Paying income tax is our duty because it helps our country to grow. But if given an option to not pay income tax or to pay less amount as income tax, I am sure nobody wants to loose this opportunity.

Today in this article, I am going to share some common ways by which we can save some amount of tax just by keeping in mind some important points while filing income tax return.

As per income tax slab rates, for the first Rs. 2,50,000/- there is no tax liability, it means no tax is required to be paid if income of a person is upto Rs. 2.5 Lakhs.

However Income Tax Department  provides certain deductions under Chapter VIA and certain reimbursements & allowances which helps in saving tax to a certain extent.

So I  will try to explain some common deductions in an easy manner so that you may understand it and apply it practically. Even if you face any confusion then you may mail me or ask query at comment box

1. Standard Deduction:

As per an amendment in the Budget 2018, tax exemption on medical reimbursement amounting to Rs. 15,000 and transport allowance amounting to Rs. 19,200 in a financial year have been replaced with a standard deduction of Rs. 40,000 (For FY 2018-19) and Rs. 50,000 (For FY 2019-20).

2. HRA:

Before filing your Income tax return, please must assure that your company provides you House Rent Allowance to compensate for your rent expenses.

HRA calculation will be covered in next article along with other important calculation of income tax.

3. Employee Contribution to PF:

Both employer and employee contribute a 12% equivalent of the employee’s basic salary every month toward employee’s pension and provident fund. An interest of about 8.65% gets accrued on it. This is a retirement benefit is provided by those companies who has more than 20 employees working with them.

4. Professional Tax:

This tax is levied by state. The maximum limit is Rs.2,500/-. It is deducted by the employer from the salary of employees and deposited  with the State Government. This can be claimed as a deduction while filing income tax return.

5. Deduction u/s 80C:

By investment in following tax saving schemes  upto a maximum limit of Rs.1,50,000/- an individual can save taxes

  • PPF (Public Provident Fund)
  • EPF (Employees’ Provident Fund)
  • Five year Bank or Post office Tax saving Deposits
  • NSC (National Savings Certificates)
  • ELSS Mutual Funds (Equity Linked Saving Schemes)
  • Kid’s Tuition Fees
  • SCSS (Post office Senior Citizen Savings Scheme)
  • Principal repayment of Home Loan
  • NPS (National Pension System)
  • Life Insurance Premium (Read : ‘Best Term insurance plans‘)
  • Sukanya Samriddhi Account Deposit Scheme

6. Deduction u/s 80D:

  • In case of the individual, Rs. 25,000 for himself and his family
  • If individual or spouse is 60 years old or more the deduction available is Rs 50,000
  • An additional deduction for insurance of parents (father or mother or both, whether dependent or not) is available to the extent of Rs. 25,000 if less than 60 years old and Rs 50,000 if parents are 60 years old or more.
  • For uninsured super senior citizens (80 years old or more) medical expenditure incurred up to Rs 50,000 shall be allowed
  • A deduction of Rs. 5000 will be allowed under this section for payment of preventive health check-up of either the individual himself or his family members which includes spouse, parents and dependent children.This deduction is NOT in addition to the deduction of Rs.25000/50000 stated above, but is included in the above deduction.

7. Deduction u/s 80DD:

You can claim up to Rs 75,000 for spending on medical treatments of your dependents (spouse, parents, kids or siblings) who have 40% disability. The tax deduction limit of upto Rs 1.25 lakh in case of severe disability (i.e. disability of 80% or above) can be availed.

To claim this deduction, you have to submit Form no 10-IA.

8. Section 80TTA:

This deduction in respect of interest on deposits in the savings which is available for Resident Individual or HUF (other than those assessee who has covered in Section 80TTB) and Maximum deduction of Rs. 10,000/- will be allowed under this section

9. Section 80TTB:

This deduction in respect of interest on deposits in case of senior citizens (a resident individual who is of the age of sixty years or more at any time during the relevant previous year) and Maximum deduction of Rs. 50,000/- will be allowed under this section

The above given list is not exhaustive one i.e. this not complete list, I have discussed here only some common deductions and allowances. If you want detailed discussion on any of the above deductions or allowances then you can ask me on my email id: taxitrj1@gmail.com or write at the comment box.

Checkout the Tips to Save Income Tax Deductions for Salaried Employees

(Republished with Amendments by Team Taxguru)

Author Bio

Qualification: CA in Practice
Company: JItender Kanswal & Co
Location: Dehradun, Uttarakhand, IN
Member Since: 31 Jan 2018 | Total Posts: 6
A qualified Chartered Accountant having around 5 years of experience in accounts & finance field. Skilled in project analysis, variance analysis, project report preparation & financial reporting. View Full Profile

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28 Comments

    1. cajitender1986 says:

      No deduction will be allowed for expenses on own study. Only childrens’ tution fees is allowed as deduction u/s 80 C

  1. cajitender1986 says:

    Dear all thanks you all for your valuable time. If you have any queries than you can mail me at taxitrj1@gmail.com
    & for informational videos pls subscribe my youtube channel ” Free Mein Seekho”. It shares valuable information.

    1. cajitender1986 says:

      Dear Mr. Indrajeet,
      First of all I want to clarify that HRA exemption is different from sec 80 C deductions & its limit of Rs 1,50,000/-
      HRA is an exemption u/s 10 from salary.
      Criteria to calculate HRA is as follows:
      Lowest of the following is exempt from tax
      1. Actual HRA received.
      2. Rent paid -10% of Baisc Salary ( it included DA if it is forming part of retirement benefits)
      3. 40 % or 50 % of Basic Salary ( 40 % if non metro cities)

      Thanks you

  2. JIGNESH PATEL says:

    In the recent budget FM declared 40K standered deduction, does it replace Conveyance allowance 19200 and Medical Relief of Rs 15000/-
    Please calrify.
    Thanks

    1. cajitender1986 says:

      Dear Mr. Jignesh, This will be in lieu of the existing transport allowance and medical expense reimbursement. So it means you will be able to claim extra exemption of Rs 5,800/- from FY 2018-19.

  3. Karan Siingh says:

    In above youo have mentioed against transport allowance of 19200 and medicacal reimbucement of rs 15000/ but the same has already been abloished by our finance minister in recently budget than how can we receive the deduction on the same, pl clarify.

    1. cajitender1986 says:

      Dear Mr. Karan,
      yes it is true that transport allowance & medical reimbursement cannot be claimed from FY 2018-19 that’s why standard deduction of Rs.40,000/- is introduced. But for upto FY 2017-18, position us unchanged and you can claim medical reimbursement & transport allowance as usual.

    1. cajitender1986 says:

      Dear Mr. Biswajit,
      Education allowance, if provided in your salary structure, is exempt upto Rs 100 per month per child up to a maximum of 2 children.
      i.e.both parents can claim separate exemption.

  4. Ramesh M says:

    Hi Sir,

    Iwould like to know is there any limit for Rent paid by employee in Cash…

    some employee showing Agreement copy along with self rent receipt copy and providing owner PAN card as well but making the payment in CASH.. is it fine or we have any limit for this cash transaction

    1. cajitender1986 says:

      Yes Akshay you are absolutely correct but Standard deduction of Rs 40,000/- in place of medical reimbursement & transport allowance is applicable from next financial year. And this information useful for those individuals who are about to file their ITR for AY 2018-19

  5. Deepak Joshi says:

    Sir i want to more information of saving
    tax for salarised individuals in detail
    further will you please explain me whether
    expenses incurred during the year by any
    salarised individual can claim that expenses
    from his gross salary for example
    car petrol expenses maintenance and repairs of car and other miss expenses

  6. mittal says:

    Respected Sir,
    Whether this form no. 10-IA is mandatory of filing with Income tax return while file Return Electornically with for Section 80 U also or it is sufficient if one has taken this certificate from concerned Medical Authority and Keep with oneself , and whenever required by Income tax Authority, it can be submitted.
    Thanks with Regards,
    Please guide,

  7. mittal says:

    Respected Sir,
    Please tell me about this form no. 10-IA ,performa etc. from what date it has become applicable? Is it mandatory to fill this form while file Return Electornically, if not submitted this form no. 10-IA for fy. Ended 31.03.2016 and 31.03.2017, any remedy for that?

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