Deductions available to Taxpayers

An individual or HUF can claim a deduction from “Total Income” under “Chapter-VIA” of the Income Tax Act, 1961, which will reduce the tax burden. 

Investment options will not only help you with saving taxes but also help you grow your money.

• Life insurance premium.
• Tax Saving
• Fixed Deposit.
• Principal repayment is taken from banks or financial institutions for the purchase or construction of the house.
• amount invested as well as interest accrued in National Savings Certificates (NSC).
• Sukanya Sam Riddhi Yojana: This scheme offers an average interest of 8.4%, with a lock-in till the girl child reaches age 21, although partial withdrawal is allowed when she reaches 18 years.
• PPF: PPF offers an average interest rate of 7.10 % with a lock-in period of 5 years. The tax benefits and capital safety are more in favor of PPF.
• ELSS: An equity-linked saving scheme (ELSS) offers an average interest of 12–15% with a lock-in period of 3 years. It is certainly an option for better returns. It depends on whether you have an appetite for market volatility or not.

Deductions U/S 80D:

Deduction in respect of Medical Insurance Premium, Central Government Health Scheme, Preventive Health Check-Up & Medical Expenditure in any mode other than cash.

• Payment for preventive health check-ups can be made in cash. Such aggregate payment cannot exceed 5,000/-
• In case both the individual taxpayer and their parents are aged more than 60 years, for whom the medical benefits have been taken, the maximum deduction that can be availed under this section is Rs 1,00,000.
• A HUF can claim a deduction for a medical insurance premium paid for any of the members of the HUF. This deduction will be Rs 25,000 if the member insured is less than 60 years of age and will be Rs 50,000 if the member insured is 60 years of age or more.

Deductions U/S 80E: 

Deduction for Interest on Education Loan for Higher Studies to INDIVIDUAL for the education of self, spouse, children, or any student for whom an individual is a legal guardian.

If you have taken an education loan and are repaying it, then the interest paid on that education loan is allowed as a deduction from the total income.

The loan should be taken from any bank, financial institution, or any approved charitable institution.

Deduction allowed will be the amount of total interest paid for 8 consecutive years, starting from the year in which you start repaying the loan or until the interest is fully repaid, whichever is earlier.

Deductions U/S 80G:

Deduction for donations towards social causes up to either 100% or 50%, with or without restriction. (The donations above Rs 2,000/-should be made in any mode other than cash to qualify for an 80G deduction).

Deductions U/S 80TTA:

Maximum of 10,000 (Deduction against interest income from your savings account with a bank, co-operative society, or post office).

Deductions U/S 80TTB-Maximum 50,000 (Deductions with respect to interest income from deposits held by senior citizens will be allowed. [No further deduction under section 80TTA shall be allowed.”

For more information, reach us at [email protected]

Written by: Radhika Agarwal

Team, MyGoalMySip.

Read Next: PW Insider: July 2022 Edition