While paying taxes is necessary, saving taxes is wise. Many Indians are unaware that using personal income tax deductions will help them to lower their tax. These deductions help you reduce your taxable income, so reducing your legally required tax payback.
Describes personal income tax deductions.
Amounts you might deduct from your overall income are personal income tax deductions. This reduces your taxable income and facilitates tax savings. The Income Tax Department lets these deductions under several areas.
Typical Deductions You Might Use
Every tax payer should be familiar with these common personal income tax deductions:
1. Section 80C – Maximum ₹1.5 Lakh
Investing in will let you claim up to ₹1.5 lakh.
- Premium in Life Insurance
- Employees’ Provident Funds (EPF)
- PPF, or public provident fund
- NSC, National Savings Certificate
- 5-Year Fixed Deposit
- ELSS, tax-saving mutual funds
- Children’s Tuition Costs
- Home loan principal payback
2. Section 80D – Medical Coverage
You can claim deduction for health insurance premium:
- Up to ₹25,000 for family and personally
- Extra ₹25,000 for parents; ₹50,000 should parents be senior citizens.
3. Section 24(b) – Home Loan Interest Deduction
Up to ₹2 lakh on Interest Paid on Home Loan (should the house be occupied)
4. Section 80TTA – Savings Account Interest
Deduction up to ₹10,000 on interest gained from savings account
5. Section 80E – Education Loan
Deduction on interest paid for education loan (no limit on amount, but only interest is covered)
Claiming These Deductions: How Should I Approach
- Show your company evidence of investment (should you be salaried).
- Correctly file your Income Tax Return (ITR).
- Save receipts and records for next reference.
Things to Remember
- Select either an old or a new tax regime. Only under the old tax system are deductions accessible.
- Early in the year, arrange your investments to prevent last-minute trouble.
- To find out how much personal income tax deductions will save you, use internet calculators.
Concluding Remarks
Knowing personal income tax deductions will enable you to save rather large sums of money annually. Start planning now, not waiting for the end of the financial year. First step towards wise financial management is smart tax planning.
