The maximum tax exemption limit under Section 80C has been retained as ₹ 1.5 Lakh only. The various investment avenues or expenses that can be claimed as tax deductions under section 80c are as below;

• PPF (Public Provident Fund)
• EPF (Employees’ Provident Fund)
• Five year Bank or Post office Tax saving Deposits
• NSC (National Savings Certificates)
• ELSS Mutual Funds (Equity Linked Saving Schemes)
• Kid’s Tuition Fees
• SCSS (Post office Senior Citizen Savings Scheme)
• Principal repayment of Home Loan
• NPS (National Pension System)
• Life Insurance Premium
• Sukanya Samriddhi Account Deposit Scheme

Contribution to annuity plan of LIC (Life Insurance Corporation of India) or any other Life Insurance Company for receiving pension from the fund is considered for tax benefit. The maximum allowable Tax deduction under this section is ₹ 1.5 Lakh.

Employee can contribute to Government notified Pension Schemes (like National Pension Scheme – NPS). The contributions can be upto 10% of the salary (salaried individuals) and ₹ 50,000 additional tax benefit u/s 80CCD (1b) was proposed in Budget 2015.

As per the previous Budget 2017-18, the self-employed (individual other than the salaried class)can contribute up to 20% of their gross income and the same can be deducted from the taxable income under Section 80CCD (1) of the Income Tax Act, 1961, as against current 10%.

To claim this deduction, the employee has to contribute to Govt recognized Pension schemes like NPS. The 10% of salary limit is applicable for salaried individuals only and Gross income is applicable for non-salaried. The definition of Salary is only ‘Dearness Allowance.’ If your employer also contributes to Pension Scheme, the whole contribution amount (10% of salary)can be claimed as tax deduction under Section 80CCD (2).

Kindly note that the Total Deduction under section 80C, 80CCC and 80CCD(1) together cannot exceed ₹ 1,50,000 for the financial year 2018-19. The additional tax deduction of ₹ 50,000 u/s 80CCD (1b) is over and above this ₹ 1.5 Lakh limit.

Contributions to ‘Atal Pension Yojana‘ are eligible for Tax Deduction under section 80CCD

In the union budget 2018, the government of India has proposed the below changes with respect to deductions available on Health Insurance and/or towards Medical treatment

• Health Insurance & Senior Citizens : In Budget 2018, it has been proposed to raise the maximum tax deduction limit for senior citizens under Section 80D of the Indian Income Tax Act 1961. The current limit of tax deduction allowed for FY 2017-18 for senior citizens is ₹. 30,000 which will be increased to ₹ 50,000, from FY 2018-19 (AY 2019-20) onwards.
  • Under Section 80D an assessee, being an individual or a Hindu undivided family, can claim a deduction in respect of payments towards annual premium on health insurance policy, preventive health check-up or medical expenditure in respect of senior citizen (above 60 years of age).
  • As of FY 2017-18, only Very Senior Citizens (who are above 80 years of age), can claim a deduction of up to ₹ 30,000 incurred towards medical expenditure, in case they don’t have health insurance. The Budget 2018 has increased this to ₹ 50,000 and also allowed the same flexibility to senior citizens. Even individuals who pay premiums for their dependent senior citizens parents can claim the additional deduction on health insurance premium (or) medical expenditure.
• Single premium Health Insurance policy / Multi-year Mediclaim policy :
  • In case of single premium health insurance policies having cover of more than one year, it is proposed that the deduction shall be allowed on proportionate basis for the number of years for which health insurance cover is provided, subject to the specified monetary limit.
  Preventive health checkup (Medical checkups) expenses to the extent of ₹ 5,000/- per family can be claimed as tax deductions. Remember, this is not over and above the individual limits as explained above. (Family includes: Self, spouse, parents and dependent children).

You can claim up to ₹ 75,000 for spending on medical treatments of your dependents (spouse, parents, kids or siblings) who have 40% disability. The tax deduction limit of upto ₹ 1.25 lakh in case of severe disability can be availed.

To claim this deduction, you have to submit Form no 10-IA.

An individual (less than 60 years of age) can claim upto ₹ 40,000 for the treatment of specified critical ailments. 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) has been revised to ₹ 1,00,000.

To claim Tax deductions under Section 80DDB, it is mandatory for an individual to obtain ‘Doctor Certificate’ or ‘Prescription’ from a specialist working in a Govt or Private hospital.

For the purposes of section 80DDB, the following shall be the eligible diseases or ailments:

• Neurological Diseases where the disability level has been certified to be of 40% and above;
  1. Dementia
  2. Dystonia Musculorum Deformans
  3. Motor Neuron Disease
  4. Ataxia
  5. Chorea
  6. Hemiballismus
  7. Aphasia
  8. Parkinson’s Disease
• Malignant Cancers
• Full Blown Acquired Immuno-Deficiency Syndrome (AIDS) ;
• Chronic Renal failure
• Hematological disorders
  1. Hemophilia
  2. Thalassaemia

Tax Benefits of Rajiv Gandhi Equity Savings Scheme (RGESS) under section 80CCG has been withdrawn. However, if an investor has invested in the RGESS scheme in FY 2016-17 (AY 2017-18), they can claim deduction under this Section until AY 2019-20.

If you take any loan for higher studies (after completing Senior Secondary Exam), tax deduction can be claimed under Section 80E for interest that you pay towards your Education Loan. This loan should have been taken for higher education for you, your spouse or your children or for a student for whom you are a legal guardian. Principal Repayment on educational loan cannot be claimed as tax deduction.

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

This was a new proposal which had been made in Budget 2016-17. The same will be continued in FY 2018-19 / AY 2019-20 too. First time Home Buyers can claim an additional Tax deduction of up to ₹ 50,000 on home loan interest payments u/s 80EE. The below criteria has to be met for claiming tax deduction under section 80EE.

• The home loan should have been sanctioned during / after FY 2016-17.
• Loan amount should be less than ₹ 35 Lakh.
• The value of the house should not be more than ₹ 50 Lakh &
• The home buyer should not have any other existing residential house in his name.

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

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

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

If you want to donate some fund to a political party of your choice, you can do so in cash of up to ₹ 2,000. Beyond that you can not donate the amount in cash mode. It can be done through Electoral Bonds.

The Tax Deduction amount under 80GG is ₹ 60,000 per annum. Section 80GG is applicable for all those individuals who do not own a residential house & do not receive HRA (House Rent Allowance).

The extent of tax deduction will be limited to the least amount of the following;

• Rent paid minus 10 percent the adjusted total income.
• ₹ 5,000 per month.
• 25 % of the total income.

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

Tax rebate of ₹ 2,500 for individuals with income of up to ₹ 3.5 Lakh has been proposed in Budget 2017-18 and the same will be continued for FY 2018-19 / AY 2019-20 as well.

For Senior Citizens, the Interest income earned on Fixed Deposits & Recurring Deposits (Banks / Post office schemes) will be exempt till ₹ 50,000 (FY 2017-18 limit is up to ₹ 10,000). This deduction can be claimed under new Section 80TTB. However, no deductions under existing 80TTA can be claimed if 80TTB tax benefit has been claimed (the limit for FY 2017-18 & FY 2018-19 u/s 80TTA is ₹ 10,000).

Section 80TTA of Income Tax Act offers deductions on interest income earned from savings bank deposit of up to ₹ 10,000. From FY 2018-19, this benefit will not be available for late Income Tax filers.

Interest income from deposits held with companies will not benefit under this section. This means, senior citizens will not get this benefit for interest income from corporate fixed deposits us/ 80TTB.

This is similar to Section 80DD. Tax deduction is allowed for the tax assessee who is physically and mentally challenged.

For FY 2017–18, the medical allowance of up to ₹ 15,000 is exempted income from your Gross salary. To claim this, you need to submit medical bills to your employer and get the allowance benefit. The medical reimbursement allowance is exempted under Section 10 of the Income Tax Act.

From FY 2018-19, a standard deduction of ₹ 40,000 in lieu of travel, medical expense reimbursement and other allowances has been proposed for salaried employees and pensioners. To claim this standard deduction, there is no need to submit medical bills to your employer.

As per this new proposal, irrespective of amount of taxable salary the assessee will be entitled to get a deduction of ₹.40,000 or taxable salary, whichever is less. Thus suppose if a person has worked for few days (or) months and his salary was just ₹ 40,000 for a previous year, then he will be entitled to deduction equal to salary being the same amount. If his salary is less, say ₹ 30,000 the deduction shall be restricted to ₹ 30,000. If salary exceeds amount of ₹ 40,000, the deduction shall be restricted to ₹ 40,000.

• From FY 2017-18, the Tax benefit on loan repayment of second house is restricted to ₹ 2 lakh per annum only (even if you have multiple houses the limit is still going to be ₹ 2 Lakh only and the ceiling limit is not per house property).
• The unclaimed loss if any will be carried forward to be set off against house property income of subsequent 8 years. In most of the cases, this can be treated as ‘dead loss‘.
• I believe that this is a major blow to the investors who have bought multiple houses on home loan(s) with an intention to save taxes alone.
• Until FY 2016-17, interest paid on your housing loan is eligible for the following tax benefits ;
  • Municipal taxes paid, 30% of the net annual income (standard deduction) and interest paid on the loan taken for that house are allowed as deductions.
  • After these deductions, your rental income can be NIL or NEGATIVE and is called ‘loss from house property’ in the latter case.
  • Such loss is currently allowed to be set off against other heads of income like Income from Salary or Business etc. which helps you to lower you tax liability substantially.