As per the income tax 1961 Act, Section 192 says that each employee/Pensioner must pay tax to the government.

There are some changes as follows in the income tax act for the Financial year 2019-2020 and Assessment year 2020-2021 (i.e. FY 01.04.2019 to 31-03-2020).

1. There is no change in income tax slabs and rates. But the person who has less than Rs.5 Lakh income need not pay tax as there is full tax rebate u/s 87A. However, there is small confusion for everyone that if the income is above 5 lakhs then the 87A rebate will apply or not. The answer is “No”, if income is above 5 Lakhs then the taxpayer must pay tax from 250000 slabs onwards.
2. Standard Deduction: As per the 2019 Budget, the standard deduction is now Rs.50000. Previously it was Rs.40000. Both Salaried employees and pensioners are eligible for this standard deduction.
3. Extra Deduction for interest paid on home loan(80EEA): If any salaried employee/Pensioner takes the home loan and buys a new house for the first time between April 2019 to March 2020, then they will get an extra deduction up to Rs.150000 under 80EEA section apart from section 24. (subject to total interest amount paid and house value should less than 45L).
4. Deduction in respect of interest paid on loan taken for the purchase of electric vehicle: If any salaried employee/Pensioner takes a vehicle loan and buys electric vehicle time between April 2019 to March 2020, then they get a deduction up to Rs.150000 under 80EEB.
5.  There is no change in the Section 80C deduction limit. i.e. Rs.150000.

House Rent Allowance (HRA) Exemption Limit-Section 10(13A):

House rent allowance is given to the employees by a company to help them in coping up with their accommodation expenses. But, if an individual lives in their own house, then this allowance is fully taxable. Employees can claim deduction on house rent allowance under section 10 (13A). An employee can claim deduction whichever is lower of the following.

1. Total HRA received from your employer
2. Rent paid less 10% of (Basic salary +DA)
3. 40% of salary (Basic+DA) for non-metros and 50% of salary (Basic+DA) for metros.

Note: If the employee gets an HRA allowance of more than Rs.3000, then the employee should submit rental receipts to his employer.

Section 80GG :

If Employee does not receive HRA from the employer and make payments towards rent for any furnished or unfurnished accommodation occupied by the employee for his own residence, then that employee can claim deduction under section 80GG towards rent paid.

the employee can claim deduction under 80GG, whichever is lower of the following:

(a)    Rs 5,000 per month

(b)   25% of the total Income (excluding long-term capital gains, short-term capital gains under section 111A and Income under Section 115A or 115D and deductions under 80C to 80U. Also, income is before making a deduction under section 80GG).

(c)    Actual rent less 10% of Income.

Deductions related to House Property – Section 24

1. Homeowners can claim a deduction of up to Rs 1.5 lakh on their home loan interest if loan had taken till 2013-14. If the house loan has taken from 2013-14 onwards, then owners can claim a deduction of up to Rs. 2lakh.
2. If any home loan is taken for the first time between 1-4-2016 to 31-03-2017, then apart from above deduction owners can claim an extra deduction of up to Rs 50000 under section EE. (applicable to the individuals who have taken house loan less than 35Lakh).
3. If any home loan is taken for the first time between 1-4-2019 to 31-03-2020, then apart from above deduction owners can claim an extra deduction of up to Rs 150000 under section EEA. (applicable to the individuals who have taken house loan less than 45Lakh).
4. house property is given for let out- then from the rent received, we should deduct the following expenses/deductions.

• Property tax & Municipal tax are paid during the year.
• 30% standard deduction on Net rent value.

Deductions:

Apart from HRA, professional tax, and standard deduction, Employees/Pensioners can claim the following deductions.

Chapter VI-A Deductions:

 Section-80C: Under this section, if an individual invests/incur in any of the following, then they can claim maximum deduction up to 1.5L.

1. Premium payments towards life insurance
2. Provident Fund
3. Public Provident Fund
4. National Savings Certificate
5. Equity Linked Savings Scheme (ELSS)
6. Sukanya Samriddhi Scheme
7. Unit Linked Insurance Plans (ULIPs)
8. Repayment of home loan principal amount
9. Registration charges and stamp duty for a home/property
10. Infrastructure bonds
11. NABARD Rural Bonds
12. Senior Citizen Savings Scheme
13. Five-year Post Office Time Deposit Scheme
14. Tuition Fess up to 2 children.
15. 5 years fixed deposit scheme.
16. Mutual Funds
17. LIC and National Pension schemes. (Income Tax benefits are currently available on Tier-1 deposits only (FY 2018-19). The contributions by the government employees (only) under Tier-II of NPS will also be covered under Section 80C for deduction up to Rs 1.5 lakh for the purpose of income tax, with a three-year lock-in period. This is w.e.f April 2019.

• Under Section 80CCC, Deduction can be claimed on the amount deposited in LIC or other insurer’s annuity plan for a pension from a fund mentioned in Section 10 (23AAB).
• Under Section 80CCD (1), Deduction can be claimed on Employee’s contribution to the National Pension Scheme account (up to Rs.1. lakh).
• Under Section 80CCD (2), Deductions can be claimed on the Employer’s contribution to the National Pension Scheme account (Up to 10% of the salary).
• Under Section 80CCD (1B), Additional deduction on Additional contribution to National Pension Scheme account. Up to Rs.50000.

Section 80D 

1. 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 limit of tax deduction allowed for FY 2017-18 for senior citizens was Rs. 30,000 which was increased to Rs 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 a health insurance policy, preventive health check-up or medical expenditure in respect of senior citizens (above 60 years of age).
2. As of FY 2017-18, only Very Senior Citizens (who are above 80 years of age), can claim a deduction of up to Rs 30,000 incurred towards the medical expenditure, in case they don’t have health insurance. Budget 2018 has increased this to Rs 50,000 and also allowed the same flexibility to senior citizens. Even individuals who pay premiums for their dependent senior citizen’s parents can claim the additional deduction on health insurance premium (or) medical expenditure.
3. Single premium Health Insurance policy / Multi-year Mediclaim policy:

• 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.

Section 80DD

An individual can claim up to Rs 75,000 for spending on medical treatments of their dependents (spouse, parents, kids or siblings) who have a 40% disability. In case of disability is more than 80% then the deduction can be claimed up to 1.25 lakh.

Section 80DDB

An individual (less than 60 years of age) can claim up to Rs 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 Rs 1,00,000 from FY 2018-19 onwards.

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

Section 80E

If an individual takes any loan for higher studies (after completing Senior Secondary Exam), tax deduction can be claimed under Section 80E for interest paid towards Education Loan. This loan should have been taken for higher education for himself, spouse or children or for a student for whom the individual is a legal guardian. Principal Repayment on the educational loans cannot be claimed as a tax deduction.

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

Section 80G

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 Rs 10,000 to Rs 2,000 only.

If an individual wants to donate some fu

80G exemption list

Donations Eligible for 100% Deduction without Qualifying Limit:

nd to a political party of their choice, he/she can do so in cash of up to Rs 2,000. Beyond that he/she cannot donate the amount in cash mode. It can be done through Electoral Bonds.

• National Defence Fund (NDF) set up by the Central Government
• Prime Minister’s National Relief Fund (PMNRF)
• National Foundation for Communal Harmony
• An approved university/educational institution of National eminence
• Zila Saksharta Samiti constituted in any district under the chairmanship of the Collector of that district
• National Illness Assistance Fund
• Fund set up by a State Government for the medical relief to the poor
• National Blood Transfusion Council or to any State Blood Transfusion Council
• The National Trust for Welfare of Persons with Autism, Cerebral Palsy, Mental Retardation, and Multiple Disabilities
• National Sports Fund
• National Cultural Fund
• Fund for Technology Development and Application
• National Children’s Fund
• Chief Minister’s Relief Fund or Lieutenant Governor’s Relief Fund with respect to any State or Union Territory
• The Army Central Welfare Fund or the Indian Naval Benevolent Fund or the Air Force Central Welfare Fund, Andhra Pradesh Chief Minister’s Cyclone Relief Fund, 1996
• The Maharashtra Chief Minister’s Relief Fund during October 1st, 1993, and October 6, 1993
• Chief Minister’s Earthquake Relief Fund, Maharashtra
• Any fund set up by the State Government of Gujarat exclusively for providing relief to the victims of the earthquake in Gujarat
• Any trust, institution or fund to which Section 80G (5C) applies for providing relief to the victims of the earthquake in Gujarat (contribution made during January 26th, 2001, and September 30th, 2001) or
• Prime Minister’s Armenia Earthquake Relief Fund
• Africa (Public Contributions – India) Fund
• Swachh Bharat Kosh (applicable from Financial Year 2014-15)
• Clean Ganga Fund (applicable from Financial Year 2014-15)
• National Fund for Control of Drug Abuse (applicable from Financial Year 2015-16).

Donations Eligible for 50% Deduction without Qualifying Limit Jawaharlal Nehru Memorial Fund

• Prime Minister’s Drought Relief Fund
• Indira Gandhi Memorial Trust
•  Rajiv Gandhi Foundation.

Section 80 TTA & new Section 80TTB

For Senior Citizens, the Interest income earned on Fixed Deposits & Recurring Deposits (Banks / Post office schemes) will not be taxable till Rs 50,000 (FY 2017-18 limit was up to Rs 10,000). This deduction can be claimed under the new Section 80TTB. However, no deductions under the existing 80TTA can be claimed if 80TTB tax benefit has been claimed.

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