How to Save Income Tax for Salaried and Professionals for FY 2018-19?

We are releasing the eBook on Tax Planning which tells you how to save income tax for FY 2018-19 (AY 2019-20) for both Salaried and Professionals. This is a short 43 slide power point presentation (in pdf) which covers all the tax saving sections and investments applicable for tax payers.

But before that lets look at the changes that happened in Income Tax laws in Budget 2018.

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Budget 2018: Changes in Income Tax Rules

1. Standard Deduction of Rs 40,000 for Salaried and Pensioners

2. Transport Allowance & Medical Reimbursement No more tax exempt for salaried

3. Cess hiked from 3% to 4% (renamed as Health & Education cess)

4. Rs 50,000 interest income for senior citizens tax exempted under newly introduced Section 80TTB

5. Health Insurance Premium Tax exemption limit increased to Rs 50,000 u/s 80D for senior citizens

6. Increased deduction for medical treatment u/s 80DDB for senior citizens up to Rs 1 lakh

7. 10% tax on long term capital gains (above Rs 1 Lakh) on stocks & equity based mutual funds. Also 10% dividend distribution tax imposed on dividend paid by equity mutual funds.

For Details of changes read: 13 changes in Income Tax laws from April 1, 2018

Mentioning Some Points I am frequently asked

1. There is NO tax benefit on Infrastructure Bonds

2. There is NO separate tax slab for Men & Women

Budget 2018 - Income Tax Slabs for FY 2018-19
Budget 2018 – Income Tax Slabs for FY 2018-19 (AY 2019-20)

You can download the tax planning eBook for FY 2018-19 by clicking the link below. As stated it covers all the income tax sections available for salaried and Professional tax payers:

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I think on some platforms the above button is not clear, in that case CLICK Here to Download the Tax Planning ebook

We give a brief of all the tax saving sections below:

1. Section 80C/80CCC/80CCD

These 3 are the most popular sections for tax saving and have lot of options to save tax. The maximum exemption combining all the above sections is Rs 1.5 lakhs. 80CCC deals with the pension products while 80CCD includes Central Government Employee Pension Scheme.

You can choose from the following for tax saving investments:

  1. Employee/ Voluntary Provident Fund (EPF/VPF)
  2. PPF (Public Provident fund)
  3. Sukanya Samriddhi Account
  4. National Saving Certificate (NSC)
  5. Senior Citizen’s Saving Scheme (SCSS)
  6. 5 years Tax Saving Fixed Deposit in banks/post offices
  7. Life Insurance Premium
  8. Pension Plans from Life Insurance or Mutual Funds
  9. NPS
  10. Equity Linked Saving Scheme (ELSS – popularly known as Tax Saving Mutual Funds)
  11. Central Government Employee Pension Scheme
  12. Principal Payment on Home Loan
  13. Stamp Duty and registration of the House
  14. Tuition Fee for 2 children

We have done a comprehensive analysis of all the above available options and you can choose which is the best for you.

Know More: Which is the Best Tax Saving Investments for you u/s 80C?

Tax Saving Investment Option under Section 80C/80CCC/80CCD
Tax Saving Investment Option under Section 80C/80CCC/80CCD

2. Section 80CCD(1B) – Investment in NPS

Budget 2015 has allowed additional exemption of Rs 50,000 for investment in NPS. This is continued this year too. We have done a complete analysis which you can read by clicking the link below.

Invest or Not: Should you Invest Rs 50,000 in NPS to Save Tax u/s 80CCD (1B)?

3. Payment of interest on Home Loan (Section 24)

The interest paid up to Rs 2 lakhs on home loan for self-occupied or rented home is exempted u/s 24. Earlier there was NO limit on interest deduction on rented property. Budget 2017 has changed this and now the tax exemption limit for interest paid on home loan is Rs 2 lakhs, irrespective of it being self-occupied or rented. However for rented homes any loss in excess of Rs 2 lakhs can be carried forward for up to 7 years.

Also Read: Should you Invest in Capital Gain Bonds to Save Taxes?

4. Payment of Interest on Education Loan (Section 80E)

The entire interest paid (without any upper limit) on education loan in a financial year is eligible for deduction u/s 80E. However there is no deduction on principal paid for the Education Loan.

The loan should be for education of self, spouse or children only and should be taken for pursuing full time courses only. The loan has to be taken necessarily from approved charitable trust or a financial institution only.

The deduction is applicable for the year you start paying your interest and seven more years immediately after the initial year. So in all you can claim education loan deduction for maximum eight years.

More details @ Tax benefit on Education Loan

5. Medical insurance for Self and Parents (Section 80D)

Premium paid for Mediclaim/ Health Insurance for Self, Spouse, Children and Parents qualify for deduction u/s 80D. You can claim maximum deduction of Rs 25,000 in case you are below 60 years of age and Rs 50,000 above 60 years of age.

An additional deduction of Rs 25,000 can be claimed for buying health insurance for your parents (Rs 50,000 in case of either parents being senior citizens). This deduction can be claimed irrespective of parents being dependent on you or not. However this benefit is not available for buying health insurance for in-laws.

HUFs can also claim this deduction for premium paid for insuring the health of any member of the HUF.

To avail deduction the premium should be paid in any mode other than cash. Budget 2013 had introduced deduction of Rs 5,000 (with in the Rs 25,000/30,000 limit) is also allowed for preventive health checkup for Self, Spouse, dependent Children and Parents. Its continued to this year too.

More Details @ Tax Benefit on Health Insurance u/s 80D

6. Treatment of Serious disease (Section 80DDB)

Cost incurred for treatment of certain disease for self and dependents gets deduction for Income tax. For senior citizens the deduction amount is up to Rs 1,00,000;  while for all others its Rs 40,000. Dependent can be parents, spouse, children or siblings. They should be wholly dependent on you.

To claim the tax exemption you need a certificate from specialist from Government Hospital as proof for the ailment and the treatment. In case the expenses have been reimbursed by the insurance companies or your employer, this deduction cannot be claimed.In case of partial reimbursement, the balance amount can be claimed as deduction

Diseases Covered:

Neurological Diseases

Also Read: 5 Good News for Senior Citizens in Budget 2018

8. Physically Disabled Tax payer (Section 80U)

Tax Payer can claim deduction u/s 80U in case he suffers from certain disabilities or diseases. The deduction is Rs 75,000 in case of normal disability (40% or more disability) and Rs 1.25 Lakh for severe disability (80% or more disability)

A certificate from neurologist or Civil Surgeon or Chief Medical Officer of Government Hospital would be required as proof for the ailment.

Disabilities Covered

  1. Blindness and Vision problems
  2. Leprosy-cured
  3. Hearing impairment
  4. Locomotor disability
  5. Mental retardation or illness
  6. Autism
  7. Cerebral Palsy

Also Read: How to Calculate Income Tax? – explained with example

9. Physically Disabled Dependent (Section 80DD)

In case you have dependent who is differently abled, you can claim deduction for expenses on his maintenance and medical treatment up to Rs 75,000 or actual expenditure incurred, whichever is lesser. The limit is Rs 1.25 Lakh for severe disability conditions i.e. 80% or more of the disabilities. Dependent can be parents, spouse, children or siblings. Also the dependent should not have claimed any deduction for self disability u/s 80DDB.

To claim the tax benefit you would need disability certificate issued by state or central government medical board.

You can also claim tax exemption on premiums paid for life insurance policy (in tax payers’ name) where the disabled person is the beneficiary. In case the disabled dependent expires before the tax payer, the policy amount is returned back and treated as income for the year and is fully taxable.

40% or more of following Disability is considered for purpose of tax exemption

  1. Blindness and Vision problems
  2. Leprosy-cured
  3. Hearing impairment
  4. Locomotor disability
  5. Mental retardation or illness

Also Read:How to Pay 0 Income Tax on Rs 16 Lakh Salary?

How to Save Income Tax for FY 2018-19
How to Save Income Tax for FY 2018-19

10. Donations to Charitable Institutions (Section 80G)

The government encourages us to donate to Charitable Organizations by providing tax deduction for the same u/s 80G. Some donations are exempted for 100% of the amount donated while for others its 50% of the donated amount. Also for most donations, the maximum exemption you can claim is limited to 10% of your gross annual income. Please note that only donations made in cash or cheque are eligible for deduction. Donations in kind like giving clothes, food, etc is not covered for tax exemption.

How to Claim Sec 80G Deduction?

  1. A signed & stamped receipt issued by the Charitable Institution for your donation is must
  2. The receipt should have the registration number issued by Income Tax Dept printed on it
  3. Your name on the receipt should match with that on PAN Number
  4. Also the amount donated should be mentioned both in number and words

Also Read: 25 Tax Free Incomes & Investments in India

11. Donations for Scientific Research (Section 80GGA)

100% tax deduction is allowed for donation to the following for scientific research u/s 80GGC

  1. To a scientific research association or University, college or other institution for undertaking of scientific research
  2. To a University, college or other institution to be used for research in social science or statistical research
  3. To an association or institution, undertaking of any programme of rural development
  4. To a public sector company or a local authority or to an association or institution approved by the National Committee, for carrying out any eligible project or scheme
  5. To the National Urban Poverty Eradication Fund set up

Also Read: How you Loose Money in FD?

12. Donations to Political Parties (Section 80GGC)

100% tax deduction is allowed for donation to a political party registered under section 29A of the Representation of the People Act, 1951 u/s 80GGC. The maximum exemption you can claim is limited to 10% of your gross annual income

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13. House Rent in case HRA is not part of Salary (Section 80GG)

In case, you do not receive HRA (House Rent Allowance) as a salary component, you can still claim house rent deduction u/s 80GG. Tax Payer may be either salaried/pensioner or self-employed.

To avail this you need to satisfy the following conditions:

  1. The rent paid should be more than10% of the income
  2. No one in the family including spouse, minor children or self should own a house in the city you are living. If you own a house in different city, you have to consider rental income on the same

The House Rent deduction is lower of the 3 numbers:

  1. Rs. 5,000 per month [changed from Rs 2,000 to Rs 5,000 in Budget 2016]
  2. 25% of annual income
  3. (Rent Paid – 10% of Annual Income)

You need to fill form no 10BA along with the tax return form

More details @ Claim Tax Benefit for Rent Paid u/s 80GG

Along with the tax saving sections and investments for both salaried and business, it also has details about all the common salary components and their tax treatment. This section can help you to plan your salary components in case your company offers such facility.

We hope that this eBook (in pdf/ppt format) would help you in understanding, planning and saving taxes.

Please give us your feedback and help us improve!

72 thoughts on “How to Save Income Tax for Salaried and Professionals for FY 2018-19?”

  1. Ved Prakash Sinha

    Dear Amit Ji,
    You have described the most typical matter i.e. filing of ITR in a very descriptive way. 80C, 80CCD points are very nice. Every points are clearly described. Never found these info in a single article. Very Nice and resourceful article.

  2. Employer’s contribution to NPS on behalf of the employees exceeding 1.5 lacs is subject to Perks. The same contribution can be claimed as the deduction under Sec. 80 CCD? Confirm whether my understanding is correct?


  3. Hi, I want to invest in Kotak Standard Multicap Fund – Direct Plan (G)

    This SIP will be for 10,000 per month. I already invest in SBI Blue chip fund from last 5 years with SIP of 10,000 per month. I am 27 years old now and want to buy house in 10 yrs.

    Please guide me if this Kotak fund is fine or can you suggest a Multi Cap fund for a goal of 10 years. Thank you!

  4. Superb article with great and useful information. It is very important to save your income tax as much as specially being a low income job person. This article shows about the ideas to overcome the income tax and invest the money at profitable direction

  5. Lalmohan Patnaik

    Dear Sir,
    I have earned around Rs.5000/- by selling some scrips, thus short term capital gain. As per the recent taxation norms, the STCG is 15%. My tax bracket is 30%. Would you please clarify, whether I have to pay tax @15% or 30.4% on the short term capital gain. If it would have been long term capital gain, what will be the impact on tax.
    Thanks and regards.
    Lalmohan Patnaik

  6. Hello Sir, I am a your loyal and regular website reader and finally thought of asking you a question.

    I am giving my portfolio below. I am 35 now and have a kid of 4 year old.

    My monthly income with spouse is 2 lakh. I have home loan of 50 lakh.

    I am doing investment in all four mutual funds from last five years.

    My goal is to have 1 Crore in next 15 years for kid’s education and 2 Crore in next 25 for retirement at the age of 60.

    Can you please review the information and help me if I can complete my goals. Appreciate if you give some suggestions. Thank you.

    5,000 per month – Reliance Regular Savings Growth Equity NOW Reliance Value Fund

    5,000 per month – DSP Blackrock Top 100

    5,000 per month – Birla Sunlife Front Line Equity

    5,000 per month – SBI bluechip fund growth direct

    10,000 per month – RD

    1 lakh FD

    1 Crore Term Insurance Insurance cover

    Total 5 Lakh LIC cover from Jeevan anand and Jeevan tarang

  7. Lavanya Upadhyay


    I was to invest in the below two funds. I can invest 5,000 in each fund. So total 10,000/month. My goal is to generate 10 Lakh corpus in next 7 years. I am a new investor. Please help with the question.

    1. HDFC Short Term Debt Fund
    2. Franklin India Ultra Short Bond Fund

    1. With SIP amount of Rs 10,000 per month generating a corpus of Rs 10 lakh in 7 years, you are expecting a return of 35% per annum. There are NO investment which can give this kind of return without taking huge risk. You have short term debt funds whose returns are similar to Fixed deposits!

      You need to reset the exception either in terms of final corpus, SIP amount or tenure of investment!

      1. Lavanya Upadhyay

        Got it Sir. I agree with you. So if I can reduce the expected corpus and invest in these two funds then what is your opinion. I have low risk appetite and do not want to invest in equity. I want to invest 10K to make sure I have some corpus that will help me with my needs. Please check these funds below. Thank you so much sir again.

        1. HDFC Short Term Debt Fund
        2. Franklin India Ultra Short Bond Fund

  8. Hi Amit, Thank you so much for sharing the best information on this topic. Very Excellent article and all points are indeed very well covered.

  9. Sir,

    Plz explain standard deduction in detail. Is it applicable for all or only for salaried/pensioners only?
    Can a house wife take its benefit?

  10. samarjeet k singh


    I need your help for some financial planning. Can you please check the below information and help. Thank you.

    My age – 34
    Income – 1,00,000/month
    Married and spouse income is 1,00,000/month. We do not have kids.

    Investments are –

    RD – 10,000 per month
    FD – 200,000 rupees

    MF –
    1. SBI Bluechip – 10,000 per month
    2. Aditya birla frontline equity – 10,000 per month

    Insurance – 1 Crore term plan.

    Liabilities – 50 lakh house loan


    1. Want to settle the house loan in next 5 years.

    Please let me know if we are on the right track.

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