Income Tax Exemptions FY 2017-18 : List of important IT Deductions for AY 2018-19

Tax deductions

Budget 2017-18 & the Finance Bill 2017 have been tabled in Parliament. The income tax rate for those earning between Rs 2.5 lakh and Rs 5 lakh has been halved to 5%. Except this change, all other Income Tax Slab rates have been kept unchanged by the Finance Minister for the Financial Year 2017-18 (Assessment Year 2018-2019).

Tax planning is an important part of a financial plan. Whether you are a salaried individual, a professional or a businessman, you can save taxes to certain extent through proper tax planning.

The Indian Income Tax act allows for certain Tax Deductions / Tax Exemptions which can be claimed to save tax. You can subtract tax deductions from your Gross Income and your taxable income gets reduced to that extent.

Let us understand all the important sections and new proposals with respect to Income Tax Exemptions FY 2017-18. I hope you find this list useful and helps in planning your taxes well in advance.

List of Income Tax Exemptions FY 2017-18 / AY 2018-19 (Chapter VI-A deductions list)

Income tax deductions list Income tax exemptions tax benefits Fy 2017-18 AY 2018-19 Section 80c limit 80D 80E NPS Home loan interest loss

Section 80c

The maximum tax exemption limit under Section 80C has been retained as Rs 1.5 Lakh only. The various investment avenues or expenses that can be claimed as tax deductions under section 80c are as below;

  • PPF (Public Provident Fund)
  • EPF (Employees’ Provident Fund)
  • Five year Bank or Post office Tax saving Deposits
  • NSC (National Savings Certificates)
  • ELSS Mutual Funds (Equity Linked Saving Schemes)
  • Kid’s Tuition Fees
  • SCSS (Post office Senior Citizen Savings Scheme)
  • Principal repayment of Home Loan
  • NPS (National Pension System)
  • Life Insurance Premium (Read : ‘Best Term insurance plans‘)
  • Sukanya Samriddhi Account Deposit Scheme

(Read : ‘Tax Saving Investment Options u/s 80c | In whose name can they be Invested?’)

Section 80CCC

Contribution to annuity plan of LIC (Life Insurance Corporation of India) or any other Life Insurance Company for receiving pension from the fund is considered for tax benefit. The maximum allowable Tax deduction under this section is Rs 1.5 Lakh.

Section 80CCD

Employee can contribute to Government notified Pension Schemes (like National Pension Scheme – NPS). The contributions can be upto 10% of the salary (salaried individuals) and Rs 50,000 additional tax benefit u/s 80CCD (1b) was proposed in Budget 2015.

As per Budget 2017-18, the self-employed (individual other than the salaried class) can now contribute up to 20% of their gross income and the same can be deducted from the taxable income under Section 80CCD (1) of the Income Tax Act, 1961, as against current 10%.

To claim this deduction, the employee has to contribute to Govt recognized Pension schemes like NPS. The 10% of salary limit is applicable for salaried individuals only and Gross income is applicable for non-salaried. The definition of Salary is only ‘Dearness Allowance.’ If your employer also contributes to Pension Scheme, the whole contribution amount (10% of salary) can be claimed as tax deduction under Section 80CCD (2).

Kindly note that the Total Deduction under section 80C, 80CCC and 80CCD(1) together cannot exceed Rs 1,50,000 for the financial year 2016-17. The additional tax deduction of Rs 50,000 u/s 80CCD (1b) is over and above this Rs 1.5 Lakh limit.

(Read : ‘NPS Scheme – Pros & Cons‘)

Contributions to Atal Pension Yojana‘ are eligible for Tax Deduction under section 80CCD.

Section 80D

Deduction u/s 80D on health insurance premium is Rs 25,000. For Senior Citizens it is Rs 30,000. For very senior citizen above the age of 80 years who are not eligible to take health insurance, deduction is allowed for Rs 30,000 toward medical expenditure.Health insurance premium Section 80D Income Tax Exemptions FY 2017-18 Medical insurance premium limit AY 2018-19

Preventive health checkup (Medical checkups) expenses to the extent of Rs 5,000/- per family can be claimed as tax deductions. Remember, this is not over and above the individual limits as explained above. (Family includes: Self, spouse, dependent children and parents).

Section 80DD

You can claim up to Rs 75,000 for spending on medical treatments of your dependents (spouse, parents, kids or siblings) who have 40% disability. The tax deduction limit of upto Rs 1.25 lakh in case of severe disability can be availed.

To claim this deduction, you have to submit Form no 10-IA.

Section 80D 80u Form no 10-IA pic

Section 80DDB

An individual (less than 60 years of age) can claim upto Rs 40,000 for the treatment of specified critical ailments. This can also be claimed on behalf of the dependents. The tax deduction limit under this section for Senior Citizens is Rs 60,000 and for very Senior Citizens (above 80 years) the limit is Rs 80,000.

To claim Tax deductions under Section 80DDB, it is mandatory for an individual to obtain ‘Doctor Certificate’ or ‘Prescription’ from a specialist working in a Govt or Private hospital.

For the purposes of section 80DDB, the following shall be the eligible diseases or ailments:

  • Neurological Diseases where the disability level has been certified to be of 40% and above;

(a) Dementia
(b) Dystonia Musculorum Deformans
(c) Motor Neuron Disease
(d) Ataxia
(e) Chorea
(f) Hemiballismus
(g) Aphasia
(h) Parkinson’s Disease

  • Malignant Cancers
  • Full Blown Acquired Immuno-Deficiency Syndrome (AIDS) ;
  • Chronic Renal failure
  • Hematological disorders
    1. Hemophilia
    2. Thalassaemia

Section 80CCG

Tax Benefits of Rajiv Gandhi Equity Savings Scheme (RGESS) under section 80CCG has been withdrawn. However, if you have claimed this deduction in current FY 2016-17, you can claim the deduction for the next two Financial Years too.

Section 24 (B) (Loss under the head Income from House Property)

  • Tax benefit on loan repayment of second house will be restricted to Rs 2 lakh per annum only (even if you have multiple house the limit is still going to be Rs 2 Lakh only and the ceiling limit is not per house property).
  • The unclaimed loss if any will be carried forward to be set off against house property income of subsequent 8 years. In most of the cases, this can be treated as ‘dead loss‘.
  • I believe that this is a major blow to the investors who have bought multiple houses on home loan(s) with an intention to save taxes alone.
  • As of now (till FY 2016-17), interest paid on your housing loan is eligible for the following tax benefits ;
    • Municipal taxes paid, 30% of the net annual income (standard deduction) and interest paid on the loan taken for that house are allowed as deductions.
    • After these deductions, your rental income can be NIL or NEGATIVE and is called ‘loss from house property’ in the latter case.
    • Such loss is currently allowed to be set off against other heads of income like Income from Salary or Business etc. which helps you to lower you tax liability substantially.Budget 2017 2018 loss income from house property limited to 2 Lakh interest on home loan Section 24 rental income Section 24 limit pic

Section 80E

If you take any loan for higher studies (after completing Senior Secondary Exam), tax deduction can be claimed under Section 80E for interest that you pay towards your Education Loan. This loan should have been taken for higher education for you, your spouse or your children or for a student for whom you are a legal guardian. Principal Repayment on educational loan cannot be claimed as tax deduction.

There is no limit on the amount of interest you can claim as deduction under section 80E. The deduction is available for a maximum of 8 years or till the interest is paid, whichever is earlier.

Section 80EE

This was a new proposal which had been made in Budget 2016-17. The same will be continued in FY 2017-18 / AY 2018-19 too. First time Home Buyers can claim an additional Tax deduction of up to Rs 50,000 on home loan interest payments u/s 80EE. The below criteria has to be met for claiming tax deduction under section 80EE.

  • The home loan should have been sanctioned during FY 2016-17.
  • Loan amount should be less than Rs 35 Lakh.
  • The value of the house should not be more than Rs 50 Lakh &
  • The home buyer should not have any other existing residential house in his name.
  • Such eligible home buyers can claim exemption of Rs. 50,000/- for interest on home loan under section 80EE from assessment year beginning from 1 st April 2017 and subsequent years.

Section 80G

Contributions made to certain relief funds and charitable institutions can be claimed as a deduction under Section 80G of the Income Tax Act. This deduction can only be claimed when the contribution has been made via cheque or draft or in cash. In-kind contributions such as food material, clothes, medicines etc do not qualify for deduction under section 80G.

The donations made to any Political party can be claimed under section 80GGC.

W.e.f FY 2017-18, the limit of deduction under section 80G / 80GGC for donations made in cash is reduced from current Rs 10,000 to Rs 2,000 only.

Section 80GG

The Tax Deduction amount under 80GG is Rs 60,000 per annum. Section 80GG is applicable for all those individuals who do not own a residential house & do not receive HRA (House Rent Allowance).

The extent of tax deduction will be limited to the least amount of the following;

  • Rent paid minus 10 percent the adjusted total income.
  • Rs 5,000 per month.
  • 25 % of the total income.

(If you are claiming HRA (House Rent Allowance) of more than Rs 50,000 per month (or) paying rent which is more than Rs 50,000 then the tenant has to deduct TDS @ 5%. It has been proposed that the tax could be deducted at the time of credit of rent for the last month of the tax year or last month of tenancy, as applicable.)

Rebate under Section 87A

Tax rebate of Rs 2,500 for individuals with income of up to Rs 3.5 Lakh has been proposed in Budget 2017-18.

  • Only Individual Assesses earning net income up to Rs 3.5 lakhs are eligible to enjoy tax rebate u/s 87A.
  • For Example : Suppose your yearly pay comes to Rs 4,50,000 and you claim Rs 1,50,000 u/s 80C. The total net income in your case comes to Rs 3,00,000 which makes you eligible to claim tax rebate of Rs 2,500.
  • The amount of tax rebate u/s 87A is restricted to maximum of Rs 2,500. In case the computed tax payable is less than Rs 2,500, say Rs 2,000 the tax rebate shall be limited to that lower amount i.e. Rs 2,000 only.
  • The Tax Assesse is first required to add all incomes i.e. salary, house income, capital gains, business or profession income and income from other sources and then deduct the eligible tax deduction amounts u/s 80C to 80U and under section 24(b) (Home Loan Interest) to come up with the net taxable income.
  • If the above net taxable income happens to be less than Rs 3.5 lakhs then the tax rebate of Rs 2,500 comes in to the picture and should be deducted from the calculated total income tax payable.

Section 80 TTA

Deduction from gross total income of an individual or HUF, up to a maximum of Rs. 10,000/-, in respect of interest on deposits in savings account with a bank, co-operative society or post office can be claimed under this section. Section 80TTA deduction is not available on interest income from fixed deposits.

Section 80U

This is similar to Section 80DD. Tax deduction is allowed for the tax assessee who is physically and mentally challenged.


It is prudent to avoid last minute tax planning. Do not invest in low-yielding life insurance polices or in any other financial products just to save taxes. It is better you plan your taxes based on your financial goals at the beginning of the Financial Year itself. Plan your taxes from April 2017 itself, instead of waiting until late December 2017 (or) January 2018.

(Read : ‘Best ELSS Tax Saving (Sec 80c) Mutual Fund Schemes for FY 2017-18‘)

It is OK to pay some taxes when you can not save or cannot invest in right financial products.  But, do not invest just to save TAXES. The cost of buying wrong financial products may outweigh the cost of taxes. Tax Planning is not a goal but a tool. Remember “Tax Planning alone is not Financial Planning.”

Also, kindly understand the tax treatment of the selected investment products across the different investment stages (i.e., investment, accrual & withdrawal) and then invest. (Read : ‘Tax treatment of various Financial Investments‘)

I believe that the above list is useful for your Tax Planning purposes. The above Income Tax Exemptions FY 2017-18 are applicable for financial year 2017-2018 (Assessment Year 2018-2019).

(Image courtesy of Stuart Miles at (Post first published on : 27-March-2017)

About The Author

  • Aarti says:

    Thanks for sharing lot of knowledge

  • sanjay kumar singhal says:

    medical reimbursement for the month of february 2018,but payment recive in april 2018,please tell me tax paid by me or not tax paid in year 2018-19 return

    • Sreekanth Reddy says:

      Dear Sanjay,
      If the money received through a claim under a medical policy from insurance company, it is only a reimbursement of expenditure already incurred by the policyholder. As this does not amount to profit or income for the insured person, this money is not taxable.

  • M S BORA says:

    Interest on House loan paid is Rs 2 Lac for a jointly owned and co-borrowed loan.
    Can both husband and wife claim Rs 2 Lac each to this Rs 2 Lac interest meaning they paid 2 lacs total but exemption they will claim Rs 2 Lacs each total 4 lacs – it is correct .. ?

    • Sreekanth Reddy says:

      Dear Mr BORA,
      If the total interest paid in a FY is Rs 2 lakh.
      Individually, both of them can claim Rs 1 lakh each (assuming the ownership ratio as 50:50).

  • D P VATNANI says:

    deduction under 80EE of rs 50000/- can be availed or not if possesion of house is not received.
    please clearify

    • Sreekanth Reddy says:

      Dear Mr Vatnani,
      Yes, sec 80EE tax benefit is available even on under-construction properties..


    Sir senior citizen below 80 year how can I get tax exemption on intrest earned from bank fd for one year

  • S N GUPTA says:

    Dear Mr,.Reddy I am a senior citizen the total expenditure on my medical treatment including doctor’s consultations during FY 2017-18 is around Rs.20,000/- how much rebate & under which section of IT Act I can avail.

  • Rajiv jain says:

    Dear sir, I want to know whether 80gg concession is applicable for women in contractual job getting consolidated salary from education deptt. RMSA. How to calculate 10% of total income.

    • Sreekanth Reddy says:

      Dear Rajiv,
      Section 80GG is applicable for all those individuals who do not own a residential house & do not receive HRA (House Rent Allowance).

  • GANESAN P says:

    Hi Sir
    I have taken cc/over draft loan in a canara bank against collateral security for the business purpose. and I took MOD(MEMORANDUM OF DEPOSIT OF TITLE DEEDS) for the bank for the loan purpose.that mod charges was around 60000 Rs. is it possible for claiming any tax deduction ?

    and my company material ( plastic hoses) was fired by some person.I have an fir copy . is it possible for claiming any tax deduction ?

    and I have taken personal loan using my car in HDB finance for the business purpose. is it possible to take interest of personal loan for claiming any tax deduction ?

  • E ASHWATH says:

    Hi Sreekanth
    I own a house and claiming HBA interest under section 24(1). AsI am having only one house and purchased first time in the year 2011, Can I get exemption under section 80EE also.

    • Sreekanth Reddy says:

      Dear Ashwath,
      Provided you meet below other criteria as well;

      The home loan should have been sanctioned during / after FY 2016-17.
      Loan amount should be less than Rs 35 Lakh.
      The value of the house should not be more than Rs 50 Lakh &
      The home buyer should not have any other existing residential house in his name.

  • Narain Thadani says:

    What is the maximum exemption on dividends on AY 2018.19?

    What is the meaning of Dividends, Gross on ITR2 for AY 2018.19?

    • Sreekanth Reddy says:

      Dear Narain,
      Up to Rs 10 lakh of dividends (on stocks) received is not subject to taxes.

      • Natarajan says:

        Under what clause of the IT act the exemption of Rs 10 lakhs of dividend is allowed? Pl reply

        • Sreekanth Reddy says:

          Dear Natarajan,
          Dividend received (up to rs 10 lakh) from an Indian company which has suffered dividend distribution tax is exempt from tax under section 10(34).

  • Umapathy M.S. says:

    Very helpful

  • K. Chandrasekhar says:

    Is Gratuity exemption upto Rs 20 lakhs available for A.Y. 2018-19?

    • Sreekanth Reddy says:

      Dear Chandrasekhar ..I believe it is applicable for AY 2018-19. You may kindly re-check this with a CA too..

  • Mohit says:

    Hi Sreekanth Sir
    I'm a defence personal, am I eligible for transport allowance tax exemption bcoz I'm receiving monthly 1893 Rs.
    Please tell me how much and under which section.
    Can I fill medical exemptions for small treatments like fever, eye, dental treatment,  or small blood tests etc.
    Bcoz my family is paying more than 20k per year.
    And please provide a detailed list of exemptions for defence personal.

    • Sreekanth Reddy says:

      Dear Mohit ji,
      You can claim Transport or conveyance allowance of up to Rs 1,600 pm in FY 2017-18 / AY 2018-19 under section 10(14)(ii) of Income Tax Act.

      You may go through THIS LINK for list of allowances and benefits available for the salaried.

  • p.v.rao says:

    PENSION DRAWN FOR APRIL 2018- 33600/-
    TOTAL PENSION FOR THE FY 2018-19 — 4,03,200
    TAX @ 5 % ABOVE Rs.3.00 lakhs 2,310
    tax rebate U/S 87A 2,500/-


    AGE 64 YEARS

  • Hanuman Prasad says:

    Hi ShriKanth,
    I have taken home loan from a bank for a flat which is now on rent. Can I take a loan from family members or relative on the same rate of interest as that of bank and prepay part of bank loan. In that case can I claim rebate under section 24 for interest part of both the loans. If yes What paper formality will be reqd.

    • Dear Hanuman,
      Yes, you can.

      If you take a loan from a recognised lender, you will be able to avail of the tax benefits under Section 80C and Section 24.

      If you do not take the loan from a recognised lender but do so from a relative or friend, then you only get part of the tax benefit.

      The interest you pay is eligible for deduction under Section 24.

      However, you will not get the benefit of principal repayment under Section 80C..

      To be eligible for the deduction of principal payment, the loan has to be from a list of recognised lenders such as banks, financial institutions or your employer company.

      Ensure that you take the loan by cheque. When you repay, make sure you do it by cheque only.
      Get a statement from the lender (Friend/relative) stating the amount paid by you every year.

      When you take a loan, document it legally. Make sure that it has the lender’s name and your name, the loan amount, the repayment tenure and the rate of interest.

  • K.Kameswara Rao says:

    I am a sr. citizen 75Y e-filing IT online.
    There was a deduction u/s 47A an amount of Rs.5000.00 rebate from the tax payable for those whose gross income is less than Rs.5,00,000.00 for Sr. citizens.
    Was the above removed for the FY 2017-18 ?
    Will you please let me through e mail.

  • Pulkit Rastogi says:

    Plz Performa of Late Return Filling FY (2010-2011) & Submit in AY (2019-2020) & PPF Exemption Performa Given on my E Mail ID Given Below

  • K Srinivasa Rao says:

    who is eligible additional standerd deduction Rs.40,000/- for the F.Y. 2018-19 please clarify

  • Arbita Chakraborty says:

    I am student pursuing the course of Company Secretary.. I have my exam in June, 2018. As questions will pertain to AY 2018-19, will the list of deductions given here do for the purpose of the exam?

    • Dear Arbita .. This article gives us a basic idea about the income tax deductions. Suggest you to go through a guide or text book(s) that are generally referred to for your exam. All the very best!

  • Abuabs says:

    My father died in Dec 2016. In Apr 2016 he had made a 5-year Tax Saving FD (under Sec 80C) in Axis Bank, the linked Savings Bank a/c was jointly in our names (I am the second holder). After his death, his name has been deleted from the Savings Bank account, but the FD still remains linked to the account. I prematurely closed all FDs in this account online, however, the Tax Saving FD cannot be closed on line. I checked with the Bank who said that I have to wait for 5 years for the FD to mature. Is there a way this FD can be prematurely closed and proceeds given to nominee?

  • Gopi Y says:

    agricultural land located in municipality area bought 45 years back , sold in 2017-18, how to arrive the indexed cost of acquisition pls suggest how to calculate the CG.

  • Sherry says:

    Dear mr Sreekanth,

    I need help. Please help me. My. Monthlysalary has the following components basic salary 24930, hra 15584, conv 9350 and other 12467 and pf 1800. I pay tution fee and have a home loan which along with pf comes to 150000. I am a single parent. Want to save tax.. Please let me know what is the exempt amount int in conveyance.. Whats the max tax i can save? Pl help

    • Dear Sherry,
      Transport Allowance granted to an employee to meet expenditure on commuting between place of residence and place of duty is up to Rs. 1600 per month (Rs. 3,200 per month for blind and handicapped employees).

  • Sherry says:

    Hi, i need to know urgently.. What is the max Conveyance allowance one can claim in 2017-18? My salary has a component of conveyance allowance… Please help..

  • Gopi Y says:

    80DD can be claimed both the parent of Rs.75000 each

  • harish joshi says:

    dear sir

    mai paramilitary force person hu. kya humko milne wala special duty allowance or ration money mai tax dena padega…. pls rply

  • Srishti says:

    I am a salaried employee getting HRA. I have a Housing loan and house is in my name and i have the possession of the house but i don’t stay there because of renovation work and i stay in a rented flat. Everything is in same city.

    Need to know if i can claim HRA+Repayment of Housing Loan+Repayment of Interest of Housing Loan.

  • Anand Gaikwad says:

    1. Recurring deposits (RD) with Bank / Post office with self name and dependents name are eligible for deduction from Salary Income.?

    2.Insurance Premium paid for Parents eligible for deduction from salary income ?

    3.Mutual Funs Investment with Dependants Name Eligible for Deduction from Salary Income ?

    please guide.

  • sunil says:

    Dear Sir,

    Please tell me what is the housing loan and interest for financial year 2017-2018 whether principal and interest how much limit please tell me what is the exempt principal and Interest amount how much we have to show, please give me reply ASAP.


    • Dear sunil,
      Principal repayment : Up to Rs 1.5 Lakh can be claimed u/s 80 c
      Up to Rs 2 Lakh can be claimed as tax deduction as loss under the head ‘income from house property’.

  • Shirin says:


    My CTC is 100000.

    Home loan – 125000/Year
    Tuition fee – 400000/Year
    Rent – 8000/Month.

    Please suggest me, where do I invest so that my TAX deduction is little less – Not 80000

    • Dear Shirin,
      Home loan interest can be claimed u/s 24b.
      Tuition fee up to Rs 1.5 lakh can be claimed u/s 80c.

      If you have health insurance then premium paid (the max limits as explained in the above article) u/s 80D.
      Other possible options, I have given in the above article.

  • Chinmay says:

    Hello sir
    If I habe invested 1.50 lacs in ppf under 80c and 50000 under 80ccd(1b). And my employer’s contribution in 59000 in nps then under 80ccd(2) do i get exemption of 59000 .? Which means total exemption would be 2,59,000 ?

    • Kartheek says:

      Hi Chinmay,

      You will get deductions as under
      80c : 1,50,000
      80ccd(1b) : 50,000
      80ccd(2) : 59,000 (sub to maximum of 10% of your salary after including this 59000 to your salary)

      so,you will get total 2,59,000 as deduction

  • Kriptha says:


    I have a doubt in HRA…
    I am paying the rent of 8300 per month, but I don’t have rental agreement or PAN details of the owner and I have only rental receipt. Can I show this 8300 in HRA without rental agreement and PAN and avail the tax benefit for 2017/18?

    • Dear Kriptha,
      Ideally, you should get the rental agreement done.
      If the rent paid is more than 1 lakh per annum, it is mandatory for the employee to report PAN of the landlord to the employer.
      In your case it is less than Rs 1 lakh pa, so you may just submit the receipts and claim HRA. Kindly make the rent payments through non-cash mode.
      But suggest you to kindly get the agreement done and request for PAN card details from your landlord.

  • Shyama says:

    I am married but no child. I am paying tuition fee of a child leaving under the same roof can I get the benefit of the tuition fee in Income tax? Thanks

  • Geethu says:

    Is 80 CCD2 included in 80C or can I get additional tax benefit ?
    Where to claim stamp duty and registration charges for new purchase of house?

    • Dear Geethu,
      Are you referring to Rs 50k for NPS investment?
      If you have made investment in NPS then can claim up to Rs 50,000 u/s 80CCD(1B), this is over and above Rs 1.5 Limit u/s 80c.

      If your employer also contributes to Pension Scheme, the whole contribution amount (10% of salary) can be claimed as tax deduction under Section 80CCD (2).

      Stamp duty and registration fee can be claimed u/s 80c.

  • Dilendra nayak says:

    Dear sir
    i am mutual fund distributor
    Having 4 employees total salary paid to this 40000 per month
    My gross income is 16 lakh
    My housing loan is continuing 14000 per month

    Pls suggested how much tax i want to pay as a professional

  • Sreedhara says:

    Dear Srikanth sir
    I’m a government employee from Karnataka my net salary about 8.5L…. My savings u/s 80c is more than 1.5L except NPS (80CCD1) can I add this amount to u/s 80CCD1(B)?????

    Also can I show Employer contribution u/s 80CCD2 Without adding this amount to Salary income?????

    Please reply me… I’m waiting…

    Thank you

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