The Article on " TAX PLANNING FOR FY 2024-25 CONTAINS 5 PARTS
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PART I: MAJOR CHANGES IN TAX RULES FOR FY 2024-25 CLICK HERE
PART 2: TAX RATES / SLABS FOR FY 2024-25 CLICK HERE
PART 3: INCOME TAX REBATES ​ READ THIS PART BELOW ​
PART 4: ESTIMATE YOUR INCOME TAX/ADVANCE TAX FOR FY 2024-25 CLICK HERE
PART 5: TAX ON RETIREMENT BENEFITS CLICK HERE

PART 3

INCOME TAX REBATES FOR FY 2024-25

TAX REBATES AND LONG TERM INVESTMENTS :

Under the old tax regime , you can avail of tax rebates for various financial transactions like paying insurance premium , interest received on Fixed deposits from banks , investment in NSC , PPF , ELSS . You can also claim for the interest you have paid on Education loans , housing loans etc .

Some of the investments, loans and other financial transactions involve you to a long term commitment of your funds invested now . It may also require long term regular investment in future. For example , monthly or annual insurance premium payment.

While your commitments are long-term, the tax rebates you get are only for the current Financial year. The rebates may be continued, amended, or abolished in the coming years. Every year the government decides on the matter during the Union Budget preparations. Hence tax rebates are not guaranteed for the future years , while your long-term financial commitments are fixed.

Hence while selecting investment options, do not solely depend upon the benefit of tax rebate alone. Suppose you are satisfied with the long-term profitability of an investment decision and your ability to fulfill those long-term commitments. In that case, you may opt for an investment that also offers Tax rebates. Rebates have to be only additional benefits and not the sole purpose of investments.

Now you may go on reading about the tax rebates you can opt

NOW NEW REGIME IS MORE COMPETITIVE IN FY 2024-25

Dated 10.09.2024 : With income tax rates under the new tax regime modified in the FY 2024-25 in favour of taxpayers, it has become competitive with old tax regime. Now rebate under section 87A is available up to Rs 7.00 lakhs in the new regime. The standard deduction is increased to Rs.75,000 in the new regime . However to avail the benefits under the new regime , you have to forgo many rebates available in the old regime. Hence it is more prudent to check now what are the rebates that are available in the old regime you have to forgo to switch to the new regime .
Check various rebates available in both regimes against the tax rates and decide which is beneficial to you

TAX REBATES YOU HAVE TO FORGO IN NEW TAX REGIME

If you opt for income tax option under section 115bac of Income tax act , you have to forgo the following tax rebates that are available under the old regime for FY 2019-20

1. Deduction allowed for Health insurance Policies under 80 D up to Rs. 50,000/- for senior citizens and up to Rs. 25,000/- for others .

2. Cumulative deduction of Rs 1.5 lakhs allowed under Section 80C, 80CCC, and Section 80 CCD for savings/investments, premium for annuity / pension fund

3. Deductions allowed for Rs 50,000 / 1,50,000 under Section 80 EE / 80 EEA for the Interest on Housing loans with certain conditions

4. Deduction allowed under 80 E for interest on education loan taken for pursuing Higher Education .

5. Deductions allowed for Rs 2.00 lakhs under Section 24 for the Interest on Housing loans

6. Deductions allowed for Rs 1,50,000 under Section 80 EEB for the Interest on loans taken for purchase of electric vehicles .

7. Interest on savings bank accounts allowed up to Rs 10,000 under Section 80TTA and for senior citizens only if they have not claimed under section 80TTB

8. Interest received by a senior citizen on deposits with banks / co-operative societies / post office up to Rs 50,000 under section 80 TTB .

TAX REBATES YOU CAN STILL AVAIL IN NEW TAX REGIME

• REBATES THAT CAN BE USED IN NEW TAX REGIME ALSO
  
  1. Rebate under section 87 A for the Resident Indians with below taxable income of Rs 7.00 lakhs in the new regime while limit is Rs 5.00 lakhs in the old regime
  
  ​2. CONVEYANCE ALLOWANCE , LFC , TRANSFER : Income Tax department amended rules in June 2020 and permitted conveyance allowance , travel allowance, LFC / LTC and transfer allowance etc to be to be under exemption category of newly 115BAC as per Gazette notification dated 26.06.2020.
  ​ Accordingly following allowances are also exempted under the new tax regime :
  
  a) any allowance granted to meet the cost of travel on tour or transfer;
  (b) any allowance, whether, granted on tour or for the period of journey in connection with transfer, to meet the ordinary daily charges incurred by an employee on account of absence from his normal place of duty;
  (c) any allowance granted to meet the expenditure incurred on conveyance in performance of duties of an office or employment of profit
  
  3. Standard Deduction of Rs 75,000 for salaried persons/pensioners in the new regime while it is restricted to Rs 50,000 in the old regime.
  

TAX REBATES YOU GET WITH NO FRESH INVESTMENTS

TAX REBATES THAT DO NOT INVOLVE ​ANY FRESH INVESTMENTS :

Without investing your money in any scheme ,you can claim Tax Deduction /rebate in FY 2024-25 by utilizing the following Tax provisions:

All below-listed rebates are available only if you opt for the old regime except no 1 which is available both in old and new regimes.
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1. Rebate under section 87 A for the Resident Indians with below taxable income of Rs 5.00 lakhs in the old regime and upto Rs 7.00 lakhs in the new regime .
2. Standard Deduction of Rs 50,000 for Salaried persons/pensioners in the old regime and Rs 75,000 in the new regime .
3. Health Insurance premium paid between Rs 25,000 to Rs 1.00 lakh under section 80D
4. Interest on Education Loan paid under section 80E
​5. Deductions allowed Rs 50,000/1,50,000 under Section 80EE/80 EEA for the Interest on Housing loans with certain conditions .
​6. Deductions allowed Rs 2.00 lakhs under Section 24 for the Interest on Housing loans .
​7. Deductions allowed Rs 1,50,000 under Section 80 EEB for the Interest on loans taken for the purchase of electric vehicles ​.
8. Interest on savings bank accounts is exempted by tax up to an amount of Rs 10,000 under Section 80TTA and for senior citizens only if they have not claimed under section 80TTB .
​9. Interest received by a senior citizen on deposits with banks / co-operative societies/post office is exempted up to Rs 50,000 under section 80 TTB ​.
10. Rent paid in excess of 10% of total income for furnished/unfurnished residential accommodation (subject to a maximum of Rs. 5,000 p.m. or 25% of total income, whichever is less) subject to certain conditions under section 80GG
11. Donations made to certain organizations under sections 80G & 80 GGA,80 GGB
12. The total tuition fee paid by a parent for a maximum of two children is eligible for tax exemption under 80C .​
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You may check the details of the above rebates below and can utilize them while submitting IT Returns

INCOME REBATE UNDER SECTION 87A OF INCOME TAX ACT

SECTION 87A - An assessee, being an individual resident in India, whose total income does not exceed Five hundred thousand rupees, shall be entitled to a deduction, from the amount of income-tax on his total income with which he is chargeable for assessment year 2022-23 of an amount equal to hundred per cent of such income-tax or an amount of Twelve thousand and five hundred rupees, whichever is less.
The above section is applicable only for residents whose total taxable income for the year is less or equal to Rs 5,00,000.Hence to obtain the above rebate ,you may use other tax rebates under various sections like 80C , 80D , 80E etc to see that your taxable income becomes less than Rs 5,00,000 . The rebate under the section is availble whether you opt for section 115 bac or not .

Further in FY 2024-25 , Rebate under section 87A is enhanced to Rs 7 .00 Lakhs for those who opt for the new tax regime only .

DEDUCTION UNDER SECTION 80D OF INCOME TAX ACT AVAILABLE UNDER OLD REGIME

Deduction allowed on Health insurance Policies under 80 D is Rs. 50,000/- for senior citizens and up to Rs. 25,000/- for others .For senior citizens, if no insurance amount is paid ,hospital expenditure up to Rs 50,000 is allowed .An assessee can claim additional Rs 50,000 for his/her parents if they are senior citizens and Rs 25,000 in other cases .
In case there is no insurance premium is paid for the senior citizens , medical expenditure incurred on behalf of them can be claimed. Overall claim cannot exceed Rs 1,00,000 . All payments should have been made in any mode other than cash .Cost of preventive health check up up to Rs 5,000 can be claimed within the overall limit and it could have been made in cash also . ​

INCOME TAX REBATES FOR SENIOR CITIZENS

DO YOU KNOW ? : Senior citizens can claim Tax Rebate under section 80D even without having paid health insurance premium .

Under section 80D , senior citizens can claim tax rebate up to Rs 50,000 against payment of health insurance premium . But they also can claim up to Rs 50,000 , even when they don't have health insurance , against their medical bills , provide amount has been paid by cheques / on-line payment / cards etc . Cash payment only on the bills will not be accepted . However payment of Rs 5,000 for health check will be accepted , even if paid in cash .

Further sons / daughters also can claim tax rebates in their income tax returns for the medical bill payment of their senior citizen parents , provided parents do not have health insurance .

Tuition Fee Exemption in income Tax 2024-25

TAX REBATE UNDER 80C FOR TUITION FEE PAID AVAILABLE UNDER OLD REGIME

DO YOU KNOW ? : Parents can claim Tax Rebate under section 80c for the tuition fees paid for their wards to educational institutions

Total tuition fee paid by a parent for maximum of two children is eligible for tax exemption under 80C .
"Tuition fees (excluding development fees, donations, etc.) paid by an individual to any university, college, school or other educational institution situated in India, for full time education of any 2 of his/her children" is eligible to be deducted under 80C .
Tuition fees paid for self or spouse is NOT eligible under 80C .
Fees paid to educational institutions situated outside India are not eligible . Only University, college, school or other educational institution must be situated in India though it can be affiliated to any foreign institutes. Tuition fee Paid for children for full time courses only is eligible. Obviously fees paid for coaching classes will not be eligible .
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Pre-nursery, play school and nursery class fees is also covered under section 80C (circular 9/2008 & 8/2007).
If both husband and wife are tax payers ,both can utilise the deduction separately for the individual payments made by them .

Not allowable Expenses:-
1. Development fees or donation not eligible.
2. Transport charges, hostel charges, Mess charges, library fees, scooter/cycle/car stand charges incurred for education are not allowed.
3. Late fees is not eligible for deduction.
4. Term Fees is not eligible for deduction.

OTHER TAX REBATES / DEDUCTIONS AVAILABLE UNDER OLD REGIME

1. Standard Deduction of Rs 50,000 allowed for salaried persons / pensioners in the old regime . In the new regime , standard Deduction of Rs 75 ,000 allowed
2. Cumulative deduction allowed under Section 80C, 80CCC, and Section 80 CCD for savings/investments, premium for annuity / pension fund is Rs. 1.5 lakh.Now under Section 80CCD, a deduction of upto Rs. 50,000 is allowed over and above the limit of Rs. 1.50 lakh under Section 80C in respect of contributions made to NPS

3. Deductions allowed Rs 50,000 / 1,50,000 under Section 80 EE / 80 EEA for the Interest on Housing loans with certain conditions

4. Deduction allowed under 80 E for interest on education loan taken for pursuing Higher Education .

'higher education' means any course of study pursued after passing the Senior Secondary Examination or its equivalent from any school, Board or university recognised by the Central Government , State government, local authority or any other authority authorized by the Central Government or State Government or local authority to do so.

5. Deductions allowed Rs 2.00 lakhs under Section 24 for the Interest on Housing loans

6. Deductions allowed Rs 1,50,000 under Section 80 EEB for the Interest on loans taken for purchase of electric vehicles.

7. Interest on savings bank accounts are exempted by tax up to an amount of Rs 10,000 under Section 80TTA and for senior citizens only if they have not claimed under section 80TTB

8. Interest received by a senior citizen on deposits with banks / co-operative societies / post office is exempted up to Rs 50,000 under section 80 TTB .

​If you need any clarifications or you want to know various rebates available under various sections of IT Act , CLICK HERE AND GO TO TAX CHARTS / TABLES AND CLICK ON DEDUCTIONS

11 POPULAR INSTRUMENTS FOR REBATES UNDER SECTION 80C DEDUCTION LIST

The below mentioned instruments can be used only if you opt for Old tax regime

1. Premium paid on a Life Insurance policy for self or spouse or child (Tax benefits come with riders .To see the riders ,go to section)

2. Contribution made under Employee’s Provident Fund Scheme Amount paid towards PPF for self/spouse, any child .

3. Contribution to a recognised Provident Fund

4. Sum deposited in Post Office Savings Bank Account(10 year/15 years)

5. Subscription to any notified securities/notified deposits schemes like ELSS ( For details , go to the end of the page )

6. Amount invested in any notified savings certificate, Unit Linked Savings certificates.

7. Investments in Unit Linked Insurance Plan of LIC Mutual Fund

8. Payments made in installments or part payment for purchasing or constructing a house property.(conditions Apply )

9.Tuition fees paid to any Indian school, college, university or other educational institutions ( Conditions Apply )

10. Contribution made to Sukanya samriddhi account

11. Tax saver Fixed Deposits issued by Commercial Banks