Investments allowable as deduction under Income Tax Act

Investments allowable as deduction under Income Tax Act

The Income Tax Act provides that on determination of the gross total income of an assessee after considering income from all the heads, certain deductions therefrom may be allowed. Here an attempt is made to explain all types of investment like deduction under income tax act:

• Payment of premium for annuity plan of LIC or any other insurer: Deduction is available upto a maximum of Rs. 1,50,000/-. The premium must be deposited to keep in force a contract for an annuity plan of the LIC or any other insurer for receiving pension from the fund. 

• Deposit made by an employee in his pension account to the extent of 10% of his salary: Where the Central Government makes any contribution to the pension account, deduction of such contribution to the extent of 10% of salary shall be allowed. Further, in any year where any amount is received from the pension account such amount shall be charged to tax as income of that previous year. benefit to any individual assesse, not being a Central Government employee.

• Payment of medical insurance premium: Individual can claim a deduction of up to Rs 25,000 for the insurance of self, spouse, and dependent children. An additional deduction for the insurance of parents is available to the extent of Rs 25,000 if they are less than 60 years of age, or Rs 50,000 (as per the Budget 2018) if your parents are aged above 60.
• HUF
  An HUF can claim a deduction under section 80D for a mediclaim taken for any of the members of the HUF. This deduction will be Rs.25,000 if the member insured is less than 60 years, and will be Rs.30,000 (increased to Rs.50,000 in Budget 2018) if the insured is 60 years of age or more.

• Deduction in respect of any income by way of royalty in respect of a patent registered on or after 01.04.2003. shall be available as :-Rs. 3 lacs or the income received, whichever is less:      The assessee who is a patented must be an individual resident in India. The assessee must furnish a certificate in the prescribed form duly signed by the prescribed authority alongwith the return of income.

• Deduction of Rs.40,000:  Union Budget 2018-19, the Finance Minister has proposed to provide Rs 40000 Standard Deduction from salary income to all employees & pensioners. As per the Tax rules that are applicable for FY 2017-18 (AY 2018-19) ; ... These allowances are part of Section 10 of the Income Tax Act.

• Investment under Rajiv Gandhi Equity Savings Scheme, 2013 / Sukanya Samruddhi Scheme,2016 / Pradhan mantri Jan dhan Yojan ,2017 etc

• Deduction in respect of interest on loan taken for residential house property: Vide Finance Act 2016, an individual is allowed a deduction upto a limit of Rs 2,00,000 being paid as interest on a loan taken from a Financial Institution.

• Deduction in respect of interest on deposits in savings account:    Section 80TTA is  provide deduction to an individual or a Hindu undivided family in respect of interest received on deposits in a savings account held with banks, cooperative banks and post office. The deduction is restricted to Rs 10,000 or actual interest whichever is lower.

• Deduction of Rs.75,000/- to an individual who suffers from a physical disability (including blindness) or mental retardation: Further, if the individual is a person with severe disability, deduction of Rs.75,000/- shall be available u/s 80U.more than 80% the limit Rs.1,00,000.

• Deduction in respect of payment in the previous year of interest on loan taken from a financial institution or approved charitable institution for higher studies: Sec 80 E    : This provision has been introduced to provide relief to students taking loans for higher studies. The payment of the interest thereon will be allowed as deduction over a period of upto 8 years. Higher education - pursued after passing the senior secondary examination or its equivalent from any recognized school, board or university.  

• Rebate Of Rs 2,500 For Individuals Having Total Income Upto Rs 5 Lakh: Finance Act 2017 has provided relief in the form of rebate to individual taxpayers, resident in India, who are in lower income not exceeding Rs 5,00,000/-. The amount of rebate is Rs 2,500/- or the amount of tax payable, whichever is lower.

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