Income Tax Deductions and Exemptions in India 2019

Income Tax Update : Budget 2019-20

• Nil tax on income upto Rs. 5 Lakhs.
• The exemption limit of Rs. 5 lakh combined with deductions on savings available under Sector 80 will mean that people earning Rs 6.5 lakh may not be required to pay any Income Tax.
• Standard Deduction of Rs. 50,000 has been allowed for salaried taxpayers.
• TDS threshold on rental income raised to Rs. 2.4 Lakhs from Rs.1.8 Lakhs.
• TDS threshold on interest on bank and post office deposits raised to Rs. 40,000 from Rs. 10,000.

Tax deduction is a reduction in tax obligation from your gross taxable income. Tax deductions are deducted from taxable income which is also known as adjusted gross income. Tax deduction varies in amount as different incomes are treated differently under various sections of income tax act.

All Salaried Individuals

• Standard Deduction of Rs. 40,000 has been allowed for salaried taxpayers. Medical Allowance and Transport Allowances has been discontinued.
• Government to contribute 12% EPF contribution for new employees (with less than 3 years of employment) in all sectors.
• New women employees (with less than 3 years of employment) to contribute only 8% of salary for EPF contribution as opposed to 12% earlier.

Senior Citizens

• Tax deduction under Section 80 D for Health Insurance expenditure has been increased to Rs. 50,000 from Rs. 30,000 earlier.
• Expense of up to Rs. 1 lakh incurred on critical illness has been exempted from tax under Section 80 DDB. Earlier the exemption was Rs. 60,000 for senior citizens and Rs. 80,000 for very senior citizens.
• Tax exempted interest income on deposits with banks has been increased from Rs. 10,000 to Rs. 50,000. Further, TDS will not be required to be deducted under section 194A and it has been extended to all FD and RD schemes.

Income Tax Deductions under section 80C to 80U

Section	Permissible limit	Type of investment, expense or income	Eligible claimants
80C	Maximum Rs. 1,50,000 (aggregate of 80C, 80CCC and 80CCD)	PPF, EPF, Bank FD's, NSC, LIC premium, tuition fees	Individuals, HUFs
80CCC	Maximum Rs. 1,50,000 (aggregate of 80C, 80CCC and 80CCD)	Pension funds	Individuals
80CCD	Maximum Rs. 1,50,000 (aggregate of 80C, 80CCC and 80CCD)	Pension fund initiated by central government	Individuals
80TTA	Up to Rs. 10,000 per year	Interest on bank savings account	Individuals and HUFs
80CCG	50% of amount invested subject maximum of Rs. 25,000	Equity saving schemes	Individuals
80CCF	Up to Rs. 20, 000	Long term infrastructure bonds	Individuals and HUFs
80D	For individual taxpayers- Premium up to Rs. 25,000 in case of individuals and up to Rs. 30,000 for senior citizens	Medical insurance premium and Health check up	Individuals and HUFs
	For HUFs- Premium up to Rs. 25,000 and up to Rs. 30,000 in case the member insured is a senior citizen or super senior citizen
80E	No limit defined	Interest on repayment of Education loan	Individuals
80EE	Maximum Rs. 50,000	Interest on loan payable for acquiring a residential house property	Individuals
80G	Differs with the amount of donation	General donations of any recognized society	Individuals, HUF's, Companies, Firms
80GGA	Depends on quantum of donation	Donations to Scientific Research or Rural development	Those who do not have income from business or profession
80GGB	Depends on quantum of donation	Donations to political parties	Indian companies
80GG	Rs. 5000 per month or 25% of total income whichever is less	Rent paid if HRA is not received	Individuals not receiving HRA