Income Tax News: Your net taxable income will be smaller and your income tax outlay will be lower the more deductions you are able to take from your income. Your total income tax liability can be lowered by claiming specific income tax deductions under several areas.
Introduction to Income Tax Deductions
For taxpayers who prefer to use the previous income tax system, the majority of these deductions are available. How much tax you may save both with and without investing your hard-earned money is the question at hand. The many income tax deductions you can take advantage of to reduce your income tax for the 2023–2024 fiscal year.
One of the most popular deductions is Section 80C of the Income-tax Act, 1961, which allows for a deduction of up to Rs 1.5 lakh every financial year. If you want to take advantage of Section 80C, you must invest in a variety of financial goods by March 31, 2024.
List is Here
The following is a list of financial products that are eligible for Section 80C benefits:
- Life insurance premium payment
- Tax-saving fixed deposit investment
- Investment into post office time deposits with a lock-in period of five years
- Public Provident fund contribution
- Tuition fees paid for up to two children in any university, college, school or other educational institution situated within India
- National Savings Certificate investments
- Investments in pension plans or deferred annuity plans
- Sukanya Samriddhi Yojana investments
- Investments in Equity-Linked Savings Scheme (ELSS)
- Contribution towards EPF
Everyone is eligible for this tax deduction, regardless of income level. Keep in mind that the Section 80C deduction was only allowed during the previous income tax system.
Claiming Additional Deduction
Under Section 80CCD (1B) of the Income-tax Act, 1961, you are eligible to claim an extra deduction of Rs 50,000 if you invest in the National Pension System (NPS). It is more than the total amount allowed by Section 80C, which is Rs 1.5 lakh.
Therefore, you can contribute to NPS and claim the additional deduction of Rs 50,000 under provision 80CCD(1B) if you have used up the entire Rs 1.5 lakh under Section 80C by investing in other financial assets that are qualified for deduction under the specified provision.
Section | Description | Exemption limit |
---|---|---|
Section 80C | For contributions towards PPF, LIC, Sukanya Samriddhi Scheme, ELSS, NPS and other financial products | Rs 1.5 lakh |
Section 80D | Health insurance premium payments | Up to Rs 25,000 for self and family (including spouse and child) |
Up to Rs 50,000 for self, family and parents | ||
Up to Rs 75,000 for self, family and senior citizen parents | ||
Section 80CCD 1(B) | Contributions towards NPS | Up to Rs 50,000 for self, family and parents |
Section 80TTA | Savings account interest | Rs 10,000 |
Section 16(ia) | No investment is required | Rs 50,000 (Standard deduction) |
Eligibility for Deduction
Having health insurance is a need in the modern world. You may be able to deduct medical insurance premiums under Section 80D of the Income-tax Act, 1961 if you have purchased policies for your parents, yourself, or your family.
There was only one income tax system in place when the Section 80D deduction was allowed. You are eligible for a deduction of Rs 25,000 under Section 80D if you are under 60 and have paid health insurance premiums for your dependent children, spouse, and yourself.
Deduction for Parents Under 60
You can deduct an extra Rs 25,000 from your taxes if you pay the premiums for your parents’ health insurance policy while they are under 60. You are eligible to receive a tax deduction of Rs 50,000 if you pay your parents’ health insurance premiums since they are senior citizens. Therefore, under Section 80D, taxpayers under the age of 60 who pay health insurance premiums for senior citizen parents may deduct up to Rs 75,000 in total from their taxes.
Deduction Limit
If you have a savings account, you are eligible to deduct up to Rs 10,000 in taxes from the net interest that the account has earned. The post office, bank, or cooperative should be the custodian of the savings account.
Multiple savings accounts that you have with different banks will be combined and handled as one account. Only under the previous tax structure is this income tax deduction possible. Remember that Section 80TTA does not allow for the deductibility of interest from other sources, such as fixed deposits or recurring deposits.
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