Do you want to save tax? Most probably, your answer will be yes. Who don’t want to minimize the taxation liability legally?
We, at Hubco.in get thousands of queries on how to minimize the taxation liabilities in case of individuals, because that is the one of the main segment which feels choked when it comes to rising expenditure and falling real incomes.
So, this article will be a blessing in disguise for you because it will help you to minimize your taxation liability, by easily understanding the complex laws in simple possible manner.
Let us understand the basic structure of tax saving section under the Indian Income Tax law.
9 ways to save tax
1. Section 80C:Under income tax law, any person (individual and HUF) can claim a total deduction of Rs.1.5 Lakh from the total income. This is the most common section which is used for tax saving purpose. Here are a few examples, which fall under this section;
2. Section 80CCD – Pension Contribution:This section is generally treated at par with 80C because they are seen as combined. The total cap for investment under this section or 80C is Rs.1.5 lakh. For example, If you invest Rs.100,000 in 80C and Rs.100,000 in 80CCD, you will only be eligible for a deduction of Rs.1,50,000/-, the maximum limit.
3. Section 80D – Medical reimbursement: A deduction of Rs.25,000 can be claimed for the medical insurance of self, spouse, and dependent children.
Further, an additional deduction is allowed for the parents of the individual in the following manner;
Upto 60 years of age: Rs.25,000/-
Above 60: Rs.50,000/-
Just to elaborate further, here are possible outcomes for this section;
If individual and parents both are less than 60 years
If individual is less than 60, but parents are above 60
If individual and parents both are above 60 years of age
4. Section 80TTA – Interest on Saving Account:If you earn interest on saving account, then you will be allowed a deduction up to Rs.10,000/-. The point to be noted here is that deduction is allowed only for interest from savings account with bank, cooperative society or post office. Interest on fixed deposit is not covered here.
5. Section 80GG – House Rent Paid:This section is a boon for those people who do not receive House Rent Allowance but still pays rent. The only condition for this section is that the assessee (including spouse or minor children) does not own any residential property at the place of employment. The following deduction is allowed:
Rent paid minus 10% of the *adjusted total income.
Rs.5000/- per month
25% of the adjusted total income
*Adjusted total income is a little complex to explain. But, if you go with hubco.in for your filings, then you don’t have to worry for these complex calculations.
6. Section 24 – Deduction on home loan:After fulfilling some basic conditions, an individual is allowed a deduction of Rs.200, 000 for the total interest on home loan. Suppose, during the financial year, you paid Rs.300,000 as interest and Rs.200,000 as principal amount o the bank. In that case, deduction of Rs.200,000 (maximum) will be allowed under section 24 and Rs.1,50,000 will be allowed in section 80C.
7. Section 80EE – Additional deduction for interest on home loan:Apart from the above deduction of Rs.200,000/-, this is an additional benefit given by the government. The benefit under this section is no more available.
8. Section 80G – Donations: Donations to certain institutions are allowed as tax exemption. Remember, no tax exemption above Rs.2000 is not if paid in cash.
9. Section 80TTB: This is a gift from the government to the senior citizens of our country. A deduction of Rs.50,000 shall be given to the individual aging more than 60 years.