There are a number of benefits associated with tax deduction which include:
You can reduce your taxable income by increasing your deductions. There are many investment options and forms of expenditure which can help you get reductions on your taxable income. The Indian Income Tax Act provides many provisions for this. Mentioned below are different tax deduction options:
By contributing to your PPF account, you can get tax deduction under Section 80C of the Indian Income Tax Act, 1961.
You can get income tax deduction for paying premium towards life insurance policies for self, spouse, and child under Section 80C of the Indian Income Tax Act, 1961. The amount received on maturity of the policy is free from tax. However, it is subject to the terms and conditions mentioned in your policy.
The amount invested in NSC is eligible for tax deduction under Section 80C of the Indian Income Tax Act, 1961. National Saving Certificates is one of the highly secured modes of investments in India. But, the interest earned from NSC is taxable. As an NSC is a cumulative scheme, interest is reinvested and qualifies for tax deduction.
You can get tax deduction by investing in fixed deposits for a tenure of 5 years, under Section 80C of the Indian Income Tax Act, 1961. Many banks in India offer tax-saving fixed deposits. However, the interest accrued on FDs is subject to tax.
Senior citizens can get tax deduction by investing in Senior Citizen Savings Scheme offered by banks. These schemes are eligible for tax deduction under Section 80C of the same act. The interest earned from these schemes is entirely taxable.
Investing in a five-year POTD, you can get tax deduction under Section 80C. However, interest accrued on the same is fully taxable.
Investing in ULIPs for yourself, spouse, and your children, you can get tax deductions under Section 80C.
Equated monthly installments paid to repay the principal amount of your home loan are eligible for income tax deductions under Section 80C of the same act.
Investing in mutual funds and equity-linked savings scheme makes you eligible for tax deductions under Section 80C of the Indian Income Tax Act, 1961.
Stamp duty and registration fee paid for transferring property are entitled to income tax deduction under Section 80C of the Indian Income Tax Act, 1961.
You can also get income tax deductions by investing in retirement plans offered by LIC or other insurance providers. Contribution to the National Pension Scheme is also eligible for tax deduction.
Tuition fee paid for your children’s education qualifies for income tax deduction under Section 80C. However, the fee needs to be paid for full-time education in an Indian university, college, and school for any two children. Tuition fee does not include any donations or development fees towards educational institutions.
Health insurance premium paid for self, spouse, and children qualifies for income tax deduction under Section 80D of the Indian Income Tax Act, 1961. The deduction allowed under this section is Rs. 25,000 for youngsters and Rs. 30,000 for senior citizens.
Investing in infrastructure bonds makes you eligible for income tax deductions under Section 80CCF of the Indian Income Tax Act.
Donating for charitable tasks will help you reduce your taxable income under Section 80G of the Indian Income Tax Act, 1961. However, make sure that you declare the whole contribution before 31st December each year.
Under Section 80DD of the Indian Income Tax Act, 1961, you can get income tax deductions for medical expenses incurred in the treatment of any disabled dependent of yours.
An amount of Rs.5000 spent on preventive health check-ups of an individual or his/her family members qualifies for tax deduction under Section 80D of the Indian Income Tax Act, 1961.
You can get tax deduction on the interest paid for an educational loan under Section 80E of the Indian Income Tax Act, 1961. The loan can be taken to pursue higher education by the employee, or for his/her spouse, children, or a student to whom the employee is a legal guardian.
An employee can get income tax deduction for the house rent paid, if the employee or his/her spouse does not own residential accommodation at the place of employment. This deduction is usually applicable for salaried taxpayers under Section 80GG of the Indian Income Tax Act, 1961.
Example: Your monthly basic salary is Rs 20,000. Your monthly house rent is Rs 5,000 for a flat in Bangalore. Your actual HRA is Rs 8,000, and you are eligible for 40% of the basic pay for HRA exemption. Now:
At Capital Mines Money Mart, we specialize in helping individuals and businesses maximize their tax benefits through strategic financial planning. Understanding these tax deductions can help you make informed investment decisions and reduce your taxable income effectively. Contact us for expert guidance on tax savings and financial growth!