Tax Planning Measures for Government Employees for the Assessment Year 2020-2021 (Financial Year 2019-2020).
1. If your Gross Total Income is less than 5 lakhs, no special tax planning is needed from yourself. You may claim Rebate under Section 87A which amounts to a maximum of Rs.12500 in the Assessment Year 2020-2021.Gross Total Income means total of the following Income
a. Income from Salaries
c. Income from Business or Profession
d. Income from Capital Gains
2. As far as Salaried persons are concerned , Standard Deduction of Rs.50,000 is available in the Assessment Year 2020-2021.
3. You may claim Second House as Second Self –Occupied Property .But Total Deduction under Interest on loan taken for the House Property will be Rs.200,000. You may take Joint Housing loan with your Spouse. Then you and your spouse can claim maximum deduction of Rs.200,000 each.
4. If your Gross Total Income (Including Interest) is less than Rs.500,000 ,You may deposit in banks /Post-Offices (Term /Fixed/Recurring) as such:-
a. Total annual Interest on such accounts is less than Rs.40,000.
Banks and Post Offices did not deduct TDS upto Rs.40,000. Banks and Co-operative Societies will deduct TDS when Interest more than 40,000.other Cases 5000.
5. Closure or Opting out of the NPS did not attract tax up to 60% of the total amount payable.
6. Please Contribute upto14% of your Salary to NPS(If you are Covered under NPS scheme)
7.Use maximum Electronic mode of payments
8. Maximum compliance of newly introduced Sections in Chapter VIA of Income Tax Act.
a. Sec 80EEA-Interest Up to 150,000 on loan taken for Residential House Property (Loan should be taken from 01/4/2019 to 31/03/2020)
Subject to conditions
b. Section 80EEB –Tax Incentives for Electric Vehicles
Maximum deduction on Interest on loan taken for purchase of an electric vehicle –Rs.150,000
(Loan Should be taken from 01/04/2019 to 31/03/2023 )
Subject to Conditions
9. Easy Application of Sec.89 is possible in the Assessment Year if you have received arrears of Salary (Easy Procedure).
10. Use PAN Card. Avoidance of PAN CARD attract TDS@20%. Aadhaar Card can be used as PAN CARD for certain transactions.
11. Link PAN with Aadhaar .It is most urgent
12. You cannot hide your transactions from 2020-2021 on words . CBDT will introduce Pre-filled Tax Returns in the Assessment Year 2020-2021 on words.
13. Contribute to NPS even if you are not coming under NPS Scheme. You may take NPS in Banks or Post offices. Besides, You may deduct the following deductions from your Gross Total Income (Chapter VIA)
A.SEC 80 C
LIC premium paid by the You in respect of self ,spouse and son and daughter can be deducted up to Rs. 150,000. In case of an individual, deduction is available in respect of policy taken in the name of taxpayer or his/her spouse or his/her children. No deduction is available in respect of premium paid in respect of policy taken in the name of any person, other than given above. Other deductions under Sec 80C are as follows
i. Tuition fees
ii.Contribution to SLI
iii.Contribution to GIS
iv. Contribution to Government Providenf Fund
B. An additional deduction of Rs. 50,000/- under Section 80CCD(1B) is available to assesse over and above the benefit of Rs. 1.50 Lakhs available as a deduction under Sec 80CCD(1). Thereby, raising the maximum limit of exemption to Rs. 2.00 Lakhs
C. Sec 80 D
a.. Health Insurance Premium
Following are the important points
i. Self and family (Including Senior Citizen)-Maximum Rs.50,000
ii. Parents –Maximum Rs. 25,000
iii. Parents (Senior) –Maximum-50,000
iv.Self and Family including Parents –Maximum Rs. 50,000
v. Self and Family including Senior citizen Parents –Maximum Rs. 75,000
vi. Self (Senior Citizen ) and including Senior Citizen Parents –Maximum Rs. 100,000
b.. Medical Expenditure
Following are the important points
i. Self and family (Senior Citizen)-Maximum Rs.50,000
ii. Parents (Senior) –Maximum Rs.50,000
iii. Self and Family including Parents –Maximum Rs. 50,000
Payment through cash mode is not allowed for Sec 80 D Payments except the following preventive medical checkup
c..Preventive Medical checkup
Maximum Rs. 50,00 deduction is allowed for Preventive Medical checkup
D. Sec 80DD Maintenance including medical treatment of a dependant No Change
E. Sec 80DDB Medical treatment of Specified diseases-No Change
F. Sec 80E Interest on loan taken for Higher Education-No Change
G. Sec80 Donations to certain funds and charitable Institutions
Following points are important in this respect
a. Pay any mode other than cash
b. Visit Income Tax Department Website and check eligibility of Institution Donations are as follows
a. Without qualifying Limit -100%
b. Without qualifying Limit- 50%
c. With qualifying Limit -100%
d. With qualifying Limit-50%
Donation to Kerala Chief Minister Draught Relief Fund can be included in Donation as 100% without limit menu.
H.Deduction in respect of Contributions Given by any Person to Political Parties or an Electoral Trust(Section 80GGC)
Any amount of contribution made by an assessee being any person to a a political party or an electoral trust except local authority and every artificial juridical person wholly or partly funded by the Government shall be allowed as deduction while computing the total income of such person .
Note :Sum contributed by way of cash shall not be allowed as deduction
I SEC 80TTA Income from interest on Saving bank Accounts
Maximum amount of Rs. 10,000 can be deducted income from interest on savings bank accounts of Banks and Post Offices included in the above Income from other sources
J. SEC 80TTB Interest on deposit in case of senior citizens.
Maximum interest of Rs,50,000 can be deducted by a senior citizen from interest on deposit income included in the above Income from other sources
L. SEC 80U In case of person with disability
Following are the important points
a. Self with disability –Maximum-Rs.75,000
b. Self with severe Disability –Maximum -125,000
14.A.Rates are the same as those specified in Part III of the First Schedule to the Finance Act 2018
| Upto Rs. 250,000 | Nil |
| Rs. 250,001 to Rs. 500,000 | 5 percent |
| Rs. 500,001 to Rs. 10,00,000 | 20 percent |
| Above Rs. 10,00,000 | 30 percent |
B. In the case of every individual,being a resident in India, who is of the age of sixty years or more but less than the age of eighty years at any time during previous year
| Up to Rs. 300,000 | Nil |
| Rs.300,001 to Rs. 500,000 | 5 percent |
| Rs. 500,001 to Rs. 10,00,000 | 20 percent |
| Above Rs. 10,00,000 | 30 percent |
15. Other Points
Faceless E-Assessment to be implemented in phased manner. Notices also to be issued electronically.
>Gifts made by resident to a person outside India will now be taxable in India.
Disclaimer: Maximum Care is exercised .But errors are human .
Author Bio
Use Sec 80EEA,Sec 80 EEB,Sec 80 G,Housing loan ,NPS etc
My Client’s Taxable Income was around 8 lakhs in AY 2019-20. He had availed 80C deduction maximum limit 150000. Payment in 80D & other deductions are either Insurance or Expenditure. Which are other investments in he can invest to make his tax zero.