What amount gets deducted under section 16?
(a) Standard Deduction
Standard deduction has been abolished from Financial Year 2005 – 2006
(b) Tax on Employment / Professional Tax
Professional tax or tax on employment levied by the state is allowed as a deduction

How do I account for my loss on House Property?
For Self Occupied property
House that is constructed or acquired after April 1999 by using borrowed capital, interest on such borrowed capital up to an amount of Rs.150, 000 can be claimed as deduction. In case, the house was acquired / constructed prior to April 1999, the amount of deduction is Rs. 30,000

For Let Out property
Rent received for let out property less Interest on borrowed capital plus 30% of the net annual value for repair and maintenance is taken as loss / profit.

For both the above, assessee has to provide a certificate from the lender specifying the interest payable towards the capital borrowed for construction or acquisition of a house. Only interest paid post completion of house is entitled / eligible for deduction and Pre-EMI interest is amortized over a period of 5 years.

Example:
1. Interest payable on housing loan (Loan taken after 01.04.1999): 160,000
2. Pre-EMI paid is Rs. 30,000
3. Annual Value of the property (in case of Let Out Property) Rs. 250,000
4. Rent received (in case of Let Out Property) Rs. 60000/- pa

For Self Occupied property
Interest on housing loan (loan post 1/4/99) is Rs. 160,000
Pre EMI at 20% on Rs. 30,000/- (Amortized over 5 years) is Rs. 6,000/-
Total loss is Rs. 166,000 though maximum allowed is restricted to Rs. 150,000/-

For Let out Property
Interest on borrowed capital is Rs. 160,000/-
Pre EMI at 20% (Amortized over 5 years) is Rs. 6,000/-
30% of annual value (250,000) is 75,000 (for repairs and maintenance)
Total of 241,000 is reduced by Rs. 60,000 (rent received) = 181,000
Total loss eligible for deduction is Rs.181,000

What are the various deductions allowed under Chapter VI A?
Under 80C, an employee is entitled to deductions for the amounts paid or deposited in the current financial year in the following schemes, subject to a limit of Rs.100, 000/-:
• Life Insurance Premium
• Contributions to recognized Provident Fund / V P F / P P F
• Contributions to approved Superannuation Fund
• Cumulative Time Deposit A/c with P O
• Contribution to U L I P, 1971 of Unit Trust of India
• Contribution to U L I P of LIC Mutual Funds
• Annuity with Insurance Company
• Subscription to Mutual Fund
• Subscription to deposit schemes of National Housing Bank
• Subscription to NSC & Interest accrued on NSC subscription
• Subscription to deposit schemes of a public sector company engaged in providing long-term finance for construction / purchase of houses in India for residential purposes.
• Repayment of Housing Loan principal
• Infrastructure Bonds
• Children Tuition Fees (education)
• Term Deposits – Scheduled Bank (5 years and more)
• Investments of up to Rs.100,000 under erstwhile section 80 CCC

80D – Medical Insurance
Deduction up to Rs. 10,000 for general category and Rs. 15000 in case of Senior Citizen

80DD – Medical Treatment for Handicapped Dependent
Deduction on medical treatment and maintenance of handicapped dependant up to Rs. 50,000 for disability below 80% and Rs. 75,000 for disability above 80%

80DDB – Medical Treatment for Specified Illness/Diseases
Deduction on medical treatment of specified illness/diseases is up to Rs. 40,000 for general category and Rs. 60,000 in case of senior citizen

80E – Interest on Education Loan
Repayment of interest paid in the current year on loan taken for higher education is eligible for deduction, if the loan availed was for pursuing employee’s own higher education. There is no limit on the deduction.

80U – Permanent Physical Disability
Assessee certified by the medical authority to be a person with permanent physical disability is allowed a deduction of a sum of Rs. 50,000, and in case the assessee is certified as one with (severe) permanent physical disability, deduction is Rs. 75,000

80L – Interest for Securities
Deduction under this section has been removed from financial year 2005-2006

80G – Donations
For deduction in respect of donations to certain funds, charitable institutions etc, the employee can claim the deduction while filing individual returns