Tax saving checklist before filing ITR for AY 2018-19

Tax saving checklist before filing ITR for AY 2018-19

Tax & Auditing

Sanchit Taksali

Sanchit Taksali

330 week ago — 7 min read

The deadline for filing of Income Tax Return (ITR) for AY 2018-19 is approaching. Being an Indian resident, it is mandatory to file your previous year’s earned income to the government as per the Income Tax Act, 1961 section 139(1).


Following are the key points or the checklist which can help you from saving the extraneous tax:


  • Section 80 (C & CCD): One of the most prominent section, which helps every individual to apply for deduction up to Rs. 2 lakhs every year while filing ITR. This year, one must can checklist if not exhausted yet:


  • Section 80C: A list of 14 instruments including Employee Provident Fund (EPF), Public Provident Fund (PPF), National Savings Certificate (NSC), payment towards children’s tuition fees, ELSS, National Pension System (NPS), Life Insurance policy premiums, deposits in the Sukanya Samriddhi Yojana, etc. which gives you deduction benefits of up to Rs. 1.50 Lakh every year.


  • Section 80CCD (1): Further, if you are an employee or planning for your retirement, then you can claim additional deduction benefits of Rs. 50,000/- through National Pension Scheme (NPS).


  • Section 80CCD (2): While in case you are an employer, then the contribution to NPS accountgives you additional deduction benefit of up to 10% of the salary of an employee. It may be noted that there is no monetary ceiling on this deduction.


Moving ahead, with your health policies, if you have taken health policies, then you can claim deduction benefit under:


  • Section 80D: where you can claim the benefit up to Rs 50,000 for senior citizens for a cover of Rs 10 lakh; and for an individual having health policy of senior citizen for a cover of Rs 10 lakhs, may cost around Rs 35,000 to Rs. 40,000 (Age range 61-64 Years); it may go even higher with a higher age group. So, a deduction benefit of Rs 50,000 may provide a huge benefit to senior taxpayers.


Furthermore, for non-senior citizens, if you pay Health Insurance premium on behalf of your parents or spouse, this section provides you with an additional deduction benefit of up to Rs 20,000. Whereas, for the medical expenses of the uninsured super senior citizens (over 80 years old),a deduction of up to Rs. 30,000 is allowed.


  • Section 80DDB: Under this section, one can claim deduction benefit in case of the dependent relative to the rehabilitation of handicapped problem. The government has proposed in the Budget to increase the limit for treatment of critical illness of a specified disease, to Rs 1 lakh for all senior citizens. Earlier, this exemption was available for Rs 60,000 for senior citizens and Rs 80,000 for very senior citizens. Moreover, tax exemption of Rs 40,000 can be claimed for medical treatment of special ailments like cancer, AIDS, etc. However, this one is allowed only for individuals below 60 years of age.


  • Section 80TTA: Another prominently note-worthy section, which gives deduction benefits in respect of interest earned on deposits in the savings account of up to Rs. 10,000. You can get exemption on any number of savings accounts as long as the total amount is less than Rs 10,000.

  • Section 80TTB: For senior citizens, interest income up to Rs. 50,000 is exempted from tax. The interest income can be on savings accounts, fixed deposits, or recurring deposits. Such income shall be on deposits with banks, co-operative banks and post office.

  • Section 80G: If you have made any donation/charitable contributions to a government-approved charitable institutions, then this section, under the IT Act, is a cherry on the cake for you. According to this, you can enjoy 100% tax deduction if you have made a donation to any of the following schemes: National Defence Fund, Prime Minister’s National Relief Fund, The National Foundation for Communal Harmony, and National/State Blood Transfusion Council.


Additionally, one can also claim up to 50% tax deduction on donations made under trusts such as Prime Minister’s Drought Relief Fund, National Children’s Fund, and Indira Gandhi Memorial Fund.


  • Section 80GG: If you are staying in a rented accomodation and haven’t received any House Rent Allowance (HRA) from the employer yet, then this section is notable The taxpayer, spouse or minor child should not own any residential accommodation at the place of employment. Going ahead, a taxpayer should not have self-occupied residential property in any other place.


  • Section 80E: If you had taken an education loan from the scheduled commercial bank for higher studies for self, spouse, children or your legal ward, then you are eligible to claim tax benefits under this section of the IT Act, 1961. However, tax deduction benefit is only applicable for the interest paid on the Education Loan and eliminates the principal amount. Deduction for the interest on loan starts from the year in which an individual has started repaying the loan. The deduction benefit is available only for 8 years.


  • Section 56(2): In case of gifts received by a blood relation, you don’t have to pay tax (100% tax-free) on gifts of any monetary value. However, in the case of gifts received from someone else worth more than Rs. 50,000, you have to pay full tax on it.


  • Section 24(b): If you have recently purchased a house by taking a housing loan then, this section is noteworthy for you. As on every interest paid on your home loan, you can claim a tax deduction benefit of Rs 2,00,000 and additional claim of Rs. 50,000 if you are a first-time home buyer.


In addition to the above sections, following are some standard deductions which one can claim; i.e. medical benefits reimbursed by an employer to the extent of Rs 15,000. Conveyance allowance can be Rs 1,600 per month, effectively Rs 19,200 per annum. This standard deduction of Rs 40,000 will replace the aforementioned benefits. The maximum tax benefit goes up from Rs 34,200 to Rs 40,000 per annum.


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Disclaimer: The views and opinions expressed in this article are those of the author and do not necessarily reflect the views, official policy or position of GlobalLinker.  


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Sanchit Taksali

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