Interim-Budget 2019-20 & the Finance Bill 2019 have been placed in Parliament. The Income Tax Slab rates have been kept unchanged by the Finance Minister for the Financial Year 2019-20 (Assessment Year 2020-2021).
Tax planning is an important part of a financial plan. Whether you are a salaried individual, a professional or a businessman, you can save taxes to an unrepeatable extent through proper tax planning.
The Indian Income Tax Act allows for unrepeatable Tax Deductions / Tax Exemptions which can be personal to save tax. You can subtract tax deductions from your Gross Income and your taxable income gets reduced to that extent.
In this post, let us go through the Income Tax Deductions List FY 2019-20, weightier ways to save taxes and weightier tax saving options for FY 219-20 / AY 2020-21.
The Income Tax Deductions List FY 2019-20 and AY 2020-21 (Chapter VI-A deductions list)
The maximum tax exemption limit under Section 80C has been retained as Rs 1.5 Lakh only. The various investment avenues or expenses that can be personal as tax deductions under section 80c are as below;
• PPF (Public Provident Fund)
• EPF (Employees’ Provident Fund)
• Five year Wall or Post office Tax Saving Deposits
• NSC (National Savings Certificates)
• ELSS Mutual Funds (Equity Linked Saving Schemes)
• Kid’s Tuition Fees
• SCSS (Post office Senior Resider Savings Scheme)
• Principal repayment of Home Loan
• NPS (National Pension System)
• Income Tax benefits are currently misogynist on Tier-1 deposits only (FY 2018-19). The contributions by the government employees (only) under Tier-II of NPS will moreover be covered under Section 80C for deduction up to Rs 1.5 lakh for the purpose of income tax, with a three-year lock-in period. This is w.e.f April 2019.
• Life Insurance Premium
• Sukanya Samriddhi Account Petrifaction Scheme
Contribution to the annuity plan of LIC (Life Insurance Corporation of India) or any other Life Insurance Company for receiving a pension from the fund is considered for tax benefit. The maximum mandated Tax deduction under this section is Rs 1.5 Lakh.
The employee can contribute to Government notified Pension Schemes (like National Pension Scheme – NPS). The contributions can be up to 10% of the salary (salaried individuals) and Rs 50,000 spare tax goody u/s 80CCD (1b) was proposed in Upkeep 2015.
As per the Upkeep 2017-18, the self-employed (individual other than the salaried class) can contribute up to 20% of their gross income and the same can be deducted from the taxable income under Section 80CCD (1) of the Income Tax Act, 1961.
To requirement this deduction, the employee has to contribute to Govt recognized Pension schemes like NPS. The 10% of the salary limit is workable for salaried individuals only and Gross income is workable for non-salaried. The definition of Salary is only ‘Dearness Allowance.’ If your employer moreover contributes to the Pension Scheme, the whole contribution value (10% of salary) can be personal as a tax deduction under Section 80CCD (2).
The Centre will now contribute 14% of vital salary to Govt employees’ pension corpus, up from 10%. This is w.e.f April 2019.
Note that the Total Deduction under section 80C, 80CCC and 80CCD(1) together cannot exceed Rs 1,50,000 for the financial year 2019-20. The spare tax deduction of Rs 50,000 u/s 80CCD (1b) is over and whilom this Rs 1.5 Lakh limit.
Contributions to ‘Atal Pension Yojana‘ are eligible for Tax Deduction under section 80CCD.
Free Download Automated Income Tax Form 16 Part B for the Financial Year 2018-19 [ This Excel Utility can prepare at a time 50 Employees Form 16 Part B ]
In the union upkeep 2018, the government of India has proposed the unelevated changes with respect to deductions misogynist on Health Insurance and/or towards Medical treatment. The same provisions are workable for FY 2019-20 as well;
• Health Insurance & Senior Citizens: In Upkeep 2018, it has been proposed to raise the maximum tax deduction limit for senior citizens under Section 80D of the Indian Income Tax Act 1961. The limit of tax deduction unreliable for FY 2017-18 for senior citizens was Rs. 30,000 which was increased to Rs 50,000, from FY 2018-19 (AY 2019-20) onwards.
• Under Section 80D an assessee, stuff an individual or a Hindu undivided family, can require a deduction in respect of payments towards yearly premium on a health insurance policy, preventive health check-up or medical expenditure in respect of senior resider (above 60 years of age).
• As of FY 2017-18, only Very Senior Citizens (who are whilom 80 years of age), can require a deduction of up to Rs 30,000 incurred towards medical expenditure, in specimen they don’t have health insurance. The Upkeep 2018 has increased this to Rs 50,000 and moreover unreliable the same flexibility to senior citizens. Plane individuals who pay premiums for their dependent senior citizens' parents can requirement the spare deduction on health insurance premium (or) medical expenditure.
• Single premium Health Insurance policy / Multi-year Mediclaim policy :
• In the specimen of single premium health insurance policies having imbricate of increasingly than one year, it is proposed that the deduction shall be unreliable on proportionate understructure for the number of years for which health insurance imbricate is provided, subject to the specified monetary limit.
The unalleviated limits are workable for Financial Year 2019-2020 (or) To wage Year (2020-2021) u/s 80D.
PICTURE OF SECTION 80D
Preventive health checkup (Medical checkups) expenses to the extent of Rs 5,000/- per family can be personal as tax deductions. Remember, this is not over and whilom the individual limits as explained above. (Family includes: Self, spouse, parents and dependent children).
You can requirement up to Rs 75,000 for spending on medical treatments of your dependents (spouse, parents, kids or siblings) who have 40% disability. The tax deduction limit of up to Rs 1.25 lakh in the specimen of severe powerlessness can be availed.
To requirement this deduction, you have to submit Form no 10-IA.
PICTURE OF FORM 10-IA
An individual (less than 60 years of age) can require up to Rs 40,000 for the treatment of specified hair-trigger ailments. This can moreover be personal on behalf of the dependents. The tax deduction limit under this section for Senior Citizens and very Senior Citizens (above 80 years) has been revised to Rs 1,00,000 w.e.f FY 2018-19.
To requirement Tax deductions under Section 80DDB, it is mandatory for an individual to obtain ‘Doctor Certificate’ or ‘Prescription’ from a specialist working in a Govt or Private hospital.
For the purposes of section 80DDB, the pursuit shall be the eligible diseases or ailments:
• Neurological Diseases where the powerlessness level has been certified to be of 40% and above;
(b) Dystonia Musculorum Deformans
(c) Motor Neuron Disease
(h) Parkinson’s Disease
• Malignant Cancers
• Full Blown Acquired Immuno-Deficiency Syndrome (AIDS) ;
• Chronic Renal failure
• Hematological disorders
Tax Benefits of Rajiv Gandhi Equity Savings Scheme (RGESS) under section 80CCG has been withdrawn. However, if an investor has invested in the RGESS scheme in FY 2016-17 (AY 2017-18), they can requirement deduction under this Section until AY 2019-20.
Section 24 (B) (Loss under the throne Income from House Property)
• From FY 2017-18, the Tax goody on loan repayment of the second house is restricted to Rs 2 lakh per annum only (even if you have multiple houses the limit is still going to be Rs 2 Lakh only and the ceiling limit is not per house property).
If you take any loan for higher studies (after completing Senior Secondary Exam), tax deduction can be personal under Section 80E for interest that you pay towards your Education Loan. This loan should have been taken for higher education for you, your spouse or your children or for a student for whom you are a legal guardian. Principal Repayment on educational loan cannot be personal as a tax deduction.
There is no limit on the value of interest you can requirement as a deduction under section 80E. The deduction is a misogynist for a maximum of 8 years or till the interest is paid, whichever is earlier.
This was a new proposal which had been made in Upkeep 2016-17. The same will be unfurled in FY 2018-19 / AY 2019-20 too. First time Home Buyers can requirement a spare Tax deduction of up to Rs 50,000 on home loan interest payments u/s 80EE. The unelevated criteria have to be met for ultimatum tax deduction under section 80EE.
• The home loan should have been sanctioned during FY 2016-17.
• Loan value should be less than Rs 35 Lakh.
• The value of the house should not be increasing than Rs 50 Lakh &
• The home property should not have any other existing residential house in his name.
• Such eligible home buyers can requirement exemption of Rs. 50,000/- for interest on home loan under section 80EE from towage year whence from 1 st April 2017 and subsequent years.
Contributions made to unrepealable relief funds and charitable institutions can be personal as a deduction under Section 80G of the Income Tax Act. This deduction can only be personal when the contribution has been made via cheque or typhoon or in cash. In-kind contributions such as supplies material, clothes, medicines etc do not qualify for deduction under section 80G.
The Tax Deduction value under 80GG is Rs 60,000 per annum. Section 80GG is workable for all those individuals who do not own a residential house & do not receive HRA (House Rent Allowance).
The extent of tax deduction will be limited to the least value of the following;
• Rent paid minus 10 percent of the adjusted total income.
• Rs 5,000 per month.
• 25 % of the total income.
(If you are ultimatum HRA (House Rent Allowance) of increasingly than Rs 50,000 per month (or) paying rent which is increasing than Rs 50,000 then the tenant has to deduct TDS @ 5%. It has been proposed that the tax could be deducted at the time of credit of rent for the last month of the tax year or last month of tenancy, as applicable.)
Revised Rebate under Section 87A
The tax rebate of Rs 12,500 for individuals with taxable income of up to Rs 5 Lakh has been proposed in Interim-Budget 2019-20-18 / AY 2020-21 as well.
• Only Individual Assesses earning net taxable income up to Rs 5 lakhs are eligible to enjoy tax rebate u/s 87A.
• For Example: Suppose your yearly pay comes to Rs 6,50,000 and you requirement Rs 1,50,000 u/s 80C. The total net income in your specimen comes to Rs 5,00,000 which makes you eligible to a requirement tax rebate of Rs 12,500.
• The value of tax rebate u/s 87A is restricted to a maximum of Rs 12,500. In specimen the computed tax payable is less than Rs 12,500, say Rs 10,000 the tax rebate shall be limited to that lower value i.e. Rs 10,000 only.
• The Tax Assesse is first required to add all incomes i.e. salary, house income, wanted gains, merchant or profession income and income from other sources and then deduct the eligible tax deduction amounts u/s 80C to 80U and under section 24(b) (Home Loan Interest) to come up with the net taxable income.
• If the whilom net taxable income happens to be less than Rs 5 lakhs then the tax rebate of Rs 12,500 comes into the picture and should be deducted from the calculated total income tax payable.
Section 80TTA of Income Tax Act offers deductions on interest income earned from savings wall petrifaction of up to Rs 10,000. From FY 2018-19, this goody will not be a misogynist for late Income Tax filers.
• The proposal has been made to not to deduct TDS of up to Rs 40,000 on interest income from Wall / Post office deposits (the FY 2018-19 TDS threshold limit u/s 194A is Rs 10,000). Kindly note that no TDS does not midpoint no tax liability. Interest income on Deposits (FDs/RDs) is still a taxable income.
Interest income from deposits held with companies will not goody under this section. This means senior citizens will not get this good for interest income from corporate stock-still deposits us/ 80TTB.
This is similar to Section 80DD. The tax deduction is unreliable for the tax assessee who is physically and mentally challenged.
Standard Deduction of Rs 50,000 in-lieu of Medical Allowance – Upkeep 2018
The current Standard Deduction of Rs 40,000 for FY 2018-19 is proposed to be increased to Rs 50,000 for FY 2019-20.
As per this new proposal, irrespective of the value of taxable salary the assessee will be entitled to get a deduction of Rs.50,000 or taxable salary, whichever is less. Thus suppose if a person has worked for few days (or) months and his salary was just Rs 50,000 for a previous year, then he will be entitled to a deduction equal to salary stuff the same amount. If his salary is less, say Rs 30,000 the deduction shall be restricted to Rs 30,000. If the salary exceeds a value of Rs 50,000, the deduction shall be restricted to Rs 50,000..