Income Tax Deductions from Gross Total Income?AY 2020-21 | FY 2019-20


Income Tax Deductions from Gross Total Income AY 2020-21 | FY 2019-20

Income Tax Deductions from Gross total Income relevant for Assessment Year  2020-21/ Financial Year 2019-20 as per Finance Bill 2019]

Kindly note that any change of deductions or Allowance under Income Tax suggested in this article is based on Finance bill 2019 proposed by BJP Government and is subject to it?s approval from parliament.

Income Tax Deductions from Gross Total Income AY 2020-21 | FY 2019-20
Income Tax Deductions from Gross Total Income AY 2020-21 | FY 2019-20

Relevant deductions from gross total income under section 80 C to 80 U [Chapter VI-A] of income tax are given below:

Income Tax Deductions from Gross Total Income AY 2020-21 | FY 2019-20

1. DEDUCTION IN RESPECT OF INVESTMENTS IN SPECIFIED ASSETS (SECTION 80C) 

Section 80C provides for a deduction of savings in specified modes of Investments form gross total income. It is available only to an Individual or HUF. The Maximum permissible deduction is Rs.1.5 lakh along with deduction u/s 80CCC & 80CCD.

S.no. Admissible Deductions
1. Premium paid on insurance on life 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 any Public Provident Fund governed by Provident Funds Act, 1925
5. Contribution by an employee to Recognized Provident Fund.
6. Contribution by an employee to an Approved Superannuation Fund.
7. Contribution made to any Public Provident Fund set up by the Central Government.
8. Subscription to any deposit scheme or contribution to any Pension fund 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. Principle repayment of Housing Loan.
12. Subscription to units of Mutual funds notified u/s 10(23D).
13. Sum deposited in 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 CERTAIN PENSION FUNDS (SECTION 80CCC)

Deduction in respect of Payment of premium for annuity plan of 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. For this purpose, the Interest or Bonus accrued or credited to the Assessee?s Account shall not be reckoned as Contribution. The Maximum Deduction allowed is Rs.1.5 lakh.

3. DEDUCTION IN RESPECT OF CONTRIBUTION TO PENSION SCHEME OF CENTRAL GOVERNMENT (SECTION 80CCD)

Contribution towards NPS by Employee [80CCD(1)]: Tax payer is an individual and he is employed by the central government (on or after January 1, 2004), or employed by any other person or self employed. He has in the previous year deposited any amount in his account under NPS. Under this, Employee is to contribute 10% of their salary or more and deduction is available under section 80CCD(1) which is restricted to 10% of the salary and for person other than employee deduction is restricted to 10% of GTI.

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 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 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 INVESEMENT BY A RESIDENT INDIVIDUAL IN LISTED EQUITY SHARES (SECTION 80CCG)

Tax Benefits of Rajiv Gandhi Equity Savings Scheme (RGESS) under section 80CCG stands withdrawn for FY 19-20/AY 20-21.

6. DEDUCTION IN RESPECT OF MEDICAL INSURANCE PREMIUM (SECTION 80D)

This Section provides for a deduction of Rs. 25,000 in respect of premium paid towards a health insurance policy for the Assessee or his family (spouse and dependent 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. 50000 is allowed in case any of the persons mentioned above are senior citizens (i.e. of age 60 years or above).

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 Section 80D 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

In nutshell, an individual taxpayer can claim deduction of up to Rs. 1 lakh under Section 80D if he or his family members and his parents are 60 years or above.

7. DEDUCTION IN RESPECT OF REHABILITATION OF HANDICAPPED DEPENDENT RELATIVE (SECTION 80DD)

It provides for a 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.

Income Tax Deductions from Gross Total Income AY 2020-21 | FY 2019-20
Income Tax Deductions from Gross Total Income AY 2020-21 | FY 2019-20

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 of that HUF who is wholly dependent on the assessee.

8. DEDUCTION IN RESPECT OF MEDICAL TREATMENT (SECTION 80DDB)

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

Further in case the amount is paid in respect of a senior citizen then the deduction would be Rs.100,000 or the amount actually paid whichever is less.

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

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

1.) The home loan should have been sanctioned during FY 2016-17.

2.) Loan amount should be less than Rs 35 Lakh.

3.) The value of the house should not be more than Rs 50 Lakh &

4.) The home buyer should not have any other existing residential house in his name.

10. TAX INCENTIVE FOR AFFORDABLE HOUSING U/S 80EEA. 

Introduced by Finance Bill 2019

In order to provide an impetus to the ?Housing for all? objective of the Government and to enable the home buyer to have low-cost funds at his disposal, it is proposed to insert a new section 80EEA in the Act so as to provide a deduction in respect of interest up to one lakh fifty thousand rupees on loan taken for residential house property from any financial institution subject to the following conditions:

(i) loan has been sanctioned by a financial institution during the period beginning on the 1st April, 2019 to 31st March 2020.

(ii) the stamp duty value of house property does not exceed forty-five lakh rupees;

(iii) assessee does not own any residential house property on the date of sanction of loan.

It is also proposed that where a deduction under this section is allowed for any interest, deduction shall not be allowed in respect of such interest under any other provisions of the Act for the same or any other assessment year.

This amendment will take effect from 1st April, 2020 and will accordingly apply in relation to assessment year 2020-21 and subsequent assessment years.

11. LOAN FOR HIGHER STUDIES

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.

12. CONTRIBUTIONS MADE TO CERTAIN RELIEF FUNDS AND CHARITABLE INSTITUTIONS:

Contributions made to certain relief funds and charitable institutions can be claimed as a deduction under Section 80G of the Income Tax Act. This deduction can only be claimed when the contribution has been made via cheque or draft or in cash. 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.

Click here to know information on Tax Exempted Institutions

13. 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;

1.) Rent paid minus 10 percent the adjusted total income.

2.) Rs 5,000 per month.

3.) 25 % of the total income.

(If you are claiming HRA (House Rent Allowance) of more than Rs 50,000 per month (or) paying rent which is more than Rs 50,000 then the tenant has to deduct TDS @ 5%. Tax could be deducted at the time of credit of rent for the last month of the tax year or last month of tenancy, as applicable.)

14. DEDUCTION IN RESPECT OF DONATIONS FOR SCIENTIFIC RESEARCH AND RURAL DEVELOPMENT (SECTION 80GGA)

Admissible Deductions:-

1.) Any sum paid by the Assessee to the Research Association which has, as its object, the undertaking of scientific research

2.) 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.

3.) Any sum paid to Research Association which has, as its object the undertaking of research in Social Science or Statistical Research.

4.) Any sum paid to Public Sector company or a local authority for carrying out any eligible project or scheme.

5.) Any sum paid to Rural Development fund.

6.) 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.

Click here to know information on Tax Exempted Institutions

15. DEDUCTION IN RESPECT OF CONTRIBUTIONS GIVEN BY COMPANIES TO POLITICAL PARTIES (SECTION 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.

Click here to know information on Tax Exempted Institutions

16. DEDUCTION IN RESPECT OF CONTRIBUTIONS GIVEN BY ANY PERSON TO POLITICAL PARTIES (SECTION 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.

Click here to know information on Tax Exempted Institutions

17. TAX INCENTIVE FOR ELECTRIC VEHICLES (SECTION 80EEB)

Introduced by Finance Bill 2019

With a view to improve environment and to reduce vehicular pollution, it is proposed to insert a new section 80EEB in the Act so as to provide for a deduction in respect of interest on loan taken for purchase of an electric vehicle from any financial institution up to one lakh fifty thousand rupees subject to the following conditions:

(i) the loan has been sanctioned by a financial institution including a non-banking financial company during the period beginning on the 1st April, 2019 to 31st March, 2023;

(ii) the assessee does not own any other electric vehicle on the date of sanction of loan.

It is also proposed that where a deduction under this section is allowed for any interest, deduction shall not be allowed in respect of such interest under any other provisions of the Act for the same or any other assessment year.

This amendment will take effect from 1st April, 2020 and will, accordingly, apply in relation to assessment year 2020-2021 and subsequent assessment years.

18. SAVING INTEREST

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.

Also 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 is allowed. 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.

19. STANDARD DEDUCTION ON SALARY INCOME

A standard deduction upto Rs 50,000/- or the amount of salary received, whichever is less is allowed.

[Kindly note that any change of deductions or Allowance under Income Tax suggested in this article is based on Finance bill 2019 proposed by BJP Government and is subject to it?s approval from parliament.]

Disclaimer: The entire contents of this document have been prepared on the basis of relevant provisions and as per the information existing at the time of the preparation. Although care has been taken to ensure the accuracy, completeness and reliability of the information provided, I assume no responsibility therefore. Users of this information are expected to refer to the relevant existing provisions of applicable Laws. The user of the information agrees that the information is not a professional advice and is subject to change without notice. I assume no responsibility for the consequences of use of such information. In no event shall I shall be liable for any direct, indirect, special or incidental damage resulting from, arising out of or in connection with the use of the information.


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11 Comments

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  1. Madam
    I am a Senior Citizen. Kindly advise whether the deduction available under Sec 80 TTB (exemption of interest of Rs.50000/- from Fds) is applicable to Fy 2019-20 (AY-2020-21) also or withdrawn. The budget presented on 5 Feb 01, 2019 is silent on this. When it was introduced in budget 2018, it was mentioned that it is applicable to AY 2019-20 and subsequent years.

    1. Dear Sir
      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 is still available in FY 19-20 or AY 20-21 as well.
      Interest earned on saving deposits and fixed deposits both shall be eligible for deduction under this provision.

  2. Maam, Exemption on TDS deduction on Intt on FDs will be Rs.50,000/- plus RS.50,000/- on intt on SB account. Total Rs.1 lacs. Is it like that from AY 2020-21. Please confirm.

    1. Dear Sir
      No it is not One Lakh
      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 is available in FY 19-20 or AY 20-21. Interest earned on saving deposits and fixed deposits both shall be eligible for deduction under this provision.
      Total Deduction Remains Rs. 50,000 Only.

  3. Nice work out to the extent the budget spoke. Thanks Pratibha jee.
    One clarification.
    Is there a change in arriving at “net taxable income ” after deuction of u/s 80C (and various sub clauses)
    if the gross pension is more than 5Lakhs, some pundits comment that no further 80C etc
    and pay tax through your nose,.
    any clarity , or we wait till the New govt is formed and regular budget is taken up?
    regards
    sarma mvs

  4. Respected Madam,
    I like to know what is meant by Rs.500,000.Is it before deduction of Sec 80C and others or after deduction of Sec80C and others?

  5. Respected Madam,
    I am very glad to got the relevant reply from you raise by other Senior Citizen.
    Thanks
    R.C.Roy, Retd. DFO

  6. Hii Bhupinder
    Standard Deduction is available only for Salaried Individuals.
    For AY 20-21 or FY 19-20 the Standard deduction of Rs. 50,000 is available for Salaried Individuals.

  7. hello mam,
    if possible for you, could you please share the standard rate of TDS deduction on salary.