By Maruthappan

What is Financial Year mean?

&
What is Assessment Year mean?

• The income you earned from 1st April 2020 to 31st March 2021
is the income earned in the current Financial Year (FY) 2020-21.

• Income earned in the current Financial Year 2020-21 (i.e. from

1st April 2020 to 31st March 2021) will become taxable in
Assessment Year 2021-22 (i.e. from 1st April 2021 to 31st March
2022)
Some examples of Assessment Year and
Financial Year or Previous Year

Period Financial Year Previous Year Assessment Year

1 April 2018 to 31st 2018-19 2018-19 2019-20

March 2019

1 April 2019 to 31st 2019-20 2019-20 2020-21

March 2020

1 April 2020 to 31st 2020-21 2020-21 2021-22

March 2021
Tax Regimes compared
 Income Tax Exemption Vs Tax Deduction Vs Tax
Rebate
• What are Income Tax Exemptions?
• Exemption means ‘exclusion’. Income Tax Exemption simply means
the income which is not subject to tax
Example:
• House Rent Allowance – You can claim tax exemption of HRA from
your Salary income.
• Gratuity limit of up to Rs 20 lakh.
What are Income Tax Deductions?
• Deduction means ‘subtraction’ i.e. an amount that is eligible to
reduce taxable income.

Examples:
• Investments in ELSS Tax saving mutual fund units, PPF, Life insurance
plans, EPF etc., u/s 80c .
• Health Insurance premium u/s 80D.
• Standard Deduction of up to Rs 40,000 (for FY 218-19) from your
Salary Income.
• Tax Benefit/relief on Home Loan for payment of Interest is allowed as
a deduction under Section 24 of the Income Tax Act.
What is Income Tax Rebate?
• Income Tax Rebate is allowed to be claimed from the total tax
payable.
Examples:
The rebate us/ 87A of up to Rs 12,500 for FY 2020-21 / AY 2021-22.
(It is generally provided to reduce the tax burden of the individuals who
fall under lower income bracket.)
House Rent Payments
Section 80C Exemptions  1,50,000/-

• 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

Section 80CCD

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

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, parents and dependent children).
Section 80EE
• PAYMENT OF INTEREST ON HOUSING LOAN ON OR AFTER
01.04.1999 MXIMUM OF 2,00000/-

Section 80EEB
• INTEREST ON LOAN AVAILED TO PURCHASE ANY
ELECTRONIC VEHICLE DURING FY 2019-20 ONWARDS -
RS.1,50,000/-