In India, all matters related to income tax are monitored under the Income Tax Act, 1961. According to this Act (Act), it is necessary that your income or benefit is subject to taxation every financial year, that is why you must know how to save income tax.
Depending on your total income, you can choose various tax benefit investment options (tax benefit investment option) and plan income tax savings accordingly. To know more deeply about the various ways through which you can save tax, you need to understand how the various tax saving options (options) are covered under this Act. In this article we will learn about all the major tax deductions under the Income Tax Act:
- Section 80C (up to Rs. 1.5 lakhs)
- Section 80 CCD on NPS
- Section 80D on health insurance (health insurance) premium
- Section 80E on Education Loan (Education Loan)
- Section 80EE Rs. Up to 50,000
- Section 80G on donations made
- Section 80GG on HRA
- Section 80 TTA on bank interest
How to save tax by using income tax deductions?
To understand how to save income tax, the first step is to know about the permission for various deductions under the Income Tax Act for Tax Benefit Investment (tax benefit investment). This can help you reduce taxable income (taxable income) according to the tax saving options (tax saving options) you have selected.
There are a number of tax benefit investments or eligible (eligible) expenses for deductions, by presenting evidence that you become eligible for deductions, and can plan income tax savings accordingly. Not only this, the various sections of the Income Tax Act are dedicated to different tax benefit investments that you should know to learn about tax savings.
To get information about how to save income tax, IA discusses various deductions related to tax benefit investment and other contributions:
- Section 80C
The Section 80C Income Tax Act is an important part, so you should understand the various tax saving options (tax saving options) included in it and how to save maximum income tax.
Under Section 80C of Income Tax 1961, you can claim deductions on your tax benefit investments (tax benefit investments) and contributions to various financial products (financial products). Many tax professionals explain income tax savings mainly considering 80C deductions.
Under Section 80C , you can pay Rs. One can avail the deduction of 1.5 lakhs. Along with this, to know in depth about income tax savings, learn about tax saving options like ELSS and PPF. Life Insurance Premium Amount, ELSS Investment, Tax Saver Fixed Deposit (Tax Savings Fixed Deposit), PPF Investment, PF Contribution (Employee Contribution / Employee Contribution Only), Home Principal Repayment Amount (Home Loan Principal Return Amount) and many other Income Tax Acts Is included under 1961. Out of the deductions mentioned above, a claim can be submitted on a total deduction of Rs. 1.5 lakhs. As part of tax planning, it is important to consider the different tax saving aspects of different tax benefit investments.
- Section 80 CCD
While learning about how to save income tax, you must have heard about the National Pension System (NPS). NPS is a tax saving option / option you can choose to reduce your net taxable income. The Section 80 CCD covers the deductions for which you can take the benefits along with the investments made in your NPS. To understand how to save income tax with NPS, you have to understand in detail about Section 80 CCD first.
Two sub-sections of 80CCD detail how income tax can be saved with NPS:
Section 80 CCD (1)
It incorporates tax benefit investment (tax benefit investment) in NPS which makes you eligible for deductions. As per your intention about how to save income tax, you can invest (invest) in NPS and get the benefit of tax benefit.
The maximum deduction under this sub-section (sub-section) is for salaried (salaried) persons and self-employed (self-employed) persons, 10% of their salary and 20% of total gross income (total gross income) respectively. You should know this when making income tax saving plan.
Section 80 CCD (1B)
80C in Rs. Increased from the limit of 1.5 lakh to Rs. This includes a tax benefit investment with an additional deduction of 50,000. If you get good salary, then you must include the tax saving options (tax saving options) covered under this section in your income tax saving plan.
- Section 80D
For the premium paid towards the tax saving option of health insurance (health insurance) , under this section you can pay Rs. Can avail the facility of deduction up to 1 lakh. When you are making an income tax saving plan, keep in mind that it includes health cover and dual benefit of tax deduction.
The subdivisions for the tax deductions limit (tax deduction limit) are as follows:
- Medical insurance premium for self, spouse and children is Rs. 25,000 deduction
- If you are a senior citizen, then Rs. 50,000 deduction
- The premium paid by your parents is Rs. 25,000 deduction
- If your parents are senior citizens, then Rs. 50,000 deduction
It is important to know these subdivisions to understand in depth how to save income tax.
- Section 80E
How to save income tax, as part of this scheme, the education loan taken by you (education loan) can give you the benefit of tax deduction facility. Unlike other tax saving options (tax saving options), the interest (interest) paid by you for an education loan is eligible for deduction under Section 80E.
To understand more about how income tax can be saved under this section, first you should check the total amount paid as loan interest (interest of loan) in a financial year (financial year). Unlike other tax benefit investments types, there is no upper-limit on deduction of claims made under this section. This is the most different factor when considering how to save income tax, which you must know about.
- Section 80EE
When planning your tax, you should consider the home loan you have taken. Because Section 80EE is on payment made by you for home loan interest (interest on home loan) Rs. Allows tax deduction of up to 50,000. This is in addition to the tax benefit section 80C limit which includes various tax saving options.
If you are buying a house for the first time, then include this section in your tax planning. Apart from this, the loan amount (loan amount) is Rs. Should not exceed 35 lakhs. When you are thinking about income tax saving, it is very important to know about such important information.
- Section 80G
Donation (donation) is considered as a tax saving option for Indian taxpayers. Therefore the work done for your good should be included in your tax saving strategies. Under Section 80G, you can file a deduction claim on donations made to non-profit organizations (nonprofits).
You should be aware of the following facts while doing tax saving planning under Section 80G:
To be eligible for deduction, societies registered under Section 12A should donate.
Rupee. Cash donations above 2000 are not considered valid for deduction.
- Section 80GG
Being a payee person, while planning how to save income tax, you can claim deduction on HRA component (component) of your salary. However, if you live in a rented house and your salary does not include HRA, then you can claim deduction under Section 80GG. The rent paid by you in this manner becomes a tax saving option for you which you can use.
The condition under this section is that you should not own a house. In addition, once a year as a tax saving under Section 80GG, the lowest of these, you can include in the claim:
- 5000 per month
- 25% of your annual salary
- Total paid rent – 10% of total income
- Section 80 TTA
Your savings account (savings account) gives you interest after some time. It becomes a part of your income and thus it can work as a tax benefit investment. Section 80 TTA allows deduction on interest income (interest income).
To understand how to save income tax under Section 80 TTA, you should know that you:
- On the interest income (interest income) received from a savings account (savings account) in a bank / post-office
- At interest received up to the limit of 10,000
If you are having trouble in understanding how to save income tax, then enjoy the facility of deduction on the interest received with other tax saving options.
Founder & CEO| Fox Investor – Financial Blog Portal & A.V.A. Taxway Associates- Corporate & Tax Law Firm
Dr. Viibhor Agarwal has a Ph.D. in IPR, start-ups, and corporate law, as well as an MBA in finance from NMIMS Mumbai, and achieved numerous certifications in corporate law. He is a practicing corporate lawyer and the founder of two business verticals. He has advised over 2000 businesses, 5000 students, and 400 new start-ups all over India and other countries like Dubai, London, the USA, and Qatar. Dr. Viibhor Agarwal assists people with business expansion and branding, regardless of size, as well as business setup, financial literacy, start-up guidance, licensing, tax planning, and other legal compliance issues. Dr. Viibhor Agarwal’s goal is to provide complete financial and business literacy to all businessmen who want to start new businesses and grow existing businesses and to those students who want to open their start-ups. In each video, Dr. Viibhor Agarwal not only explains the method of the solution but also advises subscribers on practical tips learned from and faced by clients handled by Dr. Viibhor Agarwal daily. This blog portal provides you with an easy and clear solution to your business problem, allowing you to take your business to the next level.