Though saving tax is wise, paying taxes is a responsibility. Through personal tax deductions, the Income Tax Act of India provides several strategies to light your tax load. Good planning will help you to save a decent sum of money annually.
Let’s review the most often occurring and practical personal tax deductions available to help you save.
Definitions of Personal Tax Deductions
Personal tax deductions are particular expenses or investments you may subtract from your taxable income approved by the government. You thus pay tax just on the remaining income following these deductions.
For instance, you will pay taxes just on ₹6,50,000 if your annual income is ₹8,00,000 and you claim deductions of ₹1,50,000.
Most Often Used Personal Tax Deductions Available in India
Under the Income Tax Act, these are the main deductions accessible:
Section 80C – Up to 1.5 lakh
Most people enjoy this part. For life insurance premiums, you could claim up to ₹1.5 lakh.
- Fund for Employee Providentity (EPF)
- PPF, or public provident fund
- NSC, or National Savings Certificate
- Five-year fixed deposit available from banks
- Mutual ELSS funds
- Children’s tuition cost
- On a home loan, principal repayment
2. Section 80D: Health Coverage
You can claim: up to ₹25,000 for children, spouse, and self’s insurance premiums.
- Extra ₹25,000 for parents; 50,000 if they are senior citizens
Section 24(b), Home Loan Interest
Under this section, you may claim: up to ₹2 lakh annually on interest paid on a house loan—for a house you occupy.
Section 80E – Interest on Education Loans
Not a limit on the quantity. Interest paid on an education loan for higher study qualifies for deduction.
Section 10(14) – House Rent Allowance (HRA)
Under this you can claim deduction if you rent a house and get HRA from your company.
Additional Appropriate Personal Tax Deductions
- Section 80G: Donations to approved organizations
- Section 80TTA: Savings account interest, up to ₹10,000
- Section 80U: For those with impairments
Things to Consider
- Only under the old tax system are deductions accessible.
- You need correct documentation and proof.
- Choose investments depending on your objectives as well as for tax saving.
Thought Notes: Final Thoughts
Knowing personal tax deductions guides your financial decisions. You don’t have to be a financial guru; small savings can result from simply general knowledge. You have earned every rupee you save for tax. Plan ahead, thus keep your records ready, and maximize these deductions.