With the taxation deadlines just around the corner, it’s time to start looking at your returns. One of the sections of the Income Tax Return that most people look forward to is the Income Tax Deductions. Claiming these tax deductions helps reduce your tax liability. We’ve compiled a list of 10 tax exemptions to be on the lookout for this FY!
Standard Deduction for a Salaried Person:
An exemption specifically available to the salaried person, this standard deduction is a flat deduction on your gross income. For FY 2019-20, you can claim a deduction of Rs. 50,000 flat as opposed to the limit of Rs. 40,000 that was applicable in the previous financial year.
Deductions under section 80C:
Everyone filing their Income Tax Return is familiar with the broad limit of Rs. 1, 50,000 available as a deduction under section 80C. Some of the items covered under this section are:
- PPF Investments
- EPF Investments
- Life Insurance Premiums
- ELSS Investments
- Repayment of the principal on a home loan, etc.
Deductions under section 80CCD:
Investments made in the National Pension Scheme are deductible up to Rs. 50,000 under section 80CCD (1B). This Rs. 50,000 is in addition to the Rs. 1, 50,000 deduction available under section 80C.
Deductions under section 80D:
Another deduction that is very common and beneficial is the deduction under this section. Section 80D provides for deductions on account of payments made for medical insurance premiums and health care check-ups. The limit of this deduction depends on whether you’re paying the premium for yourself, your kids, your spouse, your parents, or the combination of these beneficiaries. The standard amount of deduction under this section is Rs. 25,000.
Deduction under section 80TTA:
If you have Bank Fixed Deposits or any other interest income which doesn’t cross the threshold of Rs. 10,000 during the year, you can claim the entire interest income as a deduction up to Rs. 10,000 under this section.
Payment of Interest on Home Loan under sections 24 and section 80EE:
Payment of interest on a home loan availed by you is subject to a dual benefit for taxation purposes. First, you can claim the interest paid as a deduction under Section 24 which deals with the computation of Income from house property. Then, if you have any unclaimed interest amount as a deduction, you can claim an additional Rs.50, 000 under section 80EE provided that you meet the conditions specified in the section.
Deduction for Interest Paid on Loans Taken for Higher Education purpose:
Under section 80E, you can claim a deduction for the interest paid on an Education Loan taken for higher studies for yourself, your spouse, or your children. Higher studies mean Graduation or Post Graduation Education for this section.
Deductions under Section 80G:
Section 80G provides a tax deduction for any contributions made by you to a charitable institution or a relief fund. Any cash contributions for an amount over Rs. 2,000 would be ineligible for the deduction. For a higher amount, ensure that the payment is made by cheque or draft.
Leave Travel Allowance:
An exemption specifically available to salaried employees, Leave Travel Allowance is commonly provided by employers to their employees. You can claim this deduction twice in a block of 4 years i.e. you can claim the amount spent on a trip for yourself (alone or with your family). There are several conditions to be met for this deduction to be allowed so if you’re planning to claim a trip, ensure you’ve complied with all the requirements.
Food Coupons provided by employers can also be claimed for tax deductions up to Rs. 50 per day per meal.