Employee Investment Guidelines for FY 2019-2020 (How to Save Tax)

• i. 50% of basic salary (only in case of house is situated 40% for others
• ii. Actual rent paid in excess of 10% of basic salary
• iii. Actual HRA received

Salary includes Basic Salary & Dearness allowance

If the rent paid is 10% or less than 10% of salary, no exemption will be admissible.

HRA is fully taxable, if HRA is received by an employee who is living in his own house or if he does not pay any rent.

Individuals will be now required to deduct 5% TDS (Tax Deducted at Source) for rental payments above Rs. 50,000 per month.

If rent exceeds Rs. 1,00,000/- per annum, Employee has to furnish PAN card copy of Landlord.

The exemption shall be available in respect of 2 journeys performed in the block of 4 calendar years.

Journey has to perform in India (Domestic)

Definition of Family :

• Spouse and children of the individual.
• Parents, brothers and sisters who are wholly or mainly dependent

There is no as such ceiling limit for LTA.

• The quantum of exemption is subject to the following maximum limits, depending upon the mode of transport used or available :

ii) Where no recognized public transport system exists, the air-conditioned first class rail fare, for the distance of the journey by the shortest route, as if the journey has been performed by rail.

Set- off of losses from house property against any other income is restricted up to Rs.2,00,000/ and balance unabsorbed loss from house property can be carried forward for eight subsequent years.

• Total deduction under section 80C for various investments can’t exceed 1,50,000/-
• Only premium paid and services tax are allowed as deduction and late payment charges will not qualify for
• Tax benefit on premium payment will be restricted to maximum of
  • Policy issued before 1st April,2012 – 20% of the actual capital sum assured
  • Policy issued on or after 1st April,2012 – 10% of the actual capital sum
  • Policy issued on or after 1st April 2013 – In cases a) person with disability or a person with severe disability as referred to in section 80U, or (b) suffering from disease or ailment as specified in the rules made under section 80DDB -15% of actual capital sum assured.

• Total deduction under section 80C for various investments can’t exceed Rs.1,50,000/-
• Only contribution in the current Financial Year will be considered for

• Total deduction under section 80C for various investments can’t exceed 1,50,000/-.
• ULIP of UTI, ULIP of LIC Mutual Fund and Bank term deposit should have lock in period of 5

• Total deduction under section 80C for various investments can’t exceed 1,50,000/-.
• Contribution to NSC VIII has only been notified by the Central Government under this section eligible for

• Total    deduction      under     section    80C     for    various    investments     can’t    exceed Rs.1,50,000/-
• Full-time education includes any educational course offered by any university, college, school or other educational institution to a student who is enrolled full-time for the said course. It is also clarified that full-time education includes play-school activities, pre nursery and nursery classes.
• Only tuition and term fees are allowed as deduction.
• Admin Charges, bus charges, exam fees, donations, uniform fees, sports fees, computer fees, etc. are not considered for exemption.
• Fees in respect of full-time education of any two children of the employee are allowable

• Total deduction under section 80C for various investments can’t exceed Rs.1,50,000/-
• Only Principal amount is eligible for deduction

• Any sum paid or deposited during the year in any Bank or Post Office as a subscription to Sukanya Samriddhi Account in the name a girl child of that employee including a girl child for whom the employee is the legal guardian
• Total deduction under section 80C for various investments can’t exceed Rs.1,50,000/

• Maximum upto Rs.25,000/- & for Senior citizens it is Rs.30,000/- .
• However, deduction for preventive health checkup individually shall not exceed Rs.5,000/- including paid in respect of parents
• Preventive health checkup can be paid in cash but Mediclaim should be paid by any mode other than
• “Family” means the spouse and dependent children
• Senior citizen” means an individual resident in who is of the age of sixty years
• Additional Deduction of Rs. 25,000/- (Rs. 30,000/- for Senior Citizens) for premium paid by the employee on   Mediclaim Insurance of Parents of the employee is available
• Parents need not be dependent on the

• No benefit if the disability is less than 40%.
• Limited to Rs.75,000/- if the disability is 40% or more and less than 80%.
• If disability is more than 80%( Severe Disability) deduction is allowed upto Rs. 1,25,000/-
  • Dependant means spouse, children, parents, brothers and sisters or any

• No benefit if the disability is less than 40%.
• Limited to Rs.75,000/- if the disability is 40% or more and less than 80%.
• If disability is more than 80%, deduction is allowed upto Rs.1,25,000/-.
• Disability means blindness, low vision, leprosy – cured, hearing impairment, locomotors disability, mental retardation & mental illness. .Also include autism, cerebral palsy and multiple disabilities

• Individual below the sixty Years of Age – Rs. 40,000/-
• Any resident individual of age of 60 years or above but less then 80 years– Rs. 60,000/
• resident individual of the age of 80 years or above Rs. 80,000/
• Deduction is available in respect of amount actually paid by the taxpayer on medical treatment of specified disease or ailment (prescribed by the Board, see rule 11DD for prescribed disease or ailment).
• Dependent means spouse, children, parents, brothers and sisters or any of them.

• Deduction shall be allowed in the initial year in which interest is paid and seven subsequent years
• “Higher education” means any course of study pursued after passing Senior Secondary Examination.
• “Relative” means Spouse & Children or the student for whom the individual is legal guardian.

• Value of Residential Property not to exceed Rs. 50 Lakhs
• Deduction is available up to Rs. 50,000 towards interest on loan
• The assessee must not have any Residential house property on the date of sanction of loan.
• When the deduction in respect of interest is claim under this section, deduction in respect of such interest shall not be allowed under any other provisions of the Act for the same AY
• The deduction is allowed up to Rs 50,000 per year starting from FY 2016-17 and subsequent years until the loan is repaid.