Indian Income Tax Issues - taxsavingavenues

1. 80C: In case of taking new life insurance policies, if the premium payable during the financial year is more than 20% of the sum assured, the deduction for premium paid is not available under section 80C. For example, if the sum assured is Rs.1 Lakh and the premium paid during the financial year is more than Rs.20,000, then, no deduction is available under 80C. Employees need to take this precaution while taking up new insurance policies.

2. 80CCD(1B): In case of contribution to notified pension schemes, a. New Pension Scheme b. Atal Pension Yojana, up to Rs.50,000 per year by individual employee of the Central Government or any other employee, or a self-employed individual deduction is available under section 80CCD(1B). This is in addition to the aggregate deduction of Rs.1,50,000 which is given for Sections 80C, 80CCC and 80CCD(1) combined together.

Particulars	Amount Allowable
Medical Insurance on self and family	Actual amount paid subject to maximum of Rs.25,000
Medical Insurance on self and family-in case the insured is a senior citizen	Actual amount paid subject to maximum of Rs.50,000
Preventive Health Check-up for self and family plus preventive health check-up of parent or parents	Actual amount paid subject to maximum of Rs.5,000
Medical expenditure incurred on member of the family being a senior citizen resident in India	Allowable only in case no health insurance was in force. Actual amount paid subject to a maximum of Rs.50,000
Medical Insurance premium paid on parent or parents of the assessee	Actual amount paid subject to a maximum of Rs.25,000.
Medical Insurance Premium paid on senior-citizen parent or parents of the assessee	Actual amount paid subject to a maximum of Rs.50,000
Medical expenditure incurred on parent or parents of the assessee being a senior citizen resident in India	Allowable only in case no health insurance was in force. Actual amount paid subject to a maximum of Rs.50,000

b. Senior citizen for the purpose of this section has been given a meaning of a person who has attained the age of 60 years any time during the previous year.

c. For self and family one of them senior citizens, the total expenditure of Insurance premium plus health check up plus expenditure cannot exceed Rs.50,000.

d. Similarly, for senior citizen parents, the total expenditure cannot exceed Rs.50,000.

e. However, for preventive health check-up, Rs.5,000 is only allowed once within the overall limit. It is to be noted that preventive health check-up for self and family plus parents is restricted to Rs.5,000 only that too within the limit of maximum Rs.50,000 for self and family and parents.

f. Hence, the maximum deduction one can get is Rs.1,00,000, in case expenditure on parents is also made.

4. Section 80EEA: Deduction in respect of loan taken for residential house property.

Eligible Assessee	Individual, not restricted to resident individual provided he is not eligible to claim deduction under section 80EE.
Amount eligible for deduction	Interest payable on loan taken from any financial institution for acquisition of a residential house property. The interest need not be actually paid.
Whether eligible for construction of house property	As per the terminology of the section 80EEA, may not be eligible for construction of house property.
Amount of Deduction under section 80EEA	Rs.1,50,000 per year
Conditions for Deduction	1. Loan is sanctioned by the financial institution from 1.4.2019 to 31.3.2021 2. Stamp Value of residential house property does not exceed Rs.45 Lakh. 3. The Assessee does not own any other residential house property as on date of loan sanction. 4. The amount claimed under Section 80EEA is not allowed again under Section 24(b). It means, for example, if the interest payable is Rs.2 lakh, Rs.1.50 Lakh can be claimed under section 80EEA and the balance Rs.50,000 can be claimed under section 24(b).
Cumulative impact of deduction under section 24(b), 80C and 80EEA, assuming that the value of residential house property is less than Rs.45 Lakh.	24(b) under the head income from house property: Deduction of up to Rs.2 Lakh towards interest payable on loan taken for self-occupied house property and for let out house property, no limit for interest. 80C: Deduction up to Rs.1,50,000 for the repayment of principal on loan. 80EEA: Deduction of up to Rs.1,50,000 towards interest on loan.

5. Section 80G (Donations): Donations which are paid by way of cash are not allowed as deduction if the amount paid is more than Rs.2000.

6. Section 80TTA: deduction of interest on savings bank account up to Rs.10000 on SB accounts maintained with a bank or co-operative bank or post office. Over and above Rs.10000 will form part of taxable income.

7. From the assessment year 2012-13, interest received on a post office savings bank account is exempt to the tune of Rs.3500 in the case of an individual account and to the tune of Rs.7000 in case of a joint account.