Income Tax Deduction & Exemptions Explained

5 min readJul 20, 2023

Income tax filing is one of the most critical chores for each Indian citizen, whether they are salaried or company owners. In light of this, the Finance Ministry of India issues a budget each year outlining the dos and don’ts of Income tax deduction. Simultaneously, every citizen is perplexed about making an investment that will help them save taxes.

Income Tax Deduction & Exemptions under Sections 80C, 80D & 80DDB for FY 2022–23 & 2023–24.

Although it may appear that everyone must pay some amount of tax each year, there are a few ways to save taxes or receive a rebate. PPF, EPF, and other tax-saving investment choices are widely employed, and they provide tax exemption under section 80C. Similarly, other areas may help you save taxes, although you may not realise it.

TAX SLABSNEW REGIME0 — ₹2.5 LakhsNIL₹2.5 Lakhs — ₹5 Lakhs5% of the total income₹5 Lakhs — ₹ 7.5 Lakhs₹12,500 + 10% of the total income₹7.5 Lakhs — ₹ 10 Lakhs₹37,500 + 15% of the total income₹10 Lakhs — ₹ 12.5 Lakhs₹75,000 + 20% of the total income₹12.5 Lakhs — ₹ 15 Lakhs₹1,25,000 + 25% of the total income₹15 Lakhs₹1,87,5000 + 30% of the total income

Income Tax deduction Slab for individuals/Proprietor below the age of 60 (Rs. 2.5 Lakh of Income Tax Exemption is allowed) for FY 2022–232

TAXABLE INCOMETAX RATE₹0 to ₹2,50,000Nil₹2,50,000 to ₹5,00,0005%₹5,00,000 to ₹10,00,000₹12,500 + 20% of total income exceeding ₹5,00,000Above ₹10,00,000₹1,12,500 + 30% of total income exceeding ₹10,00,000₹10 Lakhs — ₹ 12.5 Lakhs₹75,000 + 20% of the total income₹12.5 Lakhs — ₹ 15 Lakhs₹1,25,000 + 25% of the total income₹15 Lakhs₹1,87,5000 + 30% of the total income

Individual Income tax below the Age of 80 Year but above the Age of 60 years (Rs. 3 Lakh of Income tax exemption is allowed) for FY 2022–232

TAXABLE INCOMETAX RATE₹0 to ₹3,00,000Nil₹3,00,000 to ₹5,00,0005%₹5,00,000 to ₹10,00,000₹10,000 + 20% of total income exceeding ₹5,00,000Above ₹10,00,000₹1,10,000 + 30% of total income exceeding ₹10,00,000₹10 Lakhs — ₹ 12.5 Lakhs₹75,000 + 20% of the total income₹12.5 Lakhs — ₹ 15 Lakhs₹1,25,000 + 25% of the total income₹15 Lakhs₹1,87,5000 + 30% of the total income

Individual Income tax deduction Above the Age of 80 years (Rs. 5 Lakh of Income tax exemption is allowed) for FY 2022–232

TAXABLE INCOMETAX RATE₹0 to ₹5,00,000Nil₹5,00,000 to ₹10,00,00020%Above ₹10,00,000₹1,00,000 + 30% of total income exceeding ₹10,00,000Above ₹10,00,000₹1,10,000 + 30% of total income exceeding ₹10,00,000₹10 Lakhs — ₹ 12.5 Lakhs₹75,000 + 20% of the total income₹12.5 Lakhs — ₹ 15 Lakhs₹1,25,000 + 25% of the total income₹15 Lakhs₹1,87,5000 + 30% of the total income

Salaried Employee Income Tax Exemptions 2022–23

The new tax regime has the same tax rates for all categories. Individuals and HUF under the age of 60, senior citizens above the age of 60, and super senior citizens over the age of 80 are all eligible. As a result, the basic exemption limit benefit for senior and super-senior persons has not been increased.

Taxpayers now have two options: they may either accept the new tax system and pay income tax at reduced rates without a few income tax exemptions and deductions, or they can opt out. Alternatively, they can maintain the old tax regime and pay higher rates while benefiting from certain deductions and exemptions.

However, the new tax regime allows for a few deductions. These are their names:

Individuals with special needs can receive transport allowance, which is considered a deduction. Travel expenditures to and from work will be considered a conveyance allowance. Investment in the NPS or Notified Pension Scheme will be deducted under Section 80CCD (2). There are deductions available for newly appointed workers under Section 80JJAA. Depreciation of assets (equipment) under Section 32, excluding additional depreciation charges incurred by personnel who are moved or travelling for work.

The new tax structure does not include 70 exemptions and deductions. The following are the most typical exclusions from this list:

Professional tax, House Rent Allowance (HRA), Children’s Education Allowance (CEA), Leave Travel Allowance (LTA), daily expenditures incurred during work relocation allowance, and Conveyance Allowance (under Section 24). Other special allowances [Section 10(14)] assistant allowance normal salary deduction.

Income Tax Exemptions for Salaried Employees 2022–23

Section 80C — Investment Deductions

Section 80C is one of the most well-liked and popular sections among taxpayers since it allows them to reduce their taxable income by making tax-saving investments or incurring eligible charges. The maximum yearly deduction from taxable income is Rs. 1.5 lakh.

Individuals and HUFs can both take advantage of this discount.
This deduction is not available to company, partnerships, or LLPs.
Section 80C includes subsections 80CCC, 80CCD (1), 80CCD (1b), and 80CCD.
The entire deduction limit, including subsections, is 1.5 lakh, with the exception of an extra deduction of 50,000 allowed under Section 80CCD (1b).

Section 80D — Medical Insurance Deduction For Premiums Paid

Section 80D permits you (as an individual or HUF) to deduct $25,000 for health insurance for yourself, your spouse, and any dependent children. You may additionally deduct an extra 25,000 from your parents’ insurance if they are under the age of 60. This amount was increased from 30,000 to 50,000 in the 2018 Budget for parents over the age of 60. The maximum deduction permitted by this provision is $100,000 if both the taxpayer and the taxpayer’s parent(s) are 60 or older.

Section 80DDB — Medical Expenses

Medical Expenses For Oneself Or A Dependent Relative:

A Deduction For People Under 60.

A resident person or a HUF may deduct up to $40,000 in taxes. It can be used to cover the price of treating specified medical disorders for the owner or any of his dependents. A HUF may make such a deduction for medical expenses linked to certain specified diseases for any HUF member.

For the very elderly and the elderly

If the elderly person for whose benefit the expenditures were incurred, the individual or HUF taxpayer may claim a deduction of up to $100,000. A senior citizen and a super senior citizen may claim a discount of 60,000 and 80,000 respectively until FY 2017–18. Unlike in the past, this is now a standard deduction offered to all seniors, including super seniors, up to $100,000.

Any reimbursement of medical expenses by an insurance company or an employer reduces the amount of the deduction that the taxpayer may claim under this section.

For reimbursement claims

Also, keep in mind that in order to claim such a deduction, you must have a prescription from the appropriate physician. Look over our in-depth article on Section 80DDB.

There is another a 10% surcharge if the overall income surpasses $50,000,000, and a 15% surcharge if the entire income exceeds one crore. A 3% education cess is also levied in addition to the surcharge.

The income tax exemption level for all persons under the age of 60 is $250,000; for those between the ages of 60 and 80, it is $300,000; and for individuals above 80, it is 500,000.

Every person is entitled for a tax deduction for income invested in particular securities. We have included all of the deductions for Fiscal Year 2019–20 to assist you conveniently file your income tax returns and maximise the available tax deductions.

The following is a list of income tax deductions for fiscal years 2022–23 and 2023–24 based on different parts of the Income Tax Act of 1961:

Read the article for complete information: https://setupfilings.com/learn/income-tax-deduction-exemption/