All you want to know about Income Tax Deduction types in India

This article takes you through the various sections of the Income Tax Act of India under which you can claim tax deductions while filing your returns online. Know more

Jun 25, 2019 01:06 IST India Infoline News Service

It is that time of the year again, when you are probably preparing to file income tax returns. If you are about to file returns for the first time, this overview of tax deductions in India will familiarise you with the various types of tax deductions in India. Tax deductions refer to claims you can make to reduce your taxable income. You can make these claims on your investments and some expenses for the financial year.

We will now take you through the various sections of the Income Tax Act of India under which you can claim tax deductions while filing your returns online.

Section 80C

The most popular tax deduction that taxpayers avail is under Section 80C of the Income Tax Act of India. This allows you to claim tax deduction for investments that you make in a number of financial instruments such as: 

Public Provident Fund (PPF)

- Investment up to Rs 1.5 lakh p.a. in PPF is eligible for tax deduction under Section 80C. The interest on the PPF account is also exempt from income tax.

Tax saving Mutual fund - Investment in tax savings mutual funds i.e. equity linked savings scheme (ELSS) is also eligible for tax deduction under Section 80C up to Rs 1.5 lakhs in a financial year.

Tax savings fixed deposit - Tax saving fixed deposits that have a maturity of five years and offer the benefit of tax deduction up to Rs1.5 lakh annually under Section 80C.

National Savings Certificate (NSC) - Like the PPF, the NSC is also another Government backed small savings scheme that allows deduction of up to Rs 1.5 lakhs under Section 80C.
Apart from the above-mentioned instruments, contribution to employee provident fund, repayment of principal of housing loan and payment of premium of life insurance policy also qualify for tax deduction under Section 80C.

Section 80CCC and 80CCD
Initiation or continuation of payment to any annuity plan floated by an insurance company is eligible for tax deduction under Section 80CCC. Contribution to the Government’s National Pension Scheme (NPS) is eligible for tax deduction under Section 80CCD. You can claim an additional deduction of Rs50,000 under Section 80CCD for investment in an NPS account over and above tax deductions under Section 80C and 80CCC.

Section 80TTA
Interest earned on bank savings account is eligible for deduction up to a maximum of Rs10,000 under Section 80TTA. However, this interest is first added under the head of “Income from Other Sources” before deduction.

Section 24
While principal on home loan is eligible for deduction under Section 80C, the interest levied on the loan amount is eligible for deduction under
Section 24.

Section 80D
Payment of medical insurance premium for self, spouse and dependent children is eligible for tax deduction under Section 80D. This deduction is also applicable for preventive health check- ups. 

Section 80E
Repayment of an education loan taken for higher education of self, spouse, dependent children or those for whom you are a legal guardian is eligible for income tax deduction under Section 80 E. However, only the repayment of interest (and not the principal amount) on such a loan is eligible for tax deduction.

Section 80G, 80GGA, 80GGB, 80GGC
A donation you make to any approved charitable institution during the financial year qualifies for deduction under Section 80G. Donation made towards the cause of rural development or for the purpose of scientific research is eligible for deduction under Section 80GGA. Donations made to political parties qualifies for deductions under Sections 80GGB and 80GGC.

Section 80GG
You can claim a tax deduction under Section 80GG for house rent. This is however applicable, if you have not claimed tax deduction under rent paid under any other section of the Income Tax Act. This deduction is therefore applicable to self-employed individuals and not salaried employees who are eligible for HRA exemption.

Armed with these tax saving tips under various sections of the Income Tax Act, you can now reduce your taxable income expertly as you prepare to file your returns online.

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