Investment Guideline for FY 2021-22
Employees need to make an informed decision about their investments. They need to know what is best for them. Quikchex makes the life of employees easier by automatically computing the most optimized tax election structure for all employees at the time of running payroll. While processing salaries we compute the tax structure with the lowest TDS liability, so that employees are able to maximize their net take-home.
This year’s budget had made no changes related to employee income tax.
Income Tax slabs rates as per New Tax regime will continue
Taxable Income Slab | Existing Tax Rates | New Tax Rates |
Upto 2.5 lakhs | NIL | NIL |
2.5 Lakhs to 5 Lakhs | 5%* | 5%* |
5 Lakhs to 7.5 Lakhs | 20% | 10% |
7.5 Lakhs to 10 Lakhs | 20% | 15% |
10 Lakhs to 12.5 Lakhs | 30% | 20% |
12.5 Lakhs to 15 Lakhs | 30% | 25% |
15 Lakhs above | 30% | 30% |
*For those employees with taxable income less than Rs 5 lakhs, a rebate of Rs 12,500 will continue to apply. For those with a taxable income greater than Rs 5.0 Lakhs, this rebate will not apply, and 5 % tax rate will apply for income between 2.5 to 5.0 Lakhs
- New tax rates will be optional for employees.
- If the employee wishes to go with the new proposed Income tax rates, then the employee will not be able to avail any benefit, like;
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Section 10 exemptions like House Rent, LTA
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80C (PF, PPF, LIC, ELSS, Housing Loan Repayment, etc)
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80other (80D, 80DD, 80DDB, etc) deductions
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Standard deductions 50K
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Professional Tax
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Housing Loan Interest
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However, section 80CCD deduction can be claimed
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Investment Guideline followed as per New Tax Regime
Sr. No. | Particulars | Eligibility / Coverage | Amount of deduction | Proofs to be submitted during actual submission |
1 | Deduction in respect of contribution to pension scheme of Central Government - u/s 80CCD | Tax deductions for contribution to the pension schemes notified by Central Government, i.e.,
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This extra deduction of Rs. 50,000 on NPS will increase the total deduction allowed under Section 80C and 80CCD of Income Tax Act to Rs. 2 lakh. | Copy of paid receipt with copy of enrolled policy, this should pertain to FY 2021-22 |
2 | Loss on Housing Property - 24 |
A house property which is rented for the whole or a part of the year and there is interest on housing loan deduction on same preoprty, then it is considered as let out house property for income tax purposes. |
Actual amount paid towards interest on borrowed capital or Rs.2,00,000/- which ever is less. |
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Investment Guideline followed as per OLD Tax Regime
The table below contains a list of 32 investment options that will reduce your taxable income and in turn the tax you pay. You may choose a combination that works best for you.
- Employees can claim income tax benefit under 80G Donation through ‘Personal Income Tax filings’. The company won’t allow any benefit for 80G in the Income Tax deduction.
- For getting benefit under HRA Exemption employee need to provide proper supporting as listed below at , or else HRA exemption benefit won’t be considered;
- Original monthly rent receipts with revenue stamp affixed.
- Copy of leave and license agreement, this agreement should be notarised or registered. Ensure to submit the agreement for a financial year. If the agreement period if for 11 month say from July’2020 to May’2021, then employee will get HRA exemption benefit from April’2021 to May’2021 period. For getting hra exemption tax benefit from June’2021 to March’2022, employee needs to submit the rent agreement for the said period too.
- Those paying rent amount more than Rs.8,333/- pm or Rs 1 lakh annually, need to furnish a copy of their landlord’s permanent account number (PAN), along with the rent receipts and agreement copy. Else If not provided, will not be eligible for HRA exemption.
- For paying rent over and above Rs.50,000 per month, Form 26QC is mandatory to provide as tax deducting proof.
Sr. No. | Particulars | Eligibility / Coverage | Amount of deduction | Proofs to be submitted during actual submission |
1 | Life Insurance Premium - u/s 80C |
Premium paid on life of self, spouse, children (Including minor / major / married / unmarried children). | Actual amount paid, subject to max. 1.5 lac and premium should not exceed 10% of sum assured. | Copy of receipt for the premium paid during the current F.Y. 2021-22. In case if the due date is of Mar' 2021, then last year copy can be attached for reference's. |
2 | Public Provident Fund - u/s 80C |
Amount deposited in Public Provident Fund account in the name of self, spouse, children (Including minor / major / married / unmarried children). | Actual amount deposited, subject to max . 1.5 Lac |
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3 | National Saving Certificate - u/s 80C |
Subscription to National Saving Certificate - VIII issue. | Actual amount subscription subject to max. 1.5 Lac. | Copy of National Saving Certificate for F.Y 2021-22 |
4 | Unit-linked Insurance Plan (ULIP) - u/s 80C | Premium paid on life of self, spouse, children (Including minor / major / married / unmarried children). | Contribution paid for participation in Scheme, subject to max. 1.5 Lac. | Copy of Receipts / Proof of amount paid during F.Y. 2021-22. |
5 | Equity Linked Saving Schemes(ELSS) - u/s 80C |
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Amount invested in equity linked tax saving scheme of mutual fund, subject to max. 1.5 Lac. |
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6 | Tuition Fees - u/s 80C |
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Actual amount paid subject to max. 1.5 Lac. |
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7 | Term Deposit (FD) for 5 years or more with banks - u/s 80C |
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Actual amount deposited subject to max. 1.5 Lac. | Copy of the receipt of amount deposited for F.Y.2021-22 |
8 | Re-payment of Housing Loan Principal/Registration cost - u/s 80C |
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Actual amount paid subject to max. 1.5 Lac. |
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9 | Interest accrued in respect of NSC VIII issue - u/s 80C | Amount gained in respect of interest accumulated against saving under NSC scheme. | Subject to max. 1.5 Lac. |
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10 | Post Office Savings Bank (CTD) - u/s 80C |
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Actual amount deposited subject to max. 1.5 Lac. | Copy receipts / copy of certificate or pass-book showing amount paid during F.Y.2021-22. |
11 | Pension fund set up by any Mutual Fund - u/s 80C |
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Amount contributed to the fund, subject to max. 1.5 Lac. | Photocopy of account statement showing the units purchased in the name of employee during F.Y.2021-22. |
12 | Deposit scheme of National Housing Bank (NHB) - u/s 80C | Subscription to bonds issued by NABARD as notified by the Central Government | Actual amount deposited subject to max. 1.5 Lac. | Copy of the certificate issued by the notified authority for F.Y.2021-22 |
13 | Approved Superannuation Fund - u/s 80C | You can confirm from your employer whether your superannuation fund is approved or not. Tax exemptions are available only to approved superannuation funds. | Subject to max. 1.5 Lac. | Copy of policy and sum approved by concern officer. |
14 | Contribution to Pension Fund - Insurer(80CCC) -u/s 80C | Amount paid or deposited to effect or keep in force a contract for any annuity plan of Life Insurance Corporation of India or any other approved insurer for receiving pension. | Actual amount paid, subject to max. 1.5 lac. | Copy of receipt for the amount paid during the current F.Y. 2021-22. |
15 | Sukanya Samriddhi Scheme New Rules 2016 - u/s 80C | Sukanya Samriddhi Scheme can be opened for biological as well adopted girl child. However, limit of maximum number of account is restricted to one account per girl child and a parent/legal guardian can open account for maximum of two girl child. The age limit of girl should be 10 years or less. | The contribution/payment made towards Sukanya Samriddhi Account will be an eligible deception u/s 80C up to the threshold limit of Rs.1.50 lakhs |
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16 | Deduction in respect of contribution to pension scheme of Central Government - u/s 80CCD | Tax deductions for contribution to the pension schemes notified by Central Government, i.e., a) National Pension Scheme (NPS) b) Atal Pension Yojana (APY) |
This extra deduction of Rs. 50,000 on NPS will increase the total deduction allowed under Section 80C and 80CCD of Income Tax Act to Rs. 2 lakh. | Copy of paid receipt with copy of enrolled policy, this should pertain to FY 2021-22 |
17 | Medical Insurance Premium - For Spouse and Children - u/s 80D(2)(a) |
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18 | Medical Ins. Premium - For Parents - u/s 80D(2)(b) |
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19 | Medical treatment Expenses on handicapped Dependent For Handicapped Dependent with disability - u/s 80DD |
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Least of - actual amount paid or deposited or expenses incurred or Rs.75,000/- whichever is less.(Rs.1,25,000/- where the dependent is having severe disability.) |
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20 | Medical Treatment under specified diseases - u/s 80DDB |
For medical treatment of self, spouse, guardians, children, and siblings suffering from specified disease. For example, cancer, chronic renal failure, Parkinson infection, etc. The complete list of such diseases is included in Rule 11DD. | Actual amount paid to the extent of Rs 40,000/-. In case of patient being Sr Citizen (above 60 years) or very Sr Citizen (above 80 years) amount of deduction is Rs. 1,00,000/- |
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21 | Interest on Education Loan - u/s 80(E) |
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Copy of Certificate issued by the financial institution certifying payment of interest for FY 2021-22. |
22 | Interest on Home Loan - Additional - u/s 80EE |
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Actual amount paid towards interest Rs.50,000/- which ever is less. Note : This section has been reintroduced effective FY 2016-17.Now the deduction is allowed up to Rs 50,000 per year starting from FY 2016-17 and subsequent years until the loan is repaid. |
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23 | Deduction in respect of Interest on loan taken for certain house property (Loan Sanctioned between 1st April 2019 to 31st March 2021) - u/s 80EEA |
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An additional deduction of Rs.1,50,000/- on Interest on housing loan borrowed under affordable housing until 31.03.2021 |
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24 | Deduction in respect of Interest on loan taken for purchase of electric vehicle (Loan Sanctioned between 1st April 2019 to 31st March 2023) - u/s 2. 80EEB |
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Deductions of Rs.1,50,000/- on Interest paid on loans taken to buy electric vehicle. |
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25 | Deductions is respect of rents paid - u/s 80GG |
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Deduction in respect of house rent paid by him in excess of 10% of his total income, subject to a ceiling of 25% thereof or Rs. 5,000/- per month |
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26 | Interest Income earned from a savings bank account - u/s 80TTA |
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Maximum deduction allowed u/s 80TTA is Rs. 10,000. | Copy of Saving Bank Statement or Pass Book for FY 2021-22. |
27 | Interest Income earned from a savings bank account - u/s 80TTB |
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Maximum deduction allowed u/s 80TTB is Rs. 50,000. | Copy of Saving Bank Statement or Pass Book for FY 2021-22. |
28 | Deduction in case of a person with disability - u/s 80U | Deduction in respect of permanent physical disability including blindness to taxpayer |
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29 | Interest on Housing Loan - 24 |
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Actual amount paid towards interest on borrowed capital or Rs.2,00,000/- which ever is less |
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30 | Loss on Housing Property - 24 |
A house property which is rented for the whole or a part of the year and there is interest on housing loan deduction, then it is considered as let out house property for income tax purposes. |
Actual amount paid towards interest on borrowed capital or Rs.2,00,000/- which ever is less. |
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31 | Leave Travel Allowance (LTA) |
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Least of actual expenditure incurred on travel or the amount as per act depending on mode of journey, whichever is less. |
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32 | House Rent AllowaWe hope you can use the investment options above to plan your investment more efficiently. Here are some additional tips that you can use: nce |
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The entire HRA received is not always fully exempt from tax. The least of the following three will be exempt from tax:
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*Note DONATIONS can be claimed as deduction at the time of filing Individual Income Tax return. It cannot be claimed through your Salary Income while computing tax with employer.
We hope you can use the investment options above to plan your investment more efficiently. Here are some additional tips that you can use:
- Life Insurance
- Public Provident Fund
- National Savings Certificate
- Equity Linked Savings Schemes
- Actual HRA received
- Rent Paid in excess of 10% of (Basic + DA)
- 40% or 50% of (Basic + DA) based on class of city