We help Thousands of employees to save their taxes every year. There are various deductions that is available to employees to save income tax on salary income.

We have complied various deductions available to salaried employees to save their Income tax for the year 2020 along with the section number for reference.

If you have any doubt on saving taxes then free feel to contact us to maximise your Tax refund.

Section numberDeduction Detail
16(ia)Standard Deduction [Rs. 50,000 or the amount of salary, whichever is lower]
16(ii)Entertainment allowance [actual or at the rate of 1/5th of salary, whichever is less] [limited to Rs. 5,000] – For Government Employees only
16(iii)Professional Tax – Maximum Rs 2500
23(1), first provisoTaxes levied by local authority and borne by owner if paid in relevant year for house property income
24(a)Standard deduction [30% of the annual value (gross annual value less municipal taxes)] for house property income
24(b)Interest on borrowed capital (Rs. 30,000/Rs. 2,00,000, subject to specified conditions) for house property income
10(13A)Least of the following is exempt:

a) Actual HRA Received

b) 40% of Salary (50%, if house situated in Mumbai, Calcutta, Delhi or Madras)

c) Rent paid minus 10% of salary

* Salary= Basic + DA (if part of retirement benefit) + Turnover based Commission

Note:

  i.  Fully Taxable, if HRA is received by an employee who is living in his own house or if he does not pay any rent

 ii. It is mandatory for employee to report PAN of the landlord to the employer if rent paid is more than Rs. 1,00,000
10(14)Children Education Allowance-Up to Rs. 100 per month per child up to a maximum of 2 children is exempt
10(14)Hostel Expenditure Allowance-Up to Rs. 300 per month per child up to a maximum of 2 children is exempt
10(14)Transport Allowance granted to an employee to meet expenditure for the purpose of commuting between place of residence and place of duty-Rs. 3,200 per month granted to an employee, who is blind or deaf and dumb or orthopedically handicapped with disability of lower extremities
10(14)Transport Allowance to an employee working in any transport business to meet his personal expenditure during his duty performed in the course of running of such transport from one place to another place provided employee is not in receipt of daily allowance. Amount of exemption shall be lower of following:

a) 70% of such allowance; or

b) Rs. 10,000 per month.
10(14)Conveyance Allowance granted to meet the expenditure on conveyance in performance of duties of an office – Exempt to the extent of expenditure incurred
10(14)Any Allowance granted to meet the cost of travel on tour or on transfer – Exempt to the extent of expenditure incurred
10(14)Daily Allowance to meet the ordinary daily charges incurred by an employee on account of absence from his normal place of duty – Exempt to the extent of expenditure incurred
10(14)Helper/Assistant Allowance – Exempt to the extent of expenditure incurred
10(14)Research Allowance granted for encouraging the academic research and other professional pursuits – Exempt to the extent of expenditure incurred
10(14)Uniform Allowance – Exempt to the extent of expenditure incurred
10(7)Foreign allowances or perquisites paid or allowed by Government to its employees (an Indian citizen) posted outside India
10(7)Allowances to Judges of High Court/Supreme Court (Subject to certain conditions)
10(45)Following allowances and perquisites given to serving Chairman/Member of UPSC is exempt from tax:

a) Value of rent free official residence

b) Value of conveyance facilities including transport allowance

c) Sumptuary allowance

d) Leave travel concession
10(45)Allowances paid by the UNO to its employees
10(45)Allowances to Retired Chairman/Members of UPSC (Subject to certain conditions)
 10(14)Special compensatory Allowance (Hilly Areas) (Subject to certain conditions and locations)
 10(14)Border area allowances, Remote Locality allowance or Disturbed Area allowance or Difficult Area Allowance (Subject to certain conditions and locations)
 
 10(14)
Tribal area allowance given in (a) Madhya Pradesh (b) Tamil Nadu (c) Uttar Pradesh (d) Karnataka (e) Tripura (f) Assam (g) West Bengal (h) Bihar (i) Orissa – Rs. 200 per month
 10(14)Compensatory Field Area Allowance. If this exemption is taken, employee cannot claim any exemption in respect of border area allowance (Subject to certain conditions and locations) – Rs. 2,600 per month
 10(14)Compensatory Modified Area Allowance. If this exemption is taken, employee cannot claim any exemption in respect of border area allowance (Subject to certain conditions and locations) – Rs. 1,000 per month
 10(14)Counter Insurgency Allowance granted to members of Armed Forces operating in areas away from their permanent locations. If this exemption is taken, employee cannot claim any exemption in respect of border area allowance – Rs. 3,900 per month
 10(14)Underground Allowance is granted to employees working in uncongenial, unnatural climate in underground mines – Up to Rs. 800 per month
 10(14)High Altitude Allowance is granted to armed forces operating in high altitude areas – Up to Rs. 1,600 per month
 10(14)Highly active field area allowance granted to members of armed forces – Up to Rs. 4,200 per month
 10(14)Island Duty Allowance granted to members of armed forces in Andaman and Nicobar and Lakshadweep group of Island – Up to Rs. 3,250 per month
80C ■  Life insurance premium for policy :

 –    in case of individual, on life of assessee, assessee’s spouse and any child of assessee

 ■  Sum paid under a contract for a deferred annuity :

 –    in case of individual, on life of the individual, individual’s spouse and any child of the individual (however, contract should not contain an option to receive cash payment in lieu of annuity)

 ■  Sum deducted from salary payable to Government servant for securing deferred annuity or making provision for his wife/children [qualifying amount limited to 20% of salary]

 ■  Contributions by an individual made under Employees’ Provident Fund Scheme

 ■  Contribution to Public Provident Fund Account in the name of:

 –    in case of individual, such individual or his spouse or any child of such individual

 ■  Contribution by an employee to a recognised provident fund

 ■  Contribution by an employee to an approved superannuation fund

 ■  Subscription to any notified security or notified deposit scheme of the Central Government. For this purpose, Sukanya Samriddhi Account Scheme has been notified vide Notification No. 9/2015, dated 21.01.2015. Any sum deposited during the year in Sukanya Samriddhi Account by an individual would be eligible for deduction.

 ■  Amount can be deposited by an individual or in the name of girl child of an individual or in the name of the girl child for whom such an individual is the legal guardian.

 ■  Subscription to notified savings certificates [National Savings Certificates (VIII Issue)]

 ■  Contribution for participation in unit-linked Insurance Plan of UTI :

 –    in case of an individual, in the name of the individual, his spouse or any child of such individual
 
 ■  Contribution to notified unit-linked insurance plan of LIC Mutual Fund [Dhanaraksha 1989]

 –    in the case of an individual, in the name of the individual, his spouse or any child of such individual
 
 ■  Subscription to notified deposit scheme or notified pension fund set up by National Housing Bank [Home Loan Account Scheme/National Housing Banks (Tax Saving) Term Deposit Scheme, 2008]

 ■  Tuition fees (excluding development fees, donations, etc.) paid by an individual to any university, college, school or other educational institution situated in India, for full time education of any 2 of his/her children

 ■  Certain payments for purchase/construction of residential house property

 ■  Subscription to notified schemes of (a) public sector companies engaged in providing long-term finance for purchase/construction of houses in India for residential purposes/(b) authority constituted under any law for satisfying need for housing accommodation or for planning, development or improvement of cities, towns and villages, or for both

 ■  Sum paid towards notified annuity plan of LIC (New Jeevan Dhara/New Jeevan Dhara-I/New Jeevan Akshay/New Jeevan Akshay-I/New Jeevan Akshay-II/Jeewan Akshay-III plan of LIC) or other insurer

 ■  Subscription to any units of any notified [u/s 10(23D)] Mutual Fund or the UTI (Equity Linked Saving Scheme, 2005)

 ■  Contribution by an individual to any pension fund set up by any mutual fund which is referred to in section 10(23D) or by the UTI (UTI Retirement Benefit Pension Fund)

 ■  Subscription to equity shares or debentures forming part of any approved eligible issue of capital made by a public company or public financial institutions

 ■  Subscription to any units of any approved mutual fund referred to in section 10(23D), provided amount of subscription to such units is subscribed only in ‘eligible issue of capital’ referred to above.

 ■  Term deposits for a fixed period of not less than 5 years with a scheduled bank, and which is in accordance with a scheme11 framed and notified.

 ■  Subscription to notified bonds issued by the NABARD.

 ■  Deposit in an account under the Senior Citizen Savings Scheme Rules, 2004 (subject to certain conditions)

 ■  5-year term deposit in an account under the Post Office Time Deposit Rules, 1981 (subject to certain conditions)

 ■  Contribution to specified account of the pension scheme referred to in 80CCD, in case of central Government employee.
80CCCContributions to certain pension funds of LIC or any other insurer (up to Rs. 1,50,000) (subject to certain conditions)
80CCDContribution to pension scheme notified by Central Government up to 10% of salary (subject to certain conditions and limits). Contribution made by employer shall also be allowed as deduction under 80CCD(2) while computing total income of the employee. However, amount of deduction could not exceed 14% of salary where contribution is made by central government and 10% of salary, where contribution is made by any other employee.
80DAmount paid (in any mode other than cash) by an individual or HUF to LIC or other insurer to effect or keep in force an insurance on the health of specified person. An individual can also make payment to the Central Government health scheme and/or on account of preventive health check-up (subject to limit)
  ■  specified person means:

  –   In case of Individual – self, spouse, dependent children or parents

  ■  Deduction for preventive health check-up shall not exceed in aggregate Rs. 5,000.

  ■  Payment on account of preventive health check-up may be made in cash
80DDDeduction of Rs. 75,000 (Rs. 1,25,000 in case of severe disability) to a resident individual/HUF where (a) any expenditure has been incurred for the medical treatment (including nursing), training and rehabilitation of a dependant, being a person with disability [as defined under Persons with Disabilities (Equal Opportunities, Protection of Rights and Full Participation) Act, 1995] (w.e.f. assessment year 2005-06 including autism, cerebral palsy and multiple disability as referred to in National Trust for Welfare of Persons with Autism, Cerebral Palsy, Mental Retardation & Multiple Disabilities Act, 1999), or (b) any amount is paid or deposited under an approved scheme framed in this behalf by the LIC or any other insurer or the Administrator or the specified company for the maintenance of a dependent, being a person with disability (subject to certain conditions)
80DDBExpenses actually paid for medical treatment of specified diseases and ailments subject to certain conditions
80EAmount paid out of income chargeable to tax by way of payment of interest on loan taken from financial institution/approved charitable institution for pursuing higher education (subject to certain conditions) (maximum period : 8 years)
80EEInterest payable on loan taken by an individual from any financial institution for the purpose of acquisition of a residential house property subject to certain condition. (Maximum deduction 50,000)
80EEAInterest payable on loan taken by an individual, who is not eligible to claim deduction under 80EE, from any financial institution for the purpose of acquisition of a residential house property subject to certain condition. (Maximum deduction 1,50,000)
80EEBInterest payable on loan taken by an individual from any financial institution for the purpose of purchase of an electric vehicle subject to certain condition. (Maximum deduction 1,50,000)
80GDonations to certain approved funds, trusts, charitable institutions/donations for renovation or repairs of notified temples, etc.
80GGIndividuals not receiving any house rent allowance – Rent paid in excess of 10% of total income for furnished/unfurnished resi-dential accommodation (subject to maximum of Rs. 5,000 p.m. or 25% of total income, whichever is less) (subject to certain conditions)
80GGACertain donations for scientific, social or statistical research or rural development programme or for carrying out an eligible project or scheme or National Urban Poverty Eradication Fund (subject to certain conditions)
80GGCSum contributed to any political party/electoral trust24
80TTA Interest on deposits in savings bank accounts (up to Rs. 10,000 per year)
80TTBInterest on deposit in saving account or fixed deposit (upto Rs. 50,000 per year) for senior citizen
80UDeduction of Rs. 75,000 to a resident individual who, at any time during the previous year, is certified by the medical authority to be a person with disability; In the case of a person with severe disability, allowable deduction is Rs. 1,25,000] (subject to certain conditions).
87ATax rebate in case of individual resident in India, whose total income does not exceed Rs. 5,00,000 quantum of rebate shall be an amount equal to hundred per cent of such income-tax or an amount of Rs. 12,500, whichever is less.
50 Deductions to Save Income Tax on Salary

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