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Kotak Health Shield Plan helps secure your finances in sudden medical expenses such as Cardiac, Liver, Neuro, and Cancer (all early and significant illness stages/conditions of cancer), along with offering protection for personal accidents - in case of accidental death or disability.
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Income tax filing is one of the most important task for every Indian citizen, be it a salaried individual or a businessman. In the light of this, every year, the Finance Ministry of India roles out a budget that explains the dos and don’ts of IT deductions. At the same time, every citizen is confused about making an investment that will help them to save some taxes.
Although, this might seem that everyone has to pay some amount of tax every year, there are a few ways by which you can save the taxes or get a rebate. There are tax saving investment options like PPF, EPF, and others which are commonly used and they give you tax exemption under section 80C. Similarly, there are other such sections that can help you save taxes, but you might have not have heard of.
In this article, we will help you understand the tax exemptions that you can claim under Section 80C, 80D and 80DDB.
Income tax is a percentage of income that is paid to the government by the taxpayers for the betterment of the public in general.
As per the new tax regime, the tax rates for all the categories are the same. This includes individuals and HUF below 60 years of age, senior citizens or those above 60 years of age and super senior citizens or those above 80 years of age. Therefore, there has been no increase in the basic exemption limit benefit for senior and super senior citizens.
Taxpayers now have two options – they can either take up the new tax regime and choose to pay income tax at lower rates without a few income tax exemptions and deductions. Or, they can choose to continue with the old tax regime, pay higher rates but avail certain deductions and exemptions.
However, there are a few deductions that are allowed under the new tax regime. They are as follows:
There are a total of 70 exemptions and deductions that are not a part of the new tax regime. The most common exemptions under this list include –
TAX SLABS |
NEW REGIME |
Upto INR 2.5 Lakhs |
NIL |
INR 2.5 Lakhs - INR 5 Lakhs |
5% of the total income |
INR 5 Lakhs - INR 7.5 Lakhs |
INR 12,500 + 10% of the total income |
INR 7.5 Lakhs - INR 10 Lakhs |
INR 37,500 + 15% of the total income |
INR 10 Lakhs - INR 12.5 Lakhs |
INR 75,000 + 20% of the total income |
INR 12.5 Lakhs - INR 15 Lakhs |
INR 1,25,000 + 25% of the total income |
> INR 15 Lakhs |
INR 1,87,5000 + 30% of the total income |
Taxable income |
Tax Rate |
₹0 to ₹2,50,000 |
Nil |
₹2,50,000 to ₹5,00,000 |
5% |
₹5,00,000 to ₹10,00,000 |
₹12,500 + 20% of total income exceeding ₹5,00,000 |
Above ₹10,00,000 |
₹1,12,500 + 30% of total income exceeding ₹10,00,000 |
Taxable income |
Tax Rate |
₹0 to ₹3,00,000 |
Nil |
₹3,00,000 to ₹5,00,000 |
5% |
₹5,00,000 to ₹10,00,000 |
₹10,000 + 20% of total income exceeding ₹5,00,000 |
Above ₹10,00,000 |
₹1,10,000 + 30% of total income exceeding ₹10,00,000
|
Taxable income |
Tax Rate |
₹0 to ₹5,00,000 |
Nil |
₹5,00,000 to ₹10,00,000 |
20% |
Above ₹10,00,000 |
₹1,00,000 + 30% of total income exceeding ₹10,00,000
|
Additionally, there is a surcharge of 10% if the total income exceeds ₹50 Lakh and a surcharge of 15% in case the total income is more than ₹1 crore. There is also an education cess of 3% applicable over and above the surcharge.
The income tax exemption limit for all individuals below 60 years is ₹2.5 Lakh, for individuals between 60 years and less 80 years than ₹3 Lakh and for individuals above 80 years is ₹5 Lakh.
Every individual is eligible for a deduction on the income invested in specific securities. We have listed down all the deductions for FY 2019-20, which will help you easily prepare your income tax returns and make the most of the available tax deductions.
Here is a list of income tax deductions for FY 2019-20 and AY 2020-21 as per various sections of the Income Tax Act, 1961:
This is the most important section for deductions for every taxpayer. The maximum exemption limit in the section is ₹1.5 Lakh. There are various avenues like PPF, EPF, term insurance, NPS, etc., that could be claimed under section 80C. Below is the complete list:
This section allows a maximum deduction of ₹1.5 Lakh, and it includes the contribution made to the annuity plan of a life insurance provider for the purpose of obtaining a pension from the fund.
This section includes the contribution to the Atal Pension Yojana and allows a deduction of a contribution up to 10% of the total salary of salaried employees and 20% of the gross income of non-salaried to the government-notified pension schemes. The contribution can be deducted from the taxable income under Section 80 CCD (1). In case the employer contributes to the scheme as well, the entire contribution amount can be claimed as a tax deduction under Section 80CCD (2).
It is important to remember that the complete deduction under Section 80C, Section 80CCC and Section 80CCD (1) cannot exceed ₹1.5 Lakh in aggregate. The additional tax deduction amounting to ₹50,000 under Section 80CCD (1B) is above this limit.
Income Tax Deduction under section 80D is for the premium paid for Medical Insurance. This section allows deductions on the health insurance premium paid by an individual or HUF. You can claim a deduction of ₹25,000 for self, spouse and dependent children and an additional deduction for insurance of parents of less than 60 years of age, is up to ₹25,000. If parents are above the age of 60 can seek a deduction of ₹50,000, which was increased in Budget 2018 from ₹30,000.
And if both the taxpayer and parent(s) are above 60 years of age, then the maximum deduction under section 80D is up to ₹1 Lakh.
An amount of ₹75,000 may be claimed as a deduction for spending on medical treatments of dependents with a 40% disability. This limit is ₹1.25 Lakh in case of severe disability.
Deduction for Medical Expenditure on Self or Dependent Relative:
This section which offered the tax benefits of the Rajiv Gandhi Equity Savings Scheme has been withdrawn, but if an individual has claimed a deduction in FY 2016-17, you are eligible to continue with the same for the next two financial years.
This section allows individuals to claim a deduction for the loss under the head ‘Income from House Property. It allows a tax benefit on the repayment of the loan of a second house up to ₹2 Lakh. The unclaimed amount of loss may be carried forward for eight years and set off against house property income. Additionally, any interest paid on the housing loan is eligible for a tax benefit. Municipal taxes, interest paid on loans taken for the house, and 30% of the net annual income are allowed as a deduction.
Interest on loan paid for education is eligible for Section 80E. Please note that principal repayment on a loan cannot be claimed as a deduction. The loan should have been taken for yourself, your children, and your spouse or for an individual for whom you are a legal guardian. There is no limit on the amount of interest that can be claimed as a deduction.
Individuals buying a home for the first time may claim an additional deduction of ₹50,000 on the home loan interest paid. This includes a clause that the loan should be sanctioned in or after FY 2016-17, and the loan amount should be less than ₹35 Lakh. Furthermore, the value of the house should not exceed ₹50 Lakh, and the individual should not own any other residential house under his name.
Section 80EEA allows a deduction for interest payments up to ₹1.5L. This deduction is over and above the deduction of ₹2 Lakhs available under section 24. An individual should not own any house on the date of the sanction of a loan to claim this deduction.
Section 80G includes all the contributions made to charitable institutions and relief funds. The contribution should be made through cheque, cash or via draft. The amount of deduction eligible is ₹2,000. Moreover, for donations made to political parties, the same deduction could be claimed under 80GGC.
The deduction amount for this section is ₹60,000 per annum, and the section is applicable to only those who neither have the ownership of a residential house nor receive a House Rent Allowance . The amount of deduction will be the least of the following:
This section allows a deduction of ₹10,000 from the total gross income of individuals or Hindu Undivided families. The deduction is allowed for the interest earned on the deposits made in a savings account in a bank, cooperative society or a post office. However, the deduction will not be applicable for the interest earned from fixed deposits in the bank.
This section allows a deduction to individuals who are physically and mentally challenged.
Here is the income tax exemption list 2021-22:
1. House Rent Allowance
2. Leave Travel Allowance (LTA)
3. Food coupons
Salary component |
Reimbursements |
Proof |
House rent allowance (HRA) |
Rent amount for residential housing |
Rent receipts, PAN of the employer (mandatory for rent > ₹1 Lakh annually) |
Leave travel allowance (LTA) |
Travelling costs within India such as air and rail fare |
Air and train tickets, bus or cab receipts/bills |
Telephone reimbursement |
Landline, inclusive of broadband, mobile phone |
Telephone bills |
Books and periodicals |
Cost of books and periodicals |
Bills or invoices for the books and periodicals |
It is advisable to plan the investment in advance in order to avoid the last-minute hassles. In case you are unable to invest in the right products, you would have to pay the entire tax depending on your income. The above list of income tax deductions will help you in tax planning and achieving your financial goals.
- A Consumer Education Initiative series by Kotak Life
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