Thus, a person opting for the new tax regime shall not be entitled to claim deduction u/s 80TTA(Deduction in respect of Interest on deposits in savings account) and 80TTB(Deduction in respect of Interest on deposits to senior citizens)."
It is in effect from the assessment year of 2019-20. HUFs and individuals can avail the deductions allowed under Section 80TTA. Only senior citizens can avail the deductions made available under 80TTB. Only interest on savings accounts qualifies for a deduction under this section.
What are the Deductions Applicable for Senior Citizens in the New Income Tax Regime? The deductions applicable for senior citizens as per the Union Budget 2020-21 are as follows: Pension: There exists a standard deduction of ₹50000 yearly for pensions.
Income tax exemption limit is up to Rs. 3,00,000 for senior citizen aged above 60 years but less than 80 years.
As per the latest changes in the Income Tax Act, the standard deduction for senior citizens is ₹50,000. As per the latest changes in the Income Tax Act, the standard deduction for senior citizens is ₹50,000.
Standard deduction means a flat deduction to individuals earning salary or pension income. It was introduced back in Budget 2018 in lieu of exemption of transport allowance and reimbursement of miscellaneous medical expenses. FY 2020-21 the limit of the standard deduction is Rs 50,000.
2) Further, employees can also claim an additional deduction of up to Rs 50,000 for contributing to NPS under Section 80CCD (1b). Only those investing in Tier 1 NPS accounts, will be able to claim this additional deduction of Rs 50,000. No tax benefits are available for those investing in Tier 2 NPS funds.
The new tax regime is different in two ways from the old one. Firstly, it has more slabs with lower tax rates. And secondly, all the major exemptions and deductions available to taxpayers in the existing (old) tax regime are not allowed if the new tax regime is chosen.
According to section 80TTB of the Income Tax Act, you can save up to Rs. 50,000 on interest earned in one FY. TDS (Tax Deducted at Source) is deducted when annual interest amount exceeds Rs. 10,000.
The maximum limit for claiming deduction under Section 80CCD is ₹ 2,00,000: up to ₹ 1,50,000 can be claimed under Section 80CCD(1) and additional ₹ 50,000 can be claimed under Section 80CCD(1B).
Sections 80CCD, 80CCC and 80C
The benefits of Section CCD fall under those of 80C, i.e., the deductions claimed u/s 80CCD cannot be claimed again in 80C. The overall limit of deductions under 80C, 80CCC and 80CCD is Rs. 2 lakh, with an additional deduction of Rs. 50,000 allowed u/s 80CCD sub section 1B.
Any individual who is Subscriber of NPS can claim tax benefit under Sec 80 CCD (1) with in the overall ceiling of Rs. 1.5 lac under Sec 80 CCE. An additional deduction for investment up to Rs. 50,000 in NPS (Tier I account) is available exclusively to NPS subscribers under subsection 80CCD (1B).
The new tax regime offers the flexibility to the taxpayer to invest their money as they prefer. With the new scheme, there is no obligatory requirement to invest in tax saving schemes and insurance plans which may not be in alignment with their financial goals.
Taxpayers who are at least 65 years old or blind will be able to claim an additional 2022 standard deduction of $1,400 ($1,750 if using the single or head of household filing status).
Standard deduction to pensioners & salaried persons
2.5 Lakhs for AY 2019-20 and is continued for AY 2021-22 also. For Senior citizens, the basic exemption limit is set @ Rs. 3 Lakhs.
You can claim deduction under Section 80TTB by filing your income tax return. First, the income should be included in your income under the head 'Income from other sources', and then claim Section 80TTB deduction.
Section 80CCD (2)
The contribution made by the employer can be equal to or higher than the contribution of the employee. This section applies to only salaried individuals and not to self-employed individuals. The deductions under this Section can be availed over and above those of Section 80 CCD (1).
A salaried individual can claim a deduction under 80CCD to the extent of 10% of the salary (Basic + DA) and a self-employed individual can claim a deduction up to the extent of 10% of the gross annual income. The maximum quantum of the claim under 80CCD (1) and 80CCD (2) is 1.50 Lakhs.
Voluntary Contribution: Employee can voluntarily invest an additional amount of Rs. 50,000 (or more) to the NPS Tier I account and claim tax deduction on the same under section 80 CCD 1(B), subject to a maximum of Rs. 50,000.
While Filing an ITR
Anytime in the financial year before the ITR filing, you cannot switch to another regime.
For a salary ranging between Rs 20 lakhs and Rs 25 lakhs, the applicable tax rate under the new tax regime would be the highest, that is 30%.