Tax can be saved under different sections as per Income Tax Act 1961. It can be saved in the form of deduction. Deduction means amount invested or spend as per prescribed guideline, can be subtracted from Gross Total Income to reach to Total Income, on which tax is calculated accordingly. Guidelines are mentioned below.
- 80C + 80CCC + 80CCD
The maximum deduction can be INR 1,50,000 cumulatively under all the schemes mentioned below.
- 5 Year Tax saving Time Deposit
- Pension Plans
- Life Insurance Policy
- National Saving Certificate
- Equity Linked Saving Scheme.
- 80D – Medical Insurance
An individual or HUF can claim a deduction of Rs. 25,000 under this section for insurance of self, spouse and dependent children. If payment of insurance for parents is made by assessed he can avail deduction up to INR 25000 (if they are less than 60 years of age). Deduction increases to Rs 50,000 if parents are more than 60 years old.
If In case, both taxpayer and parent(s) are 60 years or above, the maximum deduction available under this section is up to Rs.1 lakh.
- 80DD – Rehabilitation for Disabled Dependent
A resident individual/HUF can avail deduction on –
a. Any Expenditure incurred on medical treatment (including nursing), training and rehabilitation of handicapped relative who is dependent.
b. Payment or deposit made to specified scheme for maintenance of handicapped dependent relative.
i. Incase disability is 40% or more but less than 80% (fixed deduction of Rs 75,000).
ii. Where there is severe disability i.e. 80% or more (fixed deduction of Rs 1,25,000).
Certificate of disability must be taken from a prescribed medical practitioner to avail this deduction.
- 80TTA – Interest on Saving Account
An individual or a HUF can claim a deduction of maximum Rs 10,000 against interest income from your savings bank account, co-operative society, or post office. Do include the interest from a savings bank account in other income.
The deduction is not available on the interest income from fixed deposits, recurring deposits, or interest income from corporate bonds
- 80GG – House Rent Paid
A resident individual can avail this deduction for rent paid when HRA is not received. The taxpayer, spouse or minor child must not be the owner of any house i.e. are they must be living on rent.
Least of the following can be deducted:
a. Rent paid minus 10% of adjusted total income
b. Rs 5,000/- per month
c. 25% of the adjusted total income.
- 80EE – Interest on Home Loan
It is applicable for first-time homeowners. Assesse must not have any other home in his own name. The value of the property should be less than Rs 50 lakh and the loan amount must be less than Rs 35 lakh. The loan taken from a financial institution must have been sanctioned between 1 April 2016 and 31 March 2017. There is an additional deduction of Rs 50,000 available on your home loan interest on top of deduction of Rs 2 lakh (on the interest component of home loan EMI) allowed under section 24.
The subsidy is given under Pradhan Mantri Awas Yojana – Housing for all, in the form of waiving off on principal amount. Waived off amount depends on certain guideline and it varies accordingly.
- 80E – Interest on Education Loan
A deduction is allowed to an assessee for interest on loans taken for pursuing higher education himself, spouse or children or for a student for whom the taxpayer is a legal guardian.
Any amount of deduction can be claimed under this section.
The maximum duration of deduction will be lower of the following-
- Continuous 8 years.
- Year at which amount is repaid.
- 80G – Donation
Any amount donated as a donation towards the social cause can be deducted from Gross Total Income. The deduction can vary from 50% to 100% depending upon the scheme donated to.
- 80RRB – Royalty of Patent
Least of the following Income received by way of royalty shall be allowed to be deducted –
- INR 300000
- Income Received.
- Section 80 TTB – Interest Income for Senior Citizen
Maximum INR 50,000 can be availed as a deduction with respect to the interest income from the deposit held by a senior citizen.