#$600 tier where you pay my rent and I just do whatever it is I was gonna do anyway

[deadwooddross]

Hmmmm is there anything in particular you folks would want to see as stickers from me??

I’m trying to think of stuff bc I do like sending those out for patreon and whatnot, but I am just entirely drawing blanks these days, aaaaa

Relatedly: is there any other sort of blorbo posting y’all would throw dimes and peanuts at me for on patreon? I’m half tempted to have a “Pay me to draw my own characters” tier as a joke, but also it’s not a joke, they’re the main things I wanna draw 80%-98% of the time anyway, or things related to them so Why Not right

[sunshineweb]

List of Income Tax Deductions FY 2020-21 – Under New / Old Tax Regime

Due to the introduction of new tax regime in the Budget 2020, many are not confused which are the Income Tax Deductions are available for them. Let us see the complete list of Income Tax Deductions FY 2020-21 under both old or new tax regime.

Tax Planning is an important part of financial planning. However, while investing or choosing the deductions, our idea should be to concentrate at first on our financial goals rather than just concentrating on tax saving. Hence, understanding the available options is very much important.

Income Tax Slab Rates for FY 2020-21 AY 2021-22

You may be aware that during Budget 2020, Government introduced the two types of tax regimes. As per that, the income tax slabs are as below.

List of Income Tax Deductions FY 2020-21 – Under New / Old Tax Regime

Let us now discuss the list of income tax deductions FY 2020 – 21. I will divide them as new and old tax regime for your simplicity.

List of Income Tax Deductions FY 2020-21 under New Tax Regime

I have already written a detailed post on this, where I mentioned that which deductions are not available under new tax regime. You can refer the same at “New Tax Regime – Complete list of exemptions and deductions not allowed“. In this post, I am concentrating on the available deductions.

# Section 80CCD(2)

Under this section, employer contribution on account of the employee in notified pension schemes like EPF, NPS, and/or Super Annuation Account can be claimed up to Rs.7.5 lakh limit.

An employer can contribute an amount equal to 12% of the employee’s basic monthly salary to his/her EPF account. Similarly, an employer can contribute an amount equal to 10% of the employee’s basic salary to the Tier-I account of NPS (For Central Government Employees it is now 14% of Basic+DA effective from 1st April 2019). In a superannuation account, an employer can contribute a maximum of Rs 1.5 lakh exempted from tax in a financial year.

Refer the detailed post on NPS Tax Benefits at “NPS Tax Benefits 2020 – Sec.80CCD(1), 80CCD(2) and 80CCD(1B)“.

The Budget 2020 restricted the tax-exempt superannuation, NPS and EPF account contribution by the employer to maximum of Rs 7.5 lakh in a financial year. Further, the budget states that any interest or gains earned from the excess contribution will also be taxable in the hands of an employee.

# Section 10(15)(i)

Interest received on post office savings account balance is exempted up to Rs 3,500 under section 10(15)(i) of the Income-tax Act. The exemption limit is Rs.7,000 in case of joint savings account.

# Gratuity

Gratuity is tax-exempt up to Rs 20 lakh in a lifetime for non-government employees. For government employees, all gratuity received is tax-exempt, irrespective of the amount received by them. (Refer my post “Gratuity – New Limit, Eligibility, Formula, Taxation and Calculator“)

Below benefits up to certain threshold limits (if any) are allowed under new tax regime as well;

Commutation of pension

Leave encashment on retirement

Retrenchment compensation

VRS benefits

NPS withdrawal benefits

Education scholarships

Payments of awards instituted in the public interest

# Interest on EPF Account, SSY and PPF

The interest received from the EPF account continues to be exempted from tax in the new tax regime as well as the old tax regime.

The Interest and maturity amount received on the Sukanya Samriddhi account, PPF account are tax-free in both old and new tax regimes.

# Sect.87A

Individuals having taxable income of up to Rs.5 lakh will be eligible for tax rebate under section 87A up to Rs 12,500, thereby making zero tax payable in the new tax regime.

# Conveyance Allowance

You can claim income tax exemption for conveyance, travel, and other allowances given by your employers under the new tax regime as well.

List of Income Tax Deductions FY 2020-21 under Old Tax Regime

Let us now discuss the list of income tax deductions FY 2020-21 under the old tax regime. Before proceeding further, first, let us understand the difference between deductions and exemptions.

Exemption :- It is nothing but an income which is not subject to tax. There are certain exemptions which are applicable only towards certain heads of income. Hence, you have to be cautious while claiming such exemptions.

There are mainly five sources of incomes which IT Department categorized and they are Salary income, Business of Professional Income, Income from House Property, Income from Capital Gains and Income from Other Sources.

Take for example like HRA, Gratuity can be claimed as tax-exempt against your salary income. Agriculture income, dividend income, or Sec.54 of IT act against long term capital gains on the sale of the property.

Deductions:-

Income Tax Deductions means you may deduct the amount that is eligible for reducing your tax liability. Income Tax Deductions can be deducted from the Gross Total Income. There are various options of investing or expenditure, which can be claimed as Tax Deductions.

Allowances available under old tax regime:-

# Mobile/Telephone Reimbursement

If your employer offering you the mobile/telephone connection or internet connection which requires for work, then you can claim 100% of such cost. However, you have to produce a bill. Only the postpaid connections are allowed for reimbursement.

# Leave Travel Allowance

The bills for your travel against LTA can be claimed for exemption. It is allowed to be claimed twice in a block of four years. The current block is 2014 to 2017. You can carry forward your unclaimed LTA to the next year. You can request your employer to not deduct tax on it and allow you to claim it next year.

# Entertainment Allowances

You may be getting this allowance. However, the exemption is available only for Government employees. The amount of exemption is least of the following.

a) Rs 5,000

b) 1/5th of salary (excluding any allowance, benefits or other perquisites)

c) Actual entertainment allowance received

# House Rent Allowance (HRA)

This is the famous exemption which is used by many salaried individuals. However, the wrong belief is that whatever the rent they pay is actually exempted from their income. The reality is different. The amount of exemption is least of the following.

a) Actual HRA Received

b) 40% of Salary (50%, if house situated in Mumbai, Calcutta, Delhi or Madras)

c) Rent paid minus 10% of salary

(Salary= Basic + DA (if part of retirement benefit) + Turnover based Commission)

# Children Education Allowance

If your employer providing this allowance, then you can take exemption up to Rs.100 per month per child (maximum of up to 2 children). Therefore, monthly you can save Rs.200 from this allowance. The exemption may seem so low. But why to pay the tax?

# Hostel Expenditure Allowance-If your employer providing this allowance, then you can take exemption Up to Rs. 300 per month per child up to a maximum of 2 children is exempt. Therefore, you can save around a maximum of Rs.600 from this allowance.

# Conveyance Allowance

This is a different allowance than a transport allowance. It is the expenditure granted to an employee to meet the expenses on conveyance in performing his official duties. There is no limit for this. If such conveyance allowance is Rs.5,000 a month, then the whole allowance is exempt. Hence, you may this may be exempt to the extent of expenditure incurred for official purposes.

# Any Allowance to meet the cost of travel on tour or on transfer

Here also no limit. The employee can claim exempt to the extent of expenditure incurred for official purposes.

# Allowance to meet the cost of travel on tour or on transfer

Here also no limit. The employee can claim exempt to the extent of expenditure incurred for official purposes.

# Daily Allowance

If you are not placed in normal duty place, then your employer may provide you such allowance. The employee can claim exempt to the extent of expenditure incurred for official purposes.

These are the major allowances, which can be utilized to save tax on salary income. There are few other allowances also to claim the exemption. But many of such allowances are not so famous. Hence, I left them to list.

Deductions available under old tax regime:-

The complete of sections can be listed as below.

# Standard Deduction of Rs.50,000

Actually, I have to put this under Deductions. However, this standard deduction replaced the existing allowances. Hence, I placed it here for better understanding.

Earlier you used to claim Rs.15,000 under Medical Allowance and Travel Allowance. With effect from FY 2018-19, you can claim the direct Rs.40,000 deduction instead of these two allowances. However, the same is increased now to Rs.50,000 from FY 2019-20 and the same is applicable for FY 2020-21.

This deduction obviously for salaried and pensioners. This is irrespective of the amount of taxable salary you will be receiving to get a deduction of Rs.50,000 or taxable salary, whichever is less.

Hence, let us assume for FY 2019-20, you worked only for a few days. Your taxable salary is Rs.50,000. In such a scenario, you can directly claim the deduction of Rs.50,000. However, if your salary is less than Rs.40,000 (say Rs.20,000), then you have to claim only Rs.20,000 but not Rs.50,000.

# Section 80C

This is the famous section which often used by all of salaried. The maximum limit for the current year is Rs.1,50,000. Therefore, up to Rs.1,50,000, you can save tax on salary income from this section alone. The different investments you do and can also be claimed under Sec.80C are listed below.

Life Insurance premium (Paid by an individual, spouse, and child. In the case of HUF, on the life of any member of HUF).

EPF-Employee contribution can be claimed for deduction.

Public Provident Fund (Paid by an individual, spouse, and child. In the case of HUF, on the life of any member of HUF).

National Savings Certificate (NSC).

Sukanya Samriddhi Account

ELSS or Tax Saving Mutual Funds.

Senior Citizen Savings Scheme.

5-Years Post Office or Bank Deposits.

The tuition fee of kids.

Principal payment towards the home loan.

Stamp duty and registration cost of the house.

Any contribution towards NPS Tier 2 Account by Government employees is also eligible for deductions under Sec.80C.

# Sec.80CCC

Deduction under Sec.80CCC is available only for individuals. Contribution to an annuity plan of the LIC of India or any other insurer for receiving the pension. Do remember that the amount should be paid or deposited out of income chargeable to tax.

The maximum amount deductible under Sec.80CCC is Rs.1.5 lakh. Do remember that this is also the part of the combined limit of Rs.1.5 lakh available under Sec.80C, Sec.80CCC, and Sec.80CCD(1).

# Sec.80CCD1

The maximum benefit available is Rs.1.5 lakh (including Sec.80C limit).

An individual’s maximum 20% of annual income (Earlier it was 10% but after Budget 2017, it increased to 20%) or an employees (10% of Basic+DA) contribution will be eligible for deduction.

As I said above, this section will form the part of Sec.80C limit.

# Sec.80CCD2

There is a misconception among many that there is no upper limit for this section. However, the limit is least of 3 conditions. 1) Amount contributed by an employer, 2) 10% of Basic+DA (14% of Government Employees) and 3) Gross Total Income.

This is an additional deduction which will not form the part of Sec.80C limit.

The deduction under this section will not be eligible for self-employed.

NPS Tax Benefits under Sec.80CCD (1B)

This is the additional tax benefit of up to Rs.50,000 eligible for an income tax deduction and was introduced in the Budget 2015

Introduced in Budget 2015. One can avail the benefit of this Sect.80CCD (1B) from FY 2015-16.

Both self-employed and employees are eligible for availing this deduction.

This is over and above Sec.80CCD (1).

I explained all three sections of NPS (Sec.80CCD1, Sec.80CCD2 and Sec.80CCD(1B) in below image for your reference.

You can also refer my latest post on the changes “NPS Tax Benefits 2019 – Sec.80CCD(1), 80CCD(2) and 80CCD(1B)“.

NOTE:- PLEASE NOTE THAT THE COMBINED LIMIT OF DEDUCTION UNDER SEC.80C, SEC.80CCC AND SEC.80CCD(1) TOGETHER CAN NOT EXCEED RS.1,50,000 FOR FY 2020-21.

#Sec.80D

Deduction under this section is available if you satisfy the following conditions.

The taxpayer should be an individual (resident, NRI or Foreign Citizen) or HUF.

Payment should be made out of income chargeable to tax.

Payment should be in NON-CASH mode (for preventive health check up, you can pay either through cash or non-cash mode).

Changes from Budget 2018-

In Budget 2018, the maximum tax deduction limit for senior citizens under Sec.80D is raised to Rs.50,000. The earlier limit was Rs.30,000.

In case of single premium health insurance policies having a cover of more than one year, it is proposed that the deduction shall be allowed on a proportionate basis for the number of years for which health insurance cover is provided, subject to the specified monetary limit.

I will try to summarize the whole benefit from the below image.

# Sec.80DD

A resident individual or HUF is allowed to claim the deduction under Sec.80DD. You can claim the deduction if you incurred an expenditure for medical treatment, training, and rehabilitation of dependent relative (being a person with a disability).

A deduction can also be claimed if an individual or HUF deposited or paid for any approved scheme of LIC (or any other insurance) or UTI for the maintenance of such a dependent relative.

Here, dependent means spouse, children, parents, brothers, and sisters, who is wholly and mainly dependent upon the individual.

You can claim fixed duction of Rs.75,000 under this section. A higher deduction of Rs.1,25,000 is available if such dependent relative is suffering from severe disability.

# Sec.80DDB

An Individual’s of HUFs expenses actually paid for medical treatment of specified diseases and ailments subject to certain conditions can be claimed under this section.

The maximum deduction is Rs. 40,000. This can also be claimed on behalf of the dependents. The tax deduction limit under this section for Senior Citizens and very Senior Citizens (above 80 years) is now revised to Rs 1,00,000.

With effect from the assessment year 2016-17, the taxpayer shall be required to obtain a prescription from a specialist doctor (not necessarily from a doctor working in a Government hospital) for availing this deduction.

You can claim the deduction for the medical treatment of self, spouse, children, parents brothers, and sisters of the individual.

The ailments covered under this section are as below.

# Neurological Diseases where the disability level has been certified to be of 40% and above;

(a) Dementia (b) Dystonia Musculorum Deformans (c) Motor Neuron Disease (d) Ataxia (e) Chorea (f) Hemiballismus (g) Aphasia (h) Parkinson’s Disease

# Malignant Cancers

# Full Blown Acquired Immuno-Deficiency Syndrome (AIDS) ;

# Chronic Renal Failure

# Hematological disorders

a) Hemophilia

b) Thalassemia

# Sec.80E

An individual can claim deduction under Sec.80E. If the loan is taken by an individual for any study in India or outside India, then they can claim the deduction. The interest part of the loan on such education loan can be claimed for the deduction for pursuing individual’s own education or for the education of his relatives (Spouse, children or any student for whom the individual is a legal guardian).

The entire interest is deductible in the year in which the individual starts to pay interest on the loan and subsequent 7 years or until interest is paid in full (i.e for a total 8 years). But do remember that interest should be paid out of the income of chargeable to tax.

# Sec.80EEA

Along with tax deductions under Section 80C and 24b, an individual can claim up to Rs 1.5 lakh under Section 80EEA from FY 2019-20. The same is continued for FY 2020-21. However, there are certain conditions are there for the same, and they are as below:-

The home loan should have been sanctioned between 1st April, 2019 to 31st March 2020.

The Stamp duty value of the property should not exceed 45 Lakhs.

Taxpayer should not own any other residential property on the date of loan sanction.

This tax benefit will be available from 1st April 2020 (AY 2020-21) and till the end of the home loan tenure (closure).

The total interest deduction is now Rs. 3.5 lakh (Rs 2 Lakh + 

Rs 1.5 Lakh).

Note that the deduction under Section 80EEA is available for home loans from banks and approved financial institutions only. To claim tax benefit under Section 24, you should have received possession of your house (interest paid before possession is eligible for deduction over the next 5 years in 5 equal installments). Section 80EEA do not impose any requirement of possession or completion of construction. Therefore, Section 80EEA provides you immediate tax relief even if you have purchased an under-construction property.

Both resident Indians and non-resident Indians (NRIs) can claim the deduction u.s 80EEA.

Section 80EEB

A Tax deduction of up to Rs 1.5 lakh can be claimed on Interest paid on Loans taken to purchase Electronic Vehicles.

# Sec.80G

Donations to certain approved funds, trusts, charitable institutions/donations for renovation or repairs of notified temples, etc can be claimed as a deduction under this section. This deduction can only be claimed when the contribution made by cheque or draft or in cash. In-kind contributions like food material, clothes, medicines etc. do not qualify for deduction under this section.

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

From FY 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.

If you wish to donate to any political party of your choice, then you are allowed to donate up to Rs.2,000 only in cash. However, if you wish to donate more than Rs.2,000, then you can donate it using Electoral Bonds.

# Sec.80GG

I have written a complete post on this section. Refer “Section 80GG Deduction-Get Tax Benefit on rent paid if not getting HRA !!!“. I will give you a brief about this section as below.

This section only applies to those who have not availed HRA in their salary or not claiming the deduction on their rent in any of the other sections of income tax.  Below are a few conditions to avail the deduction under this section.

This section is only applicable to Individual or HUF.

Taxpayers may be either salaried or self-employed. However, must not be getting HRA.

Tax Payer himself or spouse/Minor Child/HUF of which he is a member should not own any accommodation at a place where he is doing a job or business.

If Tax Payer owns a house at a place other than the place noted above, then the concession in respect of the self-occupied property is not claimed by him [Under Section 23 (2) (a) or 23 (4) (a)].

Tax Payer has to file a declaration in Form No.10BA regarding the expenditure incurred by him towards the payment of rent.

How much amount of deduction one can avail under Sec. 80GG?

If the above five conditions are satisfied, the amount deductible under Section 80GG is LEAST OF THE FOLLOWING.

Rs.5, 000 per month;

25% of total income of taxpayer for the year; or

Rent Paid less 10% of total income (Rent Paid-10% of Total Income).

# Sec.80TTA

A deduction of up to Rs.10,000 can be claimed by an individual or HUB in respect of any income by the way of interest from a savings account with a bank, from a savings account with a co-operative society carrying on the business of banking or from a savings account with a post office but from FDs, RDs or other Term Deposits). From FY 2018-19, this benefit will not be available for late Income Tax filers.

# Sec.80TTB

This section is for Senior Citizens (Aged 60 years and above at any time during the financial year. The interest income earned from Bank FDs, RDs (including Post Office),  will be exempt up to Rs.50,000.

This deduction can be claimed under new Section 80TTB. However, if the taxpayer claimed deducted under Sec.80TTB, then he can not claim the deductions under existing 80TTA.

# Sec.80U

To claim tax benefits under Sec.80U, the taxpayer should be an individual and resident of India. If he is suffering from 40% or more than 40% of any disability, then he can claim a tax deduction.

You can claim the fixed deduction of Rs.75,000. a higher deduction of Rs.1,25,000 is allowed in respect of a person with a severe disability (i.e. having a disability of 80% or above).

# Sec.24 (B)

The interest part of your home loan EMI will be claimed under this section. The maximum limit for the self-occupied property is Rs.2,00,000 per year (even if you have multiple houses). For let-out property, earlier the entire interest payment of home loan (Loss from House Property) can be allowed to set off against any other income source without any limit. However, effective from FY 2017-18, this set-off now limited to Rs.2 lakh per individual (irrespective of the number of properties you are holding).

The unclaimed loss if any will be carried forward to be set off against house property income of subsequent 8 years. In most of cases, this can be treated as DEAD LOSS.

No tax on notional rent on second Self-occupied house has been proposed in the Budget 2019. Hence, you can now hold two Self-occupied properties and don’t have to show the rental income from the second self-occupied property as notional rent. This is with effective from FY 2019-20.

# Rebate under Sec.87A

The tax rebate of Rs.12,500 for individuals with income of up to Rs 5 Lakh has been proposed in Budget 2019. This was the biggest change proposed in Budget 2019. I have written a detailed post on this. You can refer the same for more clarity. Refer the same at “Revised Tax Rebate under Sec.87A after Budget 2019“.

To avail this benefit, there are certain conditions and they are as below.

The taxpayer must be a resident individual.

Your Total Income (Less Deductions from 80C to 80U) is equal to or less than Rs.5,00,000.

The rebate is the 100% of income tax on such income or Rs.12,500 (whichever is less).

Conclusion:- The above List of Income Tax Deductions FY 2020-21 – Under New / Old Tax Regime may not be full. However, I tried to cover all the important deductions available. Hope this may be helpful for you all.

Refer our latest posts:-

Asset Allocation of Multi-Cap Funds – SEBIs new categorization and Rationalization Rule

List of Income Tax Deductions FY 2020-21 – Under New / Old Tax Regime

Whether Banking and PSU Debt Funds are SAFE?

State Bank Of India 9.95% (SBIN-N5) Bond Call Option – What if the Bank exercised in 2021?

Your EDUCATION is the least required eligibility for investing!

Best Critical illness policy in India 2020 – Comparative Table

The post List of Income Tax Deductions FY 2020-21 – Under New / Old Tax Regime appeared first on BasuNivesh.

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[rebeccahpedersen]

How Do You Value Condominium Amenities?

TorontoRealtyBlog

I would have thought that I’ve re-written this blog over and over, throughout the years, but I combed through the archives and realized the last time I really listed off Toronto’s most common condominium amenities was back in 2012!  And a lot has changed since then.

Without exaggeration, I did not once, ever use the gym in my first condo.  And it wasn’t a bad gym, I just never had occasion to use it.

In my current condo, I run a 5K on the treadmill every Sunday night.  And by “every,” I suppose I mean in my mind, because in practice I probably do it every other week.

Perhaps I workout in my current condo gym, but never did in my previous condo, because of life changes and happenstance.  But either way, I have personally experienced both the value of a condominium amenity, and the waste of the very same one.

Let’s not forget, you do pay for condominium amenities.

One of the very most naive things I ever hear among the buyer pool is, “I feel like I’m getting so much more value when I look at condos with substantial amenities, than with condos without.”

That’s like during the the 2018 Provincial election, when the NDP and the Liberals kept trying to out-do each-other by providing more “free” services to the voters.

In both examples, you’re paying for it, whether you realize it or not.

Some condos in the downtown core have absolutely zero amenities, and some are completely over-done.

So before I give you some examples of the latter, let me show you how I break down condo amenities, at least from a value and functionality standpoint:

TIER 1:

Gym

Concierge

Rooftop Deck

TIER 2:

Party Room

Guest Suites

Pool

Hot Tub/Sauna

TIER 3:

Games/Billiard Room

Tennis/Squash Court

Yoga Studio

TIER 4:

Cinema

Dog Wash

Car Wash

Meeting Room

Multimedia/Business Room

TIER 5:

Bowling Alley

Virtual Golf Simulator

Baseball Batting Cage

Video Game Room

Poker Room

Library

Lounge

Like I said, we could probably argue about this all day long, whether it’s what tier a certain amenity belongs in, or whether one particular amenity is more valuable than another.

I’ve also probably missed a few of the newer amenities offered in downtown condos, but perhaps that’s because some of them are just so crazy that I never knew they existed.  More on that later.

For now, let me briefly run through the amenities above, and why I think they belong in certain tiers.

TIER 1:

Concierge – This is, without a doubt, the number-one amenity that people look for, whehter it’s for safety, or because they don’t like going to Canada Post to pick up packages.  A 24/7 concierge is becoming automatic in most new condominiums, and that’s primarily becuase of the popularity.

Gym – This is a close second, in my opinion.  Many of us condo-dwellers, myself included, grew up as gym-rats, and the condo gyms just aren’t “enough” for us.  But many of us have come around on supplementing a gym routine with a quick fix in the condo gym, and then there are scores of buyers who get more than they need from the condo gym, and relish the opportunity to give up a monthly membership.

Rooftop Deck – Whether this has communal BBQ’s or not, I would still put this in Tier #1, as most of my condo buyers are looking for some additional outdoor space, with or without a view, just for extra breathing room.  Especially for those buyers who have only a Juliette balcony, or a small, useless 4 x 6 foot plank.

TIER 2:

Party Room – Most people who live in condos have never rented the party room, and yet so many condo-buyers want one.  I think that when you’re contemplating a move into 700, 600, or maybe even 476 square feet, you like the idea of being able to use a much larger space.  It makes the committment to a small box in the sky a lot easier!

Guest Suites – In the same way that people like the idea of a party room, condo-buyers always seem to think of their “out-of-town guests.”  It’s very sweet of them, and again, in practice, they don’t get a ton of use out of them.

Pool – Many of you will balk at this being in Tier #2, but I get a lot of requests from buyers for a pool.  Certainly more people ask for a pool than a bowling alley, or a wine cellar, or whatever else developers are coming up with these days.

Sauna/Hot Tub – This could debatably go in Tier #3, but with a pool often comes these two features, so I think they go hand-in-hand.

TIER 3:

Games/Billiard – Getting into the third tier means these items aren’t necessarily requested by my condo-buyers, but rather I’m gaging their response to the mere presence of these amenities.  A billiard room gets used, and thus it’s the most common of all the “games” in condos.  Spaces like the games room at the Merchandise Lofts – with billiards, ping-pong, foosball, darts et al makes for a much longer stay, even an actual “event” one Saturday night.

Tennis/Squash Courts – This is hardly ever requested, but I know a lot of people who use the tennis courts in the buildings down by the waterfront.

Yoga Studio – You might think, “This is really just a gym, so why isn’t this in the first tier?”  Well, I think a gym has weights and cardio machines.  A yoga studio is a separate, defined, enclosed area strictly for yoga, although in my building people use it for band practice…

TIER 4:

Cinema – You might use this once, maybe.  If you’re using this on the regular, then you’re clearly making a point to get your condo fees’ worth!

Dog Wash – You can put this in Tier #3 if you want, and I probably won’t disagree.  There are so many dog-owners in condos these days, but I personally don’t think that means a defined dog washing station is a necessary condo amenity.  I wash my dog once per week in my bathtub, although she’s only eight pounds.

Car Wash – This can be convenient, I’ll give it that.  But as most of you know, the “coin-wash” you get of the do-it-yourself variety is awful compared to the $10 wash you get, even at Esso.  So while this is convenient when you have bird crap on your windshield, you know it’s not the real-deal.

Meeting Room – Now we get into amenities that make some of you ask, “What the hell is that?”  Well, a meeting room is essentially a smaller version of a party room, often that you don’t need to either, a) pay for, b) hire security for.  We have one in my building, one level below the party room.  I had a fantasy football summit a few years ago (don’t ask – it was a meeting after thirteen years of league play with the same ten guys, to discuss rule changes), and I didn’t want to pay for the party room, or bother my wife with the presence of the other nine guys.  This room was perfect.

Multimedia/Business – I know this sounds silly, like the “business centre” of yesteryear, but think of all the students that rent in downtown condos, many of whom rent a 1-plus-den with a roommate and have zero privacy.  Many of them go down to the multimedia room or business centre to study.

TIER 5:

Bowling Alley – This feature made its first appearance, at least that I know of, in CityPlace back in the early 2000’s.  At the time, it seemed excessive, and unnecessary.  But as I’ll explain, and perhaps delve into further on Friday, this might have paved the way for far more outlandish features.

Virtual Golf Simulator – This is where you get into the category of, “I guess if it exists in my building, I”ll use it.”  But you would never want something like this if you knew you had to pay for it!  The problem with something like a virtual golf simulator is that the technology changes dramatically from year-to-year.  Ask anybody who has hit a golf club in the simulator at Golf Town this year, and they’ll tell you.  A simulator from 6-years-ago is like firing shots in the dark and making guesses about where they end up.  Not to mention, think about the maintenance and the potential for damage.  Just add alcohol on a Saturday night, and voila!

Baseball Batting Cage – This is getting repetitive, I know…

Video Game Room – These exist, trust me.  About halfway through writing this blog, I figured I’d better provide photo evidence of some of these amenities, so I’ll come back on Friday with a dedicated post.

Poker Room – My mind is reeling with cynical comments; I don’t know where to stat.  Is it BYOSG?  Bring your own sunglasses?  Will residents show up with advertising on their shirts?  “FULL TILT POKER” hats, and the like?  Who decides the buy-ins, the games, the players?  Is the condominium corporation responsible if somebody loses their life savings, and blames it on an illness?

Library – Here’s a return to normalcy, and yet I included this in Tier #5 becuase for the life of me, I’ve never understood who seeks out the use of a library in a condo.  I understand that some people out there like to turn their front lawn into those “Little Free Libraries;” take a book, leave a book!  But in a condo, I don’t know.  I remember my old stomping grounds at 230 King Street had this odd, almost awkward little area around the corner from the front foyer where there was a small shelf with books, and one chair.  It was so odd!  I had a Halloween party back in 2005 and as we were leaving the condo, somebody stumbled upon it and was like, “Oh wow!  A secret lair!”  My current condo has a library too, which is painfully awkward, since it reeks of retirees who have nothing to do.  On the wall next to the billiard table, there are shelves, clearly installed by a resident, and books – separated into genres!  “Fiction” and “Non-Fiction,” the hand-made signs read!  Hey look, I know I’m making fun here, and many of you reading this will disagree.  But walk up the aisle of an airplane and you’ll see so many older-folks on Kindles and iPads!  I will admit, I read paper books, and I will never change.  I refuse to give up the turning of a page, the placing of a bookmark, and the proud display of an actual book on a shelf, once I’ve completed it………….three times per year.  But I find it odd that as libraries in society are being closed, condominium residents are creating them at home.

Lounge – We’re not talking about party rooms here, nor are we talking about libraries.  Some condos have something called a “lounge,” which is often a party room with no party, or a library with no books.  It’s not a business centre, or a multimedia room.  What the hell is it?  I’m not sure…

Let’s break here for now, and on Friday, I’ll show you some of the more impressive, and/or ludicrous amenities that either already exist, or are being planned…

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List of Income Tax Deductions FY 2020-21 – Under New / Old Tax Regime

Due to the introduction of new tax regime in the Budget 2020, many are not confused which are the Income Tax Deductions are available for them. Let us see the complete list of Income Tax Deductions FY 2020-21 under both old or new tax regime.

Tax Planning is an important part of financial planning. However, while investing or choosing the deductions, our idea should be to concentrate at first on our financial goals rather than just concentrating on tax saving. Hence, understanding the available options is very much important.

Income Tax Slab Rates for FY 2020-21 AY 2021-22

You may be aware that during Budget 2020, Government introduced the two types of tax regimes. As per that, the income tax slabs are as below.

List of Income Tax Deductions FY 2020-21 – Under New / Old Tax Regime

Let us now discuss the list of income tax deductions FY 2020 – 21. I will divide them as new and old tax regime for your simplicity.

List of Income Tax Deductions FY 2020-21 under New Tax Regime

I have already written a detailed post on this, where I mentioned that which deductions are not available under new tax regime. You can refer the same at “New Tax Regime – Complete list of exemptions and deductions not allowed“. In this post, I am concentrating on the available deductions.

# Section 80CCD(2)

Under this section, employer contribution on account of the employee in notified pension schemes like EPF, NPS, and/or Super Annuation Account can be claimed up to Rs.7.5 lakh limit.

An employer can contribute an amount equal to 12% of the employee’s basic monthly salary to his/her EPF account. Similarly, an employer can contribute an amount equal to 10% of the employee’s basic salary to the Tier-I account of NPS (For Central Government Employees it is now 14% of Basic+DA effective from 1st April 2019). In a superannuation account, an employer can contribute a maximum of Rs 1.5 lakh exempted from tax in a financial year.

Refer the detailed post on NPS Tax Benefits at “NPS Tax Benefits 2020 – Sec.80CCD(1), 80CCD(2) and 80CCD(1B)“.

The Budget 2020 restricted the tax-exempt superannuation, NPS and EPF account contribution by the employer to maximum of Rs 7.5 lakh in a financial year. Further, the budget states that any interest or gains earned from the excess contribution will also be taxable in the hands of an employee.

# Section 10(15)(i)

Interest received on post office savings account balance is exempted up to Rs 3,500 under section 10(15)(i) of the Income-tax Act. The exemption limit is Rs.7,000 in case of joint savings account.

# Gratuity

Gratuity is tax-exempt up to Rs 20 lakh in a lifetime for non-government employees. For government employees, all gratuity received is tax-exempt, irrespective of the amount received by them. (Refer my post “Gratuity – New Limit, Eligibility, Formula, Taxation and Calculator“)

Below benefits up to certain threshold limits (if any) are allowed under new tax regime as well;

Commutation of pension

Leave encashment on retirement

Retrenchment compensation

VRS benefits

NPS withdrawal benefits

Education scholarships

Payments of awards instituted in the public interest

# Interest on EPF Account, SSY and PPF

The interest received from the EPF account continues to be exempted from tax in the new tax regime as well as the old tax regime.

The Interest and maturity amount received on the Sukanya Samriddhi account, PPF account are tax-free in both old and new tax regimes.

# Sect.87A

Individuals having taxable income of up to Rs.5 lakh will be eligible for tax rebate under section 87A up to Rs 12,500, thereby making zero tax payable in the new tax regime.

# Conveyance Allowance

You can claim income tax exemption for conveyance, travel, and other allowances given by your employers under the new tax regime as well.

List of Income Tax Deductions FY 2020-21 under Old Tax Regime

Let us now discuss the list of income tax deductions FY 2020-21 under the old tax regime. Before proceeding further, first, let us understand the difference between deductions and exemptions.

Exemption :- It is nothing but an income which is not subject to tax. There are certain exemptions which are applicable only towards certain heads of income. Hence, you have to be cautious while claiming such exemptions.

There are mainly five sources of incomes which IT Department categorized and they are Salary income, Business of Professional Income, Income from House Property, Income from Capital Gains and Income from Other Sources.

Take for example like HRA, Gratuity can be claimed as tax-exempt against your salary income. Agriculture income, dividend income, or Sec.54 of IT act against long term capital gains on the sale of the property.

Deductions:-

Income Tax Deductions means you may deduct the amount that is eligible for reducing your tax liability. Income Tax Deductions can be deducted from the Gross Total Income. There are various options of investing or expenditure, which can be claimed as Tax Deductions.

Allowances available under old tax regime:-

# Mobile/Telephone Reimbursement

If your employer offering you the mobile/telephone connection or internet connection which requires for work, then you can claim 100% of such cost. However, you have to produce a bill. Only the postpaid connections are allowed for reimbursement.

# Leave Travel Allowance

The bills for your travel against LTA can be claimed for exemption. It is allowed to be claimed twice in a block of four years. The current block is 2014 to 2017. You can carry forward your unclaimed LTA to the next year. You can request your employer to not deduct tax on it and allow you to claim it next year.

# Entertainment Allowances

You may be getting this allowance. However, the exemption is available only for Government employees. The amount of exemption is least of the following.

a) Rs 5,000

b) 1/5th of salary (excluding any allowance, benefits or other perquisites)

c) Actual entertainment allowance received

# House Rent Allowance (HRA)

This is the famous exemption which is used by many salaried individuals. However, the wrong belief is that whatever the rent they pay is actually exempted from their income. The reality is different. The amount of exemption is least of the following.

a) Actual HRA Received

b) 40% of Salary (50%, if house situated in Mumbai, Calcutta, Delhi or Madras)

c) Rent paid minus 10% of salary

(Salary= Basic + DA (if part of retirement benefit) + Turnover based Commission)

# Children Education Allowance

If your employer providing this allowance, then you can take exemption up to Rs.100 per month per child (maximum of up to 2 children). Therefore, monthly you can save Rs.200 from this allowance. The exemption may seem so low. But why to pay the tax?

# Hostel Expenditure Allowance-If your employer providing this allowance, then you can take exemption Up to Rs. 300 per month per child up to a maximum of 2 children is exempt. Therefore, you can save around a maximum of Rs.600 from this allowance.

# Conveyance Allowance

This is a different allowance than a transport allowance. It is the expenditure granted to an employee to meet the expenses on conveyance in performing his official duties. There is no limit for this. If such conveyance allowance is Rs.5,000 a month, then the whole allowance is exempt. Hence, you may this may be exempt to the extent of expenditure incurred for official purposes.

# Any Allowance to meet the cost of travel on tour or on transfer

Here also no limit. The employee can claim exempt to the extent of expenditure incurred for official purposes.

# Allowance to meet the cost of travel on tour or on transfer

Here also no limit. The employee can claim exempt to the extent of expenditure incurred for official purposes.

# Daily Allowance

If you are not placed in normal duty place, then your employer may provide you such allowance. The employee can claim exempt to the extent of expenditure incurred for official purposes.

These are the major allowances, which can be utilized to save tax on salary income. There are few other allowances also to claim the exemption. But many of such allowances are not so famous. Hence, I left them to list.

Deductions available under old tax regime:-

The complete of sections can be listed as below.

# Standard Deduction of Rs.50,000

Actually, I have to put this under Deductions. However, this standard deduction replaced the existing allowances. Hence, I placed it here for better understanding.

Earlier you used to claim Rs.15,000 under Medical Allowance and Travel Allowance. With effect from FY 2018-19, you can claim the direct Rs.40,000 deduction instead of these two allowances. However, the same is increased now to Rs.50,000 from FY 2019-20 and the same is applicable for FY 2020-21.

This deduction obviously for salaried and pensioners. This is irrespective of the amount of taxable salary you will be receiving to get a deduction of Rs.50,000 or taxable salary, whichever is less.

Hence, let us assume for FY 2019-20, you worked only for a few days. Your taxable salary is Rs.50,000. In such a scenario, you can directly claim the deduction of Rs.50,000. However, if your salary is less than Rs.40,000 (say Rs.20,000), then you have to claim only Rs.20,000 but not Rs.50,000.

# Section 80C

This is the famous section which often used by all of salaried. The maximum limit for the current year is Rs.1,50,000. Therefore, up to Rs.1,50,000, you can save tax on salary income from this section alone. The different investments you do and can also be claimed under Sec.80C are listed below.

Life Insurance premium (Paid by an individual, spouse, and child. In the case of HUF, on the life of any member of HUF).

EPF-Employee contribution can be claimed for deduction.

Public Provident Fund (Paid by an individual, spouse, and child. In the case of HUF, on the life of any member of HUF).

National Savings Certificate (NSC).

Sukanya Samriddhi Account

ELSS or Tax Saving Mutual Funds.

Senior Citizen Savings Scheme.

5-Years Post Office or Bank Deposits.

The tuition fee of kids.

Principal payment towards the home loan.

Stamp duty and registration cost of the house.

Any contribution towards NPS Tier 2 Account by Government employees is also eligible for deductions under Sec.80C.

# Sec.80CCC

Deduction under Sec.80CCC is available only for individuals. Contribution to an annuity plan of the LIC of India or any other insurer for receiving the pension. Do remember that the amount should be paid or deposited out of income chargeable to tax.

The maximum amount deductible under Sec.80CCC is Rs.1.5 lakh. Do remember that this is also the part of the combined limit of Rs.1.5 lakh available under Sec.80C, Sec.80CCC, and Sec.80CCD(1).

# Sec.80CCD1

The maximum benefit available is Rs.1.5 lakh (including Sec.80C limit).

An individual’s maximum 20% of annual income (Earlier it was 10% but after Budget 2017, it increased to 20%) or an employees (10% of Basic+DA) contribution will be eligible for deduction.

As I said above, this section will form the part of Sec.80C limit.

# Sec.80CCD2

There is a misconception among many that there is no upper limit for this section. However, the limit is least of 3 conditions. 1) Amount contributed by an employer, 2) 10% of Basic+DA (14% of Government Employees) and 3) Gross Total Income.

This is an additional deduction which will not form the part of Sec.80C limit.

The deduction under this section will not be eligible for self-employed.

NPS Tax Benefits under Sec.80CCD (1B)

This is the additional tax benefit of up to Rs.50,000 eligible for an income tax deduction and was introduced in the Budget 2015

Introduced in Budget 2015. One can avail the benefit of this Sect.80CCD (1B) from FY 2015-16.

Both self-employed and employees are eligible for availing this deduction.

This is over and above Sec.80CCD (1).

I explained all three sections of NPS (Sec.80CCD1, Sec.80CCD2 and Sec.80CCD(1B) in below image for your reference.

You can also refer my latest post on the changes “NPS Tax Benefits 2019 – Sec.80CCD(1), 80CCD(2) and 80CCD(1B)“.

NOTE:- PLEASE NOTE THAT THE COMBINED LIMIT OF DEDUCTION UNDER SEC.80C, SEC.80CCC AND SEC.80CCD(1) TOGETHER CAN NOT EXCEED RS.1,50,000 FOR FY 2020-21.

#Sec.80D

Deduction under this section is available if you satisfy the following conditions.

The taxpayer should be an individual (resident, NRI or Foreign Citizen) or HUF.

Payment should be made out of income chargeable to tax.

Payment should be in NON-CASH mode (for preventive health check up, you can pay either through cash or non-cash mode).

Changes from Budget 2018-

In Budget 2018, the maximum tax deduction limit for senior citizens under Sec.80D is raised to Rs.50,000. The earlier limit was Rs.30,000.

In case of single premium health insurance policies having a cover of more than one year, it is proposed that the deduction shall be allowed on a proportionate basis for the number of years for which health insurance cover is provided, subject to the specified monetary limit.

I will try to summarize the whole benefit from the below image.

# Sec.80DD

A resident individual or HUF is allowed to claim the deduction under Sec.80DD. You can claim the deduction if you incurred an expenditure for medical treatment, training, and rehabilitation of dependent relative (being a person with a disability).

A deduction can also be claimed if an individual or HUF deposited or paid for any approved scheme of LIC (or any other insurance) or UTI for the maintenance of such a dependent relative.

Here, dependent means spouse, children, parents, brothers, and sisters, who is wholly and mainly dependent upon the individual.

You can claim fixed duction of Rs.75,000 under this section. A higher deduction of Rs.1,25,000 is available if such dependent relative is suffering from severe disability.

# Sec.80DDB

An Individual’s of HUFs expenses actually paid for medical treatment of specified diseases and ailments subject to certain conditions can be claimed under this section.

The maximum deduction is Rs. 40,000. This can also be claimed on behalf of the dependents. The tax deduction limit under this section for Senior Citizens and very Senior Citizens (above 80 years) is now revised to Rs 1,00,000.

With effect from the assessment year 2016-17, the taxpayer shall be required to obtain a prescription from a specialist doctor (not necessarily from a doctor working in a Government hospital) for availing this deduction.

You can claim the deduction for the medical treatment of self, spouse, children, parents brothers, and sisters of the individual.

The ailments covered under this section are as below.

# Neurological Diseases where the disability level has been certified to be of 40% and above;

(a) Dementia (b) Dystonia Musculorum Deformans (c) Motor Neuron Disease (d) Ataxia (e) Chorea (f) Hemiballismus (g) Aphasia (h) Parkinson’s Disease

# Malignant Cancers

# Full Blown Acquired Immuno-Deficiency Syndrome (AIDS) ;

# Chronic Renal Failure

# Hematological disorders

a) Hemophilia

b) Thalassemia

# Sec.80E

An individual can claim deduction under Sec.80E. If the loan is taken by an individual for any study in India or outside India, then they can claim the deduction. The interest part of the loan on such education loan can be claimed for the deduction for pursuing individual’s own education or for the education of his relatives (Spouse, children or any student for whom the individual is a legal guardian).

The entire interest is deductible in the year in which the individual starts to pay interest on the loan and subsequent 7 years or until interest is paid in full (i.e for a total 8 years). But do remember that interest should be paid out of the income of chargeable to tax.

# Sec.80EEA

Along with tax deductions under Section 80C and 24b, an individual can claim up to Rs 1.5 lakh under Section 80EEA from FY 2019-20. The same is continued for FY 2020-21. However, there are certain conditions are there for the same, and they are as below:-

The home loan should have been sanctioned between 1st April, 2019 to 31st March 2020.

The Stamp duty value of the property should not exceed 45 Lakhs.

Taxpayer should not own any other residential property on the date of loan sanction.

This tax benefit will be available from 1st April 2020 (AY 2020-21) and till the end of the home loan tenure (closure).

The total interest deduction is now Rs. 3.5 lakh (Rs 2 Lakh + 

Rs 1.5 Lakh).

Note that the deduction under Section 80EEA is available for home loans from banks and approved financial institutions only. To claim tax benefit under Section 24, you should have received possession of your house (interest paid before possession is eligible for deduction over the next 5 years in 5 equal installments). Section 80EEA do not impose any requirement of possession or completion of construction. Therefore, Section 80EEA provides you immediate tax relief even if you have purchased an under-construction property.

Both resident Indians and non-resident Indians (NRIs) can claim the deduction u.s 80EEA.

Section 80EEB

A Tax deduction of up to Rs 1.5 lakh can be claimed on Interest paid on Loans taken to purchase Electronic Vehicles.

# Sec.80G

Donations to certain approved funds, trusts, charitable institutions/donations for renovation or repairs of notified temples, etc can be claimed as a deduction under this section. This deduction can only be claimed when the contribution made by cheque or draft or in cash. In-kind contributions like food material, clothes, medicines etc. do not qualify for deduction under this section.

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

From FY 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.

If you wish to donate to any political party of your choice, then you are allowed to donate up to Rs.2,000 only in cash. However, if you wish to donate more than Rs.2,000, then you can donate it using Electoral Bonds.

# Sec.80GG

I have written a complete post on this section. Refer “Section 80GG Deduction-Get Tax Benefit on rent paid if not getting HRA !!!“. I will give you a brief about this section as below.

This section only applies to those who have not availed HRA in their salary or not claiming the deduction on their rent in any of the other sections of income tax.  Below are a few conditions to avail the deduction under this section.

This section is only applicable to Individual or HUF.

Taxpayers may be either salaried or self-employed. However, must not be getting HRA.

Tax Payer himself or spouse/Minor Child/HUF of which he is a member should not own any accommodation at a place where he is doing a job or business.

If Tax Payer owns a house at a place other than the place noted above, then the concession in respect of the self-occupied property is not claimed by him [Under Section 23 (2) (a) or 23 (4) (a)].

Tax Payer has to file a declaration in Form No.10BA regarding the expenditure incurred by him towards the payment of rent.

How much amount of deduction one can avail under Sec. 80GG?

If the above five conditions are satisfied, the amount deductible under Section 80GG is LEAST OF THE FOLLOWING.

Rs.5, 000 per month;

25% of total income of taxpayer for the year; or

Rent Paid less 10% of total income (Rent Paid-10% of Total Income).

# Sec.80TTA

A deduction of up to Rs.10,000 can be claimed by an individual or HUB in respect of any income by the way of interest from a savings account with a bank, from a savings account with a co-operative society carrying on the business of banking or from a savings account with a post office but from FDs, RDs or other Term Deposits). From FY 2018-19, this benefit will not be available for late Income Tax filers.

# Sec.80TTB

This section is for Senior Citizens (Aged 60 years and above at any time during the financial year. The interest income earned from Bank FDs, RDs (including Post Office),  will be exempt up to Rs.50,000.

This deduction can be claimed under new Section 80TTB. However, if the taxpayer claimed deducted under Sec.80TTB, then he can not claim the deductions under existing 80TTA.

# Sec.80U

To claim tax benefits under Sec.80U, the taxpayer should be an individual and resident of India. If he is suffering from 40% or more than 40% of any disability, then he can claim a tax deduction.

You can claim the fixed deduction of Rs.75,000. a higher deduction of Rs.1,25,000 is allowed in respect of a person with a severe disability (i.e. having a disability of 80% or above).

# Sec.24 (B)

The interest part of your home loan EMI will be claimed under this section. The maximum limit for the self-occupied property is Rs.2,00,000 per year (even if you have multiple houses). For let-out property, earlier the entire interest payment of home loan (Loss from House Property) can be allowed to set off against any other income source without any limit. However, effective from FY 2017-18, this set-off now limited to Rs.2 lakh per individual (irrespective of the number of properties you are holding).

The unclaimed loss if any will be carried forward to be set off against house property income of subsequent 8 years. In most of cases, this can be treated as DEAD LOSS.

No tax on notional rent on second Self-occupied house has been proposed in the Budget 2019. Hence, you can now hold two Self-occupied properties and don’t have to show the rental income from the second self-occupied property as notional rent. This is with effective from FY 2019-20.

# Rebate under Sec.87A

The tax rebate of Rs.12,500 for individuals with income of up to Rs 5 Lakh has been proposed in Budget 2019. This was the biggest change proposed in Budget 2019. I have written a detailed post on this. You can refer the same for more clarity. Refer the same at “Revised Tax Rebate under Sec.87A after Budget 2019“.

To avail this benefit, there are certain conditions and they are as below.

The taxpayer must be a resident individual.

Your Total Income (Less Deductions from 80C to 80U) is equal to or less than Rs.5,00,000.

The rebate is the 100% of income tax on such income or Rs.12,500 (whichever is less).

Conclusion:- The above List of Income Tax Deductions FY 2020-21 – Under New / Old Tax Regime may not be full. However, I tried to cover all the important deductions available. Hope this may be helpful for you all.

Refer our latest posts:-

Asset Allocation of Multi-Cap Funds – SEBIs new categorization and Rationalization Rule

List of Income Tax Deductions FY 2020-21 – Under New / Old Tax Regime

Whether Banking and PSU Debt Funds are SAFE?

State Bank Of India 9.95% (SBIN-N5) Bond Call Option – What if the Bank exercised in 2021?

Your EDUCATION is the least required eligibility for investing!

Best Critical illness policy in India 2020 – Comparative Table

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List of Income Tax Deductions FY 2020-21 – Under New / Old Tax Regime

Due to the introduction of new tax regime in the Budget 2020, many are not confused which are the Income Tax Deductions are available for them. Let us see the complete list of Income Tax Deductions FY 2020-21 under both old or new tax regime.

Tax Planning is an important part of financial planning. However, while investing or choosing the deductions, our idea should be to concentrate at first on our financial goals rather than just concentrating on tax saving. Hence, understanding the available options is very much important.

Income Tax Slab Rates for FY 2020-21 AY 2021-22

You may be aware that during Budget 2020, Government introduced the two types of tax regimes. As per that, the income tax slabs are as below.

List of Income Tax Deductions FY 2020-21 – Under New / Old Tax Regime

Let us now discuss the list of income tax deductions FY 2020 – 21. I will divide them as new and old tax regime for your simplicity.

List of Income Tax Deductions FY 2020-21 under New Tax Regime

I have already written a detailed post on this, where I mentioned that which deductions are not available under new tax regime. You can refer the same at “New Tax Regime – Complete list of exemptions and deductions not allowed“. In this post, I am concentrating on the available deductions.

# Section 80CCD(2)

Under this section, employer contribution on account of the employee in notified pension schemes like EPF, NPS, and/or Super Annuation Account can be claimed up to Rs.7.5 lakh limit.

An employer can contribute an amount equal to 12% of the employee’s basic monthly salary to his/her EPF account. Similarly, an employer can contribute an amount equal to 10% of the employee’s basic salary to the Tier-I account of NPS (For Central Government Employees it is now 14% of Basic+DA effective from 1st April 2019). In a superannuation account, an employer can contribute a maximum of Rs 1.5 lakh exempted from tax in a financial year.

Refer the detailed post on NPS Tax Benefits at “NPS Tax Benefits 2020 – Sec.80CCD(1), 80CCD(2) and 80CCD(1B)“.

The Budget 2020 restricted the tax-exempt superannuation, NPS and EPF account contribution by the employer to maximum of Rs 7.5 lakh in a financial year. Further, the budget states that any interest or gains earned from the excess contribution will also be taxable in the hands of an employee.

# Section 10(15)(i)

Interest received on post office savings account balance is exempted up to Rs 3,500 under section 10(15)(i) of the Income-tax Act. The exemption limit is Rs.7,000 in case of joint savings account.

# Gratuity

Gratuity is tax-exempt up to Rs 20 lakh in a lifetime for non-government employees. For government employees, all gratuity received is tax-exempt, irrespective of the amount received by them. (Refer my post “Gratuity – New Limit, Eligibility, Formula, Taxation and Calculator“)

Below benefits up to certain threshold limits (if any) are allowed under new tax regime as well;

Commutation of pension

Leave encashment on retirement

Retrenchment compensation

VRS benefits

NPS withdrawal benefits

Education scholarships

Payments of awards instituted in the public interest

# Interest on EPF Account, SSY and PPF

The interest received from the EPF account continues to be exempted from tax in the new tax regime as well as the old tax regime.

The Interest and maturity amount received on the Sukanya Samriddhi account, PPF account are tax-free in both old and new tax regimes.

# Sect.87A

Individuals having taxable income of up to Rs.5 lakh will be eligible for tax rebate under section 87A up to Rs 12,500, thereby making zero tax payable in the new tax regime.

# Conveyance Allowance

You can claim income tax exemption for conveyance, travel, and other allowances given by your employers under the new tax regime as well.

List of Income Tax Deductions FY 2020-21 under Old Tax Regime

Let us now discuss the list of income tax deductions FY 2020-21 under the old tax regime. Before proceeding further, first, let us understand the difference between deductions and exemptions.

Exemption :- It is nothing but an income which is not subject to tax. There are certain exemptions which are applicable only towards certain heads of income. Hence, you have to be cautious while claiming such exemptions.

There are mainly five sources of incomes which IT Department categorized and they are Salary income, Business of Professional Income, Income from House Property, Income from Capital Gains and Income from Other Sources.

Take for example like HRA, Gratuity can be claimed as tax-exempt against your salary income. Agriculture income, dividend income, or Sec.54 of IT act against long term capital gains on the sale of the property.

Deductions:-

Income Tax Deductions means you may deduct the amount that is eligible for reducing your tax liability. Income Tax Deductions can be deducted from the Gross Total Income. There are various options of investing or expenditure, which can be claimed as Tax Deductions.

Allowances available under old tax regime:-

# Mobile/Telephone Reimbursement

If your employer offering you the mobile/telephone connection or internet connection which requires for work, then you can claim 100% of such cost. However, you have to produce a bill. Only the postpaid connections are allowed for reimbursement.

# Leave Travel Allowance

The bills for your travel against LTA can be claimed for exemption. It is allowed to be claimed twice in a block of four years. The current block is 2014 to 2017. You can carry forward your unclaimed LTA to the next year. You can request your employer to not deduct tax on it and allow you to claim it next year.

# Entertainment Allowances

You may be getting this allowance. However, the exemption is available only for Government employees. The amount of exemption is least of the following.

a) Rs 5,000

b) 1/5th of salary (excluding any allowance, benefits or other perquisites)

c) Actual entertainment allowance received

# House Rent Allowance (HRA)

This is the famous exemption which is used by many salaried individuals. However, the wrong belief is that whatever the rent they pay is actually exempted from their income. The reality is different. The amount of exemption is least of the following.

a) Actual HRA Received

b) 40% of Salary (50%, if house situated in Mumbai, Calcutta, Delhi or Madras)

c) Rent paid minus 10% of salary

(Salary= Basic + DA (if part of retirement benefit) + Turnover based Commission)

# Children Education Allowance

If your employer providing this allowance, then you can take exemption up to Rs.100 per month per child (maximum of up to 2 children). Therefore, monthly you can save Rs.200 from this allowance. The exemption may seem so low. But why to pay the tax?

# Hostel Expenditure Allowance-If your employer providing this allowance, then you can take exemption Up to Rs. 300 per month per child up to a maximum of 2 children is exempt. Therefore, you can save around a maximum of Rs.600 from this allowance.

# Conveyance Allowance

This is a different allowance than a transport allowance. It is the expenditure granted to an employee to meet the expenses on conveyance in performing his official duties. There is no limit for this. If such conveyance allowance is Rs.5,000 a month, then the whole allowance is exempt. Hence, you may this may be exempt to the extent of expenditure incurred for official purposes.

# Any Allowance to meet the cost of travel on tour or on transfer

Here also no limit. The employee can claim exempt to the extent of expenditure incurred for official purposes.

# Allowance to meet the cost of travel on tour or on transfer

Here also no limit. The employee can claim exempt to the extent of expenditure incurred for official purposes.

# Daily Allowance

If you are not placed in normal duty place, then your employer may provide you such allowance. The employee can claim exempt to the extent of expenditure incurred for official purposes.

These are the major allowances, which can be utilized to save tax on salary income. There are few other allowances also to claim the exemption. But many of such allowances are not so famous. Hence, I left them to list.

Deductions available under old tax regime:-

The complete of sections can be listed as below.

# Standard Deduction of Rs.50,000

Actually, I have to put this under Deductions. However, this standard deduction replaced the existing allowances. Hence, I placed it here for better understanding.

Earlier you used to claim Rs.15,000 under Medical Allowance and Travel Allowance. With effect from FY 2018-19, you can claim the direct Rs.40,000 deduction instead of these two allowances. However, the same is increased now to Rs.50,000 from FY 2019-20 and the same is applicable for FY 2020-21.

This deduction obviously for salaried and pensioners. This is irrespective of the amount of taxable salary you will be receiving to get a deduction of Rs.50,000 or taxable salary, whichever is less.

Hence, let us assume for FY 2019-20, you worked only for a few days. Your taxable salary is Rs.50,000. In such a scenario, you can directly claim the deduction of Rs.50,000. However, if your salary is less than Rs.40,000 (say Rs.20,000), then you have to claim only Rs.20,000 but not Rs.50,000.

# Section 80C

This is the famous section which often used by all of salaried. The maximum limit for the current year is Rs.1,50,000. Therefore, up to Rs.1,50,000, you can save tax on salary income from this section alone. The different investments you do and can also be claimed under Sec.80C are listed below.

Life Insurance premium (Paid by an individual, spouse, and child. In the case of HUF, on the life of any member of HUF).

EPF-Employee contribution can be claimed for deduction.

Public Provident Fund (Paid by an individual, spouse, and child. In the case of HUF, on the life of any member of HUF).

National Savings Certificate (NSC).

Sukanya Samriddhi Account

ELSS or Tax Saving Mutual Funds.

Senior Citizen Savings Scheme.

5-Years Post Office or Bank Deposits.

The tuition fee of kids.

Principal payment towards the home loan.

Stamp duty and registration cost of the house.

Any contribution towards NPS Tier 2 Account by Government employees is also eligible for deductions under Sec.80C.

# Sec.80CCC

Deduction under Sec.80CCC is available only for individuals. Contribution to an annuity plan of the LIC of India or any other insurer for receiving the pension. Do remember that the amount should be paid or deposited out of income chargeable to tax.

The maximum amount deductible under Sec.80CCC is Rs.1.5 lakh. Do remember that this is also the part of the combined limit of Rs.1.5 lakh available under Sec.80C, Sec.80CCC, and Sec.80CCD(1).

# Sec.80CCD1

The maximum benefit available is Rs.1.5 lakh (including Sec.80C limit).

An individual’s maximum 20% of annual income (Earlier it was 10% but after Budget 2017, it increased to 20%) or an employees (10% of Basic+DA) contribution will be eligible for deduction.

As I said above, this section will form the part of Sec.80C limit.

# Sec.80CCD2

There is a misconception among many that there is no upper limit for this section. However, the limit is least of 3 conditions. 1) Amount contributed by an employer, 2) 10% of Basic+DA (14% of Government Employees) and 3) Gross Total Income.

This is an additional deduction which will not form the part of Sec.80C limit.

The deduction under this section will not be eligible for self-employed.

NPS Tax Benefits under Sec.80CCD (1B)

This is the additional tax benefit of up to Rs.50,000 eligible for an income tax deduction and was introduced in the Budget 2015

Introduced in Budget 2015. One can avail the benefit of this Sect.80CCD (1B) from FY 2015-16.

Both self-employed and employees are eligible for availing this deduction.

This is over and above Sec.80CCD (1).

I explained all three sections of NPS (Sec.80CCD1, Sec.80CCD2 and Sec.80CCD(1B) in below image for your reference.

You can also refer my latest post on the changes “NPS Tax Benefits 2019 – Sec.80CCD(1), 80CCD(2) and 80CCD(1B)“.

NOTE:- PLEASE NOTE THAT THE COMBINED LIMIT OF DEDUCTION UNDER SEC.80C, SEC.80CCC AND SEC.80CCD(1) TOGETHER CAN NOT EXCEED RS.1,50,000 FOR FY 2020-21.

#Sec.80D

Deduction under this section is available if you satisfy the following conditions.

The taxpayer should be an individual (resident, NRI or Foreign Citizen) or HUF.

Payment should be made out of income chargeable to tax.

Payment should be in NON-CASH mode (for preventive health check up, you can pay either through cash or non-cash mode).

Changes from Budget 2018-

In Budget 2018, the maximum tax deduction limit for senior citizens under Sec.80D is raised to Rs.50,000. The earlier limit was Rs.30,000.

In case of single premium health insurance policies having a cover of more than one year, it is proposed that the deduction shall be allowed on a proportionate basis for the number of years for which health insurance cover is provided, subject to the specified monetary limit.

I will try to summarize the whole benefit from the below image.

# Sec.80DD

A resident individual or HUF is allowed to claim the deduction under Sec.80DD. You can claim the deduction if you incurred an expenditure for medical treatment, training, and rehabilitation of dependent relative (being a person with a disability).

A deduction can also be claimed if an individual or HUF deposited or paid for any approved scheme of LIC (or any other insurance) or UTI for the maintenance of such a dependent relative.

Here, dependent means spouse, children, parents, brothers, and sisters, who is wholly and mainly dependent upon the individual.

You can claim fixed duction of Rs.75,000 under this section. A higher deduction of Rs.1,25,000 is available if such dependent relative is suffering from severe disability.

# Sec.80DDB

An Individual’s of HUFs expenses actually paid for medical treatment of specified diseases and ailments subject to certain conditions can be claimed under this section.

The maximum deduction is Rs. 40,000. This can also be claimed on behalf of the dependents. The tax deduction limit under this section for Senior Citizens and very Senior Citizens (above 80 years) is now revised to Rs 1,00,000.

With effect from the assessment year 2016-17, the taxpayer shall be required to obtain a prescription from a specialist doctor (not necessarily from a doctor working in a Government hospital) for availing this deduction.

You can claim the deduction for the medical treatment of self, spouse, children, parents brothers, and sisters of the individual.

The ailments covered under this section are as below.

# Neurological Diseases where the disability level has been certified to be of 40% and above;

(a) Dementia (b) Dystonia Musculorum Deformans (c) Motor Neuron Disease (d) Ataxia (e) Chorea (f) Hemiballismus (g) Aphasia (h) Parkinson’s Disease

# Malignant Cancers

# Full Blown Acquired Immuno-Deficiency Syndrome (AIDS) ;

# Chronic Renal Failure

# Hematological disorders

a) Hemophilia

b) Thalassemia

# Sec.80E

An individual can claim deduction under Sec.80E. If the loan is taken by an individual for any study in India or outside India, then they can claim the deduction. The interest part of the loan on such education loan can be claimed for the deduction for pursuing individual’s own education or for the education of his relatives (Spouse, children or any student for whom the individual is a legal guardian).

The entire interest is deductible in the year in which the individual starts to pay interest on the loan and subsequent 7 years or until interest is paid in full (i.e for a total 8 years). But do remember that interest should be paid out of the income of chargeable to tax.

# Sec.80EEA

Along with tax deductions under Section 80C and 24b, an individual can claim up to Rs 1.5 lakh under Section 80EEA from FY 2019-20. The same is continued for FY 2020-21. However, there are certain conditions are there for the same, and they are as below:-

The home loan should have been sanctioned between 1st April, 2019 to 31st March 2020.

The Stamp duty value of the property should not exceed 45 Lakhs.

Taxpayer should not own any other residential property on the date of loan sanction.

This tax benefit will be available from 1st April 2020 (AY 2020-21) and till the end of the home loan tenure (closure).

The total interest deduction is now Rs. 3.5 lakh (Rs 2 Lakh + 

Rs 1.5 Lakh).

Note that the deduction under Section 80EEA is available for home loans from banks and approved financial institutions only. To claim tax benefit under Section 24, you should have received possession of your house (interest paid before possession is eligible for deduction over the next 5 years in 5 equal installments). Section 80EEA do not impose any requirement of possession or completion of construction. Therefore, Section 80EEA provides you immediate tax relief even if you have purchased an under-construction property.

Both resident Indians and non-resident Indians (NRIs) can claim the deduction u.s 80EEA.

Section 80EEB

A Tax deduction of up to Rs 1.5 lakh can be claimed on Interest paid on Loans taken to purchase Electronic Vehicles.

# Sec.80G

Donations to certain approved funds, trusts, charitable institutions/donations for renovation or repairs of notified temples, etc can be claimed as a deduction under this section. This deduction can only be claimed when the contribution made by cheque or draft or in cash. In-kind contributions like food material, clothes, medicines etc. do not qualify for deduction under this section.

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

From FY 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.

If you wish to donate to any political party of your choice, then you are allowed to donate up to Rs.2,000 only in cash. However, if you wish to donate more than Rs.2,000, then you can donate it using Electoral Bonds.

# Sec.80GG

I have written a complete post on this section. Refer “Section 80GG Deduction-Get Tax Benefit on rent paid if not getting HRA !!!“. I will give you a brief about this section as below.

This section only applies to those who have not availed HRA in their salary or not claiming the deduction on their rent in any of the other sections of income tax.  Below are a few conditions to avail the deduction under this section.

This section is only applicable to Individual or HUF.

Taxpayers may be either salaried or self-employed. However, must not be getting HRA.

Tax Payer himself or spouse/Minor Child/HUF of which he is a member should not own any accommodation at a place where he is doing a job or business.

If Tax Payer owns a house at a place other than the place noted above, then the concession in respect of the self-occupied property is not claimed by him [Under Section 23 (2) (a) or 23 (4) (a)].

Tax Payer has to file a declaration in Form No.10BA regarding the expenditure incurred by him towards the payment of rent.

How much amount of deduction one can avail under Sec. 80GG?

If the above five conditions are satisfied, the amount deductible under Section 80GG is LEAST OF THE FOLLOWING.

Rs.5, 000 per month;

25% of total income of taxpayer for the year; or

Rent Paid less 10% of total income (Rent Paid-10% of Total Income).

# Sec.80TTA

A deduction of up to Rs.10,000 can be claimed by an individual or HUB in respect of any income by the way of interest from a savings account with a bank, from a savings account with a co-operative society carrying on the business of banking or from a savings account with a post office but from FDs, RDs or other Term Deposits). From FY 2018-19, this benefit will not be available for late Income Tax filers.

# Sec.80TTB

This section is for Senior Citizens (Aged 60 years and above at any time during the financial year. The interest income earned from Bank FDs, RDs (including Post Office),  will be exempt up to Rs.50,000.

This deduction can be claimed under new Section 80TTB. However, if the taxpayer claimed deducted under Sec.80TTB, then he can not claim the deductions under existing 80TTA.

# Sec.80U

To claim tax benefits under Sec.80U, the taxpayer should be an individual and resident of India. If he is suffering from 40% or more than 40% of any disability, then he can claim a tax deduction.

You can claim the fixed deduction of Rs.75,000. a higher deduction of Rs.1,25,000 is allowed in respect of a person with a severe disability (i.e. having a disability of 80% or above).

# Sec.24 (B)

The interest part of your home loan EMI will be claimed under this section. The maximum limit for the self-occupied property is Rs.2,00,000 per year (even if you have multiple houses). For let-out property, earlier the entire interest payment of home loan (Loss from House Property) can be allowed to set off against any other income source without any limit. However, effective from FY 2017-18, this set-off now limited to Rs.2 lakh per individual (irrespective of the number of properties you are holding).

The unclaimed loss if any will be carried forward to be set off against house property income of subsequent 8 years. In most of cases, this can be treated as DEAD LOSS.

No tax on notional rent on second Self-occupied house has been proposed in the Budget 2019. Hence, you can now hold two Self-occupied properties and don’t have to show the rental income from the second self-occupied property as notional rent. This is with effective from FY 2019-20.

# Rebate under Sec.87A

The tax rebate of Rs.12,500 for individuals with income of up to Rs 5 Lakh has been proposed in Budget 2019. This was the biggest change proposed in Budget 2019. I have written a detailed post on this. You can refer the same for more clarity. Refer the same at “Revised Tax Rebate under Sec.87A after Budget 2019“.

To avail this benefit, there are certain conditions and they are as below.

The taxpayer must be a resident individual.

Your Total Income (Less Deductions from 80C to 80U) is equal to or less than Rs.5,00,000.

The rebate is the 100% of income tax on such income or Rs.12,500 (whichever is less).

Conclusion:- The above List of Income Tax Deductions FY 2020-21 – Under New / Old Tax Regime may not be full. However, I tried to cover all the important deductions available. Hope this may be helpful for you all.

Refer our latest posts:-

Asset Allocation of Multi-Cap Funds – SEBIs new categorization and Rationalization Rule

List of Income Tax Deductions FY 2020-21 – Under New / Old Tax Regime

Whether Banking and PSU Debt Funds are SAFE?

State Bank Of India 9.95% (SBIN-N5) Bond Call Option – What if the Bank exercised in 2021?

Your EDUCATION is the least required eligibility for investing!

Best Critical illness policy in India 2020 – Comparative Table

The post List of Income Tax Deductions FY 2020-21 – Under New / Old Tax Regime appeared first on BasuNivesh.

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List of Income Tax Deductions FY 2020-21 – Under New / Old Tax Regime

Due to the introduction of new tax regime in the Budget 2020, many are not confused which are the Income Tax Deductions are available for them. Let us see the complete list of Income Tax Deductions FY 2020-21 under both old or new tax regime.

Tax Planning is an important part of financial planning. However, while investing or choosing the deductions, our idea should be to concentrate at first on our financial goals rather than just concentrating on tax saving. Hence, understanding the available options is very much important.

Income Tax Slab Rates for FY 2020-21 AY 2021-22

You may be aware that during Budget 2020, Government introduced the two types of tax regimes. As per that, the income tax slabs are as below.

List of Income Tax Deductions FY 2020-21 – Under New / Old Tax Regime

Let us now discuss the list of income tax deductions FY 2020 – 21. I will divide them as new and old tax regime for your simplicity.

List of Income Tax Deductions FY 2020-21 under New Tax Regime

I have already written a detailed post on this, where I mentioned that which deductions are not available under new tax regime. You can refer the same at “New Tax Regime – Complete list of exemptions and deductions not allowed“. In this post, I am concentrating on the available deductions.

# Section 80CCD(2)

Under this section, employer contribution on account of the employee in notified pension schemes like EPF, NPS, and/or Super Annuation Account can be claimed up to Rs.7.5 lakh limit.

An employer can contribute an amount equal to 12% of the employee’s basic monthly salary to his/her EPF account. Similarly, an employer can contribute an amount equal to 10% of the employee’s basic salary to the Tier-I account of NPS (For Central Government Employees it is now 14% of Basic+DA effective from 1st April 2019). In a superannuation account, an employer can contribute a maximum of Rs 1.5 lakh exempted from tax in a financial year.

Refer the detailed post on NPS Tax Benefits at “NPS Tax Benefits 2020 – Sec.80CCD(1), 80CCD(2) and 80CCD(1B)“.

The Budget 2020 restricted the tax-exempt superannuation, NPS and EPF account contribution by the employer to maximum of Rs 7.5 lakh in a financial year. Further, the budget states that any interest or gains earned from the excess contribution will also be taxable in the hands of an employee.

# Section 10(15)(i)

Interest received on post office savings account balance is exempted up to Rs 3,500 under section 10(15)(i) of the Income-tax Act. The exemption limit is Rs.7,000 in case of joint savings account.

# Gratuity

Gratuity is tax-exempt up to Rs 20 lakh in a lifetime for non-government employees. For government employees, all gratuity received is tax-exempt, irrespective of the amount received by them. (Refer my post “Gratuity – New Limit, Eligibility, Formula, Taxation and Calculator“)

Below benefits up to certain threshold limits (if any) are allowed under new tax regime as well;

Commutation of pension

Leave encashment on retirement

Retrenchment compensation

VRS benefits

NPS withdrawal benefits

Education scholarships

Payments of awards instituted in the public interest

# Interest on EPF Account, SSY and PPF

The interest received from the EPF account continues to be exempted from tax in the new tax regime as well as the old tax regime.

The Interest and maturity amount received on the Sukanya Samriddhi account, PPF account are tax-free in both old and new tax regimes.

# Sect.87A

Individuals having taxable income of up to Rs.5 lakh will be eligible for tax rebate under section 87A up to Rs 12,500, thereby making zero tax payable in the new tax regime.

# Conveyance Allowance

You can claim income tax exemption for conveyance, travel, and other allowances given by your employers under the new tax regime as well.

List of Income Tax Deductions FY 2020-21 under Old Tax Regime

Let us now discuss the list of income tax deductions FY 2020-21 under the old tax regime. Before proceeding further, first, let us understand the difference between deductions and exemptions.

Exemption :- It is nothing but an income which is not subject to tax. There are certain exemptions which are applicable only towards certain heads of income. Hence, you have to be cautious while claiming such exemptions.

There are mainly five sources of incomes which IT Department categorized and they are Salary income, Business of Professional Income, Income from House Property, Income from Capital Gains and Income from Other Sources.

Take for example like HRA, Gratuity can be claimed as tax-exempt against your salary income. Agriculture income, dividend income, or Sec.54 of IT act against long term capital gains on the sale of the property.

Deductions:-

Income Tax Deductions means you may deduct the amount that is eligible for reducing your tax liability. Income Tax Deductions can be deducted from the Gross Total Income. There are various options of investing or expenditure, which can be claimed as Tax Deductions.

Allowances available under old tax regime:-

# Mobile/Telephone Reimbursement

If your employer offering you the mobile/telephone connection or internet connection which requires for work, then you can claim 100% of such cost. However, you have to produce a bill. Only the postpaid connections are allowed for reimbursement.

# Leave Travel Allowance

The bills for your travel against LTA can be claimed for exemption. It is allowed to be claimed twice in a block of four years. The current block is 2014 to 2017. You can carry forward your unclaimed LTA to the next year. You can request your employer to not deduct tax on it and allow you to claim it next year.

# Entertainment Allowances

You may be getting this allowance. However, the exemption is available only for Government employees. The amount of exemption is least of the following.

a) Rs 5,000

b) 1/5th of salary (excluding any allowance, benefits or other perquisites)

c) Actual entertainment allowance received

# House Rent Allowance (HRA)

This is the famous exemption which is used by many salaried individuals. However, the wrong belief is that whatever the rent they pay is actually exempted from their income. The reality is different. The amount of exemption is least of the following.

a) Actual HRA Received

b) 40% of Salary (50%, if house situated in Mumbai, Calcutta, Delhi or Madras)

c) Rent paid minus 10% of salary

(Salary= Basic + DA (if part of retirement benefit) + Turnover based Commission)

# Children Education Allowance

If your employer providing this allowance, then you can take exemption up to Rs.100 per month per child (maximum of up to 2 children). Therefore, monthly you can save Rs.200 from this allowance. The exemption may seem so low. But why to pay the tax?

# Hostel Expenditure Allowance-If your employer providing this allowance, then you can take exemption Up to Rs. 300 per month per child up to a maximum of 2 children is exempt. Therefore, you can save around a maximum of Rs.600 from this allowance.

# Conveyance Allowance

This is a different allowance than a transport allowance. It is the expenditure granted to an employee to meet the expenses on conveyance in performing his official duties. There is no limit for this. If such conveyance allowance is Rs.5,000 a month, then the whole allowance is exempt. Hence, you may this may be exempt to the extent of expenditure incurred for official purposes.

# Any Allowance to meet the cost of travel on tour or on transfer

Here also no limit. The employee can claim exempt to the extent of expenditure incurred for official purposes.

# Allowance to meet the cost of travel on tour or on transfer

Here also no limit. The employee can claim exempt to the extent of expenditure incurred for official purposes.

# Daily Allowance

If you are not placed in normal duty place, then your employer may provide you such allowance. The employee can claim exempt to the extent of expenditure incurred for official purposes.

These are the major allowances, which can be utilized to save tax on salary income. There are few other allowances also to claim the exemption. But many of such allowances are not so famous. Hence, I left them to list.

Deductions available under old tax regime:-

The complete of sections can be listed as below.

# Standard Deduction of Rs.50,000

Actually, I have to put this under Deductions. However, this standard deduction replaced the existing allowances. Hence, I placed it here for better understanding.

Earlier you used to claim Rs.15,000 under Medical Allowance and Travel Allowance. With effect from FY 2018-19, you can claim the direct Rs.40,000 deduction instead of these two allowances. However, the same is increased now to Rs.50,000 from FY 2019-20 and the same is applicable for FY 2020-21.

This deduction obviously for salaried and pensioners. This is irrespective of the amount of taxable salary you will be receiving to get a deduction of Rs.50,000 or taxable salary, whichever is less.

Hence, let us assume for FY 2019-20, you worked only for a few days. Your taxable salary is Rs.50,000. In such a scenario, you can directly claim the deduction of Rs.50,000. However, if your salary is less than Rs.40,000 (say Rs.20,000), then you have to claim only Rs.20,000 but not Rs.50,000.

# Section 80C

This is the famous section which often used by all of salaried. The maximum limit for the current year is Rs.1,50,000. Therefore, up to Rs.1,50,000, you can save tax on salary income from this section alone. The different investments you do and can also be claimed under Sec.80C are listed below.

Life Insurance premium (Paid by an individual, spouse, and child. In the case of HUF, on the life of any member of HUF).

EPF-Employee contribution can be claimed for deduction.

Public Provident Fund (Paid by an individual, spouse, and child. In the case of HUF, on the life of any member of HUF).

National Savings Certificate (NSC).

Sukanya Samriddhi Account

ELSS or Tax Saving Mutual Funds.

Senior Citizen Savings Scheme.

5-Years Post Office or Bank Deposits.

The tuition fee of kids.

Principal payment towards the home loan.

Stamp duty and registration cost of the house.

Any contribution towards NPS Tier 2 Account by Government employees is also eligible for deductions under Sec.80C.

# Sec.80CCC

Deduction under Sec.80CCC is available only for individuals. Contribution to an annuity plan of the LIC of India or any other insurer for receiving the pension. Do remember that the amount should be paid or deposited out of income chargeable to tax.

The maximum amount deductible under Sec.80CCC is Rs.1.5 lakh. Do remember that this is also the part of the combined limit of Rs.1.5 lakh available under Sec.80C, Sec.80CCC, and Sec.80CCD(1).

# Sec.80CCD1

The maximum benefit available is Rs.1.5 lakh (including Sec.80C limit).

An individual’s maximum 20% of annual income (Earlier it was 10% but after Budget 2017, it increased to 20%) or an employees (10% of Basic+DA) contribution will be eligible for deduction.

As I said above, this section will form the part of Sec.80C limit.

# Sec.80CCD2

There is a misconception among many that there is no upper limit for this section. However, the limit is least of 3 conditions. 1) Amount contributed by an employer, 2) 10% of Basic+DA (14% of Government Employees) and 3) Gross Total Income.

This is an additional deduction which will not form the part of Sec.80C limit.

The deduction under this section will not be eligible for self-employed.

NPS Tax Benefits under Sec.80CCD (1B)

This is the additional tax benefit of up to Rs.50,000 eligible for an income tax deduction and was introduced in the Budget 2015

Introduced in Budget 2015. One can avail the benefit of this Sect.80CCD (1B) from FY 2015-16.

Both self-employed and employees are eligible for availing this deduction.

This is over and above Sec.80CCD (1).

I explained all three sections of NPS (Sec.80CCD1, Sec.80CCD2 and Sec.80CCD(1B) in below image for your reference.

You can also refer my latest post on the changes “NPS Tax Benefits 2019 – Sec.80CCD(1), 80CCD(2) and 80CCD(1B)“.

NOTE:- PLEASE NOTE THAT THE COMBINED LIMIT OF DEDUCTION UNDER SEC.80C, SEC.80CCC AND SEC.80CCD(1) TOGETHER CAN NOT EXCEED RS.1,50,000 FOR FY 2020-21.

#Sec.80D

Deduction under this section is available if you satisfy the following conditions.

The taxpayer should be an individual (resident, NRI or Foreign Citizen) or HUF.

Payment should be made out of income chargeable to tax.

Payment should be in NON-CASH mode (for preventive health check up, you can pay either through cash or non-cash mode).

Changes from Budget 2018-

In Budget 2018, the maximum tax deduction limit for senior citizens under Sec.80D is raised to Rs.50,000. The earlier limit was Rs.30,000.

In case of single premium health insurance policies having a cover of more than one year, it is proposed that the deduction shall be allowed on a proportionate basis for the number of years for which health insurance cover is provided, subject to the specified monetary limit.

I will try to summarize the whole benefit from the below image.

# Sec.80DD

A resident individual or HUF is allowed to claim the deduction under Sec.80DD. You can claim the deduction if you incurred an expenditure for medical treatment, training, and rehabilitation of dependent relative (being a person with a disability).

A deduction can also be claimed if an individual or HUF deposited or paid for any approved scheme of LIC (or any other insurance) or UTI for the maintenance of such a dependent relative.

Here, dependent means spouse, children, parents, brothers, and sisters, who is wholly and mainly dependent upon the individual.

You can claim fixed duction of Rs.75,000 under this section. A higher deduction of Rs.1,25,000 is available if such dependent relative is suffering from severe disability.

# Sec.80DDB

An Individual’s of HUFs expenses actually paid for medical treatment of specified diseases and ailments subject to certain conditions can be claimed under this section.

The maximum deduction is Rs. 40,000. This can also be claimed on behalf of the dependents. The tax deduction limit under this section for Senior Citizens and very Senior Citizens (above 80 years) is now revised to Rs 1,00,000.

With effect from the assessment year 2016-17, the taxpayer shall be required to obtain a prescription from a specialist doctor (not necessarily from a doctor working in a Government hospital) for availing this deduction.

You can claim the deduction for the medical treatment of self, spouse, children, parents brothers, and sisters of the individual.

The ailments covered under this section are as below.

# Neurological Diseases where the disability level has been certified to be of 40% and above;

(a) Dementia (b) Dystonia Musculorum Deformans (c) Motor Neuron Disease (d) Ataxia (e) Chorea (f) Hemiballismus (g) Aphasia (h) Parkinson’s Disease

# Malignant Cancers

# Full Blown Acquired Immuno-Deficiency Syndrome (AIDS) ;

# Chronic Renal Failure

# Hematological disorders

a) Hemophilia

b) Thalassemia

# Sec.80E

An individual can claim deduction under Sec.80E. If the loan is taken by an individual for any study in India or outside India, then they can claim the deduction. The interest part of the loan on such education loan can be claimed for the deduction for pursuing individual’s own education or for the education of his relatives (Spouse, children or any student for whom the individual is a legal guardian).

The entire interest is deductible in the year in which the individual starts to pay interest on the loan and subsequent 7 years or until interest is paid in full (i.e for a total 8 years). But do remember that interest should be paid out of the income of chargeable to tax.

# Sec.80EEA

Along with tax deductions under Section 80C and 24b, an individual can claim up to Rs 1.5 lakh under Section 80EEA from FY 2019-20. The same is continued for FY 2020-21. However, there are certain conditions are there for the same, and they are as below:-

The home loan should have been sanctioned between 1st April, 2019 to 31st March 2020.

The Stamp duty value of the property should not exceed 45 Lakhs.

Taxpayer should not own any other residential property on the date of loan sanction.

This tax benefit will be available from 1st April 2020 (AY 2020-21) and till the end of the home loan tenure (closure).

The total interest deduction is now Rs. 3.5 lakh (Rs 2 Lakh + 

Rs 1.5 Lakh).

Note that the deduction under Section 80EEA is available for home loans from banks and approved financial institutions only. To claim tax benefit under Section 24, you should have received possession of your house (interest paid before possession is eligible for deduction over the next 5 years in 5 equal installments). Section 80EEA do not impose any requirement of possession or completion of construction. Therefore, Section 80EEA provides you immediate tax relief even if you have purchased an under-construction property.

Both resident Indians and non-resident Indians (NRIs) can claim the deduction u.s 80EEA.

Section 80EEB

A Tax deduction of up to Rs 1.5 lakh can be claimed on Interest paid on Loans taken to purchase Electronic Vehicles.

# Sec.80G

Donations to certain approved funds, trusts, charitable institutions/donations for renovation or repairs of notified temples, etc can be claimed as a deduction under this section. This deduction can only be claimed when the contribution made by cheque or draft or in cash. In-kind contributions like food material, clothes, medicines etc. do not qualify for deduction under this section.

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

From FY 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.

If you wish to donate to any political party of your choice, then you are allowed to donate up to Rs.2,000 only in cash. However, if you wish to donate more than Rs.2,000, then you can donate it using Electoral Bonds.

# Sec.80GG

I have written a complete post on this section. Refer “Section 80GG Deduction-Get Tax Benefit on rent paid if not getting HRA !!!“. I will give you a brief about this section as below.

This section only applies to those who have not availed HRA in their salary or not claiming the deduction on their rent in any of the other sections of income tax.  Below are a few conditions to avail the deduction under this section.

This section is only applicable to Individual or HUF.

Taxpayers may be either salaried or self-employed. However, must not be getting HRA.

Tax Payer himself or spouse/Minor Child/HUF of which he is a member should not own any accommodation at a place where he is doing a job or business.

If Tax Payer owns a house at a place other than the place noted above, then the concession in respect of the self-occupied property is not claimed by him [Under Section 23 (2) (a) or 23 (4) (a)].

Tax Payer has to file a declaration in Form No.10BA regarding the expenditure incurred by him towards the payment of rent.

How much amount of deduction one can avail under Sec. 80GG?

If the above five conditions are satisfied, the amount deductible under Section 80GG is LEAST OF THE FOLLOWING.

Rs.5, 000 per month;

25% of total income of taxpayer for the year; or

Rent Paid less 10% of total income (Rent Paid-10% of Total Income).

# Sec.80TTA

A deduction of up to Rs.10,000 can be claimed by an individual or HUB in respect of any income by the way of interest from a savings account with a bank, from a savings account with a co-operative society carrying on the business of banking or from a savings account with a post office but from FDs, RDs or other Term Deposits). From FY 2018-19, this benefit will not be available for late Income Tax filers.

# Sec.80TTB

This section is for Senior Citizens (Aged 60 years and above at any time during the financial year. The interest income earned from Bank FDs, RDs (including Post Office),  will be exempt up to Rs.50,000.

This deduction can be claimed under new Section 80TTB. However, if the taxpayer claimed deducted under Sec.80TTB, then he can not claim the deductions under existing 80TTA.

# Sec.80U

To claim tax benefits under Sec.80U, the taxpayer should be an individual and resident of India. If he is suffering from 40% or more than 40% of any disability, then he can claim a tax deduction.

You can claim the fixed deduction of Rs.75,000. a higher deduction of Rs.1,25,000 is allowed in respect of a person with a severe disability (i.e. having a disability of 80% or above).

# Sec.24 (B)

The interest part of your home loan EMI will be claimed under this section. The maximum limit for the self-occupied property is Rs.2,00,000 per year (even if you have multiple houses). For let-out property, earlier the entire interest payment of home loan (Loss from House Property) can be allowed to set off against any other income source without any limit. However, effective from FY 2017-18, this set-off now limited to Rs.2 lakh per individual (irrespective of the number of properties you are holding).

The unclaimed loss if any will be carried forward to be set off against house property income of subsequent 8 years. In most of cases, this can be treated as DEAD LOSS.

No tax on notional rent on second Self-occupied house has been proposed in the Budget 2019. Hence, you can now hold two Self-occupied properties and don’t have to show the rental income from the second self-occupied property as notional rent. This is with effective from FY 2019-20.

# Rebate under Sec.87A

The tax rebate of Rs.12,500 for individuals with income of up to Rs 5 Lakh has been proposed in Budget 2019. This was the biggest change proposed in Budget 2019. I have written a detailed post on this. You can refer the same for more clarity. Refer the same at “Revised Tax Rebate under Sec.87A after Budget 2019“.

To avail this benefit, there are certain conditions and they are as below.

The taxpayer must be a resident individual.

Your Total Income (Less Deductions from 80C to 80U) is equal to or less than Rs.5,00,000.

The rebate is the 100% of income tax on such income or Rs.12,500 (whichever is less).

Conclusion:- The above List of Income Tax Deductions FY 2020-21 – Under New / Old Tax Regime may not be full. However, I tried to cover all the important deductions available. Hope this may be helpful for you all.

Refer our latest posts:-

Asset Allocation of Multi-Cap Funds – SEBIs new categorization and Rationalization Rule

List of Income Tax Deductions FY 2020-21 – Under New / Old Tax Regime

Whether Banking and PSU Debt Funds are SAFE?

State Bank Of India 9.95% (SBIN-N5) Bond Call Option – What if the Bank exercised in 2021?

Your EDUCATION is the least required eligibility for investing!

Best Critical illness policy in India 2020 – Comparative Table

The post List of Income Tax Deductions FY 2020-21 – Under New / Old Tax Regime appeared first on BasuNivesh.

List of Income Tax Deductions FY 2020-21 – Under New / Old Tax Regime published first on https://mbploans.tumblr.com/

[sunshineweb]

List of Income Tax Deductions FY 2020-21 – Under New / Old Tax Regime

Due to the introduction of new tax regime in the Budget 2020, many are not confused which are the Income Tax Deductions are available for them. Let us see the complete list of Income Tax Deductions FY 2020-21 under both old or new tax regime.

Tax Planning is an important part of financial planning. However, while investing or choosing the deductions, our idea should be to concentrate at first on our financial goals rather than just concentrating on tax saving. Hence, understanding the available options is very much important.

Income Tax Slab Rates for FY 2020-21 AY 2021-22

You may be aware that during Budget 2020, Government introduced the two types of tax regimes. As per that, the income tax slabs are as below.

List of Income Tax Deductions FY 2020-21 – Under New / Old Tax Regime

Let us now discuss the list of income tax deductions FY 2020 – 21. I will divide them as new and old tax regime for your simplicity.

List of Income Tax Deductions FY 2020-21 under New Tax Regime

I have already written a detailed post on this, where I mentioned that which deductions are not available under new tax regime. You can refer the same at “New Tax Regime – Complete list of exemptions and deductions not allowed“. In this post, I am concentrating on the available deductions.

# Section 80CCD(2)

Under this section, employer contribution on account of the employee in notified pension schemes like EPF, NPS, and/or Super Annuation Account can be claimed up to Rs.7.5 lakh limit.

An employer can contribute an amount equal to 12% of the employee’s basic monthly salary to his/her EPF account. Similarly, an employer can contribute an amount equal to 10% of the employee’s basic salary to the Tier-I account of NPS (For Central Government Employees it is now 14% of Basic+DA effective from 1st April 2019). In a superannuation account, an employer can contribute a maximum of Rs 1.5 lakh exempted from tax in a financial year.

Refer the detailed post on NPS Tax Benefits at “NPS Tax Benefits 2020 – Sec.80CCD(1), 80CCD(2) and 80CCD(1B)“.

The Budget 2020 restricted the tax-exempt superannuation, NPS and EPF account contribution by the employer to maximum of Rs 7.5 lakh in a financial year. Further, the budget states that any interest or gains earned from the excess contribution will also be taxable in the hands of an employee.

# Section 10(15)(i)

Interest received on post office savings account balance is exempted up to Rs 3,500 under section 10(15)(i) of the Income-tax Act. The exemption limit is Rs.7,000 in case of joint savings account.

# Gratuity

Gratuity is tax-exempt up to Rs 20 lakh in a lifetime for non-government employees. For government employees, all gratuity received is tax-exempt, irrespective of the amount received by them. (Refer my post “Gratuity – New Limit, Eligibility, Formula, Taxation and Calculator“)

Below benefits up to certain threshold limits (if any) are allowed under new tax regime as well;

Commutation of pension

Leave encashment on retirement

Retrenchment compensation

VRS benefits

NPS withdrawal benefits

Education scholarships

Payments of awards instituted in the public interest

# Interest on EPF Account, SSY and PPF

The interest received from the EPF account continues to be exempted from tax in the new tax regime as well as the old tax regime.

The Interest and maturity amount received on the Sukanya Samriddhi account, PPF account are tax-free in both old and new tax regimes.

# Sect.87A

Individuals having taxable income of up to Rs.5 lakh will be eligible for tax rebate under section 87A up to Rs 12,500, thereby making zero tax payable in the new tax regime.

# Conveyance Allowance

You can claim income tax exemption for conveyance, travel, and other allowances given by your employers under the new tax regime as well.

List of Income Tax Deductions FY 2020-21 under Old Tax Regime

Let us now discuss the list of income tax deductions FY 2020-21 under the old tax regime. Before proceeding further, first, let us understand the difference between deductions and exemptions.

Exemption :- It is nothing but an income which is not subject to tax. There are certain exemptions which are applicable only towards certain heads of income. Hence, you have to be cautious while claiming such exemptions.

There are mainly five sources of incomes which IT Department categorized and they are Salary income, Business of Professional Income, Income from House Property, Income from Capital Gains and Income from Other Sources.

Take for example like HRA, Gratuity can be claimed as tax-exempt against your salary income. Agriculture income, dividend income, or Sec.54 of IT act against long term capital gains on the sale of the property.

Deductions:-

Income Tax Deductions means you may deduct the amount that is eligible for reducing your tax liability. Income Tax Deductions can be deducted from the Gross Total Income. There are various options of investing or expenditure, which can be claimed as Tax Deductions.

Allowances available under old tax regime:-

# Mobile/Telephone Reimbursement

If your employer offering you the mobile/telephone connection or internet connection which requires for work, then you can claim 100% of such cost. However, you have to produce a bill. Only the postpaid connections are allowed for reimbursement.

# Leave Travel Allowance

The bills for your travel against LTA can be claimed for exemption. It is allowed to be claimed twice in a block of four years. The current block is 2014 to 2017. You can carry forward your unclaimed LTA to the next year. You can request your employer to not deduct tax on it and allow you to claim it next year.

# Entertainment Allowances

You may be getting this allowance. However, the exemption is available only for Government employees. The amount of exemption is least of the following.

a) Rs 5,000

b) 1/5th of salary (excluding any allowance, benefits or other perquisites)

c) Actual entertainment allowance received

# House Rent Allowance (HRA)

This is the famous exemption which is used by many salaried individuals. However, the wrong belief is that whatever the rent they pay is actually exempted from their income. The reality is different. The amount of exemption is least of the following.

a) Actual HRA Received

b) 40% of Salary (50%, if house situated in Mumbai, Calcutta, Delhi or Madras)

c) Rent paid minus 10% of salary

(Salary= Basic + DA (if part of retirement benefit) + Turnover based Commission)

# Children Education Allowance

If your employer providing this allowance, then you can take exemption up to Rs.100 per month per child (maximum of up to 2 children). Therefore, monthly you can save Rs.200 from this allowance. The exemption may seem so low. But why to pay the tax?

# Hostel Expenditure Allowance-If your employer providing this allowance, then you can take exemption Up to Rs. 300 per month per child up to a maximum of 2 children is exempt. Therefore, you can save around a maximum of Rs.600 from this allowance.

# Conveyance Allowance

This is a different allowance than a transport allowance. It is the expenditure granted to an employee to meet the expenses on conveyance in performing his official duties. There is no limit for this. If such conveyance allowance is Rs.5,000 a month, then the whole allowance is exempt. Hence, you may this may be exempt to the extent of expenditure incurred for official purposes.

# Any Allowance to meet the cost of travel on tour or on transfer

Here also no limit. The employee can claim exempt to the extent of expenditure incurred for official purposes.

# Allowance to meet the cost of travel on tour or on transfer

Here also no limit. The employee can claim exempt to the extent of expenditure incurred for official purposes.

# Daily Allowance

If you are not placed in normal duty place, then your employer may provide you such allowance. The employee can claim exempt to the extent of expenditure incurred for official purposes.

These are the major allowances, which can be utilized to save tax on salary income. There are few other allowances also to claim the exemption. But many of such allowances are not so famous. Hence, I left them to list.

Deductions available under old tax regime:-

The complete of sections can be listed as below.

# Standard Deduction of Rs.50,000

Actually, I have to put this under Deductions. However, this standard deduction replaced the existing allowances. Hence, I placed it here for better understanding.

Earlier you used to claim Rs.15,000 under Medical Allowance and Travel Allowance. With effect from FY 2018-19, you can claim the direct Rs.40,000 deduction instead of these two allowances. However, the same is increased now to Rs.50,000 from FY 2019-20 and the same is applicable for FY 2020-21.

This deduction obviously for salaried and pensioners. This is irrespective of the amount of taxable salary you will be receiving to get a deduction of Rs.50,000 or taxable salary, whichever is less.

Hence, let us assume for FY 2019-20, you worked only for a few days. Your taxable salary is Rs.50,000. In such a scenario, you can directly claim the deduction of Rs.50,000. However, if your salary is less than Rs.40,000 (say Rs.20,000), then you have to claim only Rs.20,000 but not Rs.50,000.

# Section 80C

This is the famous section which often used by all of salaried. The maximum limit for the current year is Rs.1,50,000. Therefore, up to Rs.1,50,000, you can save tax on salary income from this section alone. The different investments you do and can also be claimed under Sec.80C are listed below.

Life Insurance premium (Paid by an individual, spouse, and child. In the case of HUF, on the life of any member of HUF).

EPF-Employee contribution can be claimed for deduction.

Public Provident Fund (Paid by an individual, spouse, and child. In the case of HUF, on the life of any member of HUF).

National Savings Certificate (NSC).

Sukanya Samriddhi Account

ELSS or Tax Saving Mutual Funds.

Senior Citizen Savings Scheme.

5-Years Post Office or Bank Deposits.

The tuition fee of kids.

Principal payment towards the home loan.

Stamp duty and registration cost of the house.

Any contribution towards NPS Tier 2 Account by Government employees is also eligible for deductions under Sec.80C.

# Sec.80CCC

Deduction under Sec.80CCC is available only for individuals. Contribution to an annuity plan of the LIC of India or any other insurer for receiving the pension. Do remember that the amount should be paid or deposited out of income chargeable to tax.

The maximum amount deductible under Sec.80CCC is Rs.1.5 lakh. Do remember that this is also the part of the combined limit of Rs.1.5 lakh available under Sec.80C, Sec.80CCC, and Sec.80CCD(1).

# Sec.80CCD1

The maximum benefit available is Rs.1.5 lakh (including Sec.80C limit).

An individual’s maximum 20% of annual income (Earlier it was 10% but after Budget 2017, it increased to 20%) or an employees (10% of Basic+DA) contribution will be eligible for deduction.

As I said above, this section will form the part of Sec.80C limit.

# Sec.80CCD2

There is a misconception among many that there is no upper limit for this section. However, the limit is least of 3 conditions. 1) Amount contributed by an employer, 2) 10% of Basic+DA (14% of Government Employees) and 3) Gross Total Income.

This is an additional deduction which will not form the part of Sec.80C limit.

The deduction under this section will not be eligible for self-employed.

NPS Tax Benefits under Sec.80CCD (1B)

This is the additional tax benefit of up to Rs.50,000 eligible for an income tax deduction and was introduced in the Budget 2015

Introduced in Budget 2015. One can avail the benefit of this Sect.80CCD (1B) from FY 2015-16.

Both self-employed and employees are eligible for availing this deduction.

This is over and above Sec.80CCD (1).

I explained all three sections of NPS (Sec.80CCD1, Sec.80CCD2 and Sec.80CCD(1B) in below image for your reference.

You can also refer my latest post on the changes “NPS Tax Benefits 2019 – Sec.80CCD(1), 80CCD(2) and 80CCD(1B)“.

NOTE:- PLEASE NOTE THAT THE COMBINED LIMIT OF DEDUCTION UNDER SEC.80C, SEC.80CCC AND SEC.80CCD(1) TOGETHER CAN NOT EXCEED RS.1,50,000 FOR FY 2020-21.

#Sec.80D

Deduction under this section is available if you satisfy the following conditions.

The taxpayer should be an individual (resident, NRI or Foreign Citizen) or HUF.

Payment should be made out of income chargeable to tax.

Payment should be in NON-CASH mode (for preventive health check up, you can pay either through cash or non-cash mode).

Changes from Budget 2018-

In Budget 2018, the maximum tax deduction limit for senior citizens under Sec.80D is raised to Rs.50,000. The earlier limit was Rs.30,000.

In case of single premium health insurance policies having a cover of more than one year, it is proposed that the deduction shall be allowed on a proportionate basis for the number of years for which health insurance cover is provided, subject to the specified monetary limit.

I will try to summarize the whole benefit from the below image.

# Sec.80DD

A resident individual or HUF is allowed to claim the deduction under Sec.80DD. You can claim the deduction if you incurred an expenditure for medical treatment, training, and rehabilitation of dependent relative (being a person with a disability).

A deduction can also be claimed if an individual or HUF deposited or paid for any approved scheme of LIC (or any other insurance) or UTI for the maintenance of such a dependent relative.

Here, dependent means spouse, children, parents, brothers, and sisters, who is wholly and mainly dependent upon the individual.

You can claim fixed duction of Rs.75,000 under this section. A higher deduction of Rs.1,25,000 is available if such dependent relative is suffering from severe disability.

# Sec.80DDB

An Individual’s of HUFs expenses actually paid for medical treatment of specified diseases and ailments subject to certain conditions can be claimed under this section.

The maximum deduction is Rs. 40,000. This can also be claimed on behalf of the dependents. The tax deduction limit under this section for Senior Citizens and very Senior Citizens (above 80 years) is now revised to Rs 1,00,000.

With effect from the assessment year 2016-17, the taxpayer shall be required to obtain a prescription from a specialist doctor (not necessarily from a doctor working in a Government hospital) for availing this deduction.

You can claim the deduction for the medical treatment of self, spouse, children, parents brothers, and sisters of the individual.

The ailments covered under this section are as below.

# Neurological Diseases where the disability level has been certified to be of 40% and above;

(a) Dementia (b) Dystonia Musculorum Deformans (c) Motor Neuron Disease (d) Ataxia (e) Chorea (f) Hemiballismus (g) Aphasia (h) Parkinson’s Disease

# Malignant Cancers

# Full Blown Acquired Immuno-Deficiency Syndrome (AIDS) ;

# Chronic Renal Failure

# Hematological disorders

a) Hemophilia

b) Thalassemia

# Sec.80E

An individual can claim deduction under Sec.80E. If the loan is taken by an individual for any study in India or outside India, then they can claim the deduction. The interest part of the loan on such education loan can be claimed for the deduction for pursuing individual’s own education or for the education of his relatives (Spouse, children or any student for whom the individual is a legal guardian).

The entire interest is deductible in the year in which the individual starts to pay interest on the loan and subsequent 7 years or until interest is paid in full (i.e for a total 8 years). But do remember that interest should be paid out of the income of chargeable to tax.

# Sec.80EEA

Along with tax deductions under Section 80C and 24b, an individual can claim up to Rs 1.5 lakh under Section 80EEA from FY 2019-20. The same is continued for FY 2020-21. However, there are certain conditions are there for the same, and they are as below:-

The home loan should have been sanctioned between 1st April, 2019 to 31st March 2020.

The Stamp duty value of the property should not exceed 45 Lakhs.

Taxpayer should not own any other residential property on the date of loan sanction.

This tax benefit will be available from 1st April 2020 (AY 2020-21) and till the end of the home loan tenure (closure).

The total interest deduction is now Rs. 3.5 lakh (Rs 2 Lakh + 

Rs 1.5 Lakh).

Note that the deduction under Section 80EEA is available for home loans from banks and approved financial institutions only. To claim tax benefit under Section 24, you should have received possession of your house (interest paid before possession is eligible for deduction over the next 5 years in 5 equal installments). Section 80EEA do not impose any requirement of possession or completion of construction. Therefore, Section 80EEA provides you immediate tax relief even if you have purchased an under-construction property.

Both resident Indians and non-resident Indians (NRIs) can claim the deduction u.s 80EEA.

Section 80EEB

A Tax deduction of up to Rs 1.5 lakh can be claimed on Interest paid on Loans taken to purchase Electronic Vehicles.

# Sec.80G

Donations to certain approved funds, trusts, charitable institutions/donations for renovation or repairs of notified temples, etc can be claimed as a deduction under this section. This deduction can only be claimed when the contribution made by cheque or draft or in cash. In-kind contributions like food material, clothes, medicines etc. do not qualify for deduction under this section.

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

From FY 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.

If you wish to donate to any political party of your choice, then you are allowed to donate up to Rs.2,000 only in cash. However, if you wish to donate more than Rs.2,000, then you can donate it using Electoral Bonds.

# Sec.80GG

I have written a complete post on this section. Refer “Section 80GG Deduction-Get Tax Benefit on rent paid if not getting HRA !!!“. I will give you a brief about this section as below.

This section only applies to those who have not availed HRA in their salary or not claiming the deduction on their rent in any of the other sections of income tax.  Below are a few conditions to avail the deduction under this section.

This section is only applicable to Individual or HUF.

Taxpayers may be either salaried or self-employed. However, must not be getting HRA.

Tax Payer himself or spouse/Minor Child/HUF of which he is a member should not own any accommodation at a place where he is doing a job or business.

If Tax Payer owns a house at a place other than the place noted above, then the concession in respect of the self-occupied property is not claimed by him [Under Section 23 (2) (a) or 23 (4) (a)].

Tax Payer has to file a declaration in Form No.10BA regarding the expenditure incurred by him towards the payment of rent.

How much amount of deduction one can avail under Sec. 80GG?

If the above five conditions are satisfied, the amount deductible under Section 80GG is LEAST OF THE FOLLOWING.

Rs.5, 000 per month;

25% of total income of taxpayer for the year; or

Rent Paid less 10% of total income (Rent Paid-10% of Total Income).

# Sec.80TTA

A deduction of up to Rs.10,000 can be claimed by an individual or HUB in respect of any income by the way of interest from a savings account with a bank, from a savings account with a co-operative society carrying on the business of banking or from a savings account with a post office but from FDs, RDs or other Term Deposits). From FY 2018-19, this benefit will not be available for late Income Tax filers.

# Sec.80TTB

This section is for Senior Citizens (Aged 60 years and above at any time during the financial year. The interest income earned from Bank FDs, RDs (including Post Office),  will be exempt up to Rs.50,000.

This deduction can be claimed under new Section 80TTB. However, if the taxpayer claimed deducted under Sec.80TTB, then he can not claim the deductions under existing 80TTA.

# Sec.80U

To claim tax benefits under Sec.80U, the taxpayer should be an individual and resident of India. If he is suffering from 40% or more than 40% of any disability, then he can claim a tax deduction.

You can claim the fixed deduction of Rs.75,000. a higher deduction of Rs.1,25,000 is allowed in respect of a person with a severe disability (i.e. having a disability of 80% or above).

# Sec.24 (B)

The interest part of your home loan EMI will be claimed under this section. The maximum limit for the self-occupied property is Rs.2,00,000 per year (even if you have multiple houses). For let-out property, earlier the entire interest payment of home loan (Loss from House Property) can be allowed to set off against any other income source without any limit. However, effective from FY 2017-18, this set-off now limited to Rs.2 lakh per individual (irrespective of the number of properties you are holding).

The unclaimed loss if any will be carried forward to be set off against house property income of subsequent 8 years. In most of cases, this can be treated as DEAD LOSS.

No tax on notional rent on second Self-occupied house has been proposed in the Budget 2019. Hence, you can now hold two Self-occupied properties and don’t have to show the rental income from the second self-occupied property as notional rent. This is with effective from FY 2019-20.

# Rebate under Sec.87A

The tax rebate of Rs.12,500 for individuals with income of up to Rs 5 Lakh has been proposed in Budget 2019. This was the biggest change proposed in Budget 2019. I have written a detailed post on this. You can refer the same for more clarity. Refer the same at “Revised Tax Rebate under Sec.87A after Budget 2019“.

To avail this benefit, there are certain conditions and they are as below.

The taxpayer must be a resident individual.

Your Total Income (Less Deductions from 80C to 80U) is equal to or less than Rs.5,00,000.

The rebate is the 100% of income tax on such income or Rs.12,500 (whichever is less).

Conclusion:- The above List of Income Tax Deductions FY 2020-21 – Under New / Old Tax Regime may not be full. However, I tried to cover all the important deductions available. Hope this may be helpful for you all.

Refer our latest posts:-

Asset Allocation of Multi-Cap Funds – SEBIs new categorization and Rationalization Rule

List of Income Tax Deductions FY 2020-21 – Under New / Old Tax Regime

Whether Banking and PSU Debt Funds are SAFE?

State Bank Of India 9.95% (SBIN-N5) Bond Call Option – What if the Bank exercised in 2021?

Your EDUCATION is the least required eligibility for investing!

Best Critical illness policy in India 2020 – Comparative Table

The post List of Income Tax Deductions FY 2020-21 – Under New / Old Tax Regime appeared first on BasuNivesh.

List of Income Tax Deductions FY 2020-21 – Under New / Old Tax Regime published first on https://mbploans.tumblr.com/

[sunshineweb]

List of Income Tax Deductions FY 2020-21 – Under New / Old Tax Regime

Due to the introduction of new tax regime in the Budget 2020, many are not confused which are the Income Tax Deductions are available for them. Let us see the complete list of Income Tax Deductions FY 2020-21 under both old or new tax regime.

Tax Planning is an important part of financial planning. However, while investing or choosing the deductions, our idea should be to concentrate at first on our financial goals rather than just concentrating on tax saving. Hence, understanding the available options is very much important.

Income Tax Slab Rates for FY 2020-21 AY 2021-22

You may be aware that during Budget 2020, Government introduced the two types of tax regimes. As per that, the income tax slabs are as below.

List of Income Tax Deductions FY 2020-21 – Under New / Old Tax Regime

Let us now discuss the list of income tax deductions FY 2020 – 21. I will divide them as new and old tax regime for your simplicity.

List of Income Tax Deductions FY 2020-21 under New Tax Regime

I have already written a detailed post on this, where I mentioned that which deductions are not available under new tax regime. You can refer the same at “New Tax Regime – Complete list of exemptions and deductions not allowed“. In this post, I am concentrating on the available deductions.

# Section 80CCD(2)

Under this section, employer contribution on account of the employee in notified pension schemes like EPF, NPS, and/or Super Annuation Account can be claimed up to Rs.7.5 lakh limit.

An employer can contribute an amount equal to 12% of the employee’s basic monthly salary to his/her EPF account. Similarly, an employer can contribute an amount equal to 10% of the employee’s basic salary to the Tier-I account of NPS (For Central Government Employees it is now 14% of Basic+DA effective from 1st April 2019). In a superannuation account, an employer can contribute a maximum of Rs 1.5 lakh exempted from tax in a financial year.

Refer the detailed post on NPS Tax Benefits at “NPS Tax Benefits 2020 – Sec.80CCD(1), 80CCD(2) and 80CCD(1B)“.

The Budget 2020 restricted the tax-exempt superannuation, NPS and EPF account contribution by the employer to maximum of Rs 7.5 lakh in a financial year. Further, the budget states that any interest or gains earned from the excess contribution will also be taxable in the hands of an employee.

# Section 10(15)(i)

Interest received on post office savings account balance is exempted up to Rs 3,500 under section 10(15)(i) of the Income-tax Act. The exemption limit is Rs.7,000 in case of joint savings account.

# Gratuity

Gratuity is tax-exempt up to Rs 20 lakh in a lifetime for non-government employees. For government employees, all gratuity received is tax-exempt, irrespective of the amount received by them. (Refer my post “Gratuity – New Limit, Eligibility, Formula, Taxation and Calculator“)

Below benefits up to certain threshold limits (if any) are allowed under new tax regime as well;

Commutation of pension

Leave encashment on retirement

Retrenchment compensation

VRS benefits

NPS withdrawal benefits

Education scholarships

Payments of awards instituted in the public interest

# Interest on EPF Account, SSY and PPF

The interest received from the EPF account continues to be exempted from tax in the new tax regime as well as the old tax regime.

The Interest and maturity amount received on the Sukanya Samriddhi account, PPF account are tax-free in both old and new tax regimes.

# Sect.87A

Individuals having taxable income of up to Rs.5 lakh will be eligible for tax rebate under section 87A up to Rs 12,500, thereby making zero tax payable in the new tax regime.

# Conveyance Allowance

You can claim income tax exemption for conveyance, travel, and other allowances given by your employers under the new tax regime as well.

List of Income Tax Deductions FY 2020-21 under Old Tax Regime

Let us now discuss the list of income tax deductions FY 2020-21 under the old tax regime. Before proceeding further, first, let us understand the difference between deductions and exemptions.

Exemption :- It is nothing but an income which is not subject to tax. There are certain exemptions which are applicable only towards certain heads of income. Hence, you have to be cautious while claiming such exemptions.

There are mainly five sources of incomes which IT Department categorized and they are Salary income, Business of Professional Income, Income from House Property, Income from Capital Gains and Income from Other Sources.

Take for example like HRA, Gratuity can be claimed as tax-exempt against your salary income. Agriculture income, dividend income, or Sec.54 of IT act against long term capital gains on the sale of the property.

Deductions:-

Income Tax Deductions means you may deduct the amount that is eligible for reducing your tax liability. Income Tax Deductions can be deducted from the Gross Total Income. There are various options of investing or expenditure, which can be claimed as Tax Deductions.

Allowances available under old tax regime:-

# Mobile/Telephone Reimbursement

If your employer offering you the mobile/telephone connection or internet connection which requires for work, then you can claim 100% of such cost. However, you have to produce a bill. Only the postpaid connections are allowed for reimbursement.

# Leave Travel Allowance

The bills for your travel against LTA can be claimed for exemption. It is allowed to be claimed twice in a block of four years. The current block is 2014 to 2017. You can carry forward your unclaimed LTA to the next year. You can request your employer to not deduct tax on it and allow you to claim it next year.

# Entertainment Allowances

You may be getting this allowance. However, the exemption is available only for Government employees. The amount of exemption is least of the following.

a) Rs 5,000

b) 1/5th of salary (excluding any allowance, benefits or other perquisites)

c) Actual entertainment allowance received

# House Rent Allowance (HRA)

This is the famous exemption which is used by many salaried individuals. However, the wrong belief is that whatever the rent they pay is actually exempted from their income. The reality is different. The amount of exemption is least of the following.

a) Actual HRA Received

b) 40% of Salary (50%, if house situated in Mumbai, Calcutta, Delhi or Madras)

c) Rent paid minus 10% of salary

(Salary= Basic + DA (if part of retirement benefit) + Turnover based Commission)

# Children Education Allowance

If your employer providing this allowance, then you can take exemption up to Rs.100 per month per child (maximum of up to 2 children). Therefore, monthly you can save Rs.200 from this allowance. The exemption may seem so low. But why to pay the tax?

# Hostel Expenditure Allowance-If your employer providing this allowance, then you can take exemption Up to Rs. 300 per month per child up to a maximum of 2 children is exempt. Therefore, you can save around a maximum of Rs.600 from this allowance.

# Conveyance Allowance

This is a different allowance than a transport allowance. It is the expenditure granted to an employee to meet the expenses on conveyance in performing his official duties. There is no limit for this. If such conveyance allowance is Rs.5,000 a month, then the whole allowance is exempt. Hence, you may this may be exempt to the extent of expenditure incurred for official purposes.

# Any Allowance to meet the cost of travel on tour or on transfer

Here also no limit. The employee can claim exempt to the extent of expenditure incurred for official purposes.

# Allowance to meet the cost of travel on tour or on transfer

Here also no limit. The employee can claim exempt to the extent of expenditure incurred for official purposes.

# Daily Allowance

If you are not placed in normal duty place, then your employer may provide you such allowance. The employee can claim exempt to the extent of expenditure incurred for official purposes.

These are the major allowances, which can be utilized to save tax on salary income. There are few other allowances also to claim the exemption. But many of such allowances are not so famous. Hence, I left them to list.

Deductions available under old tax regime:-

The complete of sections can be listed as below.

# Standard Deduction of Rs.50,000

Actually, I have to put this under Deductions. However, this standard deduction replaced the existing allowances. Hence, I placed it here for better understanding.

Earlier you used to claim Rs.15,000 under Medical Allowance and Travel Allowance. With effect from FY 2018-19, you can claim the direct Rs.40,000 deduction instead of these two allowances. However, the same is increased now to Rs.50,000 from FY 2019-20 and the same is applicable for FY 2020-21.

This deduction obviously for salaried and pensioners. This is irrespective of the amount of taxable salary you will be receiving to get a deduction of Rs.50,000 or taxable salary, whichever is less.

Hence, let us assume for FY 2019-20, you worked only for a few days. Your taxable salary is Rs.50,000. In such a scenario, you can directly claim the deduction of Rs.50,000. However, if your salary is less than Rs.40,000 (say Rs.20,000), then you have to claim only Rs.20,000 but not Rs.50,000.

# Section 80C

This is the famous section which often used by all of salaried. The maximum limit for the current year is Rs.1,50,000. Therefore, up to Rs.1,50,000, you can save tax on salary income from this section alone. The different investments you do and can also be claimed under Sec.80C are listed below.

Life Insurance premium (Paid by an individual, spouse, and child. In the case of HUF, on the life of any member of HUF).

EPF-Employee contribution can be claimed for deduction.

Public Provident Fund (Paid by an individual, spouse, and child. In the case of HUF, on the life of any member of HUF).

National Savings Certificate (NSC).

Sukanya Samriddhi Account

ELSS or Tax Saving Mutual Funds.

Senior Citizen Savings Scheme.

5-Years Post Office or Bank Deposits.

The tuition fee of kids.

Principal payment towards the home loan.

Stamp duty and registration cost of the house.

Any contribution towards NPS Tier 2 Account by Government employees is also eligible for deductions under Sec.80C.

# Sec.80CCC

Deduction under Sec.80CCC is available only for individuals. Contribution to an annuity plan of the LIC of India or any other insurer for receiving the pension. Do remember that the amount should be paid or deposited out of income chargeable to tax.

The maximum amount deductible under Sec.80CCC is Rs.1.5 lakh. Do remember that this is also the part of the combined limit of Rs.1.5 lakh available under Sec.80C, Sec.80CCC, and Sec.80CCD(1).

# Sec.80CCD1

The maximum benefit available is Rs.1.5 lakh (including Sec.80C limit).

An individual’s maximum 20% of annual income (Earlier it was 10% but after Budget 2017, it increased to 20%) or an employees (10% of Basic+DA) contribution will be eligible for deduction.

As I said above, this section will form the part of Sec.80C limit.

# Sec.80CCD2

There is a misconception among many that there is no upper limit for this section. However, the limit is least of 3 conditions. 1) Amount contributed by an employer, 2) 10% of Basic+DA (14% of Government Employees) and 3) Gross Total Income.

This is an additional deduction which will not form the part of Sec.80C limit.

The deduction under this section will not be eligible for self-employed.

NPS Tax Benefits under Sec.80CCD (1B)

This is the additional tax benefit of up to Rs.50,000 eligible for an income tax deduction and was introduced in the Budget 2015

Introduced in Budget 2015. One can avail the benefit of this Sect.80CCD (1B) from FY 2015-16.

Both self-employed and employees are eligible for availing this deduction.

This is over and above Sec.80CCD (1).

I explained all three sections of NPS (Sec.80CCD1, Sec.80CCD2 and Sec.80CCD(1B) in below image for your reference.

You can also refer my latest post on the changes “NPS Tax Benefits 2019 – Sec.80CCD(1), 80CCD(2) and 80CCD(1B)“.

NOTE:- PLEASE NOTE THAT THE COMBINED LIMIT OF DEDUCTION UNDER SEC.80C, SEC.80CCC AND SEC.80CCD(1) TOGETHER CAN NOT EXCEED RS.1,50,000 FOR FY 2020-21.

#Sec.80D

Deduction under this section is available if you satisfy the following conditions.

The taxpayer should be an individual (resident, NRI or Foreign Citizen) or HUF.

Payment should be made out of income chargeable to tax.

Payment should be in NON-CASH mode (for preventive health check up, you can pay either through cash or non-cash mode).

Changes from Budget 2018-

In Budget 2018, the maximum tax deduction limit for senior citizens under Sec.80D is raised to Rs.50,000. The earlier limit was Rs.30,000.

In case of single premium health insurance policies having a cover of more than one year, it is proposed that the deduction shall be allowed on a proportionate basis for the number of years for which health insurance cover is provided, subject to the specified monetary limit.

I will try to summarize the whole benefit from the below image.

# Sec.80DD

A resident individual or HUF is allowed to claim the deduction under Sec.80DD. You can claim the deduction if you incurred an expenditure for medical treatment, training, and rehabilitation of dependent relative (being a person with a disability).

A deduction can also be claimed if an individual or HUF deposited or paid for any approved scheme of LIC (or any other insurance) or UTI for the maintenance of such a dependent relative.

Here, dependent means spouse, children, parents, brothers, and sisters, who is wholly and mainly dependent upon the individual.

You can claim fixed duction of Rs.75,000 under this section. A higher deduction of Rs.1,25,000 is available if such dependent relative is suffering from severe disability.

# Sec.80DDB

An Individual’s of HUFs expenses actually paid for medical treatment of specified diseases and ailments subject to certain conditions can be claimed under this section.

The maximum deduction is Rs. 40,000. This can also be claimed on behalf of the dependents. The tax deduction limit under this section for Senior Citizens and very Senior Citizens (above 80 years) is now revised to Rs 1,00,000.

With effect from the assessment year 2016-17, the taxpayer shall be required to obtain a prescription from a specialist doctor (not necessarily from a doctor working in a Government hospital) for availing this deduction.

You can claim the deduction for the medical treatment of self, spouse, children, parents brothers, and sisters of the individual.

The ailments covered under this section are as below.

# Neurological Diseases where the disability level has been certified to be of 40% and above;

(a) Dementia (b) Dystonia Musculorum Deformans (c) Motor Neuron Disease (d) Ataxia (e) Chorea (f) Hemiballismus (g) Aphasia (h) Parkinson’s Disease

# Malignant Cancers

# Full Blown Acquired Immuno-Deficiency Syndrome (AIDS) ;

# Chronic Renal Failure

# Hematological disorders

a) Hemophilia

b) Thalassemia

# Sec.80E

An individual can claim deduction under Sec.80E. If the loan is taken by an individual for any study in India or outside India, then they can claim the deduction. The interest part of the loan on such education loan can be claimed for the deduction for pursuing individual’s own education or for the education of his relatives (Spouse, children or any student for whom the individual is a legal guardian).

The entire interest is deductible in the year in which the individual starts to pay interest on the loan and subsequent 7 years or until interest is paid in full (i.e for a total 8 years). But do remember that interest should be paid out of the income of chargeable to tax.

# Sec.80EEA

Along with tax deductions under Section 80C and 24b, an individual can claim up to Rs 1.5 lakh under Section 80EEA from FY 2019-20. The same is continued for FY 2020-21. However, there are certain conditions are there for the same, and they are as below:-

The home loan should have been sanctioned between 1st April, 2019 to 31st March 2020.

The Stamp duty value of the property should not exceed 45 Lakhs.

Taxpayer should not own any other residential property on the date of loan sanction.

This tax benefit will be available from 1st April 2020 (AY 2020-21) and till the end of the home loan tenure (closure).

The total interest deduction is now Rs. 3.5 lakh (Rs 2 Lakh + 

Rs 1.5 Lakh).

Note that the deduction under Section 80EEA is available for home loans from banks and approved financial institutions only. To claim tax benefit under Section 24, you should have received possession of your house (interest paid before possession is eligible for deduction over the next 5 years in 5 equal installments). Section 80EEA do not impose any requirement of possession or completion of construction. Therefore, Section 80EEA provides you immediate tax relief even if you have purchased an under-construction property.

Both resident Indians and non-resident Indians (NRIs) can claim the deduction u.s 80EEA.

Section 80EEB

A Tax deduction of up to Rs 1.5 lakh can be claimed on Interest paid on Loans taken to purchase Electronic Vehicles.

# Sec.80G

Donations to certain approved funds, trusts, charitable institutions/donations for renovation or repairs of notified temples, etc can be claimed as a deduction under this section. This deduction can only be claimed when the contribution made by cheque or draft or in cash. In-kind contributions like food material, clothes, medicines etc. do not qualify for deduction under this section.

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

From FY 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.

If you wish to donate to any political party of your choice, then you are allowed to donate up to Rs.2,000 only in cash. However, if you wish to donate more than Rs.2,000, then you can donate it using Electoral Bonds.

# Sec.80GG

I have written a complete post on this section. Refer “Section 80GG Deduction-Get Tax Benefit on rent paid if not getting HRA !!!“. I will give you a brief about this section as below.

This section only applies to those who have not availed HRA in their salary or not claiming the deduction on their rent in any of the other sections of income tax.  Below are a few conditions to avail the deduction under this section.

This section is only applicable to Individual or HUF.

Taxpayers may be either salaried or self-employed. However, must not be getting HRA.

Tax Payer himself or spouse/Minor Child/HUF of which he is a member should not own any accommodation at a place where he is doing a job or business.

If Tax Payer owns a house at a place other than the place noted above, then the concession in respect of the self-occupied property is not claimed by him [Under Section 23 (2) (a) or 23 (4) (a)].

Tax Payer has to file a declaration in Form No.10BA regarding the expenditure incurred by him towards the payment of rent.

How much amount of deduction one can avail under Sec. 80GG?

If the above five conditions are satisfied, the amount deductible under Section 80GG is LEAST OF THE FOLLOWING.

Rs.5, 000 per month;

25% of total income of taxpayer for the year; or

Rent Paid less 10% of total income (Rent Paid-10% of Total Income).

# Sec.80TTA

A deduction of up to Rs.10,000 can be claimed by an individual or HUB in respect of any income by the way of interest from a savings account with a bank, from a savings account with a co-operative society carrying on the business of banking or from a savings account with a post office but from FDs, RDs or other Term Deposits). From FY 2018-19, this benefit will not be available for late Income Tax filers.

# Sec.80TTB

This section is for Senior Citizens (Aged 60 years and above at any time during the financial year. The interest income earned from Bank FDs, RDs (including Post Office),  will be exempt up to Rs.50,000.

This deduction can be claimed under new Section 80TTB. However, if the taxpayer claimed deducted under Sec.80TTB, then he can not claim the deductions under existing 80TTA.

# Sec.80U

To claim tax benefits under Sec.80U, the taxpayer should be an individual and resident of India. If he is suffering from 40% or more than 40% of any disability, then he can claim a tax deduction.

You can claim the fixed deduction of Rs.75,000. a higher deduction of Rs.1,25,000 is allowed in respect of a person with a severe disability (i.e. having a disability of 80% or above).

# Sec.24 (B)

The interest part of your home loan EMI will be claimed under this section. The maximum limit for the self-occupied property is Rs.2,00,000 per year (even if you have multiple houses). For let-out property, earlier the entire interest payment of home loan (Loss from House Property) can be allowed to set off against any other income source without any limit. However, effective from FY 2017-18, this set-off now limited to Rs.2 lakh per individual (irrespective of the number of properties you are holding).

The unclaimed loss if any will be carried forward to be set off against house property income of subsequent 8 years. In most of cases, this can be treated as DEAD LOSS.

No tax on notional rent on second Self-occupied house has been proposed in the Budget 2019. Hence, you can now hold two Self-occupied properties and don’t have to show the rental income from the second self-occupied property as notional rent. This is with effective from FY 2019-20.

# Rebate under Sec.87A

The tax rebate of Rs.12,500 for individuals with income of up to Rs 5 Lakh has been proposed in Budget 2019. This was the biggest change proposed in Budget 2019. I have written a detailed post on this. You can refer the same for more clarity. Refer the same at “Revised Tax Rebate under Sec.87A after Budget 2019“.

To avail this benefit, there are certain conditions and they are as below.

The taxpayer must be a resident individual.

Your Total Income (Less Deductions from 80C to 80U) is equal to or less than Rs.5,00,000.

The rebate is the 100% of income tax on such income or Rs.12,500 (whichever is less).

Conclusion:- The above List of Income Tax Deductions FY 2020-21 – Under New / Old Tax Regime may not be full. However, I tried to cover all the important deductions available. Hope this may be helpful for you all.

Refer our latest posts:-

List of Income Tax Deductions FY 2020-21 – Under New / Old Tax Regime

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State Bank Of India 9.95% (SBIN-N5) Bond Call Option – What if the Bank exercised in 2021?

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LIC Jeevan Akshay VII Pension Plan (857) – Features, Benefits, and Eligibility

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List of Income Tax Deductions FY 2020-21 – Under New / Old Tax Regime

Due to the introduction of new tax regime in the Budget 2020, many are not confused which are the Income Tax Deductions are available for them. Let us see the complete list of Income Tax Deductions FY 2020-21 under both old or new tax regime.

Tax Planning is an important part of financial planning. However, while investing or choosing the deductions, our idea should be to concentrate at first on our financial goals rather than just concentrating on tax saving. Hence, understanding the available options is very much important.

Income Tax Slab Rates for FY 2020-21 AY 2021-22

You may be aware that during Budget 2020, Government introduced the two types of tax regimes. As per that, the income tax slabs are as below.

List of Income Tax Deductions FY 2020-21 – Under New / Old Tax Regime

Let us now discuss the list of income tax deductions FY 2020 – 21. I will divide them as new and old tax regime for your simplicity.

List of Income Tax Deductions FY 2020-21 under New Tax Regime

I have already written a detailed post on this, where I mentioned that which deductions are not available under new tax regime. You can refer the same at “New Tax Regime – Complete list of exemptions and deductions not allowed“. In this post, I am concentrating on the available deductions.

# Section 80CCD(2)

Under this section, employer contribution on account of the employee in notified pension schemes like EPF, NPS, and/or Super Annuation Account can be claimed up to Rs.7.5 lakh limit.

An employer can contribute an amount equal to 12% of the employee’s basic monthly salary to his/her EPF account. Similarly, an employer can contribute an amount equal to 10% of the employee’s basic salary to the Tier-I account of NPS (For Central Government Employees it is now 14% of Basic+DA effective from 1st April 2019). In a superannuation account, an employer can contribute a maximum of Rs 1.5 lakh exempted from tax in a financial year.

Refer the detailed post on NPS Tax Benefits at “NPS Tax Benefits 2020 – Sec.80CCD(1), 80CCD(2) and 80CCD(1B)“.

The Budget 2020 restricted the tax-exempt superannuation, NPS and EPF account contribution by the employer to maximum of Rs 7.5 lakh in a financial year. Further, the budget states that any interest or gains earned from the excess contribution will also be taxable in the hands of an employee.

# Section 10(15)(i)

Interest received on post office savings account balance is exempted up to Rs 3,500 under section 10(15)(i) of the Income-tax Act. The exemption limit is Rs.7,000 in case of joint savings account.

# Gratuity

Gratuity is tax-exempt up to Rs 20 lakh in a lifetime for non-government employees. For government employees, all gratuity received is tax-exempt, irrespective of the amount received by them. (Refer my post “Gratuity – New Limit, Eligibility, Formula, Taxation and Calculator“)

Below benefits up to certain threshold limits (if any) are allowed under new tax regime as well;

Commutation of pension

Leave encashment on retirement

Retrenchment compensation

VRS benefits

NPS withdrawal benefits

Education scholarships

Payments of awards instituted in the public interest

# Interest on EPF Account, SSY and PPF

The interest received from the EPF account continues to be exempted from tax in the new tax regime as well as the old tax regime.

The Interest and maturity amount received on the Sukanya Samriddhi account, PPF account are tax-free in both old and new tax regimes.

# Sect.87A

Individuals having taxable income of up to Rs.5 lakh will be eligible for tax rebate under section 87A up to Rs 12,500, thereby making zero tax payable in the new tax regime.

# Conveyance Allowance

You can claim income tax exemption for conveyance, travel, and other allowances given by your employers under the new tax regime as well.

List of Income Tax Deductions FY 2020-21 under Old Tax Regime

Let us now discuss the list of income tax deductions FY 2020-21 under the old tax regime. Before proceeding further, first, let us understand the difference between deductions and exemptions.

Exemption :- It is nothing but an income which is not subject to tax. There are certain exemptions which are applicable only towards certain heads of income. Hence, you have to be cautious while claiming such exemptions.

There are mainly five sources of incomes which IT Department categorized and they are Salary income, Business of Professional Income, Income from House Property, Income from Capital Gains and Income from Other Sources.

Take for example like HRA, Gratuity can be claimed as tax-exempt against your salary income. Agriculture income, dividend income, or Sec.54 of IT act against long term capital gains on the sale of the property.

Deductions:-

Income Tax Deductions means you may deduct the amount that is eligible for reducing your tax liability. Income Tax Deductions can be deducted from the Gross Total Income. There are various options of investing or expenditure, which can be claimed as Tax Deductions.

Allowances available under old tax regime:-

# Mobile/Telephone Reimbursement

If your employer offering you the mobile/telephone connection or internet connection which requires for work, then you can claim 100% of such cost. However, you have to produce a bill. Only the postpaid connections are allowed for reimbursement.

# Leave Travel Allowance

The bills for your travel against LTA can be claimed for exemption. It is allowed to be claimed twice in a block of four years. The current block is 2014 to 2017. You can carry forward your unclaimed LTA to the next year. You can request your employer to not deduct tax on it and allow you to claim it next year.

# Entertainment Allowances

You may be getting this allowance. However, the exemption is available only for Government employees. The amount of exemption is least of the following.

a) Rs 5,000

b) 1/5th of salary (excluding any allowance, benefits or other perquisites)

c) Actual entertainment allowance received

# House Rent Allowance (HRA)

This is the famous exemption which is used by many salaried individuals. However, the wrong belief is that whatever the rent they pay is actually exempted from their income. The reality is different. The amount of exemption is least of the following.

a) Actual HRA Received

b) 40% of Salary (50%, if house situated in Mumbai, Calcutta, Delhi or Madras)

c) Rent paid minus 10% of salary

(Salary= Basic + DA (if part of retirement benefit) + Turnover based Commission)

# Children Education Allowance

If your employer providing this allowance, then you can take exemption up to Rs.100 per month per child (maximum of up to 2 children). Therefore, monthly you can save Rs.200 from this allowance. The exemption may seem so low. But why to pay the tax?

# Hostel Expenditure Allowance-If your employer providing this allowance, then you can take exemption Up to Rs. 300 per month per child up to a maximum of 2 children is exempt. Therefore, you can save around a maximum of Rs.600 from this allowance.

# Conveyance Allowance

This is a different allowance than a transport allowance. It is the expenditure granted to an employee to meet the expenses on conveyance in performing his official duties. There is no limit for this. If such conveyance allowance is Rs.5,000 a month, then the whole allowance is exempt. Hence, you may this may be exempt to the extent of expenditure incurred for official purposes.

# Any Allowance to meet the cost of travel on tour or on transfer

Here also no limit. The employee can claim exempt to the extent of expenditure incurred for official purposes.

# Allowance to meet the cost of travel on tour or on transfer

Here also no limit. The employee can claim exempt to the extent of expenditure incurred for official purposes.

# Daily Allowance

If you are not placed in normal duty place, then your employer may provide you such allowance. The employee can claim exempt to the extent of expenditure incurred for official purposes.

These are the major allowances, which can be utilized to save tax on salary income. There are few other allowances also to claim the exemption. But many of such allowances are not so famous. Hence, I left them to list.

Deductions available under old tax regime:-

The complete of sections can be listed as below.

# Standard Deduction of Rs.50,000

Actually, I have to put this under Deductions. However, this standard deduction replaced the existing allowances. Hence, I placed it here for better understanding.

Earlier you used to claim Rs.15,000 under Medical Allowance and Travel Allowance. With effect from FY 2018-19, you can claim the direct Rs.40,000 deduction instead of these two allowances. However, the same is increased now to Rs.50,000 from FY 2019-20 and the same is applicable for FY 2020-21.

This deduction obviously for salaried and pensioners. This is irrespective of the amount of taxable salary you will be receiving to get a deduction of Rs.50,000 or taxable salary, whichever is less.

Hence, let us assume for FY 2019-20, you worked only for a few days. Your taxable salary is Rs.50,000. In such a scenario, you can directly claim the deduction of Rs.50,000. However, if your salary is less than Rs.40,000 (say Rs.20,000), then you have to claim only Rs.20,000 but not Rs.50,000.

# Section 80C

This is the famous section which often used by all of salaried. The maximum limit for the current year is Rs.1,50,000. Therefore, up to Rs.1,50,000, you can save tax on salary income from this section alone. The different investments you do and can also be claimed under Sec.80C are listed below.

Life Insurance premium (Paid by an individual, spouse, and child. In the case of HUF, on the life of any member of HUF).

EPF-Employee contribution can be claimed for deduction.

Public Provident Fund (Paid by an individual, spouse, and child. In the case of HUF, on the life of any member of HUF).

National Savings Certificate (NSC).

Sukanya Samriddhi Account

ELSS or Tax Saving Mutual Funds.

Senior Citizen Savings Scheme.

5-Years Post Office or Bank Deposits.

The tuition fee of kids.

Principal payment towards the home loan.

Stamp duty and registration cost of the house.

Any contribution towards NPS Tier 2 Account by Government employees is also eligible for deductions under Sec.80C.

# Sec.80CCC

Deduction under Sec.80CCC is available only for individuals. Contribution to an annuity plan of the LIC of India or any other insurer for receiving the pension. Do remember that the amount should be paid or deposited out of income chargeable to tax.

The maximum amount deductible under Sec.80CCC is Rs.1.5 lakh. Do remember that this is also the part of the combined limit of Rs.1.5 lakh available under Sec.80C, Sec.80CCC, and Sec.80CCD(1).

# Sec.80CCD1

The maximum benefit available is Rs.1.5 lakh (including Sec.80C limit).

An individual’s maximum 20% of annual income (Earlier it was 10% but after Budget 2017, it increased to 20%) or an employees (10% of Basic+DA) contribution will be eligible for deduction.

As I said above, this section will form the part of Sec.80C limit.

# Sec.80CCD2

There is a misconception among many that there is no upper limit for this section. However, the limit is least of 3 conditions. 1) Amount contributed by an employer, 2) 10% of Basic+DA (14% of Government Employees) and 3) Gross Total Income.

This is an additional deduction which will not form the part of Sec.80C limit.

The deduction under this section will not be eligible for self-employed.

NPS Tax Benefits under Sec.80CCD (1B)

This is the additional tax benefit of up to Rs.50,000 eligible for an income tax deduction and was introduced in the Budget 2015

Introduced in Budget 2015. One can avail the benefit of this Sect.80CCD (1B) from FY 2015-16.

Both self-employed and employees are eligible for availing this deduction.

This is over and above Sec.80CCD (1).

I explained all three sections of NPS (Sec.80CCD1, Sec.80CCD2 and Sec.80CCD(1B) in below image for your reference.

You can also refer my latest post on the changes “NPS Tax Benefits 2019 – Sec.80CCD(1), 80CCD(2) and 80CCD(1B)“.

NOTE:- PLEASE NOTE THAT THE COMBINED LIMIT OF DEDUCTION UNDER SEC.80C, SEC.80CCC AND SEC.80CCD(1) TOGETHER CAN NOT EXCEED RS.1,50,000 FOR FY 2020-21.

#Sec.80D

Deduction under this section is available if you satisfy the following conditions.

The taxpayer should be an individual (resident, NRI or Foreign Citizen) or HUF.

Payment should be made out of income chargeable to tax.

Payment should be in NON-CASH mode (for preventive health check up, you can pay either through cash or non-cash mode).

Changes from Budget 2018-

In Budget 2018, the maximum tax deduction limit for senior citizens under Sec.80D is raised to Rs.50,000. The earlier limit was Rs.30,000.

In case of single premium health insurance policies having a cover of more than one year, it is proposed that the deduction shall be allowed on a proportionate basis for the number of years for which health insurance cover is provided, subject to the specified monetary limit.

I will try to summarize the whole benefit from the below image.

# Sec.80DD

A resident individual or HUF is allowed to claim the deduction under Sec.80DD. You can claim the deduction if you incurred an expenditure for medical treatment, training, and rehabilitation of dependent relative (being a person with a disability).

A deduction can also be claimed if an individual or HUF deposited or paid for any approved scheme of LIC (or any other insurance) or UTI for the maintenance of such a dependent relative.

Here, dependent means spouse, children, parents, brothers, and sisters, who is wholly and mainly dependent upon the individual.

You can claim fixed duction of Rs.75,000 under this section. A higher deduction of Rs.1,25,000 is available if such dependent relative is suffering from severe disability.

# Sec.80DDB

An Individual’s of HUFs expenses actually paid for medical treatment of specified diseases and ailments subject to certain conditions can be claimed under this section.

The maximum deduction is Rs. 40,000. This can also be claimed on behalf of the dependents. The tax deduction limit under this section for Senior Citizens and very Senior Citizens (above 80 years) is now revised to Rs 1,00,000.

With effect from the assessment year 2016-17, the taxpayer shall be required to obtain a prescription from a specialist doctor (not necessarily from a doctor working in a Government hospital) for availing this deduction.

You can claim the deduction for the medical treatment of self, spouse, children, parents brothers, and sisters of the individual.

The ailments covered under this section are as below.

# Neurological Diseases where the disability level has been certified to be of 40% and above;

(a) Dementia (b) Dystonia Musculorum Deformans (c) Motor Neuron Disease (d) Ataxia (e) Chorea (f) Hemiballismus (g) Aphasia (h) Parkinson’s Disease

# Malignant Cancers

# Full Blown Acquired Immuno-Deficiency Syndrome (AIDS) ;

# Chronic Renal Failure

# Hematological disorders

a) Hemophilia

b) Thalassemia

# Sec.80E

An individual can claim deduction under Sec.80E. If the loan is taken by an individual for any study in India or outside India, then they can claim the deduction. The interest part of the loan on such education loan can be claimed for the deduction for pursuing individual’s own education or for the education of his relatives (Spouse, children or any student for whom the individual is a legal guardian).

The entire interest is deductible in the year in which the individual starts to pay interest on the loan and subsequent 7 years or until interest is paid in full (i.e for a total 8 years). But do remember that interest should be paid out of the income of chargeable to tax.

# Sec.80EEA

Along with tax deductions under Section 80C and 24b, an individual can claim up to Rs 1.5 lakh under Section 80EEA from FY 2019-20. The same is continued for FY 2020-21. However, there are certain conditions are there for the same, and they are as below:-

The home loan should have been sanctioned between 1st April, 2019 to 31st March 2020.

The Stamp duty value of the property should not exceed 45 Lakhs.

Taxpayer should not own any other residential property on the date of loan sanction.

This tax benefit will be available from 1st April 2020 (AY 2020-21) and till the end of the home loan tenure (closure).

The total interest deduction is now Rs. 3.5 lakh (Rs 2 Lakh + 

Rs 1.5 Lakh).

Note that the deduction under Section 80EEA is available for home loans from banks and approved financial institutions only. To claim tax benefit under Section 24, you should have received possession of your house (interest paid before possession is eligible for deduction over the next 5 years in 5 equal installments). Section 80EEA do not impose any requirement of possession or completion of construction. Therefore, Section 80EEA provides you immediate tax relief even if you have purchased an under-construction property.

Both resident Indians and non-resident Indians (NRIs) can claim the deduction u.s 80EEA.

Section 80EEB

A Tax deduction of up to Rs 1.5 lakh can be claimed on Interest paid on Loans taken to purchase Electronic Vehicles.

# Sec.80G

Donations to certain approved funds, trusts, charitable institutions/donations for renovation or repairs of notified temples, etc can be claimed as a deduction under this section. This deduction can only be claimed when the contribution made by cheque or draft or in cash. In-kind contributions like food material, clothes, medicines etc. do not qualify for deduction under this section.

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

From FY 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.

If you wish to donate to any political party of your choice, then you are allowed to donate up to Rs.2,000 only in cash. However, if you wish to donate more than Rs.2,000, then you can donate it using Electoral Bonds.

# Sec.80GG

I have written a complete post on this section. Refer “Section 80GG Deduction-Get Tax Benefit on rent paid if not getting HRA !!!“. I will give you a brief about this section as below.

This section only applies to those who have not availed HRA in their salary or not claiming the deduction on their rent in any of the other sections of income tax.  Below are a few conditions to avail the deduction under this section.

This section is only applicable to Individual or HUF.

Taxpayers may be either salaried or self-employed. However, must not be getting HRA.

Tax Payer himself or spouse/Minor Child/HUF of which he is a member should not own any accommodation at a place where he is doing a job or business.

If Tax Payer owns a house at a place other than the place noted above, then the concession in respect of the self-occupied property is not claimed by him [Under Section 23 (2) (a) or 23 (4) (a)].

Tax Payer has to file a declaration in Form No.10BA regarding the expenditure incurred by him towards the payment of rent.

How much amount of deduction one can avail under Sec. 80GG?

If the above five conditions are satisfied, the amount deductible under Section 80GG is LEAST OF THE FOLLOWING.

Rs.5, 000 per month;

25% of total income of taxpayer for the year; or

Rent Paid less 10% of total income (Rent Paid-10% of Total Income).

# Sec.80TTA

A deduction of up to Rs.10,000 can be claimed by an individual or HUB in respect of any income by the way of interest from a savings account with a bank, from a savings account with a co-operative society carrying on the business of banking or from a savings account with a post office but from FDs, RDs or other Term Deposits). From FY 2018-19, this benefit will not be available for late Income Tax filers.

# Sec.80TTB

This section is for Senior Citizens (Aged 60 years and above at any time during the financial year. The interest income earned from Bank FDs, RDs (including Post Office),  will be exempt up to Rs.50,000.

This deduction can be claimed under new Section 80TTB. However, if the taxpayer claimed deducted under Sec.80TTB, then he can not claim the deductions under existing 80TTA.

# Sec.80U

To claim tax benefits under Sec.80U, the taxpayer should be an individual and resident of India. If he is suffering from 40% or more than 40% of any disability, then he can claim a tax deduction.

You can claim the fixed deduction of Rs.75,000. a higher deduction of Rs.1,25,000 is allowed in respect of a person with a severe disability (i.e. having a disability of 80% or above).

# Sec.24 (B)

The interest part of your home loan EMI will be claimed under this section. The maximum limit for the self-occupied property is Rs.2,00,000 per year (even if you have multiple houses). For let-out property, earlier the entire interest payment of home loan (Loss from House Property) can be allowed to set off against any other income source without any limit. However, effective from FY 2017-18, this set-off now limited to Rs.2 lakh per individual (irrespective of the number of properties you are holding).

The unclaimed loss if any will be carried forward to be set off against house property income of subsequent 8 years. In most of cases, this can be treated as DEAD LOSS.

No tax on notional rent on second Self-occupied house has been proposed in the Budget 2019. Hence, you can now hold two Self-occupied properties and don’t have to show the rental income from the second self-occupied property as notional rent. This is with effective from FY 2019-20.

# Rebate under Sec.87A

The tax rebate of Rs.12,500 for individuals with income of up to Rs 5 Lakh has been proposed in Budget 2019. This was the biggest change proposed in Budget 2019. I have written a detailed post on this. You can refer the same for more clarity. Refer the same at “Revised Tax Rebate under Sec.87A after Budget 2019“.

To avail this benefit, there are certain conditions and they are as below.

The taxpayer must be a resident individual.

Your Total Income (Less Deductions from 80C to 80U) is equal to or less than Rs.5,00,000.

The rebate is the 100% of income tax on such income or Rs.12,500 (whichever is less).

Conclusion:- The above List of Income Tax Deductions FY 2020-21 – Under New / Old Tax Regime may not be full. However, I tried to cover all the important deductions available. Hope this may be helpful for you all.

Refer our latest posts:-

List of Income Tax Deductions FY 2020-21 – Under New / Old Tax Regime

Whether Banking and PSU Debt Funds are SAFE?

State Bank Of India 9.95% (SBIN-N5) Bond Call Option – What if the Bank exercised in 2021?

Your EDUCATION is the least required eligibility for investing!

Best Critical illness policy in India 2020 – Comparative Table

LIC Jeevan Akshay VII Pension Plan (857) – Features, Benefits, and Eligibility

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List of Income Tax Deductions FY 2020-21 – Under New / Old Tax Regime

Due to the introduction of new tax regime in the Budget 2020, many are not confused which are the Income Tax Deductions are available for them. Let us see the complete list of Income Tax Deductions FY 2020-21 under both old or new tax regime.

Tax Planning is an important part of financial planning. However, while investing or choosing the deductions, our idea should be to concentrate at first on our financial goals rather than just concentrating on tax saving. Hence, understanding the available options is very much important.

Income Tax Slab Rates for FY 2020-21 AY 2021-22

You may be aware that during Budget 2020, Government introduced the two types of tax regimes. As per that, the income tax slabs are as below.

List of Income Tax Deductions FY 2020-21 – Under New / Old Tax Regime

Let us now discuss the list of income tax deductions FY 2020 – 21. I will divide them as new and old tax regime for your simplicity.

List of Income Tax Deductions FY 2020-21 under New Tax Regime

I have already written a detailed post on this, where I mentioned that which deductions are not available under new tax regime. You can refer the same at “New Tax Regime – Complete list of exemptions and deductions not allowed“. In this post, I am concentrating on the available deductions.

# Section 80CCD(2)

Under this section, employer contribution on account of the employee in notified pension schemes like EPF, NPS, and/or Super Annuation Account can be claimed up to Rs.7.5 lakh limit.

An employer can contribute an amount equal to 12% of the employee’s basic monthly salary to his/her EPF account. Similarly, an employer can contribute an amount equal to 10% of the employee’s basic salary to the Tier-I account of NPS (For Central Government Employees it is now 14% of Basic+DA effective from 1st April 2019). In a superannuation account, an employer can contribute a maximum of Rs 1.5 lakh exempted from tax in a financial year.

Refer the detailed post on NPS Tax Benefits at “NPS Tax Benefits 2020 – Sec.80CCD(1), 80CCD(2) and 80CCD(1B)“.

The Budget 2020 restricted the tax-exempt superannuation, NPS and EPF account contribution by the employer to maximum of Rs 7.5 lakh in a financial year. Further, the budget states that any interest or gains earned from the excess contribution will also be taxable in the hands of an employee.

# Section 10(15)(i)

Interest received on post office savings account balance is exempted up to Rs 3,500 under section 10(15)(i) of the Income-tax Act. The exemption limit is Rs.7,000 in case of joint savings account.

# Gratuity

Gratuity is tax-exempt up to Rs 20 lakh in a lifetime for non-government employees. For government employees, all gratuity received is tax-exempt, irrespective of the amount received by them. (Refer my post “Gratuity – New Limit, Eligibility, Formula, Taxation and Calculator“)

Below benefits up to certain threshold limits (if any) are allowed under new tax regime as well;

Commutation of pension

Leave encashment on retirement

Retrenchment compensation

VRS benefits

NPS withdrawal benefits

Education scholarships

Payments of awards instituted in the public interest

# Interest on EPF Account, SSY and PPF

The interest received from the EPF account continues to be exempted from tax in the new tax regime as well as the old tax regime.

The Interest and maturity amount received on the Sukanya Samriddhi account, PPF account are tax-free in both old and new tax regimes.

# Sect.87A

Individuals having taxable income of up to Rs.5 lakh will be eligible for tax rebate under section 87A up to Rs 12,500, thereby making zero tax payable in the new tax regime.

# Conveyance Allowance

You can claim income tax exemption for conveyance, travel, and other allowances given by your employers under the new tax regime as well.

List of Income Tax Deductions FY 2020-21 under Old Tax Regime

Let us now discuss the list of income tax deductions FY 2020-21 under the old tax regime. Before proceeding further, first, let us understand the difference between deductions and exemptions.

Exemption :- It is nothing but an income which is not subject to tax. There are certain exemptions which are applicable only towards certain heads of income. Hence, you have to be cautious while claiming such exemptions.

There are mainly five sources of incomes which IT Department categorized and they are Salary income, Business of Professional Income, Income from House Property, Income from Capital Gains and Income from Other Sources.

Take for example like HRA, Gratuity can be claimed as tax-exempt against your salary income. Agriculture income, dividend income, or Sec.54 of IT act against long term capital gains on the sale of the property.

Deductions:-

Income Tax Deductions means you may deduct the amount that is eligible for reducing your tax liability. Income Tax Deductions can be deducted from the Gross Total Income. There are various options of investing or expenditure, which can be claimed as Tax Deductions.

Allowances available under old tax regime:-

# Mobile/Telephone Reimbursement

If your employer offering you the mobile/telephone connection or internet connection which requires for work, then you can claim 100% of such cost. However, you have to produce a bill. Only the postpaid connections are allowed for reimbursement.

# Leave Travel Allowance

The bills for your travel against LTA can be claimed for exemption. It is allowed to be claimed twice in a block of four years. The current block is 2014 to 2017. You can carry forward your unclaimed LTA to the next year. You can request your employer to not deduct tax on it and allow you to claim it next year.

# Entertainment Allowances

You may be getting this allowance. However, the exemption is available only for Government employees. The amount of exemption is least of the following.

a) Rs 5,000

b) 1/5th of salary (excluding any allowance, benefits or other perquisites)

c) Actual entertainment allowance received

# House Rent Allowance (HRA)

This is the famous exemption which is used by many salaried individuals. However, the wrong belief is that whatever the rent they pay is actually exempted from their income. The reality is different. The amount of exemption is least of the following.

a) Actual HRA Received

b) 40% of Salary (50%, if house situated in Mumbai, Calcutta, Delhi or Madras)

c) Rent paid minus 10% of salary

(Salary= Basic + DA (if part of retirement benefit) + Turnover based Commission)

# Children Education Allowance

If your employer providing this allowance, then you can take exemption up to Rs.100 per month per child (maximum of up to 2 children). Therefore, monthly you can save Rs.200 from this allowance. The exemption may seem so low. But why to pay the tax?

# Hostel Expenditure Allowance-If your employer providing this allowance, then you can take exemption Up to Rs. 300 per month per child up to a maximum of 2 children is exempt. Therefore, you can save around a maximum of Rs.600 from this allowance.

# Conveyance Allowance

This is a different allowance than a transport allowance. It is the expenditure granted to an employee to meet the expenses on conveyance in performing his official duties. There is no limit for this. If such conveyance allowance is Rs.5,000 a month, then the whole allowance is exempt. Hence, you may this may be exempt to the extent of expenditure incurred for official purposes.

# Any Allowance to meet the cost of travel on tour or on transfer

Here also no limit. The employee can claim exempt to the extent of expenditure incurred for official purposes.

# Allowance to meet the cost of travel on tour or on transfer

Here also no limit. The employee can claim exempt to the extent of expenditure incurred for official purposes.

# Daily Allowance

If you are not placed in normal duty place, then your employer may provide you such allowance. The employee can claim exempt to the extent of expenditure incurred for official purposes.

These are the major allowances, which can be utilized to save tax on salary income. There are few other allowances also to claim the exemption. But many of such allowances are not so famous. Hence, I left them to list.

Deductions available under old tax regime:-

The complete of sections can be listed as below.

# Standard Deduction of Rs.50,000

Actually, I have to put this under Deductions. However, this standard deduction replaced the existing allowances. Hence, I placed it here for better understanding.

Earlier you used to claim Rs.15,000 under Medical Allowance and Travel Allowance. With effect from FY 2018-19, you can claim the direct Rs.40,000 deduction instead of these two allowances. However, the same is increased now to Rs.50,000 from FY 2019-20 and the same is applicable for FY 2020-21.

This deduction obviously for salaried and pensioners. This is irrespective of the amount of taxable salary you will be receiving to get a deduction of Rs.50,000 or taxable salary, whichever is less.

Hence, let us assume for FY 2019-20, you worked only for a few days. Your taxable salary is Rs.50,000. In such a scenario, you can directly claim the deduction of Rs.50,000. However, if your salary is less than Rs.40,000 (say Rs.20,000), then you have to claim only Rs.20,000 but not Rs.50,000.

# Section 80C

This is the famous section which often used by all of salaried. The maximum limit for the current year is Rs.1,50,000. Therefore, up to Rs.1,50,000, you can save tax on salary income from this section alone. The different investments you do and can also be claimed under Sec.80C are listed below.

Life Insurance premium (Paid by an individual, spouse, and child. In the case of HUF, on the life of any member of HUF).

EPF-Employee contribution can be claimed for deduction.

Public Provident Fund (Paid by an individual, spouse, and child. In the case of HUF, on the life of any member of HUF).

National Savings Certificate (NSC).

Sukanya Samriddhi Account

ELSS or Tax Saving Mutual Funds.

Senior Citizen Savings Scheme.

5-Years Post Office or Bank Deposits.

The tuition fee of kids.

Principal payment towards the home loan.

Stamp duty and registration cost of the house.

Any contribution towards NPS Tier 2 Account by Government employees is also eligible for deductions under Sec.80C.

# Sec.80CCC

Deduction under Sec.80CCC is available only for individuals. Contribution to an annuity plan of the LIC of India or any other insurer for receiving the pension. Do remember that the amount should be paid or deposited out of income chargeable to tax.

The maximum amount deductible under Sec.80CCC is Rs.1.5 lakh. Do remember that this is also the part of the combined limit of Rs.1.5 lakh available under Sec.80C, Sec.80CCC, and Sec.80CCD(1).

# Sec.80CCD1

The maximum benefit available is Rs.1.5 lakh (including Sec.80C limit).

An individual’s maximum 20% of annual income (Earlier it was 10% but after Budget 2017, it increased to 20%) or an employees (10% of Basic+DA) contribution will be eligible for deduction.

As I said above, this section will form the part of Sec.80C limit.

# Sec.80CCD2

There is a misconception among many that there is no upper limit for this section. However, the limit is least of 3 conditions. 1) Amount contributed by an employer, 2) 10% of Basic+DA (14% of Government Employees) and 3) Gross Total Income.

This is an additional deduction which will not form the part of Sec.80C limit.

The deduction under this section will not be eligible for self-employed.

NPS Tax Benefits under Sec.80CCD (1B)

This is the additional tax benefit of up to Rs.50,000 eligible for an income tax deduction and was introduced in the Budget 2015

Introduced in Budget 2015. One can avail the benefit of this Sect.80CCD (1B) from FY 2015-16.

Both self-employed and employees are eligible for availing this deduction.

This is over and above Sec.80CCD (1).

I explained all three sections of NPS (Sec.80CCD1, Sec.80CCD2 and Sec.80CCD(1B) in below image for your reference.

You can also refer my latest post on the changes “NPS Tax Benefits 2019 – Sec.80CCD(1), 80CCD(2) and 80CCD(1B)“.

NOTE:- PLEASE NOTE THAT THE COMBINED LIMIT OF DEDUCTION UNDER SEC.80C, SEC.80CCC AND SEC.80CCD(1) TOGETHER CAN NOT EXCEED RS.1,50,000 FOR FY 2020-21.

#Sec.80D

Deduction under this section is available if you satisfy the following conditions.

The taxpayer should be an individual (resident, NRI or Foreign Citizen) or HUF.

Payment should be made out of income chargeable to tax.

Payment should be in NON-CASH mode (for preventive health check up, you can pay either through cash or non-cash mode).

Changes from Budget 2018-

In Budget 2018, the maximum tax deduction limit for senior citizens under Sec.80D is raised to Rs.50,000. The earlier limit was Rs.30,000.

In case of single premium health insurance policies having a cover of more than one year, it is proposed that the deduction shall be allowed on a proportionate basis for the number of years for which health insurance cover is provided, subject to the specified monetary limit.

I will try to summarize the whole benefit from the below image.

# Sec.80DD

A resident individual or HUF is allowed to claim the deduction under Sec.80DD. You can claim the deduction if you incurred an expenditure for medical treatment, training, and rehabilitation of dependent relative (being a person with a disability).

A deduction can also be claimed if an individual or HUF deposited or paid for any approved scheme of LIC (or any other insurance) or UTI for the maintenance of such a dependent relative.

Here, dependent means spouse, children, parents, brothers, and sisters, who is wholly and mainly dependent upon the individual.

You can claim fixed duction of Rs.75,000 under this section. A higher deduction of Rs.1,25,000 is available if such dependent relative is suffering from severe disability.

# Sec.80DDB

An Individual’s of HUFs expenses actually paid for medical treatment of specified diseases and ailments subject to certain conditions can be claimed under this section.

The maximum deduction is Rs. 40,000. This can also be claimed on behalf of the dependents. The tax deduction limit under this section for Senior Citizens and very Senior Citizens (above 80 years) is now revised to Rs 1,00,000.

With effect from the assessment year 2016-17, the taxpayer shall be required to obtain a prescription from a specialist doctor (not necessarily from a doctor working in a Government hospital) for availing this deduction.

You can claim the deduction for the medical treatment of self, spouse, children, parents brothers, and sisters of the individual.

The ailments covered under this section are as below.

# Neurological Diseases where the disability level has been certified to be of 40% and above;

(a) Dementia (b) Dystonia Musculorum Deformans (c) Motor Neuron Disease (d) Ataxia (e) Chorea (f) Hemiballismus (g) Aphasia (h) Parkinson’s Disease

# Malignant Cancers

# Full Blown Acquired Immuno-Deficiency Syndrome (AIDS) ;

# Chronic Renal Failure

# Hematological disorders

a) Hemophilia

b) Thalassemia

# Sec.80E

An individual can claim deduction under Sec.80E. If the loan is taken by an individual for any study in India or outside India, then they can claim the deduction. The interest part of the loan on such education loan can be claimed for the deduction for pursuing individual’s own education or for the education of his relatives (Spouse, children or any student for whom the individual is a legal guardian).

The entire interest is deductible in the year in which the individual starts to pay interest on the loan and subsequent 7 years or until interest is paid in full (i.e for a total 8 years). But do remember that interest should be paid out of the income of chargeable to tax.

# Sec.80EEA

Along with tax deductions under Section 80C and 24b, an individual can claim up to Rs 1.5 lakh under Section 80EEA from FY 2019-20. The same is continued for FY 2020-21. However, there are certain conditions are there for the same, and they are as below:-

The home loan should have been sanctioned between 1st April, 2019 to 31st March 2020.

The Stamp duty value of the property should not exceed 45 Lakhs.

Taxpayer should not own any other residential property on the date of loan sanction.

This tax benefit will be available from 1st April 2020 (AY 2020-21) and till the end of the home loan tenure (closure).

The total interest deduction is now Rs. 3.5 lakh (Rs 2 Lakh + 

Rs 1.5 Lakh).

Note that the deduction under Section 80EEA is available for home loans from banks and approved financial institutions only. To claim tax benefit under Section 24, you should have received possession of your house (interest paid before possession is eligible for deduction over the next 5 years in 5 equal installments). Section 80EEA do not impose any requirement of possession or completion of construction. Therefore, Section 80EEA provides you immediate tax relief even if you have purchased an under-construction property.

Both resident Indians and non-resident Indians (NRIs) can claim the deduction u.s 80EEA.

Section 80EEB

A Tax deduction of up to Rs 1.5 lakh can be claimed on Interest paid on Loans taken to purchase Electronic Vehicles.

# Sec.80G

Donations to certain approved funds, trusts, charitable institutions/donations for renovation or repairs of notified temples, etc can be claimed as a deduction under this section. This deduction can only be claimed when the contribution made by cheque or draft or in cash. In-kind contributions like food material, clothes, medicines etc. do not qualify for deduction under this section.

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

From FY 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.

If you wish to donate to any political party of your choice, then you are allowed to donate up to Rs.2,000 only in cash. However, if you wish to donate more than Rs.2,000, then you can donate it using Electoral Bonds.

# Sec.80GG

I have written a complete post on this section. Refer “Section 80GG Deduction-Get Tax Benefit on rent paid if not getting HRA !!!“. I will give you a brief about this section as below.

This section only applies to those who have not availed HRA in their salary or not claiming the deduction on their rent in any of the other sections of income tax.  Below are a few conditions to avail the deduction under this section.

This section is only applicable to Individual or HUF.

Taxpayers may be either salaried or self-employed. However, must not be getting HRA.

Tax Payer himself or spouse/Minor Child/HUF of which he is a member should not own any accommodation at a place where he is doing a job or business.

If Tax Payer owns a house at a place other than the place noted above, then the concession in respect of the self-occupied property is not claimed by him [Under Section 23 (2) (a) or 23 (4) (a)].

Tax Payer has to file a declaration in Form No.10BA regarding the expenditure incurred by him towards the payment of rent.

How much amount of deduction one can avail under Sec. 80GG?

If the above five conditions are satisfied, the amount deductible under Section 80GG is LEAST OF THE FOLLOWING.

Rs.5, 000 per month;

25% of total income of taxpayer for the year; or

Rent Paid less 10% of total income (Rent Paid-10% of Total Income).

# Sec.80TTA

A deduction of up to Rs.10,000 can be claimed by an individual or HUB in respect of any income by the way of interest from a savings account with a bank, from a savings account with a co-operative society carrying on the business of banking or from a savings account with a post office but from FDs, RDs or other Term Deposits). From FY 2018-19, this benefit will not be available for late Income Tax filers.

# Sec.80TTB

This section is for Senior Citizens (Aged 60 years and above at any time during the financial year. The interest income earned from Bank FDs, RDs (including Post Office),  will be exempt up to Rs.50,000.

This deduction can be claimed under new Section 80TTB. However, if the taxpayer claimed deducted under Sec.80TTB, then he can not claim the deductions under existing 80TTA.

# Sec.80U

To claim tax benefits under Sec.80U, the taxpayer should be an individual and resident of India. If he is suffering from 40% or more than 40% of any disability, then he can claim a tax deduction.

You can claim the fixed deduction of Rs.75,000. a higher deduction of Rs.1,25,000 is allowed in respect of a person with a severe disability (i.e. having a disability of 80% or above).

# Sec.24 (B)

The interest part of your home loan EMI will be claimed under this section. The maximum limit for the self-occupied property is Rs.2,00,000 per year (even if you have multiple houses). For let-out property, earlier the entire interest payment of home loan (Loss from House Property) can be allowed to set off against any other income source without any limit. However, effective from FY 2017-18, this set-off now limited to Rs.2 lakh per individual (irrespective of the number of properties you are holding).

The unclaimed loss if any will be carried forward to be set off against house property income of subsequent 8 years. In most of cases, this can be treated as DEAD LOSS.

No tax on notional rent on second Self-occupied house has been proposed in the Budget 2019. Hence, you can now hold two Self-occupied properties and don’t have to show the rental income from the second self-occupied property as notional rent. This is with effective from FY 2019-20.

# Rebate under Sec.87A

The tax rebate of Rs.12,500 for individuals with income of up to Rs 5 Lakh has been proposed in Budget 2019. This was the biggest change proposed in Budget 2019. I have written a detailed post on this. You can refer the same for more clarity. Refer the same at “Revised Tax Rebate under Sec.87A after Budget 2019“.

To avail this benefit, there are certain conditions and they are as below.

The taxpayer must be a resident individual.

Your Total Income (Less Deductions from 80C to 80U) is equal to or less than Rs.5,00,000.

The rebate is the 100% of income tax on such income or Rs.12,500 (whichever is less).

Conclusion:- The above List of Income Tax Deductions FY 2020-21 – Under New / Old Tax Regime may not be full. However, I tried to cover all the important deductions available. Hope this may be helpful for you all.

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