Paying more tax than one has to is unpleasant. The good news is — the Income Tax Department offers several choices to lower your taxable income. You can save a significant amount of money annually if you are aware of these common tax deductions.
Let’s examine these choices in an orderly and straightforward manner.
Which are typical tax deductions?
Common tax deductions are figures you can deduct from your overall income prior to tax computation. Your taxable income drops as a result, and your tax pay-off lowers as well. There are several Income Tax Act sections allowing these deductions.
Top Common Tax Deductions Knowledgeable About
- Section 80C – Up to 1.5 lakh
India’s most often used deduction is this one. You may claim it for:
- Premium on life insurance
- Employees’ Provident Funds (EPFs)
- Public Provident Fund, or PPF
- ELMS mutual funds
- Fixed deposits with five years of term
- School costs for children
- Main on a house loan
- Premium on life insurance
- Section 80D: Medical Insurance
You can claim ₹25,000 for your family’s and your own health policies.
₹50,000 more for parents, should senior citizens be involved. - Section 24(b) – Home Loan Interest
Claim up to ₹2 lakh for interest paid on a house loan (self-occupied house). - Section 80E—Interest on Education Loans
There is no upper limit for deduction.
Applies for loans for your children or yourself for further education. - Section 80G: Gifts
Donating to approved relief funds or charities will result in a tax deduction. - NPS Section 80CCD(1B)
Extra ₹50,000 deduction for National Pension Scheme investment.
This goes on top of 80C. - Standard Deduction
Pensioners’ or salaried flat deduction from your salary or pension income.
Advice on Maximizing Common Tax Deductible Benefits
- Get going early in the financial year.
- Invest now not waiting until March.
- Safely save all receipts and proof.
- Plan better using web tax calculators.
- Choose investments depending on objectives, not only for tax savings.
New against Old Tax System
Many common tax deductions are not possible if you decide on the new tax system. Thus, weigh both and choose the one that reduces more taxes.
Last Thought
One of the most effective ways to lower your tax burden is to comprehend and utilize common tax deductions. Whether your income is salaried, self-employed, or retired, these deductions will enable you to save more and make wiser investments.
Not a last-minute chore, make tax planning a habit to avoid missing out.