What is the Maximum Income Tax I can save for this Year (FY 2018-19)? A question I am often asked. Tax laws keep changing year on year especially in Budget. We publish eBook every year after budget which tells you about all tax saving options that are available to an individual (both salaried & business). In this post we summarize all the tax saving sections.
Broadly speaking If you are able to avail all these sections you can make more than Rs 11 Lakhs income tax free. But unfortunately not all sections would be applicable for you. The table below gives the details of all the tax exemptions available:
|S. No.||Tax Sections||Description||Maximum Tax Exemption Limit (Rs.)|
|1||80C/ 80CCC/ 80CCD||Investment in EPF, ELSS, PPF, FD, NPS, NSC, Pension Plans, Life Insurance, SCSS, SSA and NPS. Also includes Home Loan Principal repayment, Tuition Fees, Stamp Duty.||150,000|
|2||80CCD(1B)||Investment in NPS||50,000|
|3||24||Interest paid on Home Loan for Self occupied homes.||200,000|
|4||80E||Interest paid on Education Loan. No Limit – Rs 50,000 is just an assumed value||50,000|
|5||80D||Premium payment for medical insurance for self and parents. Includes Rs 5,000 limit for preventive health checkup||60,000|
|6||80DDB||Treatment of Serious illness for self and dependents (Limit of Rs 1,00,000 for Senior Citizens and Rs 40,000 for others)||80,000|
|7||80U||Physically Disabled Tax payer (Rs 75,000 for 40% to 80% disability and Rs 1,25,000 for more than 80%)||125,000|
|8||80DD||Physically Disabled Dependent (Rs 75,000 for 40% to 80% disability and Rs 1,25,000 for more than 80%)||125,000|
|9||80G||Donation to approved charitable funds like Prime Minister Relief fund, etc (assumed value)||50,000|
|10||80GGA||Donations for scientific research or rural development (assumed value)||50,000|
|11||80GGC||Donations to political parties (assumed value)||50,000|
|12 A||80TTA||Interest received in Savings Account||10,000|
|12 B||80TTB||Interest Income for Senior Citizens Only||50,000|
|12 C||10(15)(i)||Interest up to Rs 3,500 for single holder account and up to Rs 7,000 for joint account in Post Office Saving Account||7,000|
|13||80GG||For Rent Expenses who do have HRA component in salary||60,000|
|Maximum Tax Exemption Possible (Rs.)||1,117,000|
Though 11 Lakhs sounds big amount but most people would avail only few of the above. Here is the reason:
- Rs 1.5 Lakhs exemption for donation: People donate for a cause and their passion/empathy and not to save taxes. It’s just that tax exemption sweetens the deal!
- Rs 2.5 Lakhs exemption on account of tax payer or his dependent being physically disabled. This is a much needed exemption but applies to very few tax payers.
- Rs 1,00,000 deduction for treatment of serious illness is something that very few tax payers would take advantage of.
So out of Rs 11 lakhs, around 5 lakhs exemption would be claimed by very few tax payers and in special cases only.
Most tax payers even after using all the tax saving sections would be able to claim tax benefit up to Rs 6 to 6.5 Lakhs.
Tax Saving Sections Summary:
Below is the recap of all tax saving sections for FY 2018-19:
Section 80C/80CCC/80CCD: Investment in EPF, ELSS, PPF, FD, NPS, NSC, Pension Plans, Life Insurance, SCSS, SSA and NPS. Also includes Home Loan Principal repayment, Tuition Fees, Stamp Duty (Best Tax Saving Investments u/s 80C)
Section 80CCD(1B): Investment in NPS (Should you Invest Rs 50,000 in NPS to Save Tax u/s 80CCD (1B)?)
Section 24: Interest paid on Home Loan for Self occupied homes. Budget 2017 has capped the limit to Rs 2 Lakhs for both rented and self-occupied house. You can claim claim Tax Benefit on both HRA & Home Loan – Know How?
Section 80EE: Additional exemption on Home Loan Interest for First time home buyers. (Budget 2016)
Section 80E: Interest paid on Education Loan. No upper/lower Limit! (Tax Benefit on Education Loan (Sec 80E))
Also Read: 25 Tax Free Incomes & Investments in India
Section 80CCG: Budget 2017 removed this tax exemption for RGESS
Section 80D: Premium payment for medical insurance for self and parents. Also includes Rs 5,000 limit for preventive health checkup (Making Sense of Tax Benefit on Health Insurance u/s 80D)
Section 80DDB: Treatment of Serious illness for self and dependents (Limit of Rs 80,000 for person above 80 years, Rs 60,000 for person above 60 years and Rs 40,000 for rest)
Section 80U: Physically Disabled Tax payer (Rs 75,000 for 40% to 80% disability and Rs 1,25,000 for more than 80%)
Section 80DD: Physically Disabled Dependent (Rs 75,000 for 40% to 80% disability and Rs 1,25,000 for more than 80%)
Section 80G: Donation to approved charitable funds like Prime Minister Relief fund, etc
Section 80GGA: Donations for scientific research or rural development
Section 80GGC: Donations to political parties
Section 80TTA: Interest received in Savings Account
Section 80TTB: Interest income for Senior Citizens. They can use either 80TTA or 80TTB but not both together.
Section 80GG: In case you do not receive HRA from employer or are self-employed but NO house in your name (Claim Tax Benefit for Rent Paid u/s 80GG)
We hope this would help you to maximize your income tax savings for FY 2018-19!