Investment declaration for FY22: Know about the various IT deductions and impact on your salary

A new financial year has just commenced and as with every year, a salaried earning individual has to submit  proposed investments for FY22 so that the employer can plan deductions accordingly.

In short, the take-home salary that you get every month will depend on it since tax will be deducted on the basis of your projected savings.

Therefore, before filing the proposed investment plan, it is important that you understand the details of the deduction rules.

Section 80C

This section allows deduction for investment made in PPF, EPF, LIC premium, equity linked saving schemes, principal amount payment towards home loan, stamp duty and registration charges for purchase of property, Sukanya Smriddhi Yojana (SSY), National Saving Certificate (NSC), Senior Citizen Savings Scheme (SCSS), ULIP, tax saving FD for 5 years, Infrastructure bonds etc.

Section 80CCC

80CCC allows deduction for payment towards annuity pension plans. Pension received from the annuity or amount received upon surrender of the annuity, including interest or bonus accrued on the annuity, is taxable in the year of receipt.

Section 80CCD (1)

Maximum deduction allowed in this section is least of the followings – 1) 10% of salary, in case taxpayer is a employee or 2) 20% of gross total income in case of self employed.

Section 80CCD (2)

Employers’ contribution is allowed for deduction up to 10% of basic salary plus dearness allowance under this section.

Section 80CCD (1b)

Additional deduction of Rs 50,000 is allowed for amount deposited to NPS account. Contributions to Atal Pension Yojana are also eligible for deduction.

Section 80TTA

One may claim a deduction of maximum Rs 10,000 against interest income from your savings account with a bank, co-operative society, or post office. However, FD, RD or other interest income are not included here.

Section 80GG

This deduction is available for house rent paid when HRA is not received by the employee. The deduction is available to all individuals. Deduction is done whichever is lower of rent paid minus 10% of total income or Rs. 5000/- per month or 25% of total income.

Section 80E

Interest paid on education loan is coming under this section. This loan may have been taken for the taxpayer, spouse or children or for a student for whom the taxpayer is a legal guardian.

Section 80EE

Interest is available only to home-owners (individuals) having only one house property on the date of sanction of the loan. The value of the property must be less than Rs 50 lakh and the home loan must be less than Rs 35 lakh.

Section 80D

One can claim a deduction of Rs 25,000 under section 80D on medical insurance for self, spouse and dependent children. An additional deduction for insurance of parents is available up to Rs 25,000, if they are less than 60 years of age.

If the parents are aged above 60, the deduction amount is Rs 50,000.

Section 80DD, 80DDB

Under Section 80DD expenditure incurred on medical treatment, training and rehabilitation of handicapped dependent relative is allowed. Under section 80DDB deduction for medical expenditure on self or dependent relative is allowed up to Rs 40,000 or Rs 60,000 (for senior citizen).

Section 80U

A deduction of Rs.75,000 is available to a resident individual who suffers from a physical disability (including blindness) or mental retardation. In case of severe disability, one can claim a deduction of up to Rs 1,25,000.

Section 80G

Various donations specified in under section 80G are eligible for deduction up to either 100% or 50%. Be it in PM relief fund or CM relief fund or in any other prominent fund can give you the advantages of tax benefit.

Section 80GGC

This clause allows an individual taxpayer deduction of any amount contributed to a prominent political party or an electoral trust.

Section 80TTB

This section was inserted in the Union budget 2018 in which deductions with respect to interest income from deposits held by senior citizens will be allowed. The limit for this deduction is maximum Rs 50,000 per individual.