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Income Tax Deductions & Exemptions 2019-20

February 2, 2019

Income Tax Deductions & Exemptions are defined as

Exemptions- Incomes which are exempt u/s 10 will not include while computing total income.

Deductions- Incomes from which deductions are allowable will first include in the gross total income and then deductions will be allowed.

IT Deductions List FY 2018-19/AY 2019-20

Section 80C
  • The eligible taxpayers can claim deductions of the maximum amount up to Rs1.5 lakh per year.
  • Both individuals and HUFs are eligible for income tax deductions under 80C.

The section includes the following investments and expenses:

Investment in PPF
  • You can claim a deduction for the investment made in PPF account.
  • You can invest the maximum of Rs.1.5 lakhs in a year.
  • Receipts on maturity and withdrawal are tax-free.
Investment in Fixed Deposit
  • Interest earned on fixed deposits with tenure of not less than 5 years is eligible for tax deduction under section 80C.
  • For Senior Citizens, the tax-exempt interest income on deposits with banks has increased to Rs.50,000 from Rs.10,000.
  • Further, TDS will not be required to deduct under Section 194A and it has been extended to all FD and RD Scheme.
A premium on Life Insurance Policy

You can claim a deduction under Section 80C for the premium paid for a life insurance policy as per the income tax act.

Contribution to EPF
  • You can claim a tax deduction for the contribution made in EPF under section 80C.
  • Government to contribute 12% of EPF contribution for new employees (less than 3 years of employment) in all sectors.
  • New women employees(less than 3 years of employment) to contribute only 8% of salary as the contribution.
Equity Oriented Mutual Fund

You can claim a tax deduction for an investment made in any unit of mutual funds whether it is listed on the stock exchange or not.

Repayment of Principal on housing loan

You can claim a tax deduction on the principal amount paid for a home loan under section 80C.

Tuition Fees
  • You can claim a tax deduction for the tuition fees paid under section 80C.
  • However, the deduction will only be applicable in case the fees are paid by cheque.

Section 80CCC and 80CCD

Pension Funds
  • You can claim a tax deduction under 80CCC and 80CCD for the contribution made to pension funds.
  • If you have contributed any amount in any insurance scheme to receive the pension, then you can claim a tax deduction under 80CCC.
  • However, if you have contributed to any pension scheme initiated by central Government, up to 10% of your salary such as the National Pension Scheme than you can claim tax deduction under 80CCD.

Section 80TTA

Deductions for interest on a savings account
  • You can claim a tax deduction under Section 80TTA for interest earned on the bank savings account.
  • The deduction is subject to a maximum amount of Rs.10,000.

Section 80CCF

Deduction for an investment made in long term infrastructure bonds
  • You can claim a tax deduction under Section 80CCF for an investment made in long term infrastructure bonds notified by Government.
  • You can claim a maximum deduction up to Rs.20,000.

Section 80CCG

Deduction for Investment made under an equity saving scheme
  • The deduction is also known as Rajiv Gandhi Equity Saving Scheme.
  • You can claim a tax deduction for an investment made in listed shares or mutual funds.
  • The maximum deduction allowed is Rs.25,000.

Section 80D

Payment of medical insurance premium and health check-up
  • You can claim a tax deduction under this section for the payment of medical insurance premium for self, spouse, or any child.
  • In addition, any amount paid for health check-up can also claim for the tax deduction.

Section 80E

Deduction for interest on Education Loan
  • You can claim a tax deduction under this section for interest paid on repayment of Education Loan.
  • The deduction can only be claimed on the interest paid on repayment of the loan and not on the principal amount.

Section 80EE

  • You can claim a tax deduction under section 80EE for interest payable for loan taken for acquisition of a residential house property.
  • Deduction of housing loan interest allows as a deduction under two sections ie., Section 24(b) and Section 80EE.
  • Section 24(b) allows deduction of interest of paid on loan taken for purchase, construction or renovation of the property.
  • The deduction under this section allows in the following manner:
  1. Let-out property: Entire interest amount paid on the housing loan taken for the purpose of acquisition, construction, repairing, re-construction allows as a deduction.
  2. Self-occupied House Property: Interest paid on housing loan taken for the purpose of acquisition or construction of house property allows as a deduction up to Rs.2,00,000.
  • If the loan is taken for the purpose of reconstruction, repairs or renewals of property, the amount of deduction is restricted to Rs.30,000.
  • Section 80EE allows additional deduction of up to Rs.50,000 to the first time home buyers for the interest paid on housing loan.

Section 80G, 80GGA, 80GGB, and 80GGC

  • You can claim a tax deduction under Section 80G for a general donation made during a financial year.
  • Deductions under Section 80GGA can claim if a donation is made for Scientific Research or Rural Development.
  • Deductions under section 80GGB and 80GGC can be claimed if the donation is made to any political party.

Section 80GG

  • You can claim a tax deduction under this section for the rent paid for the house.
  • However, you can claim deduction under this section only in the case when you have not received HRA.
  • If you are receiving HRA then you are not entitled to the deduction under this section.
  • When the rent paid by you is more than 10% of your total income subject to a maximum of Rs.5000 per month or 25% of total income whichever is less.

Income Tax Exemption

HRA
  • HRA received from the employer
  • Actual rent paid less 10% of basic monthly salary
  • 40% of basic salary for those staying in any place except the metros cities.
Leave Travel Assistance
  • LTA received from the employer towards the cost of domestic travel to hometown or for vacation once in 2 years by rail or by air for self and family members can claim as exempted income.
  • This deduction can claim by a person from the employer directly.
  • LTA is allowing to claim twice in the block of 4 years.
  • The current block is 2014-2018.
  • The employee is allowing to carry one unclaimed LTA to next year as well.

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