What are the Deductions Allowed for Tax Payer in Income Tax, What is the Section 80 of Income Tax 1961, What are the Deductions you can claim under Section 80 and Income Tax Deduction Under Section 80C are the few Questions which is being asked all the Time.
Here in this Article we are Deducing all the various deductions a taxpayer can claim from his total income which would bring down his taxable income and thereby reduce his tax outgoing.
This Article is not only Important for a Tax Payer for also for all the Banking and Finance Student who Aspires to Under these Complex Income Tax System to help Understand Others. Along with this Article we are Basics of Income Tax Guide PDF Download for Free.
Income Tax Deduction Under Section 80 of Income Tax Act, 1961
- Term Plan
- EPF (Employees Provident Fund)
- PPF (Public Provident Fund) & Sukanya Samridhi Scheme
- ELSS (Equity Linked Saving Scheme)
- Home Loan
- Tuition Fee
- NSC (National Saving Certificate) & SCSS (Senior Citizen Saving Scheme)
Union Budget 2019-20 Highlights : Changes in Tax Collection
Finance Minister Piyush Goyal in Budget 2019 proposed many changes in income tax rules for the year 2019-20. Besides higher standard deduction, he also proposed no tax on income up to ₹5 lakh. At present, income up to ₹2.5 lakh is exempt from personal income tax. Income between ₹2.5 and ₹5 lakh attracts 5% tax, while that between ₹5 lakh and ₹10 lakh is taxed at 20%. Income above ₹10 lakh is taxed at 30%.
Budget 2019: Here are 5 changes proposed on the Personal Income Tax Front
- The rebate under Section 87A of the Income tax Act, 1961, has been raised to ₹12,500. It is only applicable for those with net taxable income of up to ₹5 lakh. A rebate is the amount of tax the taxpayer is not liable to pay. So in the next fiscal year, if an assessee has a net taxable income of up to ₹5 lakh, he/she is allowed to claim the entire tax payable as tax rebate. For instance, if an assessee has a gross income of ₹6.5 lakh for the financial year 2019-20, and makes an investment of ₹1.5 lakh under Section 80C, his/her net taxable income comes down to ₹5 lakh, on which his/her tax liability will be ₹12,500 (5% of ₹2.5 lakh), excluding cess (income up to ₹2.5 lakh is exempt from tax). Against this, a rebate of ₹12,500 will be available and, thereby, the net tax will come down to zero.
- Standard deduction increased from ₹40,000 to ₹50000. A standard deduction reduces your taxable income, thereby reducing your tax liability. Standard deduction was re-introduced last year. This increase of ₹10,000 in standard deduction will result in tax savings of ₹3,000 for individuals in the 30% tax bracket (excluding surcharge and cess).
- In the Budget, the finance minister proposed exemption from notional rent in respect of two self-occupied house properties. Currently, if a person has two properties which are self-occupied, deemed rent from one of the house properties is taxable.
- The finance minister also proposed to extend the one-time benefit of capital gains exemption on reinvestment in two house properties. This benefit will apply where capital gains are ₹2 crore or less. Currently, the exemption is applicable only against one house property.
- The threshold on TDS on interest from bank or post office deposits has been increased to ₹40,000, from current limit of ₹10,000. This means interest income on bank/post office deposits up to ₹40,000 will not be subject to TDS.
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