Paying taxes is an important responsibility of an individual towards a nation, but at the same time, through financial planning, you can save your taxes while performing your duties using tax-saving schemes provided by the government.
Tax planning is an integral part of financial planning that helps reduce tax liability and increase contributions to retirement projects.
In case of various exemptions available to an individual under the Income Tax Act, comes deep-dive:
You may like- Prepare One by OneIncome Tax Revised Form 16 Part B for the F.Y.2020-21 with the new and old tax regime U/s 115 BAC
Section 80C - Investment / Payment Discount
In order to encourage savings and investment among taxpayers, income tax departments have deducted various exemptions from taxable income. Investments in the following schemes are eligible for exemption under this category:
1. Paying the annual premium of a life insurance policy (LIC). Discount is available only if the premium of the insured amount is less than 10%.
2. Providing tuition fees to children for two children.
3. To repay the principal of the loan taken to buy or build a residential home property.
4. Invest in tax-saving FDs.
5. Invest in Public Provident Fund (PPF) and Employees Provident Fund (EPF)
Investment in Sukanya Samridhi Yojana.
Investment in the National Pension System (NPS).
It is pertinent to note that the total limit for all investments/payments to claim deduction under section 80C is Rs. 1.5 lack excluding the additional Rs.50,000/-
You may like- Prepare One by One Income Tax Revised Form 16 Part A&B and Part B for the F.Y.2020-21 with new and old tax regime U/s 115 BAC
Section 80D - Medical Insurance
• Deduction, in addition to or appropriate to the policies received in the name of the individual or his / her spouse and dependent children. The maximum limit of deduction facility is Rs.25000/- and above 60 years of age Rs.50,000/-
Section 80E - Interest in education
One is allowed to discount the interest on loans taken for higher education. This loan is taken for the taxpayer, wife, or children or for the student for whom the taxpayer is the legal guardian.
This deduction is available for a maximum of 8 years (the year in which the interest starts to be paid) or until full interest is paid, whichever is earlier.
You may like- Prepare at a time 50 Employees Form 16 Part B for the F.Y.2020-21 with new and old tax regime U/s 115 BAC
Section 80G - Grants
The various grants mentioned in U / s 80G are eligible for 100% or up to 50% discount with or without barriers. Grants to funds such as the Prime Minister's National Relief Fund,
The National Defense Fund and the National Foundation for Communal Harmony also allows 100% operation Every taxpayer must carefully adapt their tax liability through tax-saving investments that provide financial growth beyond tax-exempt investments.
Section 80TTA - Interest on Savings Accounts
Individuals can claim a maximum rebate of Rs 10,000 against interest income from their savings account through banks, co-operative societies, or post offices.
This discount is not available on the interest income from fixed deposits, recurring deposits, or interest income from corporate bonds.
Section 80TTB - Interest Income (Senior Citizen)
Senior citizens will be allowed up to Rs 50,000 for a deduction on the interest income from deposits.
Please keep in mind that the above exemptions are just some of the general exemptions available to an individual. There are many more exemptions under the Income Tax Act that can be availed through proper planning.
