Income tax deductions for salaried employees


Income tax deductions for salaried employees

A salaried person always want to use the benefit of income tax deductions because he is able to save or reduce some income tax from his salary due to these deductions.

Here I am sharing the major income tax deductions for salaried employees, which always help to reduce their income tax.

List of Income tax deductions for salaried employees

  • 01. Standard Deduction
  • 02. HRA Deduction
  • 03. Deductions of Section 80C, 80CCC and 80CCD(1)
  • 04. Health Insurance Deduction of Section 80D
  • 05. Deduction for Education Loan for Higher Studies (Section 80E)
  • 06. Deduction for Donations (Section 80G)
  • 07. Deduction on various Savings Account Interest (Section 80TTA)
  • 08. Interest on Home Loan (Section 80C and Section 24)
  • 09. Additional Deduction for Interest on Home Loan (Section 80EE)


01. Standard Deduction 

It is basic income tax deductions which is applicable to all salaried employees. The maximum limit od standard deduction is Rs. 50,000 in a single financial years. 

This limit was Rs. 40,000 in last years but it now has been increased to Rs. 50,000 in Budget 2019. 

02. HRA Deduction

If a salaried employee is living in a rented house and he is also getting HRA in his salary, than he can avail a rebate of HRA for income tax deductions. 

If employees is paying Rs. 5000 as a rent then has not to submit slip but he is paying the rent more then Rs 5000, than he has to submit rent payslip to claim this deduction.

This deduction comes under rule u/s 10 (13a). There are three condition to calculate to calculate HRA rebate.

  • (i) 40% / 50% of salary {BS+DA(T) + T/0 commission}
  • (ii) Actual amount received
  • (iii) Rent paid- 10% of salary {BS+DA(T) + T/0 commission}

The lowest amount which will be get from above three formula, can be claimed to get HRA rebate for income tax deduction.

Note: Rent pay slip/voucher should be submitted to claim of HRA rebate if employee is paying the rent more then Rs. 5000. No need to submit rent pay slip/voucher to claim HRA rebate, if employee is paying the rent less than Rs. 5000.


03. Deductions of Section 80C, 80CCC and 80CCD(1)

Section 80C is one of the largest section to get benefit of deductions in income tax by a salaried employee. The maximum limit to claim deductions under this section is upto Rs. 1.5 lakhs.

There are many government schemes available in the market to invest money and this invested money in a particular financial year can be claimed under section 80C. list of some famous schemes for investment are given below which are eligible for an exemption under Section 80C, 80CCC and 80CCD(1) up to Rs 1.5 lakh.

  • 01. Life insurance premium (LIC, PLI)
  • 02 Equity Linked Savings Scheme (ELSS) mutual fund
  • 03. Employee Provident Fund (EPF)
  • 04. Annuity/ Pension Schemes
  • 05. Principal payment on home loans
  • 06. Children tuition fees
  • 07. Investment in PPF Account
  • 08. Investment in Sukanya Samriddhi Account
  • 09. Purchase of NSC (National Saving Certificate)
  • 10. NPS deposit 
  • 11. Tax savings FDs
  • 12. etc

04. Health Insurance Deduction of Section 80D

A salaried employee can claim various medical expenses under the section 80D of Income tax. Total premium of health insurance paid for self, family and dependent parents in a financial year can be claimed as deduction in income tax. 

The maximum limit for this section is upto Rs. 25000. (for senior citizen parents the limit is upto Rs. 50000)

Health checkups are also covered in this limit.

05. Deduction for Education Loan for Higher Studies (Section 80E)

It is one of the best benefits for a salaried employee to get deduction in income tax. Interest on education loan for higher studies of himself or his children, can be claimed under this section.

The education loan should be granted from a recognized bank or financial institution.

06. Deduction for Donations (Section 80G)

As per Section 80G of the Income Tax Act, 1961, a person will get deduction in income tax who makes donations to charitable trusts or organizations. 

This deduction varies on the basis of donation receiver trust and organisation. Deduction may be get  50% to 100% on donations under this section.


07. Deduction on various Savings Account Interest (Section 80TTA)

If any salaried person enarned interest from his savings accounts, than he can claim deduction upto Rs. 10000 under the section 80TTA of the Income Tax Act, 1961.

This section offers to claim a deduction up to Rs. 10,000 only. In the case of the earned interest is less than Rs. 10000, the whole amount will be claimed for deduction under this section. If earned interest is more than Rs. 10000, the rest amount after 10000 is taxable.

08. Interest on Home Loan (Section 80C and Section 24)

Interest on Home Loan (Section 80C and Section 24) is also one of the best way to save income tax. 

You can claim deductions upto Rs. 2 lakh for interest on home loan under this section. Principal amount of home loan can also be claimed for deduction in the income tax, but it comes in the section 80C. 

09. Additional Deduction for Interest on Home Loan (Section 80EE)

Section 80EE offers to claim an additional deduction of Rs.50,000 (Section 24) for interest on home loan EMI. Subject to the the loan must not be for more than Rs 35,00,000 and the property value must not be more than Rs 50,00,000. 

It is also comulsary that the above person must not have any other property registered under his name at the time of loan is sanctioned.

Post a Comment

0 Comments