What is the Maximum Income Tax You can Save?

What is the Maximum Income Tax You can Save?

What is the Maximum Income Tax You can Save?

Apr 4, 2019 Other by milind

What is the Maximum Income Tax I can save for this Year (FY 2018-19)? A question I am often asked. Tax laws keep changing year on year especially in Budget.

Broadly speaking If you are able to avail all these sections you can make more than Rs 11 Lakhs income tax free. But unfortunately not all sections would be applicable for you. The table below gives the details of all the tax exemptions available:

S. No. Tax Sections Description Maximum Tax Exemption Limit (Rs.)
1 80C/ 80CCC/ 80CCD Investment in EPF, ELSS, PPF, FD, NPS, NSC, Pension Plans, Life Insurance, SCSS, SSA and NPS. Also includes Home Loan Principal repayment, Tuition Fees, Stamp Duty.Best Tax Saving Investments u/s 80C 150,000
2 80CCD(1B) Investment in NPSShould you Invest Rs 50,000 in NPS to Save Tax u/s 80CCD (1B)? 50,000
3 24 Interest paid on Home Loan for Self occupied homes.You can claim claim Tax Benefit on both HRA & Home Loan – Know How? 200,000
4 80E Interest paid on Education Loan. No Limit – Rs 50,000 is just an assumed value


Tax Benefit on Education Loan (Sec 80E)

5 80D Premium payment for medical insurance for self and parents. Includes Rs 5,000 limit for preventive health checkupMaking Sense of Tax Benefit on Health Insurance u/s 80D 60,000
6 80DDB Treatment of Serious illness for self and dependents (Limit of Rs 1,00,000 for Senior Citizens and Rs 40,000 for others) 80,000
7 80U Physically Disabled Tax payer (Rs 75,000 for 40% to 80% disability and Rs 1,25,000 for more than 80%) 125,000
8 80DD Physically Disabled Dependent (Rs 75,000 for 40% to 80% disability and Rs 1,25,000 for more than 80%) 125,000
9 80G Donation to approved charitable funds like Prime Minister Relief fund, etc (assumed value) 50,000
10 80GGA  Donations for scientific research or rural development (assumed value) 50,000
11 80GGC Donations to political parties (assumed value) 50,000
12 A 80TTA Interest received in Savings AccountWhich bank offers highest interest rate on savings account? 10,000
12 B 80TTB Interest Income for Senior Citizens OnlyLearn all about Section 80TTB (introduced in Budget 2018) 50,000
12 C 10(15)(i) Interest up to Rs 3,500 for single holder account and up to Rs 7,000 for joint account in Post Office Saving Account 7,000
13 80GG For Rent Expenses who do have HRA component in salaryHow to Claim Tax Benefit for Rent Paid u/s 80GG? 60,000
Maximum Tax Exemption Possible (Rs.) 1,117,000

The Problem:

Though 11 Lakhs sounds big amount but most people would avail only few of the above. Here is the reason:

  1. Rs 1.5 Lakhs exemption for donation: People donate for a cause and their passion/empathy and not to save taxes. It’s just that tax exemption sweetens the deal!
  2. Rs 2.5 Lakhs exemption on account of tax payer or his dependent being physically disabled. This is a much needed exemption but applies to very few tax payers.
  3. Rs 1,00,000 deduction for treatment of serious illness is something that very few tax payers would take advantage of.

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