MindMap Gallery Personal Income Tax Planning
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Personal Income Tax Planning
Income tax planning is a process that helps you reduce your tax liability by taking advantage of deductions and credits while timing income and expenses. Income tax planning involves analyzing your financial situation as well as the IRS tax code so you can minimize your tax liability.
Edited at 2021-06-27 06:12:21
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Personal Income Tax Planning
Section 87A
ITR filing is still mandatory if your income exceeds the basic exemption limit of Rs. 2.5 Lakh (if age is below 60)
A person is eligible for tax rebate up to Rs 12,500 under section 87A, if the net taxable income does not exceed Rs 5 lakh.
Tax Liability is Nil if the taxable income is less than Rs. 5.0 Lakhs
Standard Deduction for Salaried Persons (Rs.50,000)
Usually deducted from the gross salary and claimed as an exemption
Section 80CCD (Pension Contribution -NPS)
Deduction for self- contribution to NPS – section 80CCD (1B) ; Max Upto 50,000/- Contributions to Atal Pension Yojana are also eligible
Section 80C (Max upto 1.50 lacs only)
Life insurance premium + ULIP
Children Tuition Fees
Public Provident Fund(PPF)
EPF/VPF
National Pension Scheme(NPS)
ELSS(Mutual Fund tax savings schemes)
Tax saving FD/Term deposits(5yrs)
Home Loan Principal Amount
National Savings Certificate(NSC)
Sukanya Samriddhi Yojana(SSY)
Section 80D (Health Insurance forSelf & Parents)
Insurance for self, spouse and dependent children ;Upto Rs. 25,000
Additional deduction for insurance of parents
Aged above 60, the deduction amount is Rs 50,000
Up to Rs 25,000, if they are less than 60 years of age
In case, both taxpayer and parent(s) are 60 years or above, the maximum deduction available under this section is up to Rs.1 lakh.
LTA Section 10(5)
Received by the employee from his employer for travelling on leave
Available only on the actual travel costs not on local conveyance etc..
LTA exemption is available for only two journeys performed in a block of four calendar years
Block applicable for the current period is the calendar year 2018-21
Section 80 EEB(Interest on EV)
“Electric vehicle” has been defined to mean a vehicle which is powered exclusively by an electric motor
Deduction for interest paid on loan taken for the purchase of electric vehicles from the AY 2020-21
Available only to individualsDeduction for interest payments up to Rs 1,50,000 is available
Loan must be sanctioned anytime during the period starting from 1 April 2019
Section 80GG(HRA)(Lowest of 3)
Actual HRA received
Basic + DA(50% in Metro & 40% in Non - Metro)Delhi, Mumbai, Chennai and Kolkata
Actual Rent Paid - 10% of (Basic + DA)
Section 24(B) (Home Loan Interest)
Homeowners can claim a deduction of up to Rs.2 lakh on their home loan interest
Section 80 EEA(Deduction for interest paid on home loan for affordable housing)
Sub Topic
Available only to individuals
In order to claim deduction under Section 80EEA, you should not own any other house property on the date of the sanction of a loan.And the taxpayer should be a first-time home buyer.
Stamp duty value of the house property should be Rs 45 lakhs or less
It will be effective for affordable real estate projects approved on or after 1 September 2019
Deduction for interest payments up to Rs 1,50,000 is available under Section 80EEA
Section 80 E (Interest on Educational Loan)
Available only for 8 years starting from the year in which you start repaying the loan or until the interest is fully repaid whichever is earlier
Disclaimer:This MindMap is just for knowledge & Education purpose only.For any clarifications do contact your CA or tax consultant
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