As the Financial Year 2018-19 is about to end. With the end of the accounting year/ financial year 31st March is the last date for various compliances, actions and decisions to be taken. One such decision is tax planning and decisions regarding Investment in various taxes saving schemes which results into deduction in Income tax Return for the year. There are various expenses/ Investments which qualifies as deduction from the Income earned during the year and has the consequence of decreasing the tax burden on the tax payer.
Below tabulated are various expense/ investment which qualifies as tax deduction from the income earned during the year and reduces the burden of tax on tax payer.
For Section 80C of Income tax Act 1961, the deduction is allowed to Individual and HUF for lower of the following
- Gross Qualifying amount (see Table 1 below)
- 1,50,000/-
Table 1
| S.NO | Nature of Payment | Expense / Investment | Particulars/ Remarks |
| 1 | Life Insurance Premium | Investment/ Expense | For Individual Policy to be taken in Own Life, Spouse, any child.
For HUF, life of member. (2 Years) |
| 2 | Contribution to Statutory provident fund and recognized provident fund | Investment | Any withdrawal before five year of service is taxable as per income tax law. |
| 3 | Public Provident Fund | Investment | Minimum amount of investment is Rs 1000/- and Maximum amount is Rs 1,50,000/-.
For claiming deduction PPF account can be opening in own name, spouse or any child. In case of HUF in the account of any member of the family. |
| 4 | Contribution towards approved superannuation fund | Investment | This is a retirement benefit for employees. |
| 5 | Subscription to National Savings Certificates. VIII Issue and IX Issue | Investment | Accrued Interest is deemed reinvested and also qualifies for deduction. |
| 6 | Deposit in Sukanya Samriddhi Yojana | Investment | For girl child. Maximum entry age is 10 years. (8 Years) |
| 7 | Unit linked Insurance plan | Investment | To be taken on his own life, spouse, any child or family member in case of HUF. (5 Years) |
| 8 | Subscription/ payment for notified annuity plan, mutual fund or UTI, pension fund etc | Investment | Such as Dhanraksha plan of LIC, Jeevan Dhara, Jeevan Akshay etc (5 Years) |
| 9 | Subscription to (including accrued interest) notified Home Loan Account Scheme | Investment | National Housing Bank (Term Saving) Term Deposit Scheme, 2008 (5 Years) |
| 10 | Any sum paid as subscription to any scheme of;
a. Public Sector Company engaged in providing long term finance for purchase/ construction of residential houses b. Housing board in India for planning, development or improvement of city/ towns |
Investment | For eg. Public Deposit scheme of HUDCO |
| 11 | Tution Fees paid to any University/ College/ Educational Institution in India | Expense | For 2 Children only. Payment for development fees, donation etc not included. |
| 12 | Repayment of Housing loan (Principal Component)** | Expense | Loan from;
1. Government Bank 2. Cooperative Bank 3. LIC 4. National Housing Bank 5. Assessee’s employer (public company, public sector company, university, co-operative society) |
| 13 | Term/ Fixed deposit scheme for 5 Years with Banks/ post office | Investment | As per the Scheme notified (5 years). The Interest earned is taxable. |
| 14 | Subscription to notified bonds of NABARD | Investment | As per Scheme notified. (5 Years) |
| 15 | Deposit to senior citizen deposit schemes | Investment | As per Scheme notified. (5 Years) |
*Bracket denotes minimum holding/ lock in period as the case may be.
**The Interest component in home loan installment is adjusted with taxable income as “Loss from house property” under section 24 of Income Tax Act.
INVESTMENT/ EXPENSES OVER AND ABOVE Rs. 1,50,000/-
Table 2
| S.NO | Payment to | Deduction amount | Remarks |
| 1. | National Pension Scheme
[Section 80CCD (1B)] |
Rs. 50,000/- | New Pension Scheme (notified) and Atal pension Yojana are covered. |
| 2. | Listed Equity Shares/ Equity Oriented funds as per the scheme
[Section 80 CCG] |
50% of Amount Invested (Max. Rs 25000/-) | 1. Allowed for only 3 Consecutive Assessment Years.
2. GTI should not Increase Rs. 12.00 Lakhs 3. Lock in period of 3 Years 4. Allowed to only resident Individual. |
| 3. | Mediclaim Insurance
[Section 80D] |
Rs. 25000/- | Medical Insurance of Family (spouse and dependent children) and Parents |
| 4. | Payment of Interest on Education Loan [Section 80E] | The amount paid | Deduction For 7 Consecutive Years |
| 5. | Donation [Section 80G] | 50% or 100% of the amount donated | Maximum donation can be 10% of the amount of taxable Income |
Note: The above expenses/ investments are deductible on the basis of actual amount incurred during the financial year.
Author Bio
I think SEC 80-CCG has been phased out form FY 2017-18