Income Tax Allowances, Income Tax Deductions, Income Tax Act 1961

Allowances & Deductions Under Income Tax Act 1961

Deductions that lowers an individual's liabilities by lowering his ratable financial gain. Deductions are usually expenses that the remunerator/assessee incurs throughout the year which will be applied against or deducted from his gross financial Income so as to work out what quantity tax is owed.

Income Tax Allowances

SECTION	TYPE OF INVESTMENT	LIMIT	ELIGIBLE PRETENDER
80 C	PPF, EPF, Tuition Fee, Interest on FD, LIC Premium, Housing Loan Repayment	Maximum Rs. 1,50,000 /-	Individual & HUF
80 CCC	Pension Income		Individuals
80 CCD	Pension Income received from Central Government		Individuals
80 D	Expenses incurred against Medical Insurance Premium and Health check up	* For Individual Taxpayer- Premium paid upto Rs. 25000/- in case of Individuals & Rs. 30000/- in case of Senior Citizen * For HUF - Premium paid upto 25000/- in case of Senior Citizen & Rs. 30000/- in case of Super Senior citizen	Individuals & HUF’s
80 TTA	Interest Received on Saving Bank A/c	Upto Rs. 10,000/- yearly	Individuals & HUF’s
80 E	Paid Interest on Education Loan	No Limit	Individuals
80 EE	Interest paid on Loan taken for acquiring a residential house property	Maximum Rs. 50,000/-	Individuals
80 GG	Rent paid and HRA not received from his Employer	Rs. 5000/- OR 25% of Total Income ( Whichever is Less)	Individuals
80 CCG	Equity Saving Schemes	50% of Amount Invested OR Rs. 25000/- (Whichever is Less)	Individuals
80 CCF	Investment in Long Term Infrastructure Bonds	Maximum Rs. 20,000/-	Individuals & HUF’s

DEDUCTIONS ONLY FOR SALARIED PERSON

1. Exemption of House Rent Allowance

A salaried individual having a rented accommodation will get HRA (House Rent Allowance). This might be entirely or partly exempted from revenue enhancement. However, if you aren’t living in any rented accommodation and still receive HRA, it'll be assessable.

In following you may claim the least as HRA exemption.

a. Total HRA received from your employer

b. Rent paid less 10% of (Basic salary +Dearness Allowances)

c. 40% of salary (Basic+DA) for non-metropolitan cities and 50% of salary (Basic+DA) for metropolitan cities

2. Standard Deduction

In Union Budget of 2018, announced a standard deduction amounting to Rs. 40,000 for salaried employees. This deduction is in the place of transport allowance (Rs. 19,200) and medical reimbursement (Rs. 15,000).

The limit of Standard Deduction of Rs. 40,000 has been increased to Rs. 50,000 in the Budget 2019.

3. Additional Deduction for Interest paid on Home Loan (u/s 80EE)

Section 80EE allows to the owners of Residential Property to claim an additional deduction of Rs.50, 000 (with deduction u/s Section 24 claim in Source of Income from House Property) for interest paid on the home loan Installment.

But there are conditions for this Deduction that:

The loan amount must not be more than of Rs 35,00,000 and the value of the property must not be more than of Rs 50,00,000. Moreover, the assesse must not have any other property registered under his/her name at the time of loan sanctioned.

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