List of Income Tax Exemptions for FY 2018-19(AY 2019-20)
Tax Deductions under Section 80C:
Section 80C of
the Income Tax Act provides provisions for tax deductions on a number of
payments, with both individuals and Hindu Undivided Families eligible for these
deductions. Eligible taxpayers can claim deductions to the tune of Rs 1.5 lakh per year under Section 80C, with this
amount being a combination of deductions available under Sections 80 C, 80 CCC
and 80 CCD.
Some of the
popular investments which are eligible for this tax deduction are mentioned
below.
·
Payment made towards life insurance policies (for self, spouse
or children)
·
Payment made towards a superannuation/provident fund
·
Tuition fees paid to educate a maximum of two children
·
Payments made towards construction or purchase of a residential
property
·
Payments issued towards a fixed deposit with a minimum tenure of
5 years
This section
provides for a number of additional deductions like investment in mutual funds,
senior citizens saving schemes, purchase of NABARD bonds, etc.
Subsections under Section 80C:
Section 80C has
an exhaustive list of deductions an individual is eligible for, which have led
to the creation of suitable sub-sections to provide clarity to taxpayers.
·
Section 80 CCC: Section 80 CCC of the
Income Tax Act provides scope for tax deductions on investment in pension funds.
These pension funds could be from any insurer and a maximum deduction of Rs 1.5 lakh can be claimed under it. This deduction
can be claimed only by individual taxpayers.
·
Section 80 CCD: Section 80
CCD aims to encourage the habit of savings among individuals, providing them an
incentive for investing in pension schemes which are notified by the Central
Government. Contributions made by an individual and his/her employer, both are
eligible for tax deduction, subject to the deduction being less than 10% of the
salary of the person. Only individual taxpayers are eligible for this
deduction.
·
Section 80 CCF: Open to
both Hindu Undivided Families and
Individuals, Section 80 CCF contains provisions for tax deductions on
subscription of long-term infrastructure bonds which have been notified by the
government. One can claim a maximum deduction of Rs 20,000 under this Section.
·
Section 80 CCG: Section 80
CCG of the Income Tax Act permits a maximum
deduction of Rs 25,000 per year, with specified individual
residents eligible for this deduction. Investments in equity savings schemes
notified by the government are permitted for deductions, subject to the limit
being 50% of the amount invested.
Tax Deductions under Section 80D:
Section 80D of
the Income Tax Act permits deductions on amounts spent by an individual towards
the premium of a health insurance policy. This includes payment made on behalf
of a spouse, children, parents or self to a Central Government health plan. An
amount of Rs 15,000 can be claimed as deduction
when paid towards the insurance for spouse, dependent children or self, while
this amount is Rs 30,000 (Union Budget 2017) if
the person is over the age of 60 years.
On February 1,
2018, Finance Minister Arun Jaitley presented the Union Budget 2018 with a few
changes in the tax deductions applicable for senior citizens. Under Section
80D, income tax deduction limit for senior citizens has been increased to
Rs.50,000 for medical expenditure.
Both
individuals and Hindu Undivided Families are eligible for this deduction,
subject to the payment being made in modes other than cash.
Subsections under Section 80D:
Section 80D is
further subdivided into two sub-sections, offering clarity on the benefits available
to taxpayers.
·
Section 80DD: Section 80DD
provides provisions for tax deductions in two cases, with the permitted
deduction being Rs 75,000 for normal disability
and Rs 1.25 lakh if it is a severe disability. This deduction can be
claimed in case of the following expenditures.
·
On payments made towards the treatment of dependants with
disability
·
Amount paid as premium to purchase or maintain an insurance
policy for such dependant
The permitted
deduction is Rs 75,000 for normal disability
and Rs 1.25 lakh for a severe disability. Both Hindu Undivided Families and
resident individuals are eligible for this deduction. The dependant, in this
case can be either a spouse, sibling, parents or children.
·
Section 80DDB: Section 80DDB
can be utilised by HUFs and resident individuals and provides provisions for
deductions on the expense incurred by an individual/family towards medical
treatment of certain diseases. The permitted deduction is limited to Rs 40,000, which can be increased to Rs 60,000 (Union
Budget 2015) if the treatment is for a senior citizen.The deduction
under Section 80DDB for senior citizens and very senior citizens has been
increased to Rs.1 lakh in Union Budget 2018.
Tax Deductions under Section 80E:
Under Section 80E of the
Income Tax Act has been designed to ensure that educating oneself doesn’t
become an additional tax burden. Under this provision, taxpayers are eligible
for tax deductions on the interest repayment of a loan taken to pursue higher
education. This loan can be availed either by the taxpayer himself/herself or
to sponsor the education of his/her ward/child. Only individuals are eligible
for this deduction, with loans taken from approved charitable organisations and
financial institutions permitted for tax benefits.
Subsections of Section 80E:
·
Section 80EE: Only
individual taxpayers are eligible for deductions under Section 80EE, with the
interest repayment of a loan taken by them to buy a residential property
qualifying for deductions. The maximum deduction permitted under this section
is Rs 3 lakhs.
Tax Deductions under Section 80G:
Section 80G
encourages taxpayers to donate to funds and charitable institutions, offering
tax benefits on monetary donations. All assessees are eligible for this
deduction, subject to them providing proof of payment, with the limit of
deductions decided based on a few factors.
·
100% deductions without any limit: Donations to
funds like National Defence Fund, Prime Minister’s Relief Fund, National
Illness Assistance Fund, etc. qualify for 100% deduction on the amount donated.
·
100% deduction with qualifying
limits: Donations to local authorities, associations or institutes to
promote family planning and development of sports qualify for 100% deduction,
subject to certain qualifying limits.
·
50% deduction without qualifying
limits: Donations to funds like the PMs Drought Relief fund, Rajiv
Gandhi Foundation, etc. are eligible for 50% deduction.
·
50% deduction with qualifying
limit: Donations to religious organisations, local authorities for
purposes apart from family planning and other charitable institutes are
eligible for 50% deduction, subject to certain qualifying limits.
The qualifying
limit refers to 10% of the gross total income of a taxpayer.
Subsections of Section 80G:
Under Section 80G has been
further subdivided into four sections to simplify understanding.
·
Section 80GG: Individual
taxpayers who do not receive house rent allowance are eligible for this
deduction on the rent paid by them, subject to a maximum deduction equivalent
to 25% of their total income or Rs 2,000 a month. The lower of these options
can be claimed as deduction.
·
Section 80GGA: Tax
deductions under this section can be availed by all assessees, subject to them
not having any income through profit or gain from a business or profession.
Donations by such members to enhance social/scientific/statistical research or
towards the National Urban Poverty Eradication Fund are eligible for tax
benefits.
·
Section 80GGB: Tax
deductions under this section can be availed by Indian Companies only, with the
amount donated by them to a political party or electoral trust qualifying for
deductions.
·
Section 80GGC: Under this
section, funds donated/contributed by an assessee to a political party or
electoral trust are eligible for deduction. Local authorities and artificial
juridical persons are not entitled to the tax deductions available under
Section 80GGC.
Tax Deductions under Section 80
IA:
Section 80 IA
provides an avenue for all taxpaying assessees to claim tax deduction on the
profits generated through industrial activities. These industrial undertakings
can be related to telecommunication, power generation, industrial parks, SEZs,
etc.
The following
subsections are related to Section 80-IA
·
Section 80 IAB: Section 80
IAB can be used by SEZ developers, who can claim tax deductions on their
profits through development of Special Economic Zones. These SEZs need to be
notified after 1/4/2005 in order for them to be eligible for tax deductions.
·
Section 80-IB: Provisions of
section 80-IB can be used by all assessees who have profits from hotels, ships,
multiplex theatres, cold storage plants, housing projects, scientific research
and development, convention centres, etc.
·
Section 80-IC: Section 80 IC
can be used by all assessees who have profits from states categorised as
special. These include Assam, Manipur, Meghalaya, Himachal Pradesh,
Uttaranchal, Arunachal Pradesh, Mizoram, Tripura and Nagaland.
·
Section 80-ID: All assessees
who have profits or gain from hotels and convention centres are eligible for
deduction under this section, subject to their establishments being located in
certain specified areas.
·
Section 80-IE: All
assessees who have undertakings in North-East India are eligible for deductions
under this Section, subject to certain conditions.
Tax Deductions under Section 80J:
Section 80J of
the Income Tax Act was
amended to include two subsections, 80JJA and 80 JJAA
·
Section 80 JJA: Section 80
JJA relates to deductions permitted on profits and gains from assessees who are
in the business of processing/treating and collecting bio-degradable waste to
produce biological products like bio-fertilizers, bio-pesticides, bio-gas, etc.
All assessees who deal with this are eligible for deductions under this
section. Such assessees can claim deduction equivalent to 100% of their profits
for 5 successive assessment years since the time their business started.
·
Section 80 JJAA: Deductions
under Section 80 JJAA can be claimed by Indian companies which have profits
from the manufacture of goods in factories. Deductions equivalent to 30% of the
salary of new full time employees for a period of 3 assessment years can be
claimed. A chartered accountant should audit the accounts of such companies and
submit a report showing the returns. Employees who are taken on a contract
basis for a period less than 300 days in the preceding year or those who work
in managerial or administrative posts do not qualify for deductions.
Tax Deduction under Section 80LA:
Deductions
under Section 80LA can be availed by Scheduled Banks which have offshore
banking units in Special Economic Zones, entities of International Financial
Services Centres and banks which have been established outside India, in
accordance to the laws of a foreign nation. These assessees are eligible for
deductions equivalent to 100% of the income for the first 5 years, and 50% of
income generated through such transactions for the next 5 years, subject to the
rules of the land.
Such entities
should have relevant permission, either under the SEBI Act, Banking Regulation
Act or registration under any other relevant law.
Tax Deduction under Section 80P:
Section 80P
caters to cooperative societies, offering tax deductions on their income,
subject to certain conditions. 100% deduction is permitted to cooperative
societies which have incomes through cottage industries, fishing, banking, sale
of agricultural harvest grown by members and milk supplied by members to milk
cooperative societies.
Cooperative
societies which are involved in other forms of business are eligible for deductions ranging between Rs 50,000 and Rs 1 lakh, depending on
the type of work they are involved in.
Deductions
which can be claimed by all cooperative societies are listed below.
·
Income which a cooperative society makes by renting out
warehouses
·
Income derived through interest on money lent to other societies
·
Income earned through interest from securities or properties
Tax Deduction under Section
80QQB:
Section 80QQB
permits tax deductions on royalty earned from sale of books. Only resident
Indian authors are eligible to claim deductions under this section, with the
maximum limit set at Rs 3 lakhs. Royalty on literary, artistic and scientific
books are tax deductible, whereas royalties from textbooks, journals, diaries,
etc. do not qualify for tax benefits. In case of an author getting royalties
from abroad, the said amount should be brought into the country within a
specified time period in order to avail tax benefits.
Tax Deduction under Section
80RRB:
Section 80RRB
offers tax incentives to patent holders, providing tax relief to resident
individuals who receive an income by means of royalty on their patent. Royalty
to the tune of Rs 3 lakhs can be claimed as deductions, subject to the patent
being registered after 31/3/2003. Individuals who receive a royalty from
foreign shores need to bring said amount to the country within a specific time
period in order to be eligible for tax deductions on such royalty.
Tax Deduction under Section
80TTA:
Deductions
under Section 80TTA can be claimed by Hindu Undivided Families and Individual
taxpayers. This section permits deductions to the tune of Rs 10,000 every year on the interest earned on
money invested in bank savings accounts in the country.
Tax Deduction under Section 80U:
Tax deductions
under Section 80U can be claimed only by resident individual taxpayers who have
disabilities. Individuals who have been certified by relevant medical
authorities to be a Person With Disability can claim a maximum deduction of Rs 75,000 per year. Individuals
who have severe disabilities are entitled to a maximum deduction of Rs 1.25
lakh, subject to them meeting certain criteria. Some of the disabilities which
classify for tax benefits are autism, mental retardation, cerebral palsy, etc.
