Check the Updated version of this article- Income Tax Deductions FY 2022-23, Click here
Financial Year 2020-21, brings to us the New Income tax regime, which was announced by the Finance Minister in Budget 2020 for those taxpayers who are fine in foregoing all the available exemptions and deductions and pay tax with simple calculations.
Though the new regime may look simple but choosing between the old and new is a bit complicated task. One has to choose the eligible benefits from the income tax deductions list 2020-21 and apply on this year’s income to see if the Old regime is beneficial or it’s better to go with the new regime.
In this article, I have prepared an infographic to summarize some of the available tax deductions that one may be eligible for and make use of to calculate one’s tax liability.
However, since all the sections require a detailed explanation, which is not possible in this limited space, so I have hyperlinked some of the topics with my other articles written in the blog. You may click on the term and read the same.
There are multiple options you can use while doing Income Tax Savings u/s 80C, you may see the list of qualifying investments here. Yes, It’s not only about your Income sometimes your expenses also let you save on taxes.
Health Insurance is one of the desirable benefits and most sought after these days. As I always say, depending on the employer-provided cover may not be wise, so better to have your own separate health cover for yourself and your family. The premiums you pay comes under section 80D.
You may make some additional tax savings over and above 80C and 80D, by investing in NPS which comes u/s 80CCD. It’s a wonderful product which one may use for Retirement Planning.
Income Tax Deductions List 2020-21 – Infographics
If you are Salaried or even a Pensioner you are eligible for Standard deduction. This is a fixed amount to be deducted from your total Income.
In fact, the standard deduction benefit available in calculating Income from House property was not touched in budget 2020 for the new income tax regime. This means you may continue claiming the same in both the regimes if you are earning Rental Income also.
If you are not earning but paying rent, but are getting HRA (House Rent Allowance) as part of your salary then you are eligible for some tax relief. You may check how the HRA component in your salary slip helps you save on Income tax.
But if you live in a Rented accommodation but are not getting HRA benefit in salary, then you may claim some tax benefit u/s 80GG
The Housing Loan Repayments also relieves you from some tax liability as the Interest portion of the EMI payment is eligible for tax relief u/s 24B, and even the interest of your Education loan comes under section 80E.
Whatever you do, your Tax Planning should be part of your overall Financial Planning and should support your goals.
It is very much visible that there are multiple provisions in tax laws that one may take advantage of while doing the tax planning and save taxes wisely. Some of the provisions applicable to you can be gauged from this Income Tax Deductions list 20-21, for others (if any) you should better consult some tax expert to help you do your tax planning in a better way.