Although paying income tax is a responsibility, it does not mean you should pay more than absolutely required. Through rebates, deductions, and exemptions, the Income Tax Act provides multiple means to reduce your tax. These are known as personal income tax relief, thus knowing them well will enable you to save a lot annually.
Relief from Personal Income Tax:
Simply said, personal income tax relief is any legal means of helping you pay less overall taxes. It can be:
- Deducting specific outlays from your income
- Claiming tax-free allowances
- Receiving returns on overpaid taxes
- Making use of government-approved investment plans
The aim is straightforward: pay taxes just on the income left over after qualified deductions.
Common Approaches to Get Relief from Personal Income Tax
- Standard Deduction (₹50,000)
- Available to every pensioned and salaried person
- Gradually lowered from gross income
- Available to every pensioned and salaried person
- Section 80C: Expenses and Investments Up to ₹1.5 lakh
- PPF, EPF, ELSS, LIC premiums, children’s school expenses, principal on a home loan
- Most often used method of relief from personal income taxes
- PPF, EPF, ELSS, LIC premiums, children’s school expenses, principal on a home loan
- Section 80D: Health Insurance
- ₹25,000 for family and self
- Additional ₹50,000 for elderly parents
- ₹25,000 for family and self
- Section 24(b) – Home Loan Interest (Up to ₹2 lakh)
- On a house owned by oneself
- No restriction on rented properties; loss from house property caps at ₹2 lakh.
- On a house owned by oneself
- HRA (House Rent Allowance)
- Salaried residents of rented homes can apply for exemption
- Considering pay, rent paid, and city of residence
- Salaried residents of rented homes can apply for exemption
- Rebate covered by Section 87A
- Should total income be less than ₹7 lakh (as per the new government), complete rebate up to ₹25,000.
- In other words: zero taxes for qualified people
- Should total income be less than ₹7 lakh (as per the new government), complete rebate up to ₹25,000.
- Section 80E – Education Loan
- No deduction limit for education loan interest paid
- Eight years of availability
- No deduction limit for education loan interest paid
Tax Relief Via Regime Selection
Starting with FY 2023–24, the new tax code became the standard one. Except from NPS and standard deduction, it provides lower tax rates but no deductions.
Choose the old tax system if you wish to enjoy complete personal income tax relief via 80C, 80D, HRA, etc.
Choose carefully based on your income and deductions accessible.
How to Apply for Relief from Personal Income Taxes
- Get all proofs: investment certificates, premium payment slips, rent receipts.
- File ITR before the approaching due date.
- Decide on the appropriate tax system.
- See tax calculators to project savings.
- If necessary, see a CA or make use of internet tax-filing systems.
Last Thoughts
Legal tax savings depend mostly on wise planning and knowledge of your rights. By properly utilizing personal income tax relief, you not only lower your tax load but also create long-term financial stability. Start early, make wise investments, and timely returns filing will help your future self thank you.