the year in which policy is surrendered or terminated.
    4. Practically, to avoid these circumstances, insurance policies are not allowed to be surrendered before 2 years or 5 years for traditional and ULIP policies respectively.
    5. This deduction for payment of life insurance premium is available to non-residents also.

    4. Investment in 5-year Tax Savings Fixed Deposits: An Individual or HUF can claim an income tax deduction for making an investment in Fixed Deposit or Term Deposit or Time Deposit with a bank or Post-office for a fixed period of 5 years in tax-savings fixed deposits.

    It may please be noted that all 5-year fixed deposits are not tax-savings fixed deposits. A tax-savings Fixed Deposit is separately stamped as 'Tax Savings' by the bank.

    Investment in Tax Savings Fixed Deposits
    Available to
    Individuals and HUF only
    Available for investment in
    5-year Tax Savings Fixed Deposit
    Available for investment in Fixed Deposit
    With a Bank or Post-Office only

    Notes: The followings are noteworthy for Tax Savings Fixed Deposits-
    1. A Tax Savings Fixed Deposits can be opened in the name of a minor also.
    2. Joint deposits are permitted (including Either or Survivor / Former or Survivor). 
    3. In the case of a joint holder type deposit, the deduction from income under section 80C shall be available only to the first holder of the deposit.
    4. The minimum amount of investment is Rs. 100 and thereafter in multiples of Rs. 100 can be invested subject to a maximum of Rs. 1,50,000 in a financial year.
    5. The maturity period of Tax Savings Fixed Deposits is 5 (five) years.
    6. A tax savings fixed deposit cannot be prematurely withdrawn before the stipulated time and no loan is allowed to be taken against such deposits. However, interest can be paid periodically or reinvested.
    7. Interest income on Tax Savings Fixed Deposits is taxable and can be paid periodically or reinvested. TDS is applicable as per the rules provided in section 194A (for resident) and section 195 (for non-residents). Income Tax Form 15G or Form 15H can be filed to save TDS.
    8. The deposit is not transferable. However, the deposits are transferable from one branch to another branch in the same name(s).
    9. A Tax Savings Fixed Deposit is governed by the BankTerm Deposit Scheme, 2006 notified by the CBDT vide Notification No. 203/2006 dated 28-07-2006.

    5. Deposits in Senior Citizens Savings Scheme (SCSS): An Individual can claim an income tax deduction for deposit in Senior Citizens Savings Scheme under Senior Citizens Savings Scheme Rules, 2004.

    This scheme is available only for a Resident Individual who may or not be a senior citizen under the income tax law.

    Withdrawal of tax benefits on pre-maturity: If any amount, including interest accrued thereon, is withdrawn by the taxpayer from his Senior Citizen Savings account before the expiry of the period of five years from the date of its deposit, the amount so withdrawn shall be deemed to be the income of the taxpayer of the previous year in which the amount is withdrawn and shall be liable to tax in the assessment year relevant to such previous year.


    Hence, it is mandatory to hold the account for a minimum period of 5 years to enjoy the benefit of the income-tax deduction.

    Exception: In the following cases, the above-mentioned rule of withdrawal of tax benefits for the receipts of amount from the Senior Citizen Savings account, even before the 5 years shall not apply-

    1. The periodic interest receipt from the Senior Citizen Savings account if the same is offered to tax in the year of receipt.

    2. If the amount is received by the nominee or legal heirs on the death of the account holder or taxpayer.

    Investment in SCSS
    Available to
    Resident Individuals only
    Available for investment in
    Senior Citizen Savings Scheme 
    Available for investment in SCSS
    With a Bank or Post-Office only

    Notes: The followings are noteworthy for the Senior Citizens Savings Scheme-
    1. An account under the Senior Citizens Savings Scheme can be opened only by a resident senior citizen.
    2. The maturity period is 5 years, though premature closure is allowed.
    3. The maximum amount of investment is Rs. 15 Lakh.
    4. The spouse of the senior citizen taxpayer can have a separate account under the scheme.
    5. Interest income is taxable and is paid quarterly. TDS is applicable as per the rules provided in section 194A. Income Tax Form 15H can be file to save TDS.
    6. A depositor cannot avail any loan against the Senior Citizens Savings Scheme.
    7. An account under SCSS can be opened by a person who is less than 60 years of age under certain circumstances. Even they can claim a deduction.

    6. Deposits in Sukanya Samriddhi Account Deposit Scheme: An Individual can claim an income tax deduction for deposit in Sukanya Samriddhi Account Deposit Scheme. This scheme is included in the list of eligible deduction vide CBDT Notification No. 09/2015 dated 21.01.2015.

    This scheme is available only for girl children up to the age of 10 years of the Individual. 

    Investment in Sukanya Samriddhi Account Deposit Scheme
    Available to
    Individuals only
    Available for investment in
    Sukanya Samriddhi Account Deposit Scheme

    Notes: The followings are noteworthy for the Sukanya Samriddhi Account Scheme-
    1. Account can be opened in the name of a girl child till she attains the age of 10 years.
    2. Only one account can be opened in the name of a girl child. One guardian can open account for a maximum of 2 girl children.
    3. Account can be opened in Post office and branches of authorised banks.
    4. Account can be opened with a minimum of Rs. 250. A minimum of Rs. 250 must be deposited in a Financial year. Maximum Rs. 1,50,000 can be deposited in a financial year.
    5. Interest, as may be notified by the government from time to time, is exempt from tax.
    6. The account shall mature on completion of 21 years from the date of opening of an account or on the marriage of Account holder whichever is earlier.

    7. Purchase of National Savings Certificate (NSC): An Individual can claim an income tax deduction for making an investment in NSC. The NSC can be purchased from the Post office by the Individual. 

    Both NSC-VIII and NSC-IX are included in the list of eligible deduction by CBDT notifications. However, the government has discontinued the sale of NSC-IX, which was launched in December 2011, from December 20, 2015. However, the benefit of the tax deduction on accrued interest NSC-IX will continue. 
    Presently. only NSC-VIII issue is in vogue.
    [Notification No.: S.O.54(E) dated 31/01/1991; Notification No. 223/2005, dated 3-11-2005; Notification No. G.S.R. 868(E), dated 7-12-2011]

    CBDT has clarified some of the issues on NSC with respect to deduction available on NSC to a taxpayer which are reproduced here.

    Some issues on NSC clarified by CBDT:

    (1) Whether income-tax exemption under section 8OC can be claimed by the first-named person in case of joint holding of NSCs VI Issue/VII Issue? The deduction under section 80C can be claimed by the person who has contributed the monies out of his income chargeable to tax. It can be claimed by the first-named person in a joint holding if the first-named person has so contributed the amount.

    (2) Whether rebate of income-tax under section 80C will be available where (a) NSCs VI Issue/VII Issue are purchased in the name of spouse and minor children, and (b) jointly by husband and wife? - The answer to question (1) will apply also here. The deduction under section 80C is to be given to the person who has purchased the NSCs out of his income chargeable to tax.

    (3) Whether the interest accruing to the NSCs would be included in the hands of an individual or in the case of person(s) in whose name(s) the subscription has been made? - The interest accruing on the subscription to the NSCs will be included in the hands of the person who has subscribed from his income chargeable to tax.

    (4) Since the interest on 6-Year NSC VI Issue is deemed to have been re-invested whether the holder of the NSC-VI Issue is entitled to claim the benefit of section 80C on this re-invested interest [Rules 19 and 28 of NSC-VI Issue Rules, 1981]?- The amount of interest re-invested will satisfy the test of having been paid out of income chargeable to tax to get the NSC and so will be entitled to deduction under section 80C.

    (5) Whether a Karta of a HUF can buy NSCs in the name of any member of the HUF? - Where subscription to the NSCs in the name of any member of the HUF, is shown by the family to have been made out of its income chargeable to tax and the beneficial ownership in such certificates vests in the family, the family would be entitled to a deduction under section 80C with reference to such contribution.

    (6) Whether the interest accrued on the subscription would be included in the hands of the individual or in the hands of the person in whose name the subscription has been made? - The interest accrued would be included in the hands of the persons who purchased the NSC out of their income chargeable to tax.

    Investment in NSC
    Available to
    Individuals and HUF
    Available for investment in
    NSC
    Available for investment in NSC
    With Post-Office only

    Notes: The followings are noteworthy for the NSC-VIII issue-
    1. NSC can be purchased from Post Offices only.
    2. The certificate shall be issued on the Passbook or exclusive e-mode.
    3. The minimum purchase amount is Rs. 100. No maximum limit.
    4. NSC purchased during a year is eligible for income-tax deduction.
    5. Certificates can be held singly or jointly.
    6. The loan facility is available by pledging with the banks.
    7. The deposits as well as interest accruing annually but deemed to have been reinvested qualify for deduction u/s 80-C of I.T. Act. Accrued interest is taxable.
    8. NSC certificates can be prematurely encashed under certain circumstances.

    8. Purchase of Mutual Funds ELSS (Equity Linked Saving Schemes): An Individual can claim an income tax deduction for making an investment in ELSS of a Mutual Fund. ELSS is an equity-oriented scheme and the lock-in period is 3 years. In the lock-in period, the units of the scheme cannot be redeemed. 

    Please note that contribution(s) during a financial year is allowed as deduction u/s 80C and not the accumulated balance as on the last day of the previous year.

    The return on the ELSS is market-linked and is not fixed return like fixed deposits. The variable return and the risk of losing the capital are inherent in ELSS.

    The investment in ELSS should be made on the basis of the risk appetite of the investor. If one is risk-averse, he should avoid the ELSS and rather go for fixed return investment products.

    Investment in ELSS
    Available to
    Individuals and HUF
    Available for investment in
    ELSS of Mutual Funds
    Available for investment in ELSS
    With Mutual Finds only

    Notes: The followings are noteworthy for deduction for contribution to ELSS-
    1. Deduction is available only on payment basis. Hence, the actual amount of contribution during a financial year is available for deduction.
    2. The deduction for investment in ELSS of mutual funds is eligible for deduction u/s 80C(2)(xiii) which adheres to the notified scheme namely Equity Linked Savings Scheme, 2005.

    9. Payment of Children School tuition fees: An Individual can claim an income tax deduction towards payment of tuition fees paid to educational institutions for a maximum of 2 children of the taxpayer. The deduction is not available for fees paid for private tuition or coaching classes.

    What constitutes 'tuition fees' is a matter of debate. The term 'tuition' is not defined in the Income Tax Act. The dictionary or literal meaning of 'tuition' is a sum of money charged for teaching by a college or university. 

    Therefore, the tuition fees will only include fees charged for imparting education by the institution. Fees paid towards development fees, bus fees, donations, etc. will not be eligible for deduction. However, education fees, computer education fees, etc. will be allowed.

    Other important rules for claiming tuition fees as a deduction-

    1. It should have been paid at the time of admission or thereafter.

    2. It excludes any payment towards any development fees or donation or payment of similar nature.

    3. It should have been paid to any university, college, school or other educational institution situated within India.

    4. It should have been paid for for the purpose of full-time education. It is clarified that full-time education includes play-school activities, pre-nursery, and nursery classes.

    5. It can be claimed for a maximum of any two children of the Individual.

    Tuition Fees
    Available to
    Individuals only
    Available for
    Payment of Tuition Fees
    To any school, college, or university in India and for full-time education
    Maximum for
    2 (Two) Children

    Notes: The followings are noteworthy for tuition fees-
    1. Deduction for tuition fees is allowed if the same is paid to any educational institution situated in India. Hence, no deduction is allowed if tuition fee is paid for foreign courses at a foreign land.
    2. If the college or institution of any foreign university is located in India then tuition fees paid to such institution is allowed as deduction.
    3. Tuition fees must be paid for full-time education. Hence, correspondence or distance or part-time courses are not covered.
    4. It is clarified that the amount allowable as tuition fees shall include any payment of fee to any university, college, school or other educational institution in India except the amount representing payment in the nature of development fees or donation or capitation fees or payment of similar nature.
    5. Deduction is not available for tuition fees paid for the self-education of the taxpayer.
    6. Deduction is not available for tuition fees paid for education of the spouse of the taxpayer. The deduction for tuition fees is available only for education of children of the taxpayer.
    7. If both the parents have taxable income then the deduction can be claimed by anyone who pays the tuition fees.
    8. The limit of a maximum of 2 children applies to each parent separately for claiming deduction for payment of tuition fees.

    10. Principal amount on repayment of Home Loan: If a loan is taken for purchase or construction of a residential house property then income-tax deduction for repayment of home loan to the extent of the principal amount is allowed under section 80C of the Income Tax Act, 1961.

    From whom to borrow the money to claim the deduction of principal repayment:

    (1) the Central Government or any State Government, or

    (2) any bank, including a co-operative bank, or

    (3) the Life Insurance Corporation, or

    (4) the National Housing Bank, or

    (5) any public company formed and registered in India with the main object of carrying on the business of providing long-term finance for construction or purchase of houses in India for residential purposes, or

    (6) any company in which the public are substantially interested or any co-operative society, where such a company or co-operative society is engaged in the business of financing the construction of houses, or

    (7) the assessee's employer where such employer is an authority or a board or a corporation or any other body established or constituted under a Central or State Act, or

    (8) the assessee's employer where such employer is a public company or a public sector company or a university established by law or a college affiliated to such university or a local authority or a co-operative society.

    Deduction u/s 80C is also available for payment of stamp duty, registration fee and other expenses paid by the taxpayer for buying the property. Other expenses shall include legal fees paid, any brokerage paid, etc.

    Remember, to claim the deduction for other expenses the law requires that if expenses are incurred and paid for the purpose of transferring the property to the taxpayer and not for only transferring the property to the taxpayer. The phrase 'for the purpose of transfer' is a wide connotation than simply for the 'transfer'.


    Withdrawal of tax benefits on transfer: If the taxpayer transfers the house property for which deduction for repayment of the principal amount of borrowed capital is claimed before the expiry of five years from the end of the financial year in which possession of such property is obtained by him then-

    (a) no deduction for repayment of any principal amount of borrowed capital shall be allowed for the year in which the house property is transferred, and

    (b) the deduction so allowed in an earlier year(s) shall be deemed to be the income of the taxpayer in the year of transfer.

    Hence, it is mandatory to hold the house property for a minimum period of 5 years to enjoy the benefit of the income-tax deduction.

    Repayment of Principal amount
    Available to
    Any person
    Available for
    Purchase or construction of a residential house property
    Available for the amount borrowed from
    Banks, Housing Finance Companies, LIC, NHB, etc.

    Notes: The followings are noteworthy for deduction on principal amount of home loan repayment-
    1. Deduction is available on payment basis. If the home loan is not paid, then no deduction will be allowed.
    2. Deduction is available even if the residential house is under construction.
    3. Deduction which is allowed u/s 24 will not be allowed u/s 80C. Interest on home loan is allowed as deduction u/s 24, hence the same will not be allowed u/s 80C.
    4. Deduction is available is only for loan taken for purchase or construction of the residential house(s). If the loan is taken for addition or alteration to, or renovation or repair of, the house property which is carried out after the issue of the completion certificate or after the house property or any part thereof has either been occupied by the assessee or any other person on his behalf or been let out, then the deduction is not available.
    5. Deduction for principal repayment of loan is available for a residential house only and not for other than a residential house viz. shop, godown, etc.
    5. Deduction can be claimed for one or more than one residential house.
    6. Deduction can be claimed by all the co-owners in case of jointly owned house property. For details on the topic read more here.
    7. Deduction is not available if money is borrowed from other than specified persons like banks, etc. For example, if money is borrowed from money lenders, relatives, friends, etc. no such deduction for repayment of principal is available.


    11. Deduction for Contribution to a Pension Fund: [section 80C(2)(xiv)]- An individual can claim a deduction for the contribution to a notified pension fund set up by a mutual fund or UTI from his gross total income.

    The amount of contribution to a notified pension fund during a financial year is eligible for deduction in that year.

    Contribution to Pension Fund
    Available to
    Individuals only
    Available for
    Contribution to a notified Pension Fund set up by a Mutual Fund or UTI

    Notes: The followings are noteworthy for deduction for contribution to a Pension Fund-
    1. Deduction is available only on payment basis. Hence, the actual amount of contribution during a financial year is available for deduction.
    2. The Pension Fund must be set up by any Mutual Fund or by the Administrator or the specified company.
    3. In this case, UTI-Retirement Benefit Pension Fund is notified as a pension fund set up by a specified company. [Notification No. 227/2005, dated 3-11-2005].
    4. Some of the notified pension funds of mutual funds are as follows-
        a) HDFC Retirement Savings Fund. [Notification No. 91/2015, dated 9-12-2015]
        b) Reliance Retirement Fund. [Notification No. 90/2014, dated 23-12-2014]
      c) Franklin India Pension Plan (formerly known as Kothari Pioneer Pension Plan/ Templeton India Pension Plan)
    Kothari Pioneer Pension Plan (now known as Franklin India Pension Plan) was notified as a Pension Fund for the purpose of Section 88(2)(xiiic) of the Income Tax Act vide Notification dated January 30, 1997. In terms of Section 80C(7) of the Act, a pension plan referred to u/s 88 shall be eligible for deduction u/s 80C w.e.f. April 1, 2005. [Extracted from the scheme documents of Franklin India Pension Plan]
    5. The pension schemes are named Retirement Fund, Pension Fund and the like. Always refer to the scheme documents to ascertain whether the fund is notified as a pension fund by the CBDT or not. For example, in the scheme documents of the Tata Retirement Savings Fund, there is no information on it being a notified pension fund for section 80C deduction.

    12. Deposit in Post Office Time Deposit Rules, 1981: A person can claim a deduction depositing amount in the Post Office Time Deposit (POTD) under the Post Office Time Deposit Rules, 1981 from his gross total income.

    The amount deposited in POTD during a financial year is eligible for deduction in that year.

    Though the income tax allows any person to avail the deduction, however, under the POTD Rules, 1981 only an Individual (singly or jointly), a minor whose age is 10 years or more, and a guardian on behalf of a minor can open an account. Hence, the deduction for deposit in a POTD account is available to an Individual only.

    Though the Rules allow opening a POTD account for 1 year, 2 years, 3 years and 5 years term, however, there is no tax benefit on the deposits with less than 5-year tenure. Only the 5-year deposit qualifies for the income-tax deduction under Section 80C.

    The Rules allow the premature withdrawal of a POTD account with penal interest.

    Withdrawal of tax benefits on pre-maturity: If any amount, including interest accrued thereon, is withdrawn by the taxpayer from the POTD account before the expiry of the period of 5 years from the date of its deposit, the amount so withdrawn shall be deemed to be the income of the taxpayer of the previous year in which the amount is withdrawn and shall be liable to tax in the assessment year relevant to such previous year.

    Hence, it is mandatory to hold the account for a minimum period of 5 years to enjoy the benefit of the income-tax deduction.

    Exception: In the following cases, the above-mentioned rule of withdrawal of tax benefits for the receipts of amount from the POTD account, even before the 5 years shall not apply-

    1. The periodic interest receipt from the POTD account if the same is offered to tax in the year of receipt.

    2. If the amount is received by the nominee or legal heirs on the death of the account holder or taxpayer.

    Investment in Post Office Time Deposit
    Available to
    Individual only
    Available for investment in
    5-year Post Office Time Deposit 
    Available at
    Post-Office only

    13. Deposit in Tax Savings Term Deposits of National Housing Bank: An Individual or HUF can claim an income tax deduction for depositing an amount in notified Term Deposits of National Housing Bank. [Section 80C(2)(xv)]

    National Housing Bank (Tax Saving) Term Deposit Scheme, 2008 is so far notified for this purpose. [Notification No. 3/2009 dated 5-1-2009]

    Investment in Tax Savings Deposit Scheme of NHB
    Available to
    Individuals and HUF only
    Available for investment in
    NHB Suvriddhi (Tax Saving) Term Deposit Scheme
    Available for investment in Fixed Deposit
    With National Housing Bank

    Notes: The followings are noteworthy for Tax Savings Deposit Scheme of NHB-
    1. NHB Tax Savings Term Deposits can be opened by an Individual or HUF only.
    2. Joint deposits are permitted. 
    3. In the case of a joint holder type deposit, the deduction from income under section 80C shall be available only to the first holder of the deposit.
    4. The deposit amount is minimum Rs. 10,000 and higher in multiples thereof up to a maximum of Rs. 1,00,000 per financial year.
    5. The maturity period is 5 (five) years.
    6. The deposit cannot be prematurely withdrawn before the stipulated time and no loan is allowed to be taken against such deposits. However, interest can be paid periodically or reinvested.
    7. Interest income on Tax Savings Fixed Deposits is taxable and can be paid periodically or reinvested. TDS is applicable as per the rules provided in section 194A (for resident) and section 195 (for non-residents). Income Tax Form 15G or Form 15H can be filed to save TDS.
    8. The deposit is not transferable.
    9. All the rules as applicable to a Bank's 5-year Tax Savings Fixed Deposit are applicable to NHB Tax Savings Term Deposits.
    10. National Housing Bank is wholly owned by the Reserve Bank of India.

    14. Subscription to NABARD Rural Bonds of National Bank for Agriculture and Rural Development (NABARD) [Notification No. 293/2007, dated 31-12-2007]

    15. Subscription to a non-commutable deferred annuity plan taken in the name of the individual, his spouse, or any child of such an individual.

    16. Any sum deducted from salary payable to a Government employee for the purpose of securing him a deferred annuity, subject to a maximum of 20% of salary. It should be for the benefit of the individual, his spouse or his children. 

    17. Contribution towards an approved superannuation fund.

    18. Contribution for participating in the unit-linked insurance plan, 1971 (ULIP-71) of Unit Trust of India (UTI).

    In the case of an individual, ULIP should be taken on his own life, the life of the spouse or any child of the individual. In the case of a Hindu undivided family, ULIP may be taken on the life of any member of the family.

    19. Contribution for participating in the notified unit-linked insurance plan (ULIP) of LIC Mutual Fund.

    1. Unit Linked Insurance Plan (formerly known as Dhanraksha-1989) of the Life Insurance Corporation Mutual Fund [Notification No. 224/2005, dated 3-11-2005]
    2. In the case of an individual, ULIP should be taken on his own life, the life of the spouse or any child of the individual. In the case of a Hindu undivided family, ULIP may be taken on the life of any member of the family.

    20. Subscription to any notified deposit scheme of—
    a) public sector company engaged in providing long-term finance for purchase or construction of residential houses in India, or

    b) housing board constituted in India for the purpose of planning, development or improvement of cities, towns and villages.

    The Central Government has notified the Public Deposit Scheme of Housing and Urban Development Corporation Ltd. (HUDCO Bhavan, India Habitat Centre, Lodi Road, New Delhi). [Notification No. 2/2007, Dated 11-1-2007]

    21. Subscription to any eligible issue of equity share capital or debentures of a public company or a public financial institution or units of a mutual fund where the entire subscription will be invested in eligible issue of capital of any company and the entire proceeds will be used for development or operation and maintenance of the infrastructure facility.

    22. Deduction for the cost of residential house property

    Any sums paid by an assessee for the purpose of purchase or construction of a residential house property, the income from which is chargeable to tax under the head "Income from house property" (or which would, if it has not been used for assessee's own residence, have been chargeable to tax under that head) where such payments are made towards or by way of any installment or part payment of the amount due under any self-financing or other schemes of any Development Authority, Housing Board, company or a co-operative socierty of which the assessee is a shareholder or member and the house is allotted to him, etc.

    Payment towards the cost of house property, however, will not include, admission fee or cost of share or initial deposit or the cost of any addition or alteration to, or, renovation or repair of the house property which is carried out after the issue of the completion certificate by competent authority, or after the occupation of the house by the assessee or after it has been let out. 

    Payments towards any expenditure in respect of which the deduction is allowable under the provisions of section 24 of the Act will also not be included in payments towards the cost of purchase or construction of a house property.

    23. Any amount paid or deposited by an employee of the Central Government as a contribution to a specified account of the pension scheme referred to in section 80CCD for a fixed period of not less than three years and which is in accordance with the scheme as may be notified by the Central Government in this behalf. This refers to the Tier-II account of the NPS fund. 

    Deduction under section 80CC


    This deduction was available in respect of investment in certain new shares and was withdrawn from the assessment year 1993-94.

    Deduction under section 80CCA


    This deduction was available in respect of-
    > deposits under National Savings Scheme, or
    > payment to a deferred annuity plan.
    This deduction is not available from the assessment year 1993-94.

    "Jeevan Dhara" and "Jeevan Akshay" plans of the Life Insurance Corporation of India was notified by Notification No: G.S.R.903(E) dated 06-09-1988 as a deferred annuity plan under this section.

    Deduction under section 80CCB


    This deduction was available in respect of investment made under the Equity Linked Savings Scheme. This deduction is not available from the assessment year 1993-94.

    ELSS is now covered in clause (xiii) of sub-section (2) of section 80C and the notified scheme is Equity Linked Savings Scheme, 2005 as mentioned above.


    Deduction under section 80CCC


    Deduction in respect of contribution to certain pension funds: A deduction under section 80CCC is available under the following circumstances-

    1. The deduction is available only to an Individual.

    2. The deduction is available only if the contribution is paid or deposited in the previous year out of his income chargeable to tax.

    3. The amount is paid to effect or keep in force a contract for an annuity plan of Life Insurance Corporation of India or any other insurer for receiving a pension from the Fund.

    4. No deduction is available for any bonus or interest received from the pension plan.

    5. The proceeds received on the surrender of the pension policy are chargeable to tax in the year of receipt as per the income tax slab in the hands of the taxpayer. The same rule also applies to his nominee.

    6. The annuity income from the pension plan is a taxable income in the hands of the taxpayer or his nominee. Such annuity or pension income is chargeable under the head 'Income from Other Sources'.

    7. There is no limit on the amount of deposit in an annuity plan. However, the maximum amount of deduction is limited to Rs. 1,50,000.

    Since the deduction available under section 80C and section 80CCC are capped by an overall limit of Rs. 1.50 Lakh, as laid down in section 80CCE, and there are no sectoral caps in section 80C, the provisions of the two sections have been aligned and the deduction amount is subject to the overall cap of Rs. 1.50 Lakh provided under section 80CCE. Section 80CCE provides that the aggregate amount of deductions under section 80C, section 80CCC, and section 80CCD shall not exceed Rs. 1,50,000.

    Contribution to Pension Fund
    Available to
    Individuals only
    Available for
    Contribution to a Pension Plan of an insurance company approved by IRDA

    Notes: The followings are noteworthy for deduction for contribution to a Pension Fund u/s 80CCC-
    1. There are certain fundamental differences between the pension fund/plan referred to in section 80C(2)(xiv) and section 80CCC.
    2. While the pension fund u/s 80C(2)(xiv) is of a mutual fund, section 80CCC refers to pension fund of IRDA approved insurance company.
    3. For claiming deduction in the pension fund u/s 80C(2)(xiv) deposit can be made in the pension fund out of  that part of the income which is not chargeable for tax viz., exempt income, capital receipt, etc. However, in the case of section 80CCC, the deposit shall be made in the pension fund only out of income chargeable to tax.
    4. Deduction for contribution to NPS or APY (Atal Pension Yojna) is not available u/s 80CCC but is available under a different section 80CCD.
    5. LIC’s Jeevan Suraksha, Jeevan Nidhi are some of the noted pension policies qualify for deduction u/s 80CCC.
    6. Always refer to the policy or plan features to ascertain whether the policy or plan is eligible for deduction u/s 80CCC or not.

    Deduction under section 80CCD


    1. The deduction under this section is available only for contribution to the 'New Pension System' (NPS).

    The notified pension scheme for claiming deduction under section 80CCD is New Pension Scheme - as notified vide Notification F.N. 5/7/2003- ECB&PR dated 22.12.2003.
    As per the notification, the only contribution to the Tier-I account of the NPS qualifies for deduction u/s 80CCD. The contribution to the Tier-II account does not qualify for the income-tax deduction.

    2. The deduction is available only to an Individual who is-

    (i) a central government employee, or
    (ii) a private sector employee, or
    (iii) a self-employed.

    3. The contribution to an NPS account made by the following persons qualify for the deduction from the gross total income of the assessee or individual-

    (i) by the central government, for a central government employee,
    (ii) by the employer of the individual, for a private sector employee,
    (iii) by the individual himself.

    4. There are three types of deduction available under this section for contribution to the NPS Tier-I account. These are:

    (i) Under section 80CCD(1): Deduction is available for the whole amount of employee's or self contribution to the NPS account subject to the following ceiling-

    (a) in the case of an employee (both central government and private sector), 10 percent of his salary of the previous year,

    (b) in the case of a self-employed individual, 20 percent of his 'Gross Total Income'.

    Salary for this purpose means Basic Salary and Dearness Allowance (D.A.).

    (ii) Under section 80CCD(1B): An additional deduction, subject to a maximum of Rs. 50,000 is available to an Individual if he contributes any sum to the NPS Tier-I account in a financial year.

    (iii) Under section 80CCD(2): An additional deduction under sub-section (2) is available for the employer's contribution to the NPS account of the employee. The deduction is limited to 10 percent of the salary of the employee of the previous year.
    Salary for this purpose means Basic Salary and Dearness Allowance (D.A.).
    The employer's share of contribution to the NPS account of the employees is regarded as 'Salary' income of the employee under section 15.

    Remember, NPS is a contributory pension fund. The Central Government contributes its share of the contribution to the employees' fund. If a private-sector employer enrolls for NPS, then the employer also contributes to the employees' NPS account. Unlike EPF, it is not mandatory for a private-sector employer to enroll in the New Pension System. It is voluntary for them. However, once enrolled the employees get an additional tax benefit for the employer's share of contribution, which is not available in the case of EPF. In the case of the employer's share of contribution, the only tax benefit is that the same is not regarded as income of the employee. No further tax benefit is given to the employee for the employer's contribution to EPF. However, in the case of NPS, there is one drawback. The employer's share of contribution to the NPS account of the employees is regarded as 'Salary' income of the employee. In effect, there is no additional tax benefit of the employer's share of contribution to the NPS account, as it appears.

    The deduction under section 80CCD(1) is aggregated with the overall tax deduction limit of Rs. 1,50,000 specified in section 80CCE. The deduction specified under section 80CCD(1B) and 80CCD(2) is over and above the limit of Rs. 1,50,000 imposed by section 80CCE.

    5. Taxability on withdrawal of the amount from NPS

    Subject to provisions of section 10 (12A) and section 10 (12B), if any amount standing to the credit of the individual in the NPS Tier-I account for which deduction was allowed u/s 80CCD, and the individual or his nominee receives the amount together with the amount accrued thereon, due to the reason of -

    (i) Closure or opting out of the pension scheme, or

    (ii) Pension received from the annuity plan purchased and taken on such closure or opting out 

    then the amount so received during the previous year shall be the income of the individual or his nominee for that Financial Year and accordingly will be charged to tax.

    Further, the amount received by the nominee, on the death of the assessee, the amount or the pension so received shall not be deemed to be the income of the nominee.

    Further, it has been specified that w.e.f 01.04.09 any amount received by the employee from the New Pension Scheme shall be deemed not to have been received in the previous year if such amount is used for purchasing an annuity plan in the same previous year.


    6. Where any amount paid or deposited into NPS account and deduction is allowed under this section, a deduction with reference to such amount shall not be allowed under section 80C.

    To understand the deduction under section 80CCD more aptly, the provisions are illustrated through a graphical presentation.


    Section
    80CCD(1)
    80CCD(1B)
    80CCD(2)
    Available to
    Individual only
    (Salaried and Self-employed)
    Individual only
    (Salaried and Self-employed)
    Employees only

    Who can Contribute
    Individual himself
    Individual himself
    Employer
    Where to Contribute
    NPS Tier-I A/c
    NPS Tier-I A/c
    NPS Tier-I A/c of the employee
    Amount of Deduction that can be claimed
    Salaried
    10% of salary
    Amount of Contribution
    Maximum 10% of Salary
    Self Employed
    20% of GTI
    Ceiling on maximum amount of  Deduction
    Subject to the limit prescribed in section 80CCE of Rs. 1,50,000

    (Included in 80CCE)
    Rs. 50,000.
    Over and above Rs. 1,50,000

    (Excluded from 80CCE)
    Over and above Rs. 1,50,000


    (Excluded from 80CCE)

    Deduction under section 80CCE


    Limit on deductions: It must be remembered that section 80C, section 80CCC and section 80CCD(1) are inter-related to the extent that the maximum amount of deduction under all these three sections is Rs. 1,50,000.

    The aggregate amount of deductions under section 80C, section 80CCC and sub-section (1) of section 80CCD shall not, in any case, exceed Rs. 1,50,000.

    Deduction under section 80CCD(1B) is independent of section 80CCE and does not come within the purview of the overall limit restricted by section 80CCE.

    The limit of deduction prescribed under each section and the overall limit of deduction is given below-

    Limit of deduction prescribed u/s 80C
    Rs. 1,50,000
    Limit of deduction prescribed u/s 80CCC
    Rs. 1,50,000
    Limit of deduction prescribed u/s 80CCD(1)[1]
    Rs. 1,50,000
    Overall Limit of deduction prescribed u/s 80CCE (Aggregate amount of deduction)
    Rs. 1,50,000
    [1] Section 80CCE covers only section 80CCD(1) in its ambit. Deduction under section 80CCD(1B) and under section 80CCD(2) is outside the purview of the overall or aggregate limit of Rs. 1,50,000 prescribed by section 80CCE.

    Deduction under section 80D


    Deduction for Health Insurance premia, Medical Expenditure, and Preventive Health Check-up

    1. The deduction is allowed to an Individual and a Hindu undivided family (HUF).

    2. The deduction is available for payment of -

    (i) Health Insurance Premium

    (ii) Contribution to the Central Government Health Scheme (CGHS) or notified scheme

    (iii) Preventive Health Check-up

    (iv) Medical Expenditure

    3. The deduction is available only if paid in the following prescribed mode-

    (i) For health insurance premium and contribution to CGHS, in any mode other than cash.

    (ii) For preventive health check-up, in any mode including cash.

    (iii) For medical expenditure, in any mode other than cash.

    4. The payment for the above shall be made -

    (i) in the case of an individual, for himself, spouse, dependent children, and parents of the Individual.

    (ii) in the case of HUF, any member of the HUF.

    5. The deduction for Medical Expenditure shall be available only if-

    (i) the expenditure is incurred by or for a senior citizen or a senior citizen member,

    (ii) no health insurance premium is paid for such a senior citizen.

    6. Where the health insurance premium is paid in advance for more than one financial year, then proportionate deduction of the premium amount will be allowed in each financial year.

    7. The deduction under this section shall be allowed only if the payment is made out of the income chargeable to income-tax.

    8. The Quantum of deduction allowed under this section shall be as follows-

    For an Individual
    Particulars
    Case-1
    Case-2
    Case-3

    Assessee
    Self & Family (none is a senior citizen)
    Parents (none is a senior citizen)
    Self & Family (none is a senior citizen)
    Parents (at least one of them is a senior citizen)
    Self & Family (at least one of them is a senior citizen)
    Parents (at least one of them is a senior   citizen)
    Health Insurance premium including sub-limit of Rs. 5,000 for preventive health checkup and contribution to CGHS
    25,000
    25,000
    25,000
    50,000
    50,000
    50,000
    Medical Expenditure
    NA
    NA
    NA
    50,000
    50,000
    50,000
    Maximum deduction
    25,000
    25,000
    25,000
    50,000
    50,000
    50,000
    Aggregate amount of deduction
    25,000+25,000=50,000
    25,000+50,000= 75,000
    50,000+50,000= 1,00,000


    For HUF
    Particulars
    Amount (Rs.)
    Health Insurance premium
    25,000
    Medical Expenditure [paid for a senior citizen member]
    50,000
    Maximum aggregate amount of deduction
    50,000

    Notes: The followings are noteworthy for deduction u/s 80D-
    1. It must be remembered that only preventive health check-up can be paid in cash. Others must be paid in non-cash or digital mode including cheque and wallet payment.
    2. A HUF is allowed deduction only for payment of health insurance premiums of any member and medical expenditure of any senior citizen member of the HUF. Thus, a HUF is not allowed a deduction for the contribution to CGHS (a HUF cannot contribute) and preventive health check-up.
    3. Health insurance premium shall be paid to a General Insurance Corporation of India or any other insurer approved by the Insurance Regulatory and Development Authority (IRDA).
    4. ‘Senior citizen’ must a resident in India else the benefit of the additional and enhanced deduction is not available.
    5. Health insurance premium, health check-up, and medical expenditure is allowed including GST.
    6. Senior Citizens include Very Senior Citizens (age more than 80 years).

    Deduction under section 80DD


    Deductions in respect of maintenance including medical treatment of a dependant who is a person with disability

    1. This deduction is available to a resident Individual and a HUF.

    2. Such an Individual or HUF has-

    (a) incurred any expenditure for the medical treatment (including nursing), training and rehabilitation of a dependant, being a person with disability; or

    (b) paid or deposited any amount under a scheme framed in this behalf by the Life Insurance Corporation or any other insurer or the Administrator or the specified company subject to the conditions specified in sub-section (2) and approved by the Board in this behalf for the maintenance of a dependant, being a person with disabilityduring the previous year.

    3. The deduction under 2(b) above shall be allowed only if the following conditions are fulfilled:-

    (i) the scheme referred to in (b) above provides for payment of the annuity or lump sum amount for the benefit of a dependant, being a person with a disability, in the event of the death of the individual in whose name subscription to the scheme has been made; 

    (ii) the assessee nominates either the dependant, being a person with a disability, or any other person or a trust to receive the payment on his behalf, for the benefit of the dependant, being a person with a disability.

    However, if the dependant, being a person with disability, predeceases the employee, an amount equal to the amount paid or deposited under sub-para(b) above shall be deemed to be the income of the assessee of the previous year in which such amount is received by the assessee and shall accordingly be chargeable to tax as the income of that previous year.

    4. The amount of the deduction is Rs. 75,000 (flat deduction) in a normal case. However, where such a dependant is a person with severe disability, the deduction amount is Rs 1,25,000 subject to the specified conditions.


    Deduction under section 80DDB



    Deduction in respect of medical treatment, etc.


    1. This deduction is available to a resident Individual and a HUF.

    2. The deduction is available for the amount actually paid for the medical treatment of specified disease or ailment [specified in Rule 11DD (1) of the Income Tax Rules, 1962] for the following persons-
    (i) in the case of an individual - himself, dependent spouse, children, parents, brothers, and sisters of the individual.
    (ii) in the case of HUF, any member of a Hindu undivided family.

    3. The deduction shall be allowed on the basis of a prescription from an oncologist, a urologist, nephrologist, a haematologist, an immunologist or such other specialist, as mentioned in Rule 11DD.

    4. The amount of deduction allowed under section 80DDB is the lower of the followings-
    (a) Amount actually paid, or
    (b) Rs. 40,000.
    Where the amount is paid for the treatment of a senior citizen or any senior citizen member of a HUF, the amount of deduction is the lower of the followings-
    (a) Amount actually paid, or
    (b) Rs. 1,00,000.


    Vide Notification SO No. 2791(E) dated 12.10.2015, Rules 11DD has been amended to do away with the requirement of furnishing a certificate in Form 10-I. A prescription from a specialist as specified in the Rules containing the name and age the patient, name of the disease/ailment along with the name, address, registration number & qualification of the specialist issuing the prescription would now be required.

    Deduction under section 80E


    Deduction in respect of interest on loan taken for higher education

    1. This deduction is available only to an Individual.

    2. The deduction under this section shall be allowed only if the payment is made out of the income chargeable to income-tax.

    3. The deduction is allowed for payment of interest on loan taken from -
    any financial institution (includes a bank), or
    any approved charitable institution for higher education
    for the purpose of pursuing higher education-
    for the assessee himself, or
    of his spouse or his children or the student for whom he is the legal guardian.

    4. There is no limit on the quantum of deduction prescribed. The entire 100 percent of the amount of interest paid is allowed as a deduction.

    5. However, there is a limit on the period for which deduction for payment of interest on higher education loans can be claimed. The deduction can be claimed for a maximum period of 8 assessment years from the first assessment year in which the individual starts paying interest. If the interest is paid in full before 8 years, then deduction shall be allowed only up to the year in which the interest was paid.


    Deduction for tuition fees under section 80C is not available for self-education whereas deduction under section 80E is available for self-education of the assessee.

    Notes: The followings are noteworthy for deduction u/s 80E-
    1. Deduction is available for full time or part-time courses. 
    2. Deduction is available for higher studies from an Indian university or a foreign university and the Institute may be in India or in a foreign country.
    3. The course may be a Regular Course or a Distance Course. Both courses are available for deduction.
    4. Any course taken after passing the higher secondary examination or standard XII is considered as higher education for the purpose of deduction under this section.

    Deduction under section 80EE


    Deduction in respect of interest on loan taken for residential house property.

    1. This deduction is available only to Individuals.

    2. The deduction is available for interest payable on loan taken by him from any financial institution.

    3. The loan was taken only for the purpose of acquisition of a residential property.

    4. The maximum amount of deduction available is Rs. 50,000.

    5. This deduction is available subject to the following conditions-


    a) The loan has been sanctioned by the financial institution during FY 2016-17 only.
    b) The amount of loan sanctioned is not more than Rs. 35 Lakh.
    c) The value of the residential house property is not more than Rs. 50 Lakh.
    d) The assessee does not own any residential house property on the date of sanction of loan.

    6. The deduction is available from the assessment year 2017-18 and onwards.

    7. The deduction claimed on interest payment under this section shall not be allowable as a deduction under any other provisions of the Act. In other words, no deduction for such interest is allowed under section 24(b).



    Notes: The followings are noteworthy for deduction u/s 80EE-
    1. It is material to get the loan sanctioned in FY 2016-17. It may be disbursed after March 2017.
    2. The deduction is available only for the ‘acquisition’ of a residential house property. It is not available for the construction of a residential house property. However, the acquisition of an under-construction house property is allowed.
    3. Deduction is available even if interest remains unpaid.
    4. Deduction is available for a residential house property and not for commercial shops, godowns, etc.
    5. The ‘value’ of the residential house property refers to consideration value and not the market value or stamp-duty value.
    6. This is a one-time deduction i.e. available only if the loan is sanctioned in FY 2016-17. Since the financial year 2016-17 has already passed, the deduction is not possible presently. However, if the loan is sanctioned in that FY, then the deduction can be claimed even in AY 2020-21.
    7. 'Financial Institution' means any bank or a housing finance company.

    Deduction under section 80EEA


    Deduction in respect of interest on loan taken for residential house property.

    1. This deduction is available only to Individuals.

    2. The deduction is available for interest payable on loan taken by him from any financial institution.

    3. The loan was taken only for the purpose of acquisition of a residential property.


    4. The maximum amount of deduction available is Rs. 1,50,000.

    5. This deduction is available subject to the following conditions-
    a) The loan has been sanctioned by the financial institution during FY 2019-20 only.
    b) The stamp duty value of the residential house property is not more than Rs. 45 Lakh.
    c) The assessee does not own any residential house property on the date of sanction of loan.

    6. The deduction is available from the assessment year 2020-21 and onwards.

    7. The deduction claimed on interest payment under this section shall not be allowable as a deduction under any other provisions of the Act. In other words, no deduction for such interest is allowed under section 24(b).


    Notes: The followings are noteworthy for deduction u/s 80EEA-
    1. It is material to get the loan sanctioned in FY 2019-20. It may be disbursed after March 2020.
    2. The deduction is available only for the ‘acquisition’ of a residential house property. It is not available for the construction of a residential house property. However, the acquisition of an under-construction house property is allowed.
    3. Deduction is available even if interest remains unpaid.
    4. Deduction is available for a residential house property and not for commercial shops, godowns, etc.
    5. The ‘value’ of the residential house property refers to stamp-duty value and not the consideration value.  The consideration value may be more than Rs.45 lakh.
    6. This is a one-time deduction i.e. available only if the loan is sanctioned in FY 2019-20. However, if the loan is sanctioned in that FY, then the deduction can be claimed even after AY 2020-21.
    7. 'Financial Institution' means any bank or a housing finance company.
    8. The limit on the amount of sanctioned loan has been dispensed with in section 80EEA compared to section 80EE. Thus, the sanctioned loan amount may be of any amount.
    9. If an individual is claiming a deduction under section 80EE, he is not eligible to claim the deduction under section 80EEA.
    10. The deduction up to Rs. 2,00,000 u/s 24(b) for interest payable on housing loans is available and is not taken away. Thus total deduction that can be claimed for interest on housing loan in AY 2020-21 is Rs. 3,50,000.
    11. Section 80EEA is introduced by the Finance (No.2) Act, 2019 ( No. 23 of 2019) and is applicable from AY 2020-21.


    Deduction under section 80EEB



    Deduction for interest on loan taken for the purchase of an electric vehicle.

    1. This deduction is available only to Individuals.

    2. The deduction is available for interest payable on loan taken by him from any financial institution.

    3. The loan was taken only for the purpose of the purchase of an electric vehicle.



    4. The maximum amount of deduction available is Rs. 1,50,000.

    5. This deduction is available subject to the condition that the loan has been sanctioned by the financial institution during FY 2019-20 to FY 2022-23.


    6. The deduction is available from the assessment year 2020-21 and onwards.

    7. The deduction claimed on interest payment under this section shall not be allowable as a deduction under any other provisions of the Act.

    Notes: The followings are noteworthy for deduction u/s 80EEB-
    1. It is material to get the loan sanctioned in FY 2019-20 to FY 2022-23. It may be disbursed at a later period.
    2. The deduction is available only for the ‘purchase’ of an electric vehicle. 
    3. Deduction is available even if interest remains unpaid.
    4. This is a one-time deduction i.e. available only if the loan is sanctioned between FYs 2019-20 to 2022-23. However, if the loan is sanctioned in any of these FY, then the deduction can be claimed every year till the interest becomes payable.
    5. 'Financial Institution' means any bank or an NBFC.
    6. The sanctioned loan amount may be of any amount.
    7. Section 80EEB is introduced by the Finance (No.2) Act, 2019 ( No. 23 of 2019) and is applicable from AY 2020-21.


    Deduction under section 80G


    Deductions in respect of donations to certain funds, charitable institutions, etc..

    1. This deduction is available to any person including Individuals.

    2. The deduction is available for donations to certain institutions.

    3. Donations made in cash for more than Rs. 2,000 is not eligible for deduction. In other words, no deduction under section 80G can be claimed if the donation is paid in cash and for more than Rs. 2,000. This is applicable to donations to each institution.

    4. The maximum amount of deduction available is complex and requires attention.

    For the sake of simplicity, the donation to various institutions is categorized into four categories based on the quantum of deduction allowed under section 80G-

    Category-I
    Donations entitled for 100 percent deduction without Qualifying limit
    Some of the noted funds/institutions under this category are mentioned here-

    Prime Minister’s National Relief Fund
    National Children’s Fund
    National Defence Fund set up by the Central Government
    Chief Minister’s Earthquake Relief Fund, Maharashtra
    Swachh Bharat Kosh
    Clean Ganga Fund

    Category-II
    Donations entitled for 50 percent deduction without Qualifying limit
    Some of the noted funds/institutions under this category are mentioned here-

    Jawaharlal Nehru Memorial Fund
    Prime Minister’s Drought Relief Fund
    Indira Gandhi Memorial Fund
    Rajiv Gandhi Foundation

    Category-III
    Donations entitled for 100 percent deduction subject to Qualifying limit
    Some of the noted funds/institutions under this category are mentioned here-

    Donation to Government or any approved local authority, institution or association to be utilized for the purpose of promoting family planning.

    Donation by a company to the Indian Olympic Association or to any other association or institution notified for the development of infrastructure for sports and games in India or the sponsorship of sports and games in India 

    Category-IV
    Donations entitled for 50 percent deduction subject to Qualifying limit
    Some of the noted funds/institutions under this category are mentioned here-

    Funds/ Institutions which satisfies conditions mentioned under section 80G(5).

    Donation to Government or any local authority for the purpose of utilization for any charitable purpose other than promoting family planning.

    Any authority constituted in India for dealing with and satisfying the needs for housing accommodation or for the purpose of planning/development of  towns, villages, etc.

    Any notified temple, mosque, gurdwara, church or other places for the purpose of renovation or repairs.

    Donations to a charitable trust

    5. Amount of deduction:

    For Category-I
    100 percent of the Amount of Donation
    For Category-II
    50 percent of the Amount of Donation
    For Category-III
    [Lower of [(10 percent x Adjusted GTI) or Amount of Donation]] x 100%
    For Category-IV
    [Lower of [(10 percent x Adjusted GTI) or Amount of Donation]] x 50%

    Consolidated donation by the employer on behalf of employees
    In cases where employees make donations to the Prime Minister’s National Relief Fund, the Chief Minister’s Relief Fund or the Lieutenant Governor’s Relief Fund through their respective employers, it is not possible for such funds to issue a separate certificate to every such employee in respect of donations made to such funds as contributions made to these funds are in the form of a consolidated cheque. An employee who makes donations towards these funds is eligible to claim deduction under section 80G. It is, hereby, clarified that the claim in respect of such donations as indicated above will be admissible under section 80G on the basis of the certificate issued by the Drawing and Disbursing Officer (DDO)/Employer in this behalf - Circular No. 2/2005, dated 12-1-2005.


    'Adjustable Gross Total Income' means Gross Total Income -  Deduction u/s 80CCC to 80U except for deduction under section 80G. Gross Total Income does not include Long Term Capital Gains, Short Term Capital Gains chargeable u/s 111A, exempt income and income referred to in sections 115A, 115AB, 115AC, and 115AD


    In other words, the Adjusted Gross Total Income is computed as below-

    Heads of Income
    Amount
    (in Rs.)
    Income from Salary
    Xxx
    Income from House Property
    Xxx
    Income from Business or Profession
    Xxx
    Income from Capital Gains- Any Long Term and Short Term Capital Gain
    Xxx
    Income from Other Sources
    Xxx
    Gross Total Income
    Xxx
    Less: Any Long Term Capital Gains
    (-)Xxx
    Less: Short Term Capital Gains chargeable u/s 111A
    (-)Xxx
    Less: Deduction u/s 80CCC to 80U except Deduction under section 80GG
    (-)Xxx
    Less: Income referred to in sec 115A, 115AB, 115AC or 115 AD
    (related to non-residents/foreign company)
    (-)Xxx
    Adjusted Gross Total Income
    Xxx

    Notes: The followings are noteworthy for deduction u/s 80G-
    1. Donation made in kind like donating food, clothes, etc. are not eligible for deduction. Only donation made in money is eligible for deduction.
    2. The deduction is available whether the donation is made voluntarily or under an obligation.
    3. Deduction under section 80G is available if the institution is notified by the income tax department.
    4. The donation receipt will reveal the details of registration of the institution with the income tax department to avail the deduction.
    5. No deduction is available for donating money to a foreign trust.
    6. Deduction for donation to a political party is not covered under section 80G but is covered under section 80GGB or 80GGC.

    Deduction under section 80GG


    Deductions in respect of rents paid not receiving any House Rent Allowance (HRA)

    1. This deduction is available to Individuals only.

    2. The deduction is available for house rent paid by the assessee for own residence.

    3. The rent must be paid for residential accommodation that may be furnished or unfurnished.

    4. The individual, if salaried, must not be receiving House Rent Allowance or HRA from his employer.

    5. The deduction under section 80GG for payment of rent is also available to self-employed.

    6. Amount of Deduction: The assessee will be entitled to a deduction in respect of house rent paid by him in excess of 10% of his total income. The deduction shall be equal to 25% of total income or Rs. 5,000/- per month, whichever is less. The total income for working out these percentages will be computed before making any deduction under section 80GG.

    In other words, the deduction under this section shall be computed as follows-

    (i) Rent paid minus 10 percent of adjusted gross total income,
    (ii) Rs. 5,000 per month,
    (iii) 25 percent of adjusted gross total income, whichever is less.

    Hence, the amount of deduction is the least of the three options mentioned above.

    'Adjustable Gross Total Income' means Gross Total Income -  Deduction u/s 80CCC to 80U except for deduction under section 80GG. Gross Total Income does not include Long Term Capital Gains, Short Term Capital Gains chargeable u/s 111A, exempt income, and income referred to in sections 115A, 115AB, 115AC, and 115AD

    In other words, the Adjusted Gross Total Income is computed as below-

    Heads of Income
    Amount
    (in Rs.)
    Income from Salary
    Xxx
    Income from House Property
    Xxx
    Income from Business or Profession
    Xxx
    Income from Capital Gains- Any Long Term and Short Term Capital Gain
    Xxx
    Income from Other Sources
    Xxx
    Gross Total Income
    Xxx
    Less: Any Long Term Capital Gains
    (-)Xxx
    Less: Short Term Capital Gains chargeable u/s 111A
    (-)Xxx
    Less: Deduction u/s 80CCC to 80U except Deduction under section 80GG
    (-)Xxx
    Less: Income referred to in sec 115A, 115AB, 115AC or 115 AD
    (related to non-residents/foreign company)
    (-)Xxx
    Adjusted Gross Total Income
    Xxx

    7. The deduction is allowed subject to the following conditions-

    (a) He has not been in receipt of any House Rent Allowance specifically granted to him which qualifies for exemption under section 10(13A) of the Act;

    (b) The assessee files the declaration in Form No.10BA

    (c) The assessee does not own:

    (i) any residential accommodation himself or by his spouse or minor child or where such employee is a member of a Hindu Undivided Family, by such family, at his ordinary place of residence, or the place of employment or carries on his business or profession; or

    (ii) at any other place, any residential accommodation which is in the occupation of the individual, the value of which is to be determined-

    under section 23(2)(a) [covers a self-occupied house property], or 

    under section 23(4)(a) [covers, where more than two house properties are owned by the individual and any two of them at his option, are taken as self-occupied house property and the others are taken as a deemed to be let-out house property], as the case may be.

    Meaning of 'Rent'

    Though the deduction under section 80GG is allowed for payment of rent, however, the section itself does not define the term 'rent'.

    However, section 194I - which deals with TDS from rent payment defines the term rent. Taking a clue from that definition, it can be concluded that-

    "Rent" means any payment, by whatever name called, under any lease, sub-lease, tenancy or any other agreement or arrangement for the use of -
    a) land and building including land appurtenant to a building
    b) any plant and machinery or equipment
    c) any furniture and fittings.

    It is important to note that the above asset(s) may or may not be owned by the payee or landlord.

    Therefore, rent shall include all the payments made by the tenant or employee for the use of residential accommodation to the landlord.

    Hence, the payment towards maintenance charges shall also qualify for the exemption as it constitutes 'rent' under the income-tax law.


    Reporting and disclosure of HRA exemption and Deduction u/s 80GG in ITR-1

    In the ITR form, the deduction under section 80GG is disclosed in the 'Part C - Deductions and Taxable Total Income' whereas exemption claimed for rent payment from HRA under section 10(13A) is disclosed in the 'Part B - Gross Total Income' under 'Nature of Exempt Allowance' in the 'Salary/Pension' column.

    In the assessment year 2019-20, many return filers have wrongly claimed the deduction for rent paid u/s 80GG instead of reporting the same in the exempt allowances column. Many inadvertently claimed HRA exemption as per Form-16 in the exempt allowances column and further reported the rent payment in the column titled '80GG-Rent Paid' in the Part-C of ITR-1.

    Due to these mistakes, the income tax department has issued/is issuing notices to such wrong return filers.

    The following screenshots of ITR-1 are enclosed here for better explaining and understanding the reporting requirement in the ITR-1. The ITR-1 form is taken for AY 2019-20 since the online ITR-1 form for AY 2020-21 is yet to be released by the income tax department, though it is notified for the AY 2020-21.


    Picture-1: It shows how to show the HRA exemption in ITR-1 when the employee receives HRA from his employer and pays the rent. In this case, he cannot claim deduction u/s 80GG.

    In this case, the '80GG-Rent paid' will remain blank for deduction u/s 80GG.

    income-tax-deductions-for-salaried-employees-fy-2019-20
    Picture-1

    Picture-2: It shows how to claim deduction u/s 80GG for rent payment. When the employee does not receive HRA from his employer and pays the rent, he can claim deduction u/s 80GG.

    In this case, the 'Nature of Exempt Allowance' will remain blank for section 10(13A).

    income-tax-deductions-for-salaried-employees-fy-2019-20
    Picture-2

    Important Note: The exemption u/s 10(13A) and the deduction u/s 80GG, both are claimed for rent payment. The exemption is claimed when HRA is received and deduction is claimed when HRA is not received.

    One should enter the amount of rent payment in the column '80GG-Rent paid'. If the rent paid in the financial year is Rs. 2,00,000 enter the figure in the white cell provided. The form will automatically calculate the eligible deduction amount.

    A person should report the correct exemption or deduction, as applicable to him, accordingly.


    Illustration 1: Mr. Rakesh is a salaried individual. During FY 2019-20, his income from the salary is Rs. 4,00,000. His interest income from bank fixed deposits for the year is Rs. 5,000. He is eligible to deduction u/s 80C for Rs. 1,50,000. He lives in a rented house and paid Rs. 2,00,000 as rent for the year. He does not receive HRA from his employer.
    Compute the amount of deduction under section 80GG and the Total Income.

    Particulars
    Amount (Rs.)
    Amount (Rs.)
    Income from Salary
    4,00,000

    Less: Standard Deduction
    50,000
    3,50,000
    Interest Income

    5,000
    Gross Total Income

    3,55,000
    Less: Deduction under chapter VI-A:


    Section 80C

    1,50,000
    Adjusted Gross Total Income

    2,05,000
    Less: Deduction under section 80GG 
    [Working Note 1]

    51,250
    Total Income

    1,53,750

    Working Note 1:
    Particulars
    Amount (Rs.)
    Amount (Rs.)
    (a) Adjusted Gross Total Income

    2,05,000
    Least of the followings-


    (i) Rent Paid
    2,00,000

    Less: 10% of Rs. 2,05,000 [as per (a)]
    20,500
    1,79,500
    (ii) Flat Deduction @ Rs. 5,000 p.m.

    60,000
    (iii) 25% of Rs. 2,05,000 [as per (a)]

    51,250

    Illustration 2: All the data in Illustration 1 remain the same except that the salary income is Rs. 4,90,000. Compute the amount of deduction under section 80GG and the Total Income.

    Particulars
    Amount (Rs.)
    Amount (Rs.)
    Income from Salary
    4,90,000

    Less: Standard Deduction
    50,000
    4,40,000
    Interest Income

    5,000
    Gross Total Income

    4,55,000
    Less: Deduction under chapter VI-A:


    Section 80C

    1,50,000
    Adjusted Gross Total Income

    3,05,000
    Less: Deduction under section 80GG 
    [Working Note 1]

    60,000
    Gross Total Income

    2,45,000
    Working Note 1:
    Particulars
    Amount (Rs.)
    Amount (Rs.)
    (a) Adjusted Gross Total Income

    3,05,000
    Least of the followings-


    (i) Rent Paid
    2,00,000

    Less: 10% of Rs. 3,05,000 [as per (a)]
    30,500
    1,69,500
    (ii) Flat Deduction @ Rs. 5,000 p.m.

    60,000
    (iii) 25% of Rs. 3,05,000 [as per (a)]

    76,250


    Notes: The followings are noteworthy for deduction u/s 80GG-
    1. A self-employed or a professional cannot receive any HRA. They can claim a deduction for rent payment under this section for his or his family's residence. Such rent payment is not allowed as business expenditure to a self-employed as the rent expenditure is not related to his business, but a personal expenditure.
    2. An employee if not receiving HRA from his employer then he cannot claim any exemption u/s 10(13A) for rent payment. However, if he is receiving HRA from his employer then he shall claim exemption u/s 10(13A). He cannot claim both the exemption u/s 10(13A) and deduction u/s 80GG unless he is in receipt of HRA for part of the year.
    3. The assessee must reside in the accommodation for which deduction u/s 80GG for rent payment is claimed. If he does not reside then the deduction is not available.
    4. The individual must actually pay the rent to claim the deduction. If the rent remains unpaid, then no deduction is allowed.
    5. The rent may be paid in cash (subject to Rs. 2 Lakh limit of cash receipt) or cheque or otherwise. However, it is advisable to pay the rent through cheque or other banking channels.
    6. If the monthly rent payment is more than Rs. 50,000, then the tenant must deduct TDS.

    Deduction under section 80GGA


    Deductions in respect of certain donations for scientific research or rural development

    1. This deduction is available to all assessees including individuals.

    2. The entire amount of contribution or donation is allowed as a deduction. 

    This is obviously subject to the maximum amount of gross total income. In other words, the deduction cannot exceed the gross total income.

    3. The deduction is available in respect of contribution or donation of any sum as given in the Table below-

    Sl
    No
    Donations made to persons
    Approval /
    Notification
    under Section
    Authority granting
    approval/Notification
    1
    A research association which has as its object the undertaking of scientific research or to a University, college or other institution to be used for scientific research

    u/s 35 (1 )(ii)

    Central Government
    2
    A research association which has as its object the undertaking of research in social science or statistical research or to a University, college or other institution to be used for research in social science or statistical research

    u/s 35 (1) (iii)

    Central Government
    3
    An association or institution, which has as its object the undertaking of any programme of rural development, to be used for carrying out any programme of rural development approved for the purposes of section 35CCA

    u/s 35CCA (2)

    Prescribed Authority under Rule 6AAA
    4
    An association or institution which has as its object the training of persons for implementing programmes of rural development.

    u/s 35CCA(2A)

    Prescribed Authority under Rule 6AAA
    5
    A public sector company or a local authority or to an association or institution approved by the National Committee, for carrying out any eligible project or scheme

    u/s 35 AC(2)(a)

    National Committee for Promotion of Social & Economic Welfare
    6
    A rural development fund
    u/s 35 CCA(1)(c)
    Set up and notified by the Central Government
    7
    National Urban Poverty Eradication Fund
    u/s 35CCA(1)(d)
    Set up and notified by the Central Government

    4. If the amount of contribution or donation for more than Rs. 10,000 is paid in cash then no deduction will be allowed.

    5. This deduction cannot be claimed if the assessee including individual has any business income.

    Deduction under section 80GGB


    Deductions in respect of contributions to political parties by companies

    Section 80GGB is applicable only to companies, hence not discussed here. However, the provisions are similar to section 80GGC discussed below.

    Deduction under section 80GGC


    Deductions in respect of contributions to political parties by any person other than a company

    1. This deduction is available to any person except a company, local authority, and every artificial juridical person wholly or partly funded by the government. Thus an individual is eligible to claim the deduction.

    2. The entire amount of contribution is allowed as deduction.

    3. The deduction is available for contribution to a registered political party or an electoral trust.

    4. This deduction will not be allowed if the contribution is paid in cash. Hence, to claim the deduction, the contribution must be paid by cheque, wallet or any other banking channels.


    Deduction under section 80TTA


    Deduction in respect of interest on deposits in a bank account

    1. This deduction is available only to an individual and a HUF.

    2. The individual must not be a senior citizen or a very senior citizen.

    3. The deduction is available for interest on savings bank account held with-
    (a) a bank including a co-operative bank,
    (b) a Post Office.
    Hence, the deduction is not available from interest income from a fixed, recurring deposit, etc.

    4. The amount of deduction is-
    (a) Actual amount of interest income from a savings bank account, or
    (b) Rs. 10,000, whichever is less.
    Hence, the maximum amount of deduction is limited to Rs. 10,000.


    Deduction under section 80TTB


    Deduction in respect of interest on deposits in a bank account

    1. This deduction is available only to a resident senior citizen individual.

    2. The individual must be a senior citizen or a very senior citizen.

    3. The deduction is available for interest on bank deposits held with-
    (a) a bank including a co-operative bank,
    (b) a Post Office.
    Hence, the deduction includes interest income from every bank deposit including a savings account, a fixed deposit, a recurring deposit, etc.

    4. The amount of deduction is-
    (a) Actual amount of interest income bank deposits, or
    (b) Rs. 50,000, whichever is less.
    Hence, the maximum amount of deduction is limited to Rs. 50,000.

    5. Taxpayers claiming deduction under section 80TTB shall not be eligible for deduction under section 80TTA.


    Deduction under section 80U


    Deduction in case of a person with a disability.

    1. This deduction is available only to a resident Individual.

    2. Such an individual must be certified to a person with a disability by the medical authority.

    3. Such an individual must furnish Form 10-IA to claim the deduction.

    4. The amount of deduction allowed under section 80U is allowed on a flat rate basis at Rs. 75,000. 

    If the individual is a person with severe disability, the deduction amount is Rs. 1,25,000.

    5. The deduction is available irrespective of any expenditure incurred by such an individual for such disability.


    Conclusion

    All the income tax deduction than a salaried individual can claim in FY 2019-20 is discussed in length. One should undertake proper tax planning to save taxes on his income and avail maximum benefits of the given income-tax deduction.


    References:

    Notification for New Pension Scheme (NPS) for section 80CCD

    MINISTRY OF FINANCE
    (Department of Economic Affairs)
    (ECB & PR Division)

    NOTIFICATION

    New Delhi, the 22nd December, 2003

    F.No. 5/7/2003-ECB &PR- The government approved on 23rd August, 2003 the proposal to implement the budget announcement of 2003-04 relating to introducing a new restructured defined contribution pension system for new entrants to Central Government service, except to Armed Forces, in the first stage, replacing the existing system of defined benefit pension system.

    i. The system would be mandatory for all new recruits to the Central Government service from 1stof January 2004 (except the armed forces in the first stage). The monthly contribution would be 10 percent of the salary and DA to be paid by the employee and matched by the Central government. However, there will be no contribution form the Government in respect of individuals who are not Government employees. The contribution and investment returns would be deposited in a nonwithdrawable pension tier-I account. The existing provisions of defined benefit pension and GPF would not be available to the new recruits in the Central Government service.

    ii. In addition to the above pension account, each individual may also have a voluntary tier-II withdrawable account at his option. This option is given as GPF will be withdrawn for new recruits in Central government service. Government will make no contribution into this account. These assets would be managed through exactly the above procedures. However, the employee would be free to withdraw part or all of the ‗second tier‗ of his money anytime. This withdrawable account does not constitute pension investment, and would attract no special tax treatment.

    iii. Individuals can normally exit at or after age 60 years for tier-I of the pension system. At the exit the individual would be mandatorily required to invest 40 percent of pension wealth to purchase an annuity (from an IRDA- regulated life insurance company). In case of Government employees the annuity should provide for pension for the lifetime of the employee and his dependent parents and his spouse at the time of retirement. The individual would receive a lump-sum of the remaining pension wealth, which he would be free to utilize in any manner. Individuals would have the flexibility to leave the pension system prior to age 60. However, in this case, the mandatory annuitisation would be 80% of the pension wealth.

    Architecture of the new Pension System

    (i) It will have a central record keeping and accounting (CRA) infrastructure, several pension fund managers (PFMs) to offer three categories of schemes viz. option A, B and C.

    (ii) The participating entities (PFMs and CRA) would give out easily understood information about past performance, so that the individual would be able to make informed choices about which scheme to choose.

    2. The effective date for operationalization of the new pension system shall be form 1 st of January, 2004.


    U.K. SINHA, Jt. Secy.


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