Budget 2018 has created a
significant impact on personal finance, in respect of investments, savings, and
taxes. It is important to think beyond Section 80C to maximize your income tax
benefits. Also, you must align your investments with your tax-saving
instruments to get absolute benefits.
Here we have a complete list of
tax deductions you can claim under the Income Tax Act, this financial year
2018-19.
Section 80C – Investments
There are approximately 14 instruments through
which you can claim a deduction under Section 80C. Financial instruments like
Employee Provident Fund, National Savings Certificate, Public Provident Fund,
National Pension System, payment made towards children’s tuition, Life
Insurance premium, ELSS, deposit in Sukanya Samriddhi Yojana, etc offer tax
benefit under this section.
A deduction of Rs.1,50,000 from your total income in FY 2017-18 can be claimed by
an individual or a HUF, u/s 80C.
Section 80CCD – Government Pension Scheme
Under this section, you can claim a deduction
for contribution made towards National Pension Scheme.
Section 80CCD (1) – Employee’s
Contribution –
If you are an employee: Maximum deduction
allowed is 10% of your salary.
If you are self-employed: Maximum deduction
allowed is 20% of your gross total income.
Section 80CCD (1B) – Self contribution –
An additional deduction of up to Rs.50,000 for investment in a Tier
I NPS account. Contribution made towards Atal Pension Yojana is eligible as
well.
Section 80CCD (2) – Employer’s
Contribution –
An additional deduction of up to 10% of the
salary of the employee, towards contribution made to employee’s pension fund.
No financial limit exists on this deduction.
Download Automated Income Tax Arrears Relief Calculator U/s 89(1) with Form 10E from F.Y. 2000-01 to F.Y.2018-19 [ Up dated Version ]
Section 80D – Health Insurance
Tax benefit u/s 80D of Rs.50,000 shall be available
for senior
citizens.
If you pay a premium for a Health Insurance,
on behalf of your parents, an additional deduction of up to Rs.20,000 (Rs.50,000 (less) Rs.30,000)
shall be available. If you fall under the tax bracket of 30%, you shall be
eligible for an additional tax benefit of up to Rs.6,000 (30% of Rs.20,000).
In case of super senior citizens (aged above
80 years) who are uninsured, a medical expense of up to Rs.30,000 shall be allowed as a
deduction.
Section 80DDB – Critical Illness
Under section 80DDB tax deduction of Rs.40,000 is available, for
medical treatment of specified ailments, for individuals below 60 years of age.
These specified ailments include AIDS, Cancer, Thalassaemia, etc.
Rule 11DD has the list of these specified
ailments. A certificate from a registered doctor, in Form 10I will have to be
furnished.
Tax exemption on treatment expense of
specified critical illness was Rs.60,000 for senior citizens and Rs.80,000 for very senior
citizens. This limit has been proposed to be increased to Rs.1,00,000 for all senior citizens.
If an expenditure has been incurred by
you for treatment of your senior citizen parents, for a specified ailment, ad
additional tax deduction of Rs.40,000 can be claimed.
Section 80TTA – Savings Account
Interest earned on Savings Account in post
office, bank, or cooperative society, shall be exempt up to Rs.10,000.
Interest earned from this account will have to
be included in Other Income. Deduction claimed will have to be on the total
interest earned or Rs.10,000,
whichever is less. This benefit is available for an individual and a HUF.
This tax benefit is not allowed on interest
earned via Recurring Deposits, Fixed Deposits, or Corporate Bonds.
Section 80GG – HRA
If you are residing in a rented house, HRA is
an excellent tax saving option for you. The tax benefit you will be able to
avail would depend on your Basic Salary, the HRA that has been provided by your
employer, the rent you pay, and your place of residing.
Section 80G – Charity & Relief Funds
Tax exemption of up to 50% of the amount paid
via cash, draft, or cheque (up to Rs.10,000), towards a charitable organization or relief fund can
be claimed. Contribution towards specified organizations makes you eligible for
100% tax exemption.
W.e.f FY 2017-18, a donation in cash, in
excess of Rs.2,000, shall not be allowed as a
deduction. A donation made above Rs.2,000 will have to be made in any mode other than cash, to
avail tax benefit.
Section 80E – Education Loan
Interest paid on loan for higher education
post completion of your Senior Secondary Examination shall be eligible for
a tax deduction claim under this section. This benefit shall be allowed on loan
taken for higher education of yourself, your spouse, your children, or a
student for whom you are a local guardian.
Tax deduction under this section can be
availed for up to 8 years or till the payment of interest, whichever is
earlier. No limit has been set on the amount of interest.
Standard Deduction of Rs.40,000
A standard deduction of Rs 40,000 has been introduced for
employees. You will have to forego the transport allowance with deduction Rs.19,200,
and medical reimbursement with deduction Rs.15,000.
This standard deduction will provide a benefit
of Rs5,800 (Rs.40,000 (less) Rs.34,200)
Section 24(b) – Home Loan
You can claim a tax benefit on the interest
component of your home loan u/s 24(b). In case of properties that are
self-occupied, deduction of up to Rs.2,00,000 shall be applicable.
