The Income-tax Act, 1961, is quite detailed and allows benefits for very specific niche-y categories. It may be a little overwhelming, with all the technical jargon floating around, to evaluate whether you are taking advantage of all the tax benefits available. After all, everyone wants to reduce income tax outflow.
So we compiled a list of the best tax deductions that you can take advantage of, before pressing the ‘File’ button, on your income-tax return:
Section 80C deduction – To be done before March 31
Section 80C allows an individual to deduct Rs. 1,50,000 from his/ her gross total income by investing in specific instruments before March 31 of the relevant financial year. Some of the specified instruments are:
- Eligible ELSS (Equity Linked Saving Scheme) Mutual Funds
- Tax saving fixed deposits
- Eligible life insurance premiums
- PF (Provident Fund)/ PPF (Public Provident Fund) / VPF (Voluntary Provident Fund) contribution
- Unit Linked Insurance Plan (ULIP)
- National Savings Certificate (NSC) (VIII issue)
- Home loan principal repayment
- Section 80CCC – Deduction for premium paid for annuity plan of LIC or other insurer
- Section 80CCD – Deduction for pension contribution – An additional Rs. 50,000 is allowed as deduction (in addition to Rs. 1,50,000 already allowed under Section 80C) by taking the advantage of this provision
Plan your Section 80C investment well before March 31 of the relevant previous year, to reduce income tax levy.
Section 80TTA deduction – Freedom from tax on savings bank interest!
Section 80TTA allows for a reduction of upto Rs. 10,000, in case the taxable income includes interest from savings account at a bank, co-operative society or post office.
Section 80TTB deduction – More freedom from tax on savings bank interest for seniors!
In case the return is being filed for an individual aged 60 years or more, a reduction of upto Rs. 50,000 is allowed from taxable income, in case the income includes fixed deposit interest and savings account interest. However, no Section 80TTA deduction is allowed in these cases.
Section 80GG – Deduction for house rent paid
In case HRA is not received, and the recipient individual, his/ her spouse or child does not own any residential accommodation at the place of work, the rent paid for the accommodation can be allowed as deduction. The maximum deduction allowed under this section is Rs. 60,000 per annum.
Section 80D – Deduction for medical insurance premium
A deduction is also allowed for medical insurance premium paid for self, spouse and/ or dependent children, upto a limit of Rs. 25,000. In case premium is paid for parents as well, an additional Rs. 25,000 is allowed as deduction making the total upto Rs. 50,000. In case the parents are aged above 60 years, the allowed deduction (for parents) shall be Rs. 50,000, making the total allowable deduction Rs. 75,000. In case the person claiming the deduction as well as the parents, are aged above 60 years, then the allowable deduction is Rs. 1,00,000.
Section 80DDB – Medical expenditure
A deduction upto Rs. 40,000 can be claimed for treatment of any ailment, for the person or any of his/ her dependents. In case the person on behalf of whom such expenditure is made is 60 years of age or above, then the allowed deduction is Rs. 1,00,000.
Section 80G – Donate money and receive deductions!
A donation made to qualifying entity, is allowable as 100% deduction or 50% deduction, with or without restrictions, depending on the entity to which the donation is made. Some examples of entities to which 100% deduction is allowed for donations are National Defence Fund, Prime Minister’s National Relief Fund, Clean Ganga Fund etc. From FY 2017-18, donations exceeding Rs. 2,000 shall not be allowed as deduction, if made in cash.
Section 80GGB & 80GGC – Contribution to political parties
Section 80GGB allows deduction to companies on contributions made to political parties and electoral trusts. Section 80GGC allows deduction to individual taxpayers on contributions made to political parties and electoral trusts. Such deduction is allowed only if it is not made by way of cash.
If you have any doubts or queries regarding the above Sections or deductions, please feel free to comment and discuss below. Thanks!
