Section 80C
Section 80C of the Income Tax Act allows you a deduction from taxable income in respect of certain investments and expenses. Some of these include:
a) Life insurance premium paid for self, spouse, and children
b) Employee Provident Fund (EPF)
c) Public Provident Fund (PPF)
d) 5-year Tax Saving Fixed Deposit with a bank or post office
e) National Savings Certificate (NSC)
f) Equity Linked Savings Scheme (ELSS)
g) National Pension Scheme (NPS)
h) Sukanya Samriddhi Account (SSA)
i) Senior Citizen Savings Scheme (SCSS)
j) Home loan principal repayment
k) Stamp duty, registration fee, and some other specified expenses paid towards the purchase of a house property
l) Tuition fees paid to an education institution in India for the full-time education of any two children.
The maximum deduction allowed in a financial year is the amount invested or Rs. 1,50,000, whichever is lower. The deduction under Section 80C can be availed by an individual and a Hindu Undivided Family (HUF).
Section 80D
Section 80D allows you a deduction from taxable income for premium paid towards health insurance as follows.
a) You can claim a deduction for health insurance premium paid for self, spouse, and dependent children. The maximum deduction allowed in a financial year is the premium paid or Rs. 25,000, whichever is lower. If you or your spouse is a senior citizen, the maximum deduction allowed is Rs. 50,000.
b) You can claim a separate deduction for health insurance premium paid for parents. The maximum deduction allowed in a financial year is the premium paid or Rs. 25,000, whichever is lower. If one or both of your parents is/are senior citizens, the maximum deduction allowed is Rs. 50,000.
To avail of the tax deduction, the premium payment can be made in any electronic mode like debit/credit card, internet banking, UPI, wallet, etc., except for cash.
Section 80CCD
Section 80CCD allows you a deduction from taxable income in respect of contributions made towards the National Pension Scheme (NPS) as follows.
a) For NPS contribution, under Section 80CCD(1), a salaried employee is allowed a deduction of up to 10% of salary. Other individuals are allowed a deduction of up to 20% of their salary. The maximum deduction allowed in a financial year is Rs. 1,50,000.
b) Under Section 80CCD(1B), you can avail of an additional deduction of up to Rs. 50,000 for NPS contribution.
c) Under Section 80CCD(2), you can avail deduction for your employer’s contributions to your NPS account. Central Government and State Government employees can avail of a deduction of up to 14% of salary. Other individuals can avail of a deduction of up to 10% of their salary.
Section 24
Section 24 allows you a deduction from taxable income for interest paid on a Home loan. The maximum deduction allowed in a financial year is the interest amount paid or Rs. 2,00,000, whichever is lower. The acquisition or construction of the house should be completed within 5 years from the end of the financial year in which the home loan was taken.
The interest paid during the construction period can be claimed as a deduction in equal instalments over 5 financial years after the completion of construction or acquisition of the property.
Section 80TTA
Section 80TTA allows you a deduction from taxable income in respect of interest earned on a savings account balance. The deduction is applicable to savings accounts maintained with public sector banks, private sector banks, co-operative banks, and post offices. The maximum deduction allowed in a financial year is the interest amount earned or Rs. 10,000, whichever is lower. The provisions of Section 80TTA are applicable to individuals (less than 60 years old) and Hindu Undivided Family (HUF).
Make the most of tax deductions
The Government has allowed various deductions under various sections of the Income Tax Act for specified investments, insurance premium payments, and other payments like home loan principal repayment and interest payment, children’s tuition fees, etc. Many individuals anyways incur some of these investments and payments. When you align them to your tax planning and overall financial planning, you can maximise your savings. Hence, this year-end, spend some time on your tax planning, make the payments, submit the proofs to your company’s Finance Department, and maximise your tax savings.
Gopal Gidwani is a freelance personal finance content writer with 15+ years of experience. He can be reached at LinkedIn.
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Published: 18 Dec 2023, 01:23 PM IST