Section 80C-80T Deductions for Financial Year 2018-19 (Income Tax Act 1961)

Section 80C-80T Deductions for Financial Year 2018-19 (Income Tax Act 1961)

Deductions from Gross Total Income under Section 80C to 80U of Income Tax Act 1961 [Relevant for A.Y  2019-20/F.Y 2018-19 as proposed by Finance Bill 2018]

Relevant deductions from gross total income under section 80 C to 80 U of Income Tax Act 1961 are given below:

1. DEDUCTION IN RESPECT OF INVESTMENTS IN SPECIFIED MODES UNDER : SEC 80C 

Deductions allowed in respect of Investments in specified assets under Section 80C is available only for Individual or HUF.

The Maximum permissible deduction is Rs.1,50,000 (along with deduction u/s 80CCC & 80CCD)

S.no. Admissible Deductions
1. Insurance premium paid on life insurance of the Individual or HUF
2. Sum paid under the contract for deferred on life of the Assessee or his/ her spouse or children.
3. Sum deducted by the government from the salary of an employee for securing a deferred annuity for self, spouse or children. The sum so deducted should not exceed one-fifth of the salary.
4. Contribution to  PPF governed by Provident Funds Act, 1925
5. Contribution by an employee to Recognized PF.
6. Contribution by an employee to an Approved Superannuation Fund.
7. Contribution made to any PPF set up by the Central Government.
8. Contribution to any Pension fund which is set up by the National Housing Bank.
9. Payment of Tuition fees by an Individual Assessee at the time of admission to any university, college, school or other educational institutions within India for the purpose of full time education of any two children.
10. Subscription to deposit scheme of Public Sector, engaged in providing housing finance.
11. Housing Loan repayment of Principal Amount.
12. Mutual funds notified u/s 10(23D).
13. Fixed Deposits (FDs) with tenure of five years.
14. Sum deposited in 5 yrs Post Office Time Deposit (POTD) scheme.
2. DEDUCTION IN RESPECT OF CONTRIBUTION TO PENSION FUNDS : SEC 80CCC

Deduction in respect of Payment of premium for LIC or any other Insurer is provided. The Premium must be deposited to keep in force a contract for annuity plan of LIC or any other insurer for receiving pension from the fund.

Maximum Deduction permissible is Rs.1.5 lakh(along with deduction u/s 80C & 80CCD)

3. DEDUCTION IN RESPECT OF CONTRIBUTION TO PENSION SCHEME : SEC 80CCD

Contribution towards NPS by Employee [80CCD(1)]: If any Individual Tax payer who is employed by the central government (on or after January 1, 2004), or employed by any other person or self employed has deposited any amount (in the previous year) in his account under NPS, then in such cases, such Individual can claim deduction under section 80CCD(1).

Note: Deduction allowed under Section 80CCD(1) is upto 10% of their salary and for person other than employee deduction is restricted to 10% of Gross Total Income.

As per Section 80CCD(1B), Tax payer shall be allowed a deduction in computation of his total income of the whole of the amount paid or deposited in the previous year in his account under a pension scheme notified by the Central Government, which shall not exceed fifty thousand rupees.

Contribution towards NPS by Employer [80CCD(2)]: Contribution by the employer to NPS is deductible under section 80CCD(2) in the hands of the concerned employee in the year in which contribution is made. However no deduction is available in respect of employer’s contribution which is in excess of 10 percent of the salary of the employee.

4. LIMIT ON MAXIMUM DEDUCTION U/S 80C, 80CCC, 80CCD 

The Limit for maximum deduction available u/s 80C, 80CCC, 80CCD (combined together) is Rs.1.5 Lakh only.

Assessee gets an additional deduction of Rs. 50,000 if he makes investment in NPS scheme notified by the Central Government. This means the Limit for maximum deduction available u/s 80C, 80CCC, 80CCD+80CCD(1B) is Rs. 2 Lakh.

5. DEDUCTION IN RESPECT OF INVESTMENT IN LISTED EQUITY SHARES : SEC 80CCG

Tax Benefits of Rajiv Gandhi Equity Savings Scheme (RGESS) under section 80CCG has been withdrawn. However, if you have claimed this deduction in current FY 2016-17, you can claim the deduction for the next two Financial Years too.

6. DEDUCTION IN RESPECT OF MEDICAL INSURANCE PREMIUM : SEC 80D

*As amended by Finance Bill 2018

Section 80D provides for a deduction of Rs. 25,000 in respect of premium paid towards a health insurance policy for the Assessee or his spouse and children or any contribution made to the Central Government Health Scheme in aggregate and a further deduction of Rs. 25000 is allowed of premium paid in respect of health insurance policy for parents. An increased deduction of Rs. 30000 is allowed in case any of the persons mentioned above are senior citizens (i.e. of age 60 years or above).

It has been proposed by finance bill 2018 that the upper limit of this increased deduction should be raised to Rs. 50,000.

Further it is provided that for claiming such deduction u/s 80D the payment must be by any mode other than cash.

Further Deduction of Rs. 5000 shall be allowed in respect of payment made on Account of preventive health check-up of self, spouse, children or parents made during the previous year. For claiming this deduction payment can be by any mode including cash.

The Analysis of proposed amendment is provided in the table given below: 

Nature of amount spent Family Member Parents
Age below 60 years Age 60 years or more Age below 60 years Age 60 years or more
Medical Insurance 25,000 50,000 25,000 50,000
CGHS 25,000 50,000
Health Check-up 5,000 5,000 5,000 5,000
Medical Expenditure 50,000 50,000
Maximum deduction 25,000 50,000 25,000 50,000

 

7. DEDUCTION IN RESPECT OF REHABILITATION OF HANDICAPPED DEPENDENT RELATIVE : SEC 80DD

Section 80DD provides deduction to an Assessee being an individual or HUF who is a resident in India. Deduction of Rs. 75,000 is available in respect of any Amount paid for the medical treatment (including nursing), training and rehabilitation of a dependent, or any amount paid or deposited under a scheme framed in this behalf.

In case of severe disability (i.e. a person with 80% or more disability), the deduction of Rs. 1,25,000 shall be available.

To claim this deduction, you have to submit FORM NO. 10-IA.

Dependent means In the case of an Individual the spouse, children, parents, brothers, sisters, of the individual and in the case of HUF, any member who is wholly dependent on the assessee.

8. DEDUCTION IN RESPECT OF MEDICAL TREATMENT : SEC 80DDB

*As amended by Finance Bill 2018

The deduction of Rs. 40000 or Amount actually paid whichever is less shall be allowed to an Assessee who is resident in India being an Individual or HUF. Deduction shall be allowed of any amount paid for the medical treatment of such disease or ailment as may be specified in the rules.

It has been proposed that in case the amount is paid in respect of a senior citizen/very senior citizen then the deduction would be Rs.100,000 or the amount actually paid whichever is less.[Earlier the limit was Rs. 60,000 for Senior Citizen & Rs. 80,000 for very senior citizen.]

9. FIRST TIME HOME BUYERS CAN CLAIM AN ADDITIONAL TAX DEDUCTION OF UP TO RS 50,000 ON HOME LOAN INTEREST PAYMENTS : SEC 80EE. 

THE BELOW CRITERIA HAS TO BE MET FOR CLAIMING TAX DEDUCTION UNDER SECTION 80EE.

  • The home loan should have been sanctioned during / after FY 2016-17.
  • Loan amount should be less than Rs 35 Lakh.
  • The value of the house should not be more than Rs 50 Lakh &
  • The home buyer should not have any other existing residential house in his name.
10. LOAN FOR HIGHER STUDIES : SEC 80E

If you take any loan for higher studies (after completing Senior Secondary Exam), tax deduction can be claimed 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 claimed as tax deduction.

There is no limit on the amount of interest you can claim as deduction under section 80E. The deduction is available for a maximum of 8 years or till the interest is paid, whichever is earlier.

11. CONTRIBUTIONS MADE TO CERTAIN RELIEF FUNDS AND CHARITABLE INSTITUTIONS: SEC 80G

This deduction can only be claimed when the contribution has been made via cheque or draft or in cash for any Contributions made to certain relief funds and charitable institutions. In-kind contributions such as food material, clothes, medicines etc do not qualify for deduction under section 80G.

The donations made to any Political party can be claimed under section 80GGC.

W.e.f F.Y. 2017-18, the limit of deduction under section 80G / 80GGC for donations made in cash is reduced from current Rs 10,000 to Rs 2,000 only.

12. SECTION 80GG: APPLICABLE FOR ALL THOSE INDIVIDUALS WHO DO NOT OWN A RESIDENTIAL HOUSE & DO NOT RECEIVE HRA

The Tax Deduction amount under 80GG is Rs 60,000 per annum. Section 80GG is applicable 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 amount of the following;

  • Rent paid minus 10 percent the adjusted total income.
  • Rs 5,000 per month.
  • 25 % of the total income.
13. DEDUCTION IN RESPECT OF DONATIONS FOR SCIENTIFIC RESEARCH AND RURAL DEVELOPMENT : SEC. 80GGA

Admissible Deductions:-
· Any sum paid by the Assessee to the Research Association which has, as its object, the undertaking of scientific research
· Any sum paid to an Association or Institution which has, as its object, the undertaking of any programme of Rural Development to be used for carrying for carrying out any programme of Rural Development.
· Any sum paid to Research Association which has, as its object the undertaking of research in Social Science or Statistical Research.
· Any sum paid to Public Sector company or a local authority for carrying out any eligible project or scheme.
· Any sum paid to Rural Development fund.
· Any sum paid to National Urban Poverty Education Fund (NUPEF).
Sub-section (2A) has been inserted which provides that no deduction shall be allowed in respect of donation of any sum exceeding Rs. 10000 unless such sum is paid by any mode other than cash.

14. DEDUCTION IN RESPECT OF CONTRIBUTIONS GIVEN BY COMPANIES TO POLITICAL PARTIES : SEC 80GGB

This provides of deduction of any sum contributed in the Previous Year by an Indian Company to any Political Party or an Electoral Trust. From assessment year 2014-15, no deduction shall be allowed in respect of any sum contributed by way of cash.

15. DEDUCTION IN RESPECT OF CONTRIBUTIONS GIVEN BY ANY PERSON TO POLITICAL PARTIES : SEC 80GGC

This provides for deduction of any sum contributed in the Previous Year by any Person to a Political Party or an Electoral Trust. It will not be available to a Local Authority and an Artificial Judicial Person. No deduction shall be allowed in respect of any sum contributed by way of cash.

16. SAVING INTEREST : SEC 80TTA

*As amended by Finance Bill 2018

Deduction from gross total income of an individual or HUF, up to a maximum of Rs. 10,000/-, in respect of interest on deposits in savings account with a bank, co-operative society or post office can be claimed under this section. Section 80TTA deduction is not available on interest income from fixed deposits.

It has been proposed to insert a new provision to allow deduction of up to Rs. 50,000 to the senior citizen who has earned interest income from deposits with banks or post office or co-operative banks. Interest earned on saving deposits and fixed deposits both shall be eligible for deduction under this provision.

Deduction under Section 80TTA shall not be available to senior citizens in respect of interest on saving deposits.

 

17. NEW DEDUCTION INTRODUCED FOR FARM PRODUCER COMPANIES

*As amended by Finance Bill 2018

To promote agricultural activities a new section 80PA is proposed to be inserted. This new provision proposes 100% deductions of profits for a period of 5 years to farm producer companies who have total turnover of up to Rs. 100 crores during the financial year.

For claiming this deduction the gross total income of producer companies should include income from:

a. The marketing of agricultural produce grown by its members.
b. The purchase of agricultural implements, seeds, livestock or other articles intended for agriculture for the purpose of supplying them to its members.
c. The processing of the agricultural produce of its members.

 

18. 80-JJAA : INCENTIVE FOR EMPLOYMENT GENERATION

*As amended by Finance Bill 2018

Deduction of 30% is allowed in addition to normal deduction of 100% in respect of emoluments paid to eligible new employees who have been employed for a minimum period of 240 days during the year.

However, the minimum period of employment is relaxed to 150 days in the case of apparel industry, the same has been extend to footwear and leather industry.

Manufacturers are often denied the deduction if an employee is employed in 1st year for a period of less than 240 days/150 days, but continues to remain employed for more than 240 days/150 days in the 2nd year. To overcome this difficulty, the requirement of period of employment has been proposed to be relaxed. Now as per the proposed provision the deductions shall be allowed to the manufacturer in respect of an employee hired in 1st year, if he continues to remain in employment in current year(2nd year) for more than 240/150 days, as the case may be.

[Disclaimer : The above deductions are based on Finance Bill 2018, & subject to change by Finance Act 2018]

 

 

Source: https://studycafe.in/

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