Income Tax Deductions U/s 80C For F.Y. 2019-20, With Automated Arrears Relief Calculator U/s 89(1) with Form 10E for the F.Y. 2019-20 ( Updated Version)

What exactly is an Income Tax Deduction U/s 80C?

A deduction from an Income Tax point of view is the investment/expenditure made by you that help you save taxes. So, the income tax deduction reduces your gross income (means the income on which, the tax has to be paid). Thereby, reducing your tax on your total income

Types of Income Tax Deduction are:-

Income tax department allows deductions specified in Chapter VI-A of the Income Tax Act. So, here’s the complete list of all the Income Tax Deductions for AY 2019-20 and 2020-21 as per the Income Tax that you can use to reduce your tax outgo (depending on your tax situation):

Download Automated Income Tax Arrears Relief Calculator U/s 89(1) With Form 10e from the financial year 2000-01 to Financial Year  2019-20 ( Update Version) in Excel 

 80C Deductions: LIC, PF, PPF, etc.

80C deduction is the most popular Income Tax Deductions. The 80C deduction limit for AY 2018-19, 2019-20 and 2020-21 are? 1,50,000. The various options of investments and payments that qualify for deduction under this section are:

·         Life Insurance Premium (LIP)Deduction is allowed in respect of life insurance premium that you pay on your Life insurance policy but policy must be in the name of:

1. In case of an individual: Individual, spouse or any child of such individual.
2. In case of HUF: Any member of HUF.

Do note that before making the payment towards the premium, first check with an agent or read the policy description whether it is eligible for the deduction for income tax purpose.

·         Public Provident Fund (PPF)Deduction is allowed in respect of the Contribution made by you towards your PPF. The limit for the minimum deposit in PPF A/C is Rs. 500 and limit for maximum deposit are Rs 1,50,000 during a year. PPF can be in the name of:

1. In case of an individual: Individual, spouse or any child of such individual.
2. In case of HUF: Any member of HUF.

The best part about PPF is that the interest you receive on your PPF account and receipts on maturity or withdrawals is fully tax-free. The PPF account matures after 15 years but part of the money can be withdrawn after 5 years.

·         Unit Linked Insurance Plan (ULIP)Deduction is allowed in respect of the Contribution made by you towards your ULIP. You can make investments in the name of:

1. In case of an individual: Individual, spouse or any child of such individual.
2. In case of HUF: Any member of HUF.

·         Children's Tuition FeesYou can claim a deduction for the payment of tuition fees of your children to any university, college, school or other educational institution situated within India for the purpose of education. However, the deduction would not be allowed for payment towards any development fees or donation or payment of similar nature. This deduction is allowed for a maximum of two children.

·         Principal Repayment of Housing LoanYou can claim the deduction of principal repayment of your housing loan taken for purchase or construction of residential house property. The deduction can also be availed in respect of stamp duty charges, registration fee and other expenses paid for the purchase of your house. This deduction is available for both individuals and HUF.

But keep in mind that if you sell/transfer such house property in respect of which such deduction was taken before the expiry of 5 years from the end of the financial year in which possession was taken, then the deduction availed in the earlier years will be taxable for you in that year.

·         Sukanya Samriddhi SchemeIn lines with the Beti Bachao, Beti Padhao campaign, this scheme was launched on 22nd January 2015 by Prime Minister Narendra Modi. You claim deduction under this scheme for any sum deposited by you in the Sukanya Samriddhi Account of your girl child or any girl child for whom you’re her legal guardian. The minimum limit of deposit under this account is Rs 1000 annually and the maximum Rs 1,50,000. Interest earned and money withdrawals from this account are tax-free.

·         Mutual Funds (Equity Linked Saving Scheme)You can claim the deduction in respect of subscription to units of UTI or mutual funds specified u/s 10(23D) of Income Tax India, 1961.

·         Provident FundIf you're an employee, then you can claim the deduction in respect of contribution towards your Statutory Provident Fund or Recognized Provident Fund Account.

·         Bank FDR’s (Known as 5 Year Tax Saving FDR’s)Almost everyone invests in Bank FDR’s but did you know that you can claim a deduction for it too. The investment must be made in tax saving term deposit for a lock-in period of 5 years or more with scheduled banks to avail the deduction.

·         Post Office Tax Saving FDR’s (Post Office Time Deposit Scheme)Similar to Bank FDR’s, 5-year FDRs of Post Offices are also eligible for deduction under section 80C.

·         National Saving Certificate (NSC)Subscribe to NSC and you’ll be eligible for the deduction for the amount you contribute. These can be purchased from Post Office. 

80CCC: Pension Plan

Deposit/Payment made by you towards LIC or any other insurer in the approved annuity plan for receiving a pension from the fund referred to in section 10(23AAB) can be claimed as deduction under this section is lower of the following:

• 100% of the amount paid
• Rs 1,50,000

However, as per section 80CCE, you can claim a deduction of only Rs 1,50,000 under section 80C, 80CCC, and 80CCD (1) cumulatively.

Section 80CCD: [Deduction in respect of contribution to pension scheme of Central Government]

The 80CCD deduction for AY 2019-20 can be divided into three different categories:

• 80CCD (1): You can avail this deduction irrespective of whether you're in employment or self-employed on the amount deposited under a pension scheme notified by the Central Government (NPS deduction for AY 2018-19). The deduction allowed in this section is lower of the following 3 amounts:
1. 10% of your Salary (Basic salary+D.A) (in case you're in employment) or 20 % of your Gross Total Income (in case you're self-employed)
2. Limit left under section 80CCE i.e. Rs 1,50,000 - deduction u\s 80C - deduction u\s 80CCC.
3. Actual Amount paid under eligible NPS.

·         80CCD(1B): You can claim an additional deduction of up to Rs. 50,000 under this section for investment in NPS Scheme. This is in addition to 80CCD (1).

·         80CCD (2): Sec 80CCD(2) deduction for AY 2019-20 can be availed by you if you're an employee and your employer makes a contribution under NPS Scheme for employees. It is allowed only to the extent of 10% of your salary (Basic salary+D.A).

Note: In the above example, Deduction u\s 80CCD(1B) is not considered because deduction u/s 80CCD(1B) is available without any additional condition. The deduction is available lower of Amount invested or Rs 50,000/-