Tuesday, December 25, 2018

All You Need to Know for your Salary Investment Proof Submission

Time to submit investment proof – Remember these deductions for salaries

You are at the part of the year when your HR department is asking you for Investment proofs. You started to assess your investments, and what, you have not done your investment fully. I am explaining you below what all types of investment you can do to save tax on salaries.
Please note that all deduction are available on paid basis.

House Rent Allowance:

HRA is allowed to employees who are leaving in the rented accommodation as they are away from their home or could not live in their owned house due to some unavoidable reasons:

HRA limits varies with city you live in:

The least of the following will be exempt:

Other Cities (Gurgaon, Noida etc.)
Allowance actually received
Allowance actually received
Rent paid less 10% of basic salary
Rent paid less 10% of basic salary
50 per cent of basic salary
40 per cent of basic salary

PAN Card number along with name and address of the landlord is mandatory and needs to be
declared if the rent paid is more than ₹ 1 lakh annually.

Can I claim HRA and home Loan together?

There are no restriction
as per Income Tax Act and hence,
Home Loan deduction and HRA can
be claimed together.
However, organizations have differing views on the subject of an individual having an owned
property in the same city as that in which he is staying in a rented accommodation. Some
organizations feel, this combination can be claimed only if the individual has a sufficient reason
for having a property in the same city but is staying in a rented accommodation.
There is no problem when both the owned property and rental accommodation is in different

House property:

If you have purchased a property on loan, then principal, interest and loss on house property is available for deductions, given you have received the possession of the house property.
Maximum deduction allowed on account of interest paid on loan for a self-occupied property:

Purpose of borrowing capital
Date of borrowing capital
Maximum Deduction allowable
1 Repair or renewal or reconstruction of the house
Any time
₹ 30,000
2 Acquisition or construction of the house
Before 01.04.1999
₹ 30,000
3 Acquisition or construction of the house
On or after 01.04.1999
₹ 2,00,000

Conditions for availing maximum deduction of ₹ 2,00,000:
1.     The house so acquired or constructed should be completed within 5 years from the end of the FY in which the capital was borrowed.
2.     The completion certificate of the house property against which deduction is claimed either from the builder or through self-declaration from the employee.
3.     Certificate specifying the amount of interest payable.
Note: In case of Joint Property, the co-owner’s declaration needs to be submitted.
A maximum of 1/5th of the pre-construction period Interest will be allowed as deduction. Pre-construction period Interest will be allowed as deduction subject to maximum ceiling of ₹30,000 or ₹2,00,000 as the case may be.
Any principal amount paid during the pre-construction period cannot be claimed.

Deduction of principal is covered in section 80C.
Loss from house property is limited to maximum of Rs. 2,00,000.

Investment under section 80C:

You can invest in one or more of the following options and get a deduction u/s80C:
Life Insurance, Unit Linked Insurance Plan (ULIP), Pension plans, Equity Linked Savings Scheme(ELSS) or Mutual fund, Infrastructure bond, Public Provident Fund, National Saving Certificate, Deposits more than 5 years, Sukanya Smiridhi Yojna.
You will also get deduction for Home loan and Tuition fee (upto 2 children)
Limit for deduction for above items cannot be more than Rs. 1,50,000.
Note : NPS is available for deduction more than limit of Rs.1,50,000 basis satisfying some conditions.


Limits are:

S. No
Self, spouse, dependent children
Maximum Eligible in ₹
Maximum Eligible in ₹
Maximum Eligible Deduction (inclusive of preventive check-up)
Senior Citizen
Senior Citizen
Other than Senior citizen
Senior Citizen
Other than Senior citizen
Other than Senior citizen

Conditions for claiming deduction under section 80DD/80U:
Eligible Person
Resident Individual or HUF
Resident Individual
Allowable for
Spouse, children, parents, brothers/sisters of employee or any of them dependent on him

Rs, 75000
Rs. 75000
Severe disability
Rs. 125000
Rs. 125000
Incurred any expenditure or paid /deposited any amount as specified
Certificate from the medical authority
It may be noted that employer should ensure that employee has submitted Form No. 10-IA for claiming deduction u/s 80DD or 80U.

Education loan
All interest on loan for education for Self/Spouse/Children is allowed for deduction.

Please note that:
Investment proofs are submitted with Employers for deductions, however, ultimate responsibility resides with employee to produce documents as and when required by the authorities, so keep them handy.
Always check with your HR department for documents required by them for deductions. This guide can help you to be prepared.


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