Revenue Tax Deductions Record FY 2023-24

Tax planning is a vital a part of a monetary plan. Whether or not you’re a salaried particular person, an expert or a businessman, it can save you taxes to sure extent via correct tax planning.

The Indian Revenue Tax act permits for sure Tax Deductions / Tax Exemptions which will be claimed to avoid wasting tax. You’ll be able to subtract tax deductions out of your Gross Revenue and your taxable revenue will get lowered to that extent.

The Authorities of India launched two kinds of tax regimes and left the precise to decide on between the outdated & new regimes to the person taxpayers. The 2 regimes differ primarily based on the revenue tax charge and the revenue tax slab.

From FY 2023-24, the NEW TAX REGIME is a default scheme and whoever not opting the outdated regime, will mechanically be liable to adjust to the New TAX regime. So, Govt would ultimately like to maneuver to a easy and exemption-free tax construction with decrease charges.

Whereas the brand new tax regime provides lowered charges for the taxpayers, it disallows sure tax deductions and exemptions. And the outdated tax regime has a better charge for the person revenue tax slab as compared however provides tax deductions and exemptions for taxpayers who’ve invested in numerous monetary devices.

On this publish, let’s perceive – What are the revenue tax slab charges for FY 2023-24 beneath outdated and new tax regimes? What are the obtainable revenue tax deductions listing FY 2023-24 beneath outdated & new tax regimes? How you can save revenue tax in Monetary Yr 2023-24 (Evaluation Yr 2024-25)?

Newest Revenue Tax Slab Charges FY 2023-24 / AY 2024-25

In case you want to declare your IT deductions and exemptions then your revenue will likely be topic to tax as per the beneath revenue tax slab charges.

In case you go for new tax regime, the relevant revenue tax slabs and charges for FY 2023-24 are as beneath;

Revenue Tax Deductions Record FY 2023-24 / AY 2024-25

People opting to pay tax beneath the brand new proposed decrease private revenue tax regime should forgo nearly all tax breaks that you’ve got been claiming within the outdated tax construction.

Let’s first take a look in any respect the tax deductions and/or exemptions that aren’t obtainable beneath the brand new tax regime for FY 2023-24;

• Probably the most generally claimed deductions beneath part 80C will go.
  • Part 80C deductions claimed for provident fund contributions, life insurance coverage premium, faculty tuition price for youngsters and numerous specified investments resembling ELSS, NPS, PPF can’t be availed.
• Home lease allowance
• Depart Journey Allowance
• Deduction obtainable beneath part 80TTA (Deduction in respect of Curiosity on deposits in financial savings account) and 80TTB (Deduction in respect of Curiosity on deposits to senior residents).
• Curiosity paid on housing mortgage taken (Part 24).
  • Underneath the brand new tax regime, set-off & carry ahead of loss beneath Revenue from Home Property will not be allowed. Nonetheless, you’ll be able to nonetheless use it to nullify rental revenue from a let-out property.
• The deduction claimed for medical insurance coverage premium beneath part 80D may even not be claimable.
• Tax break on curiosity paid on training mortgage won’t be claimable-section 80E.
• Tax break on donations to charitable establishments obtainable beneath part 80G won’t be obtainable

So, all deductions beneath chapter VIA (like part 80C, 80CCC, 80CCD, 80D, 80DD, 80DDB, 80E, 80EE, 80EEA, 80EEB, 80G, 80GG, 80GGA, 80GGC, 80IA, 80-IAB, 80-IAC, 80-IB, 80-IBA, and so forth.) won’t be claimable by these choosing the brand new tax regime.

Revenue Tax Deductions & Exemptions Record for AY 2024-25 | Underneath Outdated & New Tax Regimes

Beneath are the vital revenue tax deductions and exemptions which are obtainable beneath each outdated and new tax regimes for AY 2024-25;

Commonplace Deduction of Rs 50,000

Earlier, the usual deduction beneath Part 16 was allowed solely beneath the outdated tax regime solely.

With efficient from FY 2023-24, the good thing about the usual deduction has been prolonged to the brand new tax regime as nicely. A salaried worker can now avail of a regular deduction of Rs 50,000 from their taxable revenue beneath each the regimes. You don’t have to submit any funding or expense proof to avail of this.

Household pensioners choosing the brand new tax regime will likely be eligible to assert customary deduction of Rs 15,000. Household pension beneath Part 57 (IIA), as much as 33.33% or Rs 15,000, whichever is much less, is eligible. Underneath the revenue from different sources, household pension is taxable u/s 57(iia). Nonetheless, a deduction of 1/third of the household pension as much as Rs 15000 is allowed beneath the outdated tax regime; the identical deduction is now obtainable beneath the brand new tax regime as per Finances 2023.

The usual deduction profit has changed the medical reimbursement and journey allowances for the salaried people.

Part 80CCD (2)

Investing in NPS Tier I provides three tax deductions:

• Deduction of as much as Rs 1.5 lakh from taxable revenue beneath Part 80C.
• Extra deduction of as much as Rs 50,000 beneath Part 80CCD (1B) of the Revenue Tax Act, solely obtainable via NPS funding.
• The third deduction (Sec 80CCD-2, applies to the salaried solely) is within the type of employer’s contribution of as much as 10 per cent of wage (fundamental part + dearness allowance) to the NPS Tier I account. It isn’t thought-about taxable revenue, which reduces the tax burden. Within the case of presidency staff, it’s 14 per cent as an alternative of 10 per cent.
• Underneath the brand new tax regime, the primary two deductions will not be obtainable, however the third one continues.
• Employer contribution on account of worker in notified pension schemes like EPF, NPS and/or Tremendous Annuation Account will be claimed as much as Rs 7.5 lakh restrict.

Curiosity acquired on Publish workplace Account

Underneath Part 10(15)(i) of the Revenue Tax Act, curiosity acquired from the publish workplace financial savings account is exempt from tax for as much as Rs 3,500 for particular person accounts and Rs 7,000 within the case of joint accounts per monetary 12 months.

Gratuity & Different retiral advantages

Gratuity is tax-exempt as much as Rs 20 lakh in a lifetime for non-government staff. For presidency staff, all gratuity acquired is tax-exempt, no matter the quantity acquired by them.

Beneath advantages as much as sure threshold limits (if any) are allowed beneath new tax regime as nicely;

• Commutation of pension
• retrenchment compensation
• VRS advantages
• NPS withdrawal advantages
• Schooling scholarships
• Funds of awards instituted in public curiosity

Revised Depart Encashment Profit

Many of the firms assist you to encash the unused steadiness of leaves throughout your service or throughout resignation. You might be additionally allowed to encash them on retirement. So, encashing the depart steadiness is called ‘Depart Encashment’. (Depart encashment is an outlined profit scheme). Depart encashment guidelines fall beneath Part 10 (10AA)(ii) of the Revenue-tax Act.

Many organizations present the ability of encashment of depart both;

• In the course of the interval of employment (or)
• On the time of retirement (together with separation on account of resignation, retrenchment, VRS and so forth aside from termination) of the worker (or)
• On the time of Termination of the worker.

Associated complete article : Newest Depart Encashment Taxation guidelines | Elevated Tax Exemption Restrict

Curiosity on EPF Account

Efficient 1 April 2022, any curiosity on an worker’s contribution to EPF upto Rs 2.5 lakhs per 12 months is tax-free and any curiosity earned on a contribution over and above INR 2.5 lakhs is taxable within the fingers of the workers. Nonetheless, when there is no such thing as a employer contribution, as is the case for presidency staff, people can contribute as much as Rs. 5 lakh with out being taxed. 

The Curiosity and maturity quantity acquired on Sukanya Samriddhi account, PPF account are tax-free in each outdated and new tax regimes.

Conveyance Allowance

You’ll be able to declare revenue tax exemption for conveyance, journey and different allowances given by your employers beneath each the regimes.

Part 87A revised Tax Rebate of upto Rs 25,000

The brink restrict us/ 87A is Rs 12,500 or Rs 25,000 relying on the kind of tax regime you go for.

• Solely Particular person Assesses incomes internet taxable revenue as much as Rs 5 lakhs are eligible to get pleasure from tax rebate u/s 87A beneath each new and outdated tax constructions.
• People incomes internet taxable revenue of as much as Rs 7 lakh are eligible to assert tax rebate u/s 87A however beneath new tax regime solely.
• The Tax Assessee is first required so as to add all incomes i.e., wage, home revenue, capital features, enterprise or career revenue and revenue from different sources after which deduct the eligible tax deduction quantities u/s 80C to 80U and beneath part 24(b) (Residence Mortgage Curiosity) to give you the web taxable revenue. (In case you go for new tax regime you then can not declare revenue tax deductions u/s 80c, 80d and so forth.,)
• The quantity of tax rebate u/s 87A is restricted to the utmost of Rs 12,500 or Rs 25,000. In case the computed tax payable is lower than Rs 12,500, say Rs 10,000 the tax rebate shall be restricted to that decrease quantity i.e., Rs 10,000 solely.

Associated article : Part 87A Tax Rebate FY 2023-24 | Is Sec 87A Tax Rebate Obtainable beneath New & Outdated Tax Regimes?

Part 54

Therefore, with impact from Evaluation Yr 2024-25, the Finance Act 2023 has restricted the utmost exemption to be allowed beneath Part 54. In case the price of the brand new property (capital asset) exceeds Rs. 10 crore, the surplus quantity shall be ignored for computing the exemption beneath Part 54. As much as FY 2022-23, there was no tax exemption ceiling restrict u/s 54.

Exemption beneath part 54 will be claimed in respect of capital features arising on switch of capital asset, being long-term residential home property. With impact from Evaluation Yr 2021-22, a taxpayer has an choice to make funding in two residential home properties in India to assert part 54 exemption. This feature will be exercised by the taxpayer solely as soon as in his lifetime supplied the quantity of long-term capital acquire doesn’t exceed Rs. 2 crores.

Associated Article : Capital Features Tax Exemption Choices on Sale of Home or Plot | Newest Guidelines

Revenue Tax Advantages obtainable beneath Outdated Tax Regime for FY 2023-24 / AY 2024-25

Beneath are the revenue tax deductions which are obtainable beneath the outdated tax regime solely;

Part 80c

The utmost tax exemption restrict beneath Part 80C is Rs 1.5 Lakh for FY 2023-24. The assorted finest tax saving and funding choices that may be claimed as tax deductions beneath part 80c are as beneath;

• PPF (Public Provident Fund)
• EPF (Staff’ Provident Fund)
• 5 12 months Financial institution or Publish workplace Tax saving Deposits
• NSC (Nationwide Financial savings Certificates)
• ELSS Mutual Funds (Fairness Linked Saving Schemes)
• Child’s Tuition Charges
• SCSS (Publish workplace Senior Citizen Financial savings Scheme)
• Principal compensation of Residence Mortgage
• NPS (Nationwide Pension System) Revenue Tax advantages are at present obtainable on Tier-1 deposits solely. The contributions by the central authorities staff (solely) beneath Tier-II of NPS may even be lined beneath Part 80C for deduction as much as Rs 1.5 lakh for the aim of revenue tax, with a three-year lock-in interval. That is w.e.f April 2019.
• Life Insurance coverage Premium
• Sukanya Samriddhi Account Deposit Scheme

Kindly be aware that the utmost restrict of Rs. 1,50,000 is the combination of the deduction that could be claimed beneath sections 80C, 80CCC and 80CCD.

Part 80CCC

Contribution to annuity plan of LIC (Life Insurance coverage Company of India) or another Life Insurance coverage Firm for receiving pension from the fund is taken into account for tax profit. The utmost allowable Tax deduction beneath this part is Rs 1.5 Lakh.

Part 80CCD

Worker can contribute to Authorities notified Pension Schemes (like Nationwide Pension Scheme – NPS). The contributions will be upto 10% of the wage (salaried people) and Rs 50,000 further tax profit u/s 80CCD (1b) can also be obtainable.

The self-employed (particular person aside from the salaried class) can contribute as much as 20% of their gross revenue and the identical will be deducted from the taxable revenue beneath Part 80CCD (1) of the Revenue Tax Act, 1961.

Contributions to ‘Atal Pension Yojana‘ are eligible for Tax Deduction beneath part 80CCD.

Kindly be aware that the Complete Deduction beneath part 80C, 80CCC and 80CCD (1) collectively can not exceed Rs 1,50,000 for the monetary 12 months 2020-21. The extra tax deduction of Rs 50,000 u/s 80CCD (1b) is over and above this Rs 1.5 Lakh restrict.

Part 80D Tax Profit for AY 2024-25

The beneath threshold limits are relevant for Monetary Yr 2023-2024 (or) Evaluation Yr (2024-2025) u/s 80D.

Medical expenditure of as much as Rs 50,000 will be claimed by a senior citizen supplied he/she has no medical health insurance. So, combination quantity of deduction can not exceed Rs 1,00,000 in any case.

Preventive well being checkup (Medical checkups) bills to the extent of Rs 5,000/- per household will be claimed as tax deductions. Keep in mind, this isn’t over and above the person limits as defined above. (Household contains : Self, partner, dad and mom and dependent kids).

NRIs can also declare tax deduction u/s 80D.

Part 80DD

You’ll be able to declare as much as Rs 75,000 for spending on medical therapies of your dependents (partner, dad and mom, youngsters or siblings) who’ve 40% incapacity. The tax deduction restrict of upto Rs 1.25 lakh in case of extreme incapacity will be availed.

To say this deduction, you must submit Type no 10-IA.

Part 80DDB

A person (lower than 60 years of age) can declare upto Rs 40,000 for the remedy of specified vital illnesses. This may also be claimed on behalf of the dependents. The tax deduction restrict beneath this part for Senior Residents and really Senior Residents (above 80 years) has been revised to Rs 1,00,000 w.e.f FY 2018-19.

To say Tax deductions beneath Part 80DDB, it’s necessary for a person to acquire ‘Physician Certificates’ or ‘Prescription’ from a specialist working in a Govt or Non-public hospital.

Part 24 (B) (Tax Advantages on Residence Mortgage EMIs)

• From FY 2017-18, the Tax profit on mortgage compensation of second home is restricted to Rs 2 lakh each year solely (even when you’ve got a number of homes the restrict remains to be going to be Rs 2 Lakh solely and the ceiling restrict will not be per home property).
• The unclaimed loss if any will likely be carried ahead to be set off in opposition to home property revenue of subsequent 8 years. In many of the instances, this may be handled as ‘lifeless loss‘.
• If development/acquisition will not be accomplished inside 5 years from the tip of the monetary 12 months by which capital was borrowed, the deduction restrict is Rs 30,000 solely.
• Curiosity for pre-construction/acquisition interval is allowable in 5 equal instalments starting from the 12 months of completion of home property.
• If the house mortgage is taken on joint names then the deduction is allowed to every co-borrower in proportion to his share within the mortgage.
• To say tax profit beneath Part 24, it’s best to have acquired possession certificates of your own home. 
• Deduction in the direction of principal compensation of housing mortgage will not be obtainable beneath the new tax regime. 

Part 80E (Tax Profit on Schooling Mortgage)

In case you take any mortgage for increased research (after finishing Senior Secondary Examination), tax deduction will be claimed beneath Part 80E for curiosity that you simply pay in the direction of your Schooling Mortgage. This mortgage ought to have been taken for increased training for you, your partner or your kids or for a pupil for whom you’re a authorized guardian. Principal Reimbursement on academic mortgage can’t be claimed as tax deduction.

There isn’t a restrict on the quantity of curiosity you’ll be able to declare as deduction beneath part 80E. The deduction is on the market for a most of 8 years or until the curiosity is paid, whichever is earlier.

Part 80E is on the market to NRIs as nicely.

Part 80EEA

In addition to the tax deductions beneath Part 80C and 24b, a person can declare as much as Rs 1.5 lakh beneath Part 80EEA from FY 2019-20. The identical is sustained for FY 2023-24 or AY 2024-25 as nicely, topic to beneath situations;

• The house mortgage ought to have been sanctioned between 1st April, 2019 to thirty first March 2020.
• The Stamp responsibility worth of the property shouldn’t exceed 45 Lakhs.
• Taxpayer shouldn’t personal another residential property on the date of mortgage sanction.
• This tax profit will likely be obtainable from 1st April 2020 (AY 2020-21) and until the tip of the house mortgage tenure (closure).
• The overall curiosity deduction is now Rs. 3.5 lakh (Rs 2 Lakh + 
• Rs 1.5 Lakh).

Kindly be aware that the deduction beneath Part 80EEA is on the market for residence loans from banks and accepted monetary establishments solely. Underneath Part 24, even curiosity paid on residence loans from associates and family members is eligible for tax profit.

To say tax profit beneath Part 24, it’s best to have acquired possession of your own home (curiosity paid earlier than possession is eligible for deduction over the following 5 years in 5 equal installments). Part 80EE and 80EEA don’t impose any requirement of possession or completion of development. Due to this fact, Part 80EEA gives you fast tax reduction even when you’ve got bought an under-construction property.

Each resident Indians and non-resident Indians (NRIs) can declare the deduction u.s 80EEA.

Part 80EEB

A Tax deduction of as much as Rs 1.5 lakh will be claimed on Curiosity paid on Loans taken to buy Digital Automobiles. You’ll be able to declare tax deduction advantages provided that the mortgage is accepted between 1 January 2019 and 31 March 2023.

Part 80G

Contributions made to sure reduction funds and charitable establishments will be claimed as a deduction beneath Part 80G of the Revenue Tax Act. This deduction can solely be claimed when the contribution has been made by way of cheque or draft or in money. In-kind contributions resembling meals materials, garments, medicines and so forth don’t qualify for deduction beneath part 80G.

The donations made to any Political celebration will be claimed beneath part 80GGC.

W.e.f FY 2017-18, the restrict of deduction beneath part 80G / 80GGC for donations made in money is lowered from present Rs 10,000 to Rs 2,000 solely.

If you wish to donate some fund to a political celebration of your alternative, you are able to do so in money of as much as Rs 2,000. Past that you simply can not donate the quantity in money mode. It may be executed via Electoral Bonds.

Part 80GG

The Tax Deduction quantity beneath 80GG is Rs 60,000 each year. Part 80GG is relevant for all these people who don’t personal a residential home & don’t obtain HRA (Home Lease Allowance).

The extent of tax deduction will likely be restricted to the least quantity of the next;

• Lease paid minus 10 p.c the adjusted whole revenue.
• Rs 5,000 monthly.
• 25 % of the full revenue.

Part 80 TTA & Part 80TTB

For Senior Residents, the Curiosity revenue earned on Fastened Deposits & Recurring Deposits (Banks / Publish workplace schemes) of upto Rs 50,000 is tax exempted. This deduction will be claimed beneath new Part 80TTB. Nonetheless, no deductions beneath current 80TTA will be claimed if 80TTB tax profit is claimed.

Part 80TTA of Revenue Tax Act provides deductions on curiosity revenue earned from financial savings financial institution deposit of as much as Rs 10,000. From FY 2018-19, this profit won’t be obtainable for late Revenue Tax filers.

• No TDS of as much as Rs 40,000 on curiosity revenue from Financial institution / Publish workplace deposits (the FY 2018-19 TDS threshold restrict u/s 194A is Rs 10,000). Kindly be aware that no TDS doesn’t imply no tax legal responsibility. Curiosity revenue on Deposits (FDs/RDs) remains to be a taxable revenue.

Curiosity revenue from deposits held with firms won’t profit beneath this part. This implies, senior residents won’t get this profit for curiosity revenue from company fastened deposits us/ 80TTB.

Part 80U

That is much like Part 80DD. Tax deduction is allowed for the tax assessee who’s bodily and mentally challenged.

Comparability of Tax Deductions & Exemptions obtainable beneath Outdated & New Tax Regimes

Beneath is the comparability desk to get an general thought of all of the vital tax exemptions and deductions obtainable beneath the outdated and/or new tax regimes for Monetary Yr 2023-24 (AY 2024-25).

Deduction (or) Exemption	Outdated Tax Regime	New Tax Regime
Commonplace Deduction of Rs 50,000	Sure	Sure
HRA Allowance	Sure	No
Rebate u/s 87A (upto Rs 25,000 in new tax regime)	Sure	Sure
Skilled Tax	Sure	No
Curiosity on Residence mortgage u/s 24B on Self-occupied property	Sure	No
Curiosity on Residence Mortgage u/s 24b on let-out property	Sure	Sure
Chapter VI A Deductions (80c, 80CCC, 80CCD, 80D, 80E, 80G and so forth.)	Sure	No
Deduction u/Sec 80CCD(1B) of As much as Rs. 50,000	Sure	No
Staff Contribution to NPS/EPF (Sec 80CCD-2)	Sure	No
Employer’s Contribution to NPS	Sure	Sure
Financial institution Account Curiosity Sec 80TTA & 80TTB	Sure	No
Gratuity Profit	Sure	Sure
Depart Encashment Profit	Sure	Sure
Part 54 (Reinvestment of Lengthy-Time period Capital Features)	Sure	Sure

A phrase of recommendation:

It’s prudent to keep away from final minute tax planning. Don’t put money into low-yielding life insurance coverage polices or in another monetary merchandise simply to avoid wasting taxes. It’s higher you propose your taxes primarily based in your monetary objectives at the start of the Monetary Yr itself. 

It’s OK to pay some taxes once you can not save or can not put money into proper monetary merchandise. However don’t make investments simply to avoid wasting TAXES. The price of shopping for fallacious monetary merchandise might outweigh the price of taxes. Tax Planning will not be a purpose however a software. Keep in mind “Tax Planning alone will not be Monetary Planning.”

Kindly perceive the tax remedy of the chosen funding merchandise throughout the completely different funding levels (i.e., funding, accrual & withdrawal) after which make investments.

As mentioned, beneath the brand new tax regime, the people can decide to pay tax on the lowered charges with out claiming the assorted tax exemptions and deductions. So, you’ll have to work out your tax legal responsibility beneath the outdated and new tax regime earlier than deciding which one is extra helpful.

Proceed studying :

(In case you have any questions in your private monetary issues, you’ll be able to publish them in our Discussion board part. We’re more than pleased to reply and assist you to in making knowledgeable funding choices.)

(Publish first printed on : 07-Aug-2023)