There are various deductions a taxpayer can claim from his total income - on which Income Tax is applicable in India.
This will bring down his taxable income and reduce his tax outgo.
Some of the important deductions available are
This will bring down his taxable income and reduce his tax outgo.
Some of the important deductions available are
- Section 80C: Investments
- Section 80TTA: Interest on Savings Accounts
- Section 80GG: House Rent Paid
- Section 80E: Interest on Education Loan
- Section 80D: Medical Insurance
- Section 80G: Donations
- Section 80RRB: Royalty on Patents
- Section 80TTb: Interest Income
SECTION 80C : POSSIBLE OPTIONS
The maximum amount of deduction that can be claimed for the Financial Year 2018-19 is Rs.1,50,000/-
Investments can be made in
- Employees Provident Fund and Voluntary Provident Fund: This option is for salaried employees. A part of your salary is deducted monthly as your contribution towards EPF. The total amount deducted annually can be claimed by you as deduction while computing your total taxable income. However, you must check with your employer how much interest is earned on the corpus during the financial year. Interest earned above the limit of 9.5 per cent is taxable in the hands of the employee. Similarly, if the contribution from your employer is more than 12 per cent of your salary, then the excess is taxable in your hands.
- Public Provident Fund: PPF is a scheme provided by the government and the investment in it is eligible for deduction under Section 80C. Minimum Investment: Rs500/- per year, Maximum Investment: RS.1,50,000/- per year. Maturity Period: 15 years, cumulative scheme - all monies including interest are paid at the end of 15 years. Interest is tax free and is compounded annually. A point worth noting is that the interest rate is assured but not fixed. The rate is subject to revision every quarter. The interest rate effective for January-March 2019 quarter is 8 per cent.
- Life Insurance Premiums: Amount paid towards life insurance purchased for oneself, spouse and children can be included in Section 80C deduction. However premiums paid by you for your parents, brother, in-laws is not eligible. If an HUF buys an insurance for its member, it can claim deduction under Section 80C.
- Home Loan Principal Repayment: The EMI (Equated Monthly Instalment) that you pay has two components, principal and interest. The principal qualifies under Section 80C.
- National Savings Certificate: Minimum Investment: Rs.500/- Maximum Investment: No Limit. Maturity Period: 5 years, cumulative scheme - all monies including interest are paid at maturity Current Interest Rate: 8% p.a.
- Five year Bank Deposits: Any term deposit for a period of 5 years also qualifies for deduction under 80C. Interest earned on these deposits are taxable.
- ELSS (Equity Linked Saving Schemes): There are some mutual fund (MF) schemes specially created to offer you tax savings and these are called Equity Linked Savings Scheme (ELSS). The investments that you make in ELSS are eligible for deduction under Section 80C. ELSS has the potential of earning higher returns compared to other tax-saving investments as it is equity-linked, but this means that it comes with higher risk. There is no limit on the amount that can be invested in any of these schemes, but the tax benefit is available only for Rs 1.5 lakh.
DISCLAIMER : THIS BLOG IS FOR INFORMATION AND NOT TO SOLICIT ANY BUSINESS.
