Income Tax : FY 2022-23 (2023)

This page provides all the details you need to know about the Income Tax for the financial year 2022-23.

Table of Contents

  • Income Tax
  • New and Old Tax Systems
  • Tax Slabs - New Tax System
  • Tax Slabs - Old Tax System
  • Section 87A - Tax Rebate
  • Surcharge
  • Health and Education Cess
  • Section 89 - Tax Relief
  • Exemptions and Deductions in New Tax System
  • How to Calculate Income Tax?
  • Income from Salary
  • Income from Property
  • Income from Capital Gains
  • Income from Business or Profession
  • Income from Agriculture
  • Income from Other Sources
  • Exemptions
    • HRA (House Rent Allowance) Exemption:
    • LTA (Leave Travel Allowance) Exemption:
    • Transport Allowance Exemption:
    • Conveyance Allowance Exemption:
    • Children Education Allowance Exemption:
    • Children Hostel Expenditure Allowance Exemption:
  • Deductions
  • Standard Deduction
  • Deductions under Section 80C
  • NPS Deductions (in addition to Section 80C)
  • APS Deductions (in addition to Section 80C)
  • Other Deductions
  • Section 80D - Medical Insurance Premium Paid for Family and Parents
  • Section 80U - Self Disability
  • Section 80DD - Dependents with Disability
  • Section 80DDB - Treatment for Critical Diseases
  • Section 24B - Home Loan related
  • Section 80EE - First Home Buyer
  • Section 80EEA - Affordable Housing
  • Section 80EEB - Purchase of Electric Vehicle
  • Section 80E - Higher Education Loan
  • Section 80G - Donations Paid to Charities
  • Section 80TTA - Interest from Savings Bank (SB) Account
  • Section 80TTB - Interest from FD and RD
  • Section 80GG - Rent Paid but No HRA
  • Section 10 - Professional Tax

Income Tax

If you earn an income or receive a salary from your employer, then you have to pay income tax.

Income tax is a percentage of your income that you pay to the Government of India to fund various development activities in the country.

Financial Year & Assessment year

As you know, a calendar year is from January to December.

For income tax purposes, the financial year concept is taken into consideration.

A financial year is from 1st April to 31st March. For example, the financial year 2022-23 means it is from 01-Apr-2022 to 31-Mar-2023.

Any income earned during a financial year is taxed in the next financial year. So, the financial year in which the tax is assessed or calculated is called the Assessment Year.

For example, any income earned during the financial year 2022-23 will be taxed in the financial year 2023-24. So, 2023-24 is the Assessment year.

New and Old Tax Systems

In the past, there was only one tax system tocalculate your income tax. It had 3 different tax slabs for 3 different age groups. It provided a lot of Exemptions and Deductions that you canmake use of to reduce the amount of income tax you pay to the Government.

But, starting from 01-Apr-2020, there will be 2 tax systems. They are

  1. New Tax System

  2. Old Tax System

The details about each are given below.

1. New Tax System:

New Tax System has been effective since 01-Apr-2020 and it is optional. If you want, you can choose. Or, you can ignore it.

It is a simplified tax system and hence it has

  • only 1 tax slab for all the age groups. It has reduced tax rates as compared to the Old Tax System

  • Most of the exemptionsand deductionsavailable in the old tax system are NOT allowed here. Only a very few exemptions and deductions will be allowed

2. Old Tax System:

This is the tax system that you have been following till 31-Mar-2020. This will still be available and you can choose to follow this the way you used it in the past.

It has 3 different tax slabs for 3 different age groups. It provides a lot of Exemptions and Deductions that you canmake use of to reduce the amount of income tax you pay to the Government.

Which Tax System to Choose?

So, whichtax system should you choose? Old or New?

There is no fixed answer to this question. It varies from one person to another person.

You can work out your income taxamount using both systems and then choose the one that is best for your situation.

Every financial year, you can switch between old and new tax systems. Even if you choose new tax system this financial year, you can switch back to old tax system in the next financial year and vice versa.

But, there is one condition.

You can switch between old and new tax systems if you don't have any kind of business income. If you have any kind of business income, then you can switch back to old tax system only once. After that, you can't move to the new tax system until your business income becomes zero.

Tax Slabs - New Tax System

New Tax System has a simplified tax structure and hence it has only 1 tax slab for all the age groups.

IncomeTax Rate
From Rs. 0 to Rs. 2,50,0000%
From Rs. 2,50,001 to Rs. 5,00,0005%
From Rs. 5,00,001 to Rs. 7,50,00010%
From Rs. 7,50,001 to Rs. 10,00,00015%
From Rs. 10,00,001 to Rs. 12,50,00020%
From Rs. 12,50,001 to Rs. 15,00,00025%
Above Rs. 15,00,00030%

Tax Slabs - Old Tax System

The old tax system has 3 different tax slabs for 3 different age groups. They are given below.

Ordinary Citizen (Below 60 years of Age):

IncomeTax Rate
From Rs. 0 to Rs. 2,50,0000%
From Rs. 2,50,001 to Rs. 5,00,0005%
From Rs. 5,00,001 to Rs. 10,00,00020%
Above Rs. 10,00,00030%

Senior Citizen (60 years to 80 years of Age):

IncomeTax Rate
From Rs. 0 to Rs. 3,00,0000%
From Rs. 3,00,001 to Rs. 5,00,0005%
From Rs. 5,00,001 to Rs. 10,00,00020%
Above Rs. 10,00,00030%

Super Senior Citizen (Above 80 years of Age):

IncomeTax Rate
From Rs. 0 to Rs. 5,00,0000%
From Rs. 5,00,001 to Rs. 10,00,00020%
Above Rs. 10,00,00030%

Section 87A - Tax Rebate

Tax rebate under Section 87A is available onbotholdandnewtaxsystems.

This section was introduced in the financial year2017-18 to provide tax rebate to individuals whose income level is below a specific limit.

If the total taxable income (that is income minus deductions) is less than or equal to Rs. 5 Lakhs, then you will get a tax rebate of a maximum of Rs. 12,500.

This rebate is applied to the income tax payable before applying health and education cess.

The rebate will be Rs. 12,500 or the income tax payable (before cess), whichever is less.

For example, if the tax payable is Rs. 10,000 then the rebate applied will be Rs. 10,000 only. So, the final tax to be paid will be Rs. 0 (zero).

Note:

Earlier, the tax rebate under this section was Rs. 2,500 if the total taxable income was less than or equal to Rs. 3.5 Lakhs.

The rebate amount has been increased to Rs. 12,500 in Budget 2019 and it has been effective since 01-Apr-2019.

Surcharge

Surchargeis same on bothold and new tax systems.

Surcharge is a tax applied on top of the "income tax" payable. Surcharge is based on the level of income earned.

The surcharge for the individuals is given below.

Net Taxable IncomeSurcharge
Less than Rs. 50 Lakhs0% of Income tax
From Rs. 50 Lakhs to Rs. 1 Crore10%of Income tax
From Rs. 1 Crore to Rs. 2 Crore15%of Income tax
From Rs. 2 Crore to Rs. 5 Crore25% of Income tax
Above Rs. 5 Crore37% of Income tax

Health and Education Cess

Health and Education Cess issameon botholdandnewtaxsystems.

Health and Education Cess was introduced in Budget-2018. It has been effective since 01-Apr-2018.

This has replaced the Primary Education Cess and Higher Education Cess.

Health and Education cess is a tax applied on top of the "income tax payable". It is charged at 4% of the income tax.

Section 89 - Tax Relief

Tax relief under Section 89 is available on both old and new tax systems.

As you know, the income tax is calculated on the total income earned during the financial year.

Sometimes, you may receive the past dues (known as salary arrears) in the current financial year and it may increase the income tax you need to pay.

For example, you may receive Rs. 1 lakh as salary arrears in the FY 2022-23 whereas those arrears should have been paid to you in the FY 2015-16.

This delay in receiving the payment may increase the tax you pay because of

  • the income tax slab rates have increased over the years, OR

  • the salary arrears may push you to the next slab of the income tax slab rates

So, to save you from the burden of paying additional tax due to the delay in receiving the salary arrears, the Government allows an option called tax relief under Section 89.

As per this section, any extra tax, that you pay due to the salary arrears, can be reduced subject to conditions.

Exemptions and Deductions in New Tax System

Even though the new tax system doesn't allow most of the exemptions and deductions, it still allows very few exemptions and deductions. They are given below.

Available Exemptions:

  • Transport Allowance given to a divyang (disabled) employee to travel between home and work place

  • Conveyance Allowance given to meet the travel expenses to perform office duties

  • Any Allowance given to meet the travel expenses on tour or on transfer

  • Daily Allowance given to meet the ordinary daily expenses incurred by an employee because of absence from his normal place of duty

Available Deductions:

  • Employer contribution into NPS

  • Retirement benefits, gratuity, etc.

  • Commutation of pension

  • Leave encashment on retirement

  • Retrenchment (redundancy) compensation

  • VRS benefits

  • EPFO Employer contribution

  • NPS withdrawal benefits

  • Education scholarships

  • Payments of awards instituted in public interest

How to Calculate Income Tax?

To calculate income tax, we need the following details.

  • Income from Salary

  • Income from Property

  • Income from capital gains

  • Income from Business or Profession

  • Income from Agriculture

  • Income from any other Sources

  • Various Exemptions availed

  • Deductions under various sections

  • Tax that is paid already

The details about the income, exemptions and deductions are given in the upcoming sections.

Income from Salary

Income from Salary should be considered for both old and new tax systems.

Any amount that you receive from your Employer as a part of your salary or in addition to your salary will fall under this category.

Various components of the Salary are given below.

  • Basic Pay

  • DA (Dearness Allowance)

  • HRA (House Rent Allowance)

  • LTA (Leave Travel Allowance)

  • Medical Allowance

  • Travel allowance

  • Conveyance allowance

  • Children Education Allowance

  • Uniform Allowance

  • Salary arrears

  • Employer's contribution to NPS (National Pension System)

  • Any other allowances

  • Perquisites

Income from Property

The income tax benefits of "income from property" will depend upon whether you choose old tax system or new tax system.

Before jumping into the benefits of old and new tax systems, first let us see some details related to income from property.

Any income that you receive by renting out your property will fall under this category. The income from the property can be positive (gain) or negative (loss).

Gain:

If the rent received is more than the expenses you paid to maintain the property, then it is a gain.

Example: In a financial year, if the rent received is Rs. 60,000 and the expenses you incurred is Rs. 50,000, then you get a gain of Rs. 10,000.

Loss:

If the rent received is lesser than the expenses you paid to maintain the property, then it is a loss.

Example: In a financial year, if the rent received is Rs. 60,000 and the expenses you incurred is Rs. 1 Lakh, then you incur a loss of Rs. 40,000.

Income Calculation:

To calculate the income from the rental property, we need the following details.

Old Tax System:

There is no limit on the gainamount that can be shown under this category. You have to show the entire gain.

But, there is a limit on the loss amount that can be shown under this category. The limit is Rs. 2 Lakhs for the financial year.

If you incur a loss from the property and the loss amount is more than Rs. 2 Lakhs, then any amount above Rs. 2 Lakhs will need to be carried forward for the next 8 financial years.

Example: If you incur a loss of Rs. 4 Lakhs, then you can show only Rs. 2 Lakhs as "loss" under this category for the current financial year.

The remaining loss of Rs. 2 Lakh amount can be shown in the next financial year or during the next 8 financial years.

New Tax System:

There isno limiton the gainamount that can be shown under this category. You have to show the entire gain.

New tax system doesn't allow any lossamount to be included. Also, it doesn't allow the "loss" amount to be carried forward for the next financial years.

Income from Capital Gains

Income from Capital Gains should be considered for both old and new tax systems.

Any income that you receive by selling your capital asset will fall under this category.

Examples of capital assets are given below.

  • Listed Shares

  • Unlisted Shares

  • Equity Mutual Funds

  • Debt Mutual Funds

  • Real Estate

  • Gold

  • Listed Bonds

  • Zero Coupon Bonds

  • Other capital assets, if any

The income that you receive by selling the capital asset can be positive (gain) or negative (loss).

Depending upon the holding periodof the capital asset, the gain or loss can be categorised as below.

  1. Short term capital gain (STCG)

  2. Short term capital loss (STCL)

  3. Long term capital gain (LTCG)

  4. Long term capital loss (LTCL)

Depending upon the capital asset, the tax charged on the capital gain will fall under one of the following categories.

  1. Short term capital gain (STCG) added to your Income and it will be taxed as per the Income tax Slab (under Section 111A)

  2. Short term capital gain (STCG) charged at 15%

  3. Long term capital gain (LTCG) charged at 10%

  4. Long term capital gain (LTCG) charged at 20%

For more details about capital gains tax, please check the Capital Gains Tax page present in this website.

Income from Business or Profession

Income from Business or Profession should be considered for both old and new tax systems.

Any income that you earn as a self-employed or through your business will fall under this category.

Examples for this kind of income are

  • Self employed

  • Freelancer

  • Contractor

  • LIC Agents

  • Chartered Accountants

  • Tuition income for Teachers

  • Doctor's own practice

  • Lawyer's own practice

Note:

If you have any kind of business income and if you opt for the new tax system, then you can switch back to the old tax system only once. After that, you can't move to the new tax system until your business income becomes zero.

Income from Agriculture

Income from Agriculture should be considered for both Old and New tax systems.

If the income from agriculture is the only income for a person, then that income is completely tax free.

But, if the person has any other income in addition to the agriculture income, then the non-agriculture income will be taxed at a higher tax rate.

Example:

If a person earns Rs. 6 lakhs from agriculture and it is his only source of income, then entire Rs. 6 lakhs will be tax free.

If a person earns Rs. 6 lakhs from agriculture and another Rs. 4 lakhs from other sources (such as a business or a job), then the non-agriculture income of Rs. 4 lakhs will be taxed at a higher tax rate.

Income from Other Sources

Income from Other Sources should be considered for both old and new tax systems.

Any income that you receive from the sources other than the ones mentioned in the above sections will fall under this category.

Examples of some of the other sourcesare given below.

  • Interest earned from Savings Bank (SB) account

  • Interest earned from Fixed Deposit (FD) or Recurring Deposit (RD) accounts

  • Pension received from a Pension Fund

  • Dividends received from SharesorMutual Funds

  • EPF account interest earned from employee's contributions (both EPF & VPF) over Rs. 2.5 Lakhs

  • Any winning from Lottery, Puzzle, Race, Game, Gambling, etc

  • Any income from Crypto assets (Virtual Digital Assets)

All the above mentioned income will be taxed as per the income tax slabs except the winning from lottery, puzzle, game.

Winning from Lottery, Puzzle, Race, Game, Gambling:

Any income received from the winning of lottery, puzzle, race, game or gambling is taxed at a flat rate of 30%.

They don't get any benefit of exemptions, deductions or income tax slab rates.

Income from Crypto assets:

Any income from the sale of Crypto assets (Virtual digital assets) is taxed at a flat rate of 30%.

They don't get any benefit of exemptions, deductions or income tax slab rates.

They don't get any benefit of indexation of the gains.

Any loss from the Crypto assets can't be carried forward.

Any loss from the Crypto assets can't be set off with any other gains.

Exemptions

An exemption means exclusion. If an income component is exempt from tax, then it need not be included in the calculation of total income. Note that exemptions will always be lesser than the income.

Examples of exemptions are given below.

  • HRA (House Rent Allowance) exemption

  • LTA (Leave Travel Allowance) exemption

  • Transport Allowance Exemption

  • Conveyance Allowance Exemption

  • Children Education Allowance Exemption

  • Children Hostel Expenditure Allowance Exemption

The details of each exemption are given below.

HRA (House Rent Allowance) Exemption:

HRA exemption is available only in the old tax system. It is not available in the new tax system.

If you receive House Rent Allowance from your salary and you live in a rental property, then you can claim HRA exemption.

It is calculated as the lowest of the following 3 items.

  1. Actual HRA received

  2. 40% of (Basic Pay + DA) if you live in Non-Metro cities. 50% of (Basic Pay + DA) if you live in Metro cities

  3. Rent paid minus 10% of (Basic Pay + DA)

Note:

For this purpose, the Metro cities are Chennai, Mumbai, Kolkata and New Delhi. All other places will be considered as non-Metro.

LTA (Leave Travel Allowance) Exemption:

LTAexemption is available only in the old tax system. It is not available in the new tax system.

If you receive Leave Travel Allowance from your salary and if you travel for your holiday trip in India, then you can claim LTA exemption.

Note that you can claim LTA exemption twice in a block of 4 years.

The 4 years block is determined by the Government. The current block is 2022 to 2025. That is, from 01-Jan-2022 to 31-Dec-2025.

The amount spent on travel tickets can be exempted. But, you can't claim food, accommodation and shopping expenses.

Transport Allowance Exemption:

Transportallowance exemption is available only in the new tax system. It is not available in the old tax system.

Transport allowance exemption is available only to divyang (disabled) employee to travel between home and work place.

There is no limit on the exemption. Entire allowance amount can be exempted.

Conveyance Allowance Exemption:

Conveyance allowance exemption is available on both old and new tax systems.

Conveyance Allowance is different to transport allowance. It is paid to the employee to cover transportation expenses to carry out the official duties.

There is no limit on the exemption. Any amount spent on travel expenses can be exempted.

Children Education Allowance Exemption:

Children education allowance exemption is available only in the old tax system. It is not available in the new tax system.

If you receive Children Education Allowance from your salary, then you can claim this exemption for a maximum of 2 children.

The exemption amount is Rs. 100 per month per child.

So, you can claim a maximum of Rs. 200 per month for 2 children. This comes up to Rs. 2400 for 2 children for the whole financial year.

Children Hostel Expenditure Allowance Exemption:

Children hostel expenditure allowance exemption is available only in the old tax system. It is not available in the new tax system.

If you receive Hostel Expenditure Allowancefrom your salary, then you can claim this exemption for a maximum of 2 children.

The exemption amount is Rs. 300 per month per child.

So, you can claim a maximum of Rs. 600 per month for 2 children. This comes up to Rs. 7200 for 2 children for the whole financial year.

Deductions

Deduction means subtraction. A deduction is a component eligible to reduce the taxable income and hence it reduces the amount of tax to be paid.

Deduction amount can be higher than the income.

Deductions are available under the following categories.

The details about each of the deductions are given in the following sections.

Standard Deduction

Standard deduction is available only in the old tax system. It is not available in the new tax system.

What is Standard Deduction?

Standard Deduction was introduced in Budget 2018 and it has been effective since01-Apr-2018.

This will replace the existing medical allowance exemption and transport allowance exemption. It means you will not get medical allowance exemption of Rs. 15,000 and transport allowance exemption of Rs. 19,200.

How much is it?

Standard deduction amount is a maximum of Rs. 50,000. It means you can deduct Rs. 50,000 from your taxable income directly.

Standard deduction amount was Rs. 40,000 when it was introduced. But, it has been increased to Rs. 50,000 from 01-Apr-2019 onwards.

Eligibility:

The standard deduction is available only to salaried individuals and pensioners. It is not available to Business income or other income categories.

If a pensioner receives a pension from the previous employer, then it is taxable under the head "Salaries". So, the pensioner can claim the standard deduction.

This is available to all category of people such as ordinary citizens, senior citizens and super senior citizens.

You need not produce any bills to get this deduction.

Examples:

If your taxable income is Rs. 4 Lakhs, then you can deduct Rs. 50,000 and your new taxable income will become Rs. 3.5 Lakhs.

If the taxable income is less than Rs. 50,000, then the standard deduction will be limited to the taxable income.

For example, if your taxable income is Rs. 30,000, then the standard deduction will be limited to Rs. 30,000 only.

Deductions under Section 80C

Section 80C deductions are available only in the old tax system. They are not available in the new tax system.

This section provides deductions through various investment schemes.

The maximum limit on deductions allowed under this section is Rs. 1.5 Lakhs.

Even if you have investments more than Rs. 1.5 Lakhs, only Rs. 1.5 Lakhs will be considered for income tax purposes. Any remaining amount will not get any tax deduction benefits.

Various investments that come under Section 80C are given below.

EPF:

EPF (Employees Provident Fund) contribution by the employee. That is, 12% of (Basic Pay + DA) deducted from salary

VPF:

VPF (Voluntary Provident Fund) contribution by the employee. That is, a maximum of 88% of (Basic Pay + DA) contributed voluntarily by the employee. You can voluntarily contribute any amount from 0% to 88% of (Basic Pay + DA)

PPF:

PPF (Public Provident Fund). The amount deposited in PPF scheme

SSA:

Sukanya Samriddhi Account. Amount deposited in Sukanya Samriddhi Account scheme

ELSS:

ELSS (Equity Linked Savings Scheme). Amount invested in ELSS scheme

NSC:

NSC (National Savings Certificate). Amount invested to purchase NSC certificate from a Post Office

SCSS:

SCSS (Senior Citizens Savings Scheme). Amount invested in SCSS scheme of Post Office or Bank

Tax Saver FD:

Tax Saving FD (Fixed deposits). Amount invested in 5 years tax savings FD account from a Bank or Post Office.

Please note that only 5 years Tax Saver FD is considered. Other Fixed Deposit accounts are not considered.

ULIP:

ULIP (Unit Linked Insurance Plan) Premium. The premium amount paid towards a ULIP policy

LIC:

LIC Premium. The premium amount paid towards a LIC life insurance policy

Pension Plan:

Pension Plan. The premium amount paid towards a Pension plan

Tuition Fees:

Children Education Tuition Fees. Tuition fees paid to an Educational Institution, School, College or University located within India. A maximum of 2 children can be considered.

NPS - Tier 1 Account:

NPS (National Pension System) Tier-1 account contribution. Contribution towards Tier-1 account of NPS by an employee, self-employed individual or general public

NPS - Tier 2 Account:

NPS (National Pension System) Tier-2 account contribution. Contribution towards Tier-2 account of NPS by Central Government employees only. No tax benefit for corporate employees or general public

APS:

APS (Atal Pension Scheme). The amount contributed in APS scheme

Home Loan:

Self Occupied Home Loan. The principal component of the home loan paid towards the self occupied home.

Note that only the principal amount is allowed. The interest amount is not allowed.

Also, rental property loan is not allowed here.

Others:

Any other deductions other than the ones mentioned above

NPS Deductions (in addition to Section 80C)

The deduction benefits for investing in NPS (National Pension System) are given below.

These deductions are in addition toRs. 1.5 Lakhs available under Section 80C.

Employer Contribution - Section 80CCD (2):

This deduction is available in both old and new tax systems.

The Employee will get tax deduction for the contribution made by the employer under this section.

The eligible deduction amount is the lowest of the following 3 items.

  • Amount contributed by the Employer

  • 10% of (Basic Pay + DA)

  • Gross total income

This contribution is in addition to Rs. 1.5 Lakh provided under Section 80C.

Additional Benefit of Rs. 50,000 - Section 80CCD 1(B):

This deduction is available only in the old tax system. It is not available in the new tax system.

An additional tax deduction benefit of Rs. 50,000 is available every financial year under section 80CCD (1B) for NPS investments.

This is in addition to Rs. 1.5 Lakhs deductions available under Section 80C.

This deduction has been available since 01-Apr-2015.

APS Deductions (in addition to Section 80C)

The additional deduction benefits for investing in APS (Atal Pension Scheme) are given below.

This deduction is available only in the old tax system. It is not available in the new tax system.

An additional tax deduction benefit of up to Rs. 50,000 is available every financial year under section 80CCD (1B) for APS investments.

This is in addition to Rs. 1.5 Lakhs deductions available under Section 80C.

Other Deductions

The deductions available under various other sections are listed below.

  • Section 80D - Medical insurance premium paid for family and parents

  • Section 80U - Self disability

  • Section 80DD - Dependents with disability

  • Section 80DDB - Treatment for critical diseases

  • Section 24B - Home loan related

  • Section 80EE - First home buyer

  • Section 80EEA - Affordable Housing

  • Section 80EEB - Electric Vehicle Loan

  • Section 80E - Higher Education Loan

  • Section 80G - Donations paid to charities

  • Section 80GGC - Donations paid to Political parties

  • Section 80TTA - Interest from Savings Bank (SB) Account

  • Section 80TTB - Interest from FD and RD

  • Section 80GG - Rent paid but no HRA

  • Section 87A - Tax rebate

  • Section 10 - Professional Tax

The details about each of the deductions are given in the following sections.

Section 80D - Medical Insurance Premium Paid for Family and Parents

Section 80D deduction is available only in the old tax system. It is not available in the new tax system.

This section provides deduction benefits for the following.

  1. Medical insurance premium paid for the family

  2. Medical insurance premium paid for parents

  3. Preventive health checkup cost for the family

The details of each deduction are given below.

1) Medical Insurance Premium Paid for Family:

Medical insurance premium amount paid for the family can be deducted under this section. Family includes self, spouse and dependent children.

  • the allowed deduction amount is Rs. 25,000 for the whole family if all the members of the family are below 60 years of age

  • the allowed deduction is Rs. 50,000 for the whole family if one of the family members is above 60 years of age

2) Medical Insurance Premium Paid for Parents:

Medical insurance premium amount paid for parents can be deducted under this section. Note this includes parents only. Parent-in-laws are not included.Parents may or may not be dependent.

  • Allowed deduction amount is Rs. 25,000 if both the parents are below 60 years of age

  • Allowed deduction amount is Rs. 50,000 if one of the parents is above 60 years of age

3) Preventive Health Checkup Cost:

Preventive health checkup is carried out to identify any diseases and take appropriate measures to prevent it.

Amount spent towards preventive health checkup of family members is allowed for deduction. A maximum deduction of Rs. 5,000 for the whole family is allowed.

Family includes self, spouse, dependent children and parents. Parents may or may not be dependent.

Preventive health checkup cost is inclusive of the above mentioned limits (not over and above).

Section 80U - Self Disability

Section 80U deduction is available only in the old tax system. It is not available in the new tax system.

If you are suffering from physical disability, then you can claim deduction under this section.

  • If you are disabled (40% disability), you can claim a deduction of Rs. 75,000

  • If you are severely disabled (80% disability), then you can claim a deduction of Rs. 1,25,000

You need not produce any document to claim this deduction. But, you need to keep the certificate provided by the Medical Authority certifying your disability.

Section 80DD - Dependents with Disability

Section 80DD deduction is available only in the old tax system. It is not available in the new tax system.

If any of your dependents are suffering from disability, then you can claim deduction under this section.

Dependents can be your spouse, children, parents, brothers or sisters. This deduction is given to provide medical treatment for the disabled.

  • If your dependent is disabled (40% disability), you can claim a deduction of Rs. 75,000

  • If your dependent is severely disabled (80% disability), then you can claim a deduction of Rs. 1,25,000

You should produce the Medical Certificate provided by the concerned Medical Authority certifying the disability of your dependent.

Section 80DDB - Treatment for Critical Diseases

Section 80DDB deduction is available only in the old tax system. It is not available in the new tax system.

You can claim a deduction for the treatment of critical diseases. The treatment can be for either yourself or your dependents.

Dependents include spouse, children, parents, brothers and sisters.

The deduction amount will be as per the following.

  • if the person undergoing the treatment is below 60 years of age, then you can claim Rs. 40,000 or the actual amount spent, whichever is less

  • if the person undergoing the treatment is a senior citizen, then you can claim Rs. 1 Lakh or the actual amount spent, whichever is less

  • if the person undergoing the treatment is a super senior citizen, then you can claim Rs. 1 Lakh or the actual amount spent, whichever is less

The list of critical diseases covered under this section is given below.

1) Neurological Diseases where the disability level has been certified to be of 40% and above

  • Dementia

  • Dystonia Musculorum Deformans

  • Motor Neuron Disease

  • Ataxia

  • Chorea

  • Hemiballismus

  • Aphasia

  • Parkinsons Disease

2) Malignant Cancers

3) Full Blown Acquired Immuno-Deficiency Syndrome (AIDS)

4) Chronic Renal failure

5) Hematological disorders

  • Hemophilia

  • Thalassaemia

Section 24B - Home Loan related

Section 24B deduction benefits will depend upon whether you choose old tax system or new tax system.

Old Tax System:

The interest amount paid towards the home loan can be claimed under this section.

  • if the property is self occupied, then you can claim Rs. 2 Lakhs or the actual interest paid, whichever is less

  • if the property is rented out, then you can claim the entire interest paid as deduction. There is no upper limit for the interest amount

New Tax System:

  • if the property is self occupied, then you can't claim any interest paid. So, the deduction allowed is Rs. zero

  • if the property is rented out, then you can claim the entire interest paid as deduction. There is no upper limit for the interest amount

Section 80EE - First Home Buyer

Section 80EE deduction is available only in the old tax system. It is not available in the new tax system.

First home buyers can get an additional deduction of Rs. 50,000 paid towards theinterestamount of the home loan if they meet all the conditions listed below.

  1. You should be a first home buyer and you should live in that property

  2. The purchase price of the house should be less than Rs. 50 Lakhs

  3. The loan amount borrowed (if any) should be less than Rs. 35 Lakhs

  4. The loan should have been taken during the financial year 2016-17. That is, between 01-Apr-2016 and 31-Mar-2017

This deduction of Rs. 50,000 is in addition to Rs. 2 Lakh deduction available under Section 24B.

This additional deduction amount can be claimed every financial year until the loan amount is fully repaid.

Section 80EEA - Affordable Housing

Section 80EEA deduction is available only in the old tax system. It is not available in the new tax system.

This is a new Section and it was introduced in the full budget of 2019. It has been effective since 01-Apr-2019.

This section provides tax deduction of up to Rs. 1.5 Lakhs for affordable housing subject to the following conditions.

  • You should be a first home buyer. It means that you should not own any other house on the date of loan sanction

  • The home loan should be sanctioned between 01-Apr-2019 and 31-Mar-2022

  • The value of the property (stamp duty value) should not exceed Rs. 45 Lakhs

The interest amount of up to Rs. 1.5 Lakhs paid towards the home loan can be claimed under this section every financial year till the loan is fully repaid.

This deduction of Rs. 1.5 Lakhs is in addition to Rs. 2 Lakhs deduction available under Section 24B.

So, a total deduction of up to Rs. 3.5 Lakhs (that is Rs. 1.5 Lakhs plus Rs. 2 Lakhs) can be claimed by a first home buyer.

Section 80EEB - Purchase of Electric Vehicle

Section 80EEB deduction is available only in the old tax system. It is not available in the new tax system.

This is a new Section and it was introduced in the full budget of 2019. It has been effective since 01-Apr-2019.

This section provides tax deduction of up to Rs. 1.5 Lakhs for the purchase of electric vehicle subject to the following conditions.

  • The electric vehicle should be purchased between 01-Apr-2019 and 31-Mar-2023

  • The vehicle loan should be taken from a financial institution

The interest amount of up to Rs. 1.5 Lakhs paid towards the vehicle loan can be claimed under this section every financial year till the loan is fully repaid.

This deduction benefit is available for both cars and bikes.

Section 80E - Higher Education Loan

Section 80E deduction is available only in the old tax system. It is not available in the new tax system.

The interest amount paid towards the education loan can be claimed as deduction under this section.

Note that only interest amount can be claimed. The principal amount can't be claimed.

Any amount of interest payment can be claimed. There is no upper limit on the interest amount.

The educational loan should be for a Graduate or Post Graduate course in India or Overseas.

The education loan can be taken for yourself, spouse or children.

This deduction facility is available for 8 financial years or till the time the loan is paid off, whichever is earlier.

For example, you have taken an educational loan with a term of 7 years. If you choose to repay in 5 years, then you can claim deduction for 5 years only.

The first financial year will be the year in which you started paying the loan.

Section 80G - Donations Paid to Charities

Section 80G deduction is available only in the old tax system. It is not available in the new tax system.

Donations made to approved Charities, Trusts and Funds can be claimed as deduction under this section.

Donations can be made in the form of cash, cheque or demand draft.

There is no limit on the donation amount made by cheque or demand draft.

But, there is a limit of Rs. 2,000 if the donation is made by cash. That is, the maximum deduction allowed is Rs. 2,000 even if the amount is above Rs. 2,000.

Donations like clothes, food and other items are not allowed for deduction.

Deduction Types:

Depending upon the Charity and Trust Fund, the deduction allowed can be categorised in the following 4 types.

  1. 100% of the donation is allowed for deduction

  2. 50% of the donation is allowed for deduction

  3. 100% of the donation subject to a maximum of 10% of the adjusted gross total income

  4. 50% of the donation subject to a maximum of 10% of the adjusted gross total income

For the calculation purpose, the "Adjusted Gross Total Income" is calculated as follows.

Total Income (minus)
exemptions (minus)
deduction from all Sections of 80 except 80G (minus)
short term capital gain (minus)
long term capital gain

Before you donate, make sure you check the type of the Charity or Trust and then donate.

Section 80TTA - Interest from Savings Bank (SB) Account

Section 80TTA deduction is available only in the old tax system. It is not available in the new tax system.

The interest earned from Savings Bank (SB) account can be claimed as deduction under this section.

A maximum of Rs. 10,000can be claimed as deduction under this section.

For example, if you earn interest amount of Rs. 15,000 from your SB account during the financial year, then Rs. 10,000 can be deducted and the remaining Rs. 5,000 will be the taxable amount.

Savings Bank (SB) account of Bank, Post Office or Co-Operative Society will be considered.

Note that this section only allows SB accounts. Interest earned from Fixed Deposit (FD) and Recurring Deposit (RD) are not allowed for deduction under this section.

Section 80TTB - Interest from FD and RD

Section 80TTB deduction is available only in the old tax system. It is not available in the new tax system.

This section is exclusively for Senior citizens.

This section was introduced in Budget 2018 and it has been effective since 01-Apr-2018.

Senior citizens can use this section to claim deduction on the interest amount earned from Fixed Deposits (FD) and Recurring Deposits (RD) accounts.

A maximum of Rs. 50,000can be claimed as deduction.

For example, if the interest earned from FD and RD accounts in the financial year is Rs. 75,000, then Rs. 50,000 can be deducted and the remaining Rs. 25,000 will be the taxable amount.

Please note that this section can't be used to claim deduction for interest earned from Savings Banks (SB) account.

Section 80 TTB and 80 TTA are mutually exclusive for senior citizens. It means that if a senior citizen is utilising Section 80 TTB, then they can't utilise Section 80 TTA and vice versa.

Section 80GG - Rent Paid but No HRA

Section 80GG deduction is available only in the old tax system. It is not available in the new tax system.

You can use this section to claim deduction if you are living in a rented house but you are not receiving HRA (House Rent Allowance) from your Employer.

The deduction amount that you can claim is the lowest of the following 3 things.

  1. Rs. 60,000 per financial year

  2. Total rent paid (minus) 10% of total salary

  3. 25% of total salary

To claim this deduction, you should meet the following conditions.

  • You should not receive HRA (House Rent Allowance) from your Employer

  • You, your spouse or your minor children should not own any property in the place where you are working

  • If you own a property in a different place than where you are working, then you should rent that property out. You should not claim tax benefits against that property as "self occupied"

Section 10 - Professional Tax

Section 10 deduction is available only in the old tax system. It is not available in the new tax system.

Professional tax is from the State Government of the state in which you are working. So, this amount will vary from one state to another state.

You can use this section to claim deduction on the professional tax paid. Any amount paid as a professional tax can be claimed as deduction.

For example, if you are paying Rs. 200 per month as professional tax, then you can claim Rs. 2,400 (200 x 12) as deduction.

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