Deductions Which One Can Claim To Minimize Tax Burden in financial year 2018-19

a.  Deduction Under Section 80C –

-It allows a maximum limit of Rs 1,50,000/- across investments ranging from following:-

          -Provident fund,

          -PPF

          -Infrastructure bonds

          -Fixed deposits (5 years or more)

          -NSC

          -Insurance

          -Pension plans

          -Unit linked insurance

          -Equity linked savings scheme

          -Tuition fees of your children

          -Repayment of principal on your housing loan

b.  Deduction Under Section 80D –

1.     Basic deduction Under Section 80D:-
   -Mediclaim premium paid for Self, Spouse or dependent children. Maximum deduction Rs.25,000/-
   -In case any of the persons specified above is a senior citizen (i.e. 60 years or more)
   -And Mediclaim Insurance premium is paid for such senior citizen, deduction amount is Rs.30,000/-(This amount has been increased to Rs 50,000/- from A.Y 2019-20)
   -For uninsured super senior citizens (more than 80 years old) & senior citizen ( i.e. 60 years or more)
   -Medical expenditure incurred up to Rs 30,000/- shall be allowed as a deduction under section 80D. (This amount has been increased to Rs.50,000/- from A.Y 2019-20)

2.    Additional deduction Under Section 80D:

-Mediclaim premium paid for parents. Maximum deduction Rs 25,000/-.

-In case any of the parents covered by the Mediclaim policy is a senior citizen, deduction amount is enhanced to Rs. 30,000/-. (It has been increased to Rs 50,000/- from A.y 2019-20)
-This deduction is allowed only to an individual (resident / nonresident/Indian citizen/ foreign citizen) or a Hindu undivided family (resident/nonresident)

c.   Deduction Under Section 80DD–

-A person who has spent money on the maintenance (including medical treatment)  of dependent persons with disability could avail deductions.

d.   Deduction Under Section 80DDB –

-Deductions of expenses on medical treatment of specified ailments (such as AIDS, cancer and neurological diseases) can be claimed.         

-The maximum amount of deduction allowed from gross total income is restricted to Rs.40,000/-.

-But which goes up to Rs.60,000/- if the age of the person treated is 60 years or more.

(This has been increased to Rs 1,00,000/- wef A.y 2019-20 and to Rs.80,000 for super senior citizen (that is,80 years or more)for A.y 2016-17 to 2018-19 and to Rs.1,00,000/-from A.y 2019-20 on condition that, no medical reimbursement is received from any insurance company or employer for this amount.)

e.    Deduction Under Section 80E–

-Interest on loan taken for higher education & vocational courses

-Taxpayers also tend to forget that the interest paid on an education loan    taken for higher studies or vocational curses qualifies for deduction under Section 80E.

-Deduction is also available where the loan is taken for the purpose of higher education of spouse or children of the individual or the student for whom the individual is a legal guardian.

-Also remember that the deduction benefit on interest is allowed for maximum eight years, or till the interest is fully paid.

f.   Deduction Under Section 80EE–

-Income Tax Benefit on Home Loan Interest

-Benefit of this section can avail by Individual assessee.

-Deduction under this section is not available for any other assessee (like HUF, firm etc.).

-Individual can claim benefit under this section only when all the following conditions are satisfied, these are:-
    *Purchaser should be first time buyer. i.e. he has never purchased any house and             now he is going to purchase a house.

    *Value of the house should not more than Rs.50,00,000/-.

    *Loan taken by Individual for the purpose of buy a house should not be more than             Rs.35,00,000/-.

    *On the date of sanction of loan individual does not have any own residential house           property.

    *Loan for this purpose taken by individual should be from the Financial Institution          or Housing Finance Company.

    *For this purpose, loan should be sanctioned between 01.04.16 to 31.03.17.

    *The Assessee can claim deduction under section 80EE on interest payable on home         loan.

-The amount deduction shall be the interest payable or Rs 50,000/-, whichever is less.

-The deduction is available for A.Y 2017-18 and subsequent assessment years till the loan are repaid.

g.   Deduction Under Section 80G –

-Charitable deduction is also available in respect of donations made by an individual to certain funds, charitable institutions and so on.
-There is no restriction on the amount of charity.
-The rate of deduction, however, is either 50 or 100 per cent.
-However, you cannot use this route to evade tax by bringing down your income tax slab.

-There is a ceiling on the deduction a taxpayer can claim in a year.

-The quantum of deduction is limited to 10% of the gross total income of the donor.

-Also, only cash donations are taken into account.

-Donations of food, clothes and medicines do not qualify for such a deduction.

h.    Deduction Under Section 80U –

-Person with disability.

-An individual who is certified by the prescribed medical authority to be a person with disability shall be allowed a deduction of Rs 75,000/-.

-An individual who is certified as a person with severe disability, shall be allowed a deduction of Rs 1,25,000/-.