Income Tax -Exemptions and Deductions Procedure

The Income Tax Exemptions and Deductions applicable for Financial Year 2020-2021 are detailed in
Please update the required details in E-payroll POI Screen
Create a new folder, scan and save the necessary Proof of Investment / Expenses and Annexures to
Attach the folder and submit the POI
Retain all original Bills/Receipts/Bank Statement/Tickets/Boarding Passes etc for future verification
Submission of POI is not applicable for those who have opted for the New Tax Regime
Important Note on PAN Number

It is mandatory for all employees to have a Permanent Account Number (PAN) as per the Income T
hand over a copy of the PAN card to your local HR staff. If you already have a PAN, check in pay slip
provide a copy of your PAN card to your local HR staff to have it corrected. If you do not have a PAN
NSDL. Income Tax will be deducted at higher rate where PAN is not updated. Once you receive you
updated in the payroll

House Rent Allowance

● The rent receipt (ANNEXURE I) has to be filled and submitted for Apr 2020 and Nov / Dec 2020
● Employees joined the company after Apr 2020 have to submit the rent receipt for the month during which they jo
● In case of change in the amount of rent paid, the rent receipt for both the months (prior to rent change and after
● Enclose Lease agreement in case of rent paid is above Rs 19,999/- per month
● Land lord PAN number/Address is mandatory for Rent payment of Rs 8,333/- and above per month
● Declaration for non-availability of PAN will not be accepted. Copy of the PAN of Land lord should be submitted w

Leave Travel Allowance (LTA)

● LTA is allowed to claim twice in a block of four years
● Current block is calendar year Jan 2018 to Dec 2021
● Tax benefit can be claimed for actual fare only. Expenses incurred towards hotel accommodation, food, sight seei
● Proofs for expense have to attached as below
● Travel by Air- ticket & boarding pass. Benefit will be limited to fare charges of Economy class of Indian Airlines
● Travel by Train- ticket. Maximum eligibility is for A/C first Class fare.
● Travel by Vehicle- Bill from rental agency with details of date, place visited, kilometers, and number of persons tra
fare based on kilometers travelled
● Travel within India is only eligible.
● Exemption is available for the farthest place by the shortest route when a circular journey is performed
● Travel by self, spouse, two kids & dependent parents are only eligible. Travel by parents- in-law are not eligible.
● To claim LTA exemption employee should have taken minimum 3 days of earned leave during the period of tra
the claim form
● During the course of verification, if any bills are found fraudulent, stringent action will be taken on such employee
● Employees have to mention their “place of work” in Annexure based on which the Exemption will be granted
● Please submit the required details in ANNEXURE III

Leave Travel Allowance (LTA) Cash Voucher Scheme

● Employees who have opted for the simplified tax regime [ New Tax Regime ] will not be able to take the benefit o
● Employees should exercise the option of LTA cash voucher scheme [ deemed LTA fare ] in lieu of the applicable LT
● Employee should spend 3 times the value of LTA cash allowance on goods and servcies which are subject to GST a
● The above spending should be during the period from 12 Oct 2020 to 31st Mar 2021
● Employees can spend on buying goods like refrigerator,washing machine, mobile phone, two wheeler/four wheel
● The spending must happen in digital mode i.e. other than cash
● The employee must obtain and submit an invoice from the vendor who is a registered dealer for GST purpose ind
● Invoice should be in the name of the employee
● If an employee spends less than 3 times of the LTA cash allowance, the income tax exemption would be proportio

Interest on self occupied residential property

● If house property is Acquired or constructed before 01.04.2014 maximum deduction available is Rs 1,50,000/- per
● If house property is Acquired or constructed after 01.04.2014 maximum deduction available is Rs 2,00,000/- per a
occupied earlier or during the F.Y 2020-21. i.e before the submission of the documents for claiming the benefit
● Where a person is availing the benefit of HRA, the deduction of Rs 2,00,000 per annum can be claimed only when
to his employment being carried on at any other place provided the property is not actually let out by the person du
● Form of verification & provisional certificate from bank with PAN of the bank has to be submitted for getting this t
● In absence of Form of verification tax benefit will not be available.
● To avail the home loan benefit, employee needs to submit the bank certificate with break up of Interest and Princ
● The Interest on a loan taken for purchase of plot / site /commercial site is not eligible for tax benefit
● In case of joint ownership, where the share is defined, interest claimed should not exceed the proportionate amo
● After completion of house construction or purchase of house, an employee cannot avail both HRA and interest on
property is in a different city from the place of work
● Declaration in Form of verification (ANNEXURE IV) with Annexure to Form of verification (ANNEXURE V) having da
occupied), duly supported by detailed computation of Income from House Property and certificate from the person
amount and the interest paid for the year has to be submitted. The Bank certificate should clearly specify the princi
the bank

● Interest of Pre-Construction Period – Interest payable by an assessee in respect of funds borrowed for the acquis
period prior to the previous year in which such property has been acquired or constructed (to the extent it is not all
deducted in five equal annual installments commencing from the previous year in which the house is acquired or co
● In case the loan is in the name of co-owners, declaration (ANNEXURE VI) stating the proportion in which co-applic
will be provided based on the number of co-applicants in equal proportion
● In the absence of Annexure IV, Annexure V, Annexure VI (Co-Owners) and Bank Statement, Interest on Housing Lo

Interest on Letout property

●The Bank certificate with PAN and details of Principal/ interest payment for the year should be attached
● Declaration in Form of verification (ANNEXURE IV) with Annexure to Form of verification (ANNEXURE V) with requ
● Declaration (ANNEXURE VI) stating the proportion in which co-applicants will be claiming the benefit should be su
● Submit duly filled Rental Income computation
● The interest Paid on Let out property is to be calculated as per below example
● Maximum Loss from House Property is restricted to Rs.2,00,000/- as per the Income Tax Act
● If employee is having more than one property, i.e.self occupied and let out property, the total benefit will be restr

Document ANNEXURE V ANNEXURE VI

Rent Received (Annual Value)

Less: Muncipal tax paid (if any)

Net Annual Value of the property (NAV)

Less: Standard Deduction @ 30% of NAV

Less: Interest paid on Housing Loan

Loss from House property

Interest on self occupied residential property - (Sec. 80EEA)

● This deduction will not be allowable if deduction is being claimed u/s 80EE
● The loan should be taken from any financial institution (i.e, a bank or banking institution or a housing finance com
● It should be taken for acquisition of residential house property
● The deduction would be limited to Rs. 1.50 lakhs from AY 2020-2021 onwards and would continue for subsequen
● Loan should be sanctioned between 1.4.2019 to 31.3.2021
● Stamp duty of residential house property should not exceed Rs. 45 lakhs
● The assessee does not own any other residential house property on the date of sanction of loan
● If interest is claimed as deduction under Section 80EEA, such interest or such portion of interest is not again dedu
for the same or any other aseessment year
● To avail this benefit, employee needs to submit the bank certificate with break up of Interest & Principal. Loan san
considered to provide tax benefit
● Employee needs to submit Sale deed evidencing purchase of residential house property and stamp valuation of th
● Declaration in ANNEXURE XIV, ANNEXURE XV to be filled and submitted stating that employee does not own any o
and he is not claiming deduction under any other section of the Act for current or any other assessment year

ANNEXURE XIV Document

Deductions under Sec.80 C of the Income Tax Act, 1961

Public provident fund (PPF)

● Maximum deduction available is Rs 1,50,000/- per annum
● Copy of passbook along with the cover page showing investor name and Account Number to be attached
● Copy of challan duly acknowledged by the bank to be attached

Life Insurance Premium

● Maximum deduction available is Rs 1,50,000/- per annum
● Premium paid by an employee, on his life, his/her spouse / life of any child (child may be dependent / independen
deduction
● Premium paid details to be updated and attached in ANNEXURE VII
● If the premium is due after 31st Dec 2020, a declaration in (ANNEXURE VIII) stating that the premium will be paid
last premium paid receipt should be enclosed

Contribution to Pension Fund plan of LIC / HDFC Insurance / ICICI Prudential etc for re
● Maximum deduction available is Rs 1,50,000/- per annum
● Copy of premiun paid receipt to be submitted
● If the premium is due after 31st Dec 2020, a declaration in (ANNEXURE IX ) stating that the premium will be paid
premium paid receipt should be enclosed

Repayment of principal towards housing loan

● Maximum deduction available is Rs 1,50,000/- per annum
● Repayment of principal towards housing loan for the purpose of purchase or construction of a residential house p
purpose of transfer of such house property to the assessee can be claimed

● Copy of Certificate issued by the Housing Finance Co.giving the break-up of principal & interest payments and PAN

ANNEXURE IV ANNEXURE V ANNEXURE VI

Fixed Deposit of nationalized banks

● Maximum deduction available is Rs 1,50,000/- per annum
● The investment made on fixed deposits for a minimum period of 5 years with a schedule bank in accordance with
deduction
● The Fixed Deposit Receipt should specify that the same qualifies for deduction under sec 80C

National savings certificate

● Maximum deduction available is Rs 1,50,000/- per annum
● Investments in NSC –VIII issue are also eligible for deduction
● Copy of certificate issued by post office to be submitted
● Interest on NSC will be considered as Other income
● Details to be submitted in ANNEXURE X along with copy of the certificates

Equity Linked Saving Schemes (Mutual Fund Units)

● Maximum deduction available is Rs 1,50,000/- per annum
● Copy of account statement issued by the mutual fund company / Copy of Bond / Counter folio duly signed by the
● In case of Systematic Investment plan (SIP), declaration ANNEXURE XI to be submitted for payments to be made a

Post Office Deposits

● Maximum deduction available is Rs 1,50,000/- per annum
● Amount deposited in 5 years Time Depoist Scheme of post office is eligible for deduction
● Copy of the certificate to be submitted

Sukanya Samriddhi Scheme

● Maximum deduction available is Rs 1,50,000/- per annum
● Copy of the pass book and transaction to be submitted
Unit Linked Insurance Plan
● Maximum deduction available is Rs 1,50,000/- per annum
● Payment receipt or copy of ULIP Statement to be submitted

Tuition Fees
● Maximum deduction available is Rs 1,50,000/- per annum (For two children)
● Copy of Tuition fees payment receipts to be submitted
● For Tuition fees payments to be made during the period Jan 2021 to March 2021 declaration in (Annexure XII) sta
submitted

● Only tuition fees in India for full time education are eligible for consideration. Others like donation, admission fee

National Pension Scheme (NPS) Sec 80CCD(1B)

● Maximum deduction available is Rs 50,000/- per annum
● Copy of account statement issued by the company /Institution to be submitted clearly mentioning exemption u/s

Medical Insurance Premium - (Section 80 D)

● Copy of premium paid receipt issued by Insurance Company to be submitted
● Premium paid on Mediclaim policy covering self, spouse, dependent children and Parents of the employee elligib
● Aggregate deduction is Rs. 75,000/- ( Rs 25000/- for Self, spouse and Dependent Children) + Rs. 25,000/- (Parents
● In case of payment made to preventive health check-up for self, spouse, dependent children and parents of the e
● If the premium is due between 1st Jan 2021 and 31st March 2021, a declaration in (ANNEXURE XIII) stating that th
2021 along with copy of last year premium paid receipt to be submitted

● Medical insurance (Optional) deducted through Payroll is not required to be updated again in the screen. Please m

Deduction in respect of maintenance including medical treatment of a handicapped d

● Deduction available for Expenditure incurred on Medical treatment (including Nursing, training and Rehabilitation
● Deduction available for Amount deposited with LIC/UTI’s scheme or other IRDA approved insurer approved by CB

● Proof of expenditure incurred and proof of dependent being handicapped as certified by physician, oculist or a su
● The relevant rule, required certificate and form attached. Form and certificate to be submitted with all the require
● The amount of deduction is Rs 75000/-
● A higher deduction of Rs 1,25,000/- is available where such dependent is a person with severe disability having an

Deduction in respect of medical treatment (Sec. 80DDB)

● Deduction available for Expenditure incurred on medical treatment of self or dependent members suffering from
Chronic renal failure, Hemophilia Thalassaemia
● Proof of expenditure incurred to be submitted
● Certificate in the prescribed Form i.e., Form No. 10-I, as prescribed under Income Tax Rule 11DD to be submitted
● The relevant rule, required certificate and form attached. Form and certificate to be submitted with all the require
● The amount of deduction is Rs 40000/-
● A higher deduction of Rs 1,00,000/- is available where the assessee or his dependent is a senior citizen [60 years o

Deduction in respect of interest on loan taken for higher education (Sec. 80E)
● Deduction available inrespect of loan taken for the purpose of pursuing higher education [all fields] pursued after
any school, board or university recognised by the Central Government or State Government or local authority
● Deduction available inrespect of loan taken by the taxpayer for the purpose of pursuing his own higher education
● Entire payment of interest is deductible
● The deduction is available for a maximum of 8 years or till the interest is paid, whichever is earlier
● This deduction is allowed in computing the taxable income of the initial assessment year [i.e, the assessment year
the interest on the loan] and seven immediately succeeding assessment years [or until the above interest is paid in
● Copy of Educational Loan Certificate issued by the bank giving a breakup of loan & Interest for FY 2020-21 to be su

Deduction in respect of interest on loan taken for residential house property (Sec. 80
● The following conditions should be satisfied in order to claim deduction under section 80EE
● The assessee is an individual, may be resident or non-resident
● Loan is taken for acquisition of residential house property
● Loan is taken from a bank or a housing finance company
● Loan has been sanctioned by the bank / housing finance company during April 1, 2016 and March 31,2017
● The amount of loan sanctioned for residential house property does not exceed Rs 35 Lakh
● The value of residential house property does not exceed Rs 50 Lakh
● The assessee does not own any residential house property on the date of sanction of loan
● If the above conditions are satisfied, the assessee can claim deduction under section 80EE
● Deduction is available in respect of interest payable on the above loan or Rs 50,000 whichever is less
Deduction in respect of interest on loan taken for purchase of electric vehicle (Sec. 80
● The following conditions should be satisfied in order to claim deduction under section 80EEB
●The loan should be taken from any financial institution / bank for purchase of electric vehicle.
● The deduction would be limited to Rs. 1.50 lakhs from AY 2021-2022 onwards and would continue for subsequen
● Loan should be sanctioned between 1.4.2019 to 31.3.2023
● The deduction of interest allowed in this section cannot be allowed as deduction in any other section
● To avail this benefit, employee needs to submit the bank certificate with break up of Interest & Principal. Loan san
considered to provide tax benefit
● Employee needs to submit Invoice evidencing purchase of electric vehicle
● Employee needs to submit RC copy evidencing that vehicle has been registered in his / her name
● Declaration in ANNEXURE XVI to be filled and submitted stating that employee is not claiming deduction under an
year

Document

Deduction in case of a person with disability (Sec. 80U)

● Deduction available inrespect of a person suffering from not less than 40 % of any disability given below
● Blindness, low vision, leprosy-cured, hearing impairment, locomotor disability, mental retardation, mental illness
● The tax payer shall have to furnish a copy of the certificate issued by the medical authority
● Where the condition of disability requires reassessment, a fresh certificate from the medical authority shall have
original certificate in order to continue to claim the deduction
● Certificate from a physician, surgeon, an oculist or a psychiatrist, as the case may be, working in a government ho
● The relevant rule, required certificate and form attached. Form and certificate to be submitted with all the require
● The amount of deduction is Rs 75000/-
● A higher deduction of Rs 1,25,000/- is available in respect of a person with severe disability [ i.e having any disabil

Previous Employment Salary

● To be sent to below address only
● Payroll Team, Mphasis Limited, Bagmane Technology Park , Laurel Building, 1st Floor, C.V. Raman Nagar, Byrasand
● Copy of the Form 16 or Income tax computation sheet from previous employer(s)(during 2020-21) duly signed by
seal
● This is applicable to the employees who joined after 1st Apr 2020 only
●Softcopy to be sent to richard.minus@mphasis.com & shilpa.paib@mphasis.com
n the pay slip please
epancy, you can
come Tax Department /
ocal HR staff so that it is

ANNEXURE I.docx
Document

ANNEXURE IV

Document

ANNEXURE VI
 ANNEXURE VI

Amount (Rs)
120000

5000

115000

34500

80500

150000

-69500
ANNEXURE VII

ANNEXURE VIII

ANNEXURE IX
 Document

ANNEXURE XI
 Document

ANNEXURE XIII

(Sec. 80DD)

Income Tax Rule

11A

Income Tax
Form10IA
 Income Tax
Form10IA

Certificate for
Disabilities

Income Tax Rule

11DD

Form 10 I
Income Tax Rule
11A

Form 10 IA

Certificate for
Disabilities