Introduction
As a taxpayer in India, it is essential to understand the various deductions available under the Income Tax Act. Deductions help reduce the tax liability of a person and encourage savings and investments. In this blog, we will explore the different deduction sections under the Income Tax Act.
Section 80C Section 80C is the most popular deduction section under the Income Tax Act. It allows taxpayers to claim deductions up to Rs. 1.5 lakh for investments made in various tax-saving instruments. Some of the popular investments eligible for deductions under Section 80C are as follows:
- Life insurance premiums
- Public Provident Fund (PPF)
- Equity-Linked Saving Scheme (ELSS)
- National Pension Scheme (NPS)
- Tax-saving fixed deposits (FDs)
- Sukanya Samriddhi Yojana
- Principal repayment of home loan
Section 80CCC This section provides deductions for contributions made to pension plans offered by insurance companies. The maximum deduction allowed is Rs. 1.5 lakh, including deductions under Section 80C.
Section 80CCD This section offers deductions for contributions made to the National Pension Scheme (NPS). Taxpayers can claim deductions up to Rs. 1.5 lakh under this section. Additionally, an additional deduction of Rs. 50,000 is available for contributions made to NPS Tier-II account.
Section 80D Section 80D offers deductions for health insurance premiums paid by taxpayers. The maximum deduction allowed under this section is Rs. 50,000 for senior citizens and Rs. 25,000 for individuals. Taxpayers can also claim a deduction of up to Rs. 5,000 for preventive health check-ups.
Section 80E This section offers deductions for interest paid on education loans. Taxpayers can claim deductions for interest paid on education loans for their own or their children’s education. The maximum deduction allowed is the actual interest paid or Rs. 1.5 lakh, whichever is lower.
Section 80EEA This section offers deductions for interest paid on home loans for first-time homebuyers. Taxpayers can claim a deduction of up to Rs. 1.5 lakh for interest paid on home loans taken between April 1, 2019, and March 31, 2022.
Section 80EEB This section offers deductions for interest paid on loans taken to purchase an electric vehicle. Taxpayers can claim a deduction of up to Rs. 1.5 lakh for interest paid on loans taken to purchase an electric vehicle.
Section 80G This section provides deductions for donations made to specified charitable institutions. Taxpayers can claim deductions for donations made to various organizations, such as Prime Minister’s National Relief Fund, National Defense Fund, and Swachh Bharat Kosh, among others.
Section 80GG This section provides deductions for individuals who do not receive House Rent Allowance (HRA) from their employers. Taxpayers can claim deductions for the rent paid, subject to certain conditions.
Section 80GGC This section provides deductions for donations made to political parties. Taxpayers can claim deductions for donations made to political parties registered under the Representation of the People Act, subject to certain limits.
Section 80TTA This section offers deductions for interest earned on savings accounts. Taxpayers can claim deductions up to Rs. 10,000 for interest earned on savings accounts held with banks, cooperative societies, and post offices.
Section 80U This section provides deductions for individuals with disabilities. Taxpayers with disabilities can claim deductions up to Rs. 75,000 or Rs. 1.25 lakh, depending on the severity of the disability.
Section 80GGB This section provides deductions for donations made to companies for corporate social responsibility (CSR) activities. Taxpayers can claim deductions for donations made to companies registered under Section 135 of the Companies Act, subject to certain limits.
Section 80RRB This section offers deductions for income earned from royalty on patents. Taxpayers can claim deductions for income earned from patents registered under the Patents Act, subject to certain limits.
Section 80TTB This section provides deductions for senior citizens on interest earned on various deposits. Senior citizens can claim deductions up to Rs. 50,000 for interest earned on various deposits such as fixed deposits, recurring deposits, and savings deposits.
Section 80DDB This section offers deductions for expenses incurred on treatment of specified diseases. Taxpayers can claim deductions for expenses incurred on the treatment of specified diseases such as cancer, chronic renal failure, and others, subject to certain limits.
Conclusion
Understanding the various deductions available under the Income Tax Act is essential for taxpayers to reduce their tax liabilities. The sections mentioned above are some of the most popular deduction sections under the Income Tax Act. It is important to note that there are several other deduction sections available, and taxpayers should consult their tax advisors to make the most of the deductions available to them.
Read more useful content:
- section 145 of income tax act
- section 10e of income tax act
- section 9 of the income tax act
- section 94b of income tax act
- section 206aa of income tax act
Frequently Asked Questions (FAQs)
What is income tax?
Income tax is a tax that is levied on the income earned by an individual or entity in a given financial year.
Who is required to pay income tax?
Any individual or entity that earns taxable income is required to pay income tax.
How is income tax calculated?
Income tax is calculated based on the income earned by an individual or entity, after taking into account any applicable deductions and exemptions.
What are deductions and exemptions?
Deductions and exemptions are provisions under the Income Tax Act that allow taxpayers to reduce their taxable income, thereby reducing their tax liability.
What is the due date for filing income tax returns?
The due date for filing income tax returns in India is typically July 31st for individuals and September 30th for businesses. However, this date may vary based on the taxpayer’s category and the specific financial year.
What is TDS?
TDS (Tax Deducted at Source) is a mechanism through which the government collects tax from individuals and entities at the time of payment, such as salaries, rent, and interest.
What is PAN?
PAN (Permanent Account Number) is a unique 10-digit alphanumeric number that is issued by the Income Tax Department to all individuals and entities that are required to pay income tax.
What is Form 16?
Form 16 is a certificate issued by an employer to its employees that contains details of the tax deducted at source (TDS) and the salary earned by the employee during the financial year.
What is Advance Tax?
Advance tax is the tax that is paid by an individual or entity in advance, based on an estimate of the income that will be earned during the financial year.
What is a tax audit?
A tax audit is an examination of a taxpayer’s financial records by a qualified professional to ensure compliance with tax laws and regulations. Tax audits are typically conducted by the Income Tax Department.
