According to section 80C of the Income Tax Act, 1961, a taxpayer can receive a deduction of Rs. 1, 50,000 on his/her total taxable income. The department of income tax will refund the excess amount to the taxpayer’s bank account. This is applicable only to individuals and Hindu undivided Families (HUFs).
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Tax deduction under section 80C can be claimed when payments are made to the following:
This section is further divided into sub-sections. Each of which applies to different criteria. The total amount claimable under this section is Rs.1,50,000.
It is a subpart of the broader section 80C. It allows tax deductions on payments made to pension funds.
This act exclusively focuses on pension funds. Contributions made to annuity plans or pension plans with Life Insurance Corporation (LIC) or any other registered insurance companies in India are eligible for this tax deduction. It is applicable to resident and nonresident individuals.
The amount paid to avail the pension program should be from taxable income. The amount received after maturity including interests and bonuses are also taxable. It can be claimed once all the criteria are met.
Under this section, contributions made to National Pension Scheme (NPS) are eligible for a tax deduction. It is a pension program run by the central government for self employed individuals, government employees and private sector employees.
Section 80CCD (1): The amount deducted is limited to a maximum of 10% of salary for salaried employees and a maximum of 20% of income for self employed individuals. In both the cases the amount cannot exceed 1.5lakhs for a particular financial year.
Section 80CCD (1B): It is a deduction for self contribution to NPS. An amount of 50,000 is deducted from the contribution.
Section 80CCD (2): Applicable to employers.10% of their salary contribution to employee’s NPS can be claimed.
It is a tax deduction on medical insurance. It can be self insurance as well as insurance on family.
Individuals can claim a deduction of Rs.25, 000 on medical insurance for self and family. It has a different scheme for medical insurance on parents. If parents are aged above 60 years a deduction of Rs.50, 000 can be claimed. If they are aged less than 60 years the amount deducted is Rs.25, 000. If there is an exceptional case where both the parent(s) and tax payer are aged above 60 years, then the amount deducted would be Rs.1 Lakh.
It is a deduction on medical expenditure of a taxpayer. It includes self as well as dependent family.
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In case of individuals below the age of 60, the amount deductable is Rs.40, 000. It can be deducted from expenses incurred on any medical condition specified. If the individual or related dependent is aged above 60 years, Rs.1Lakh can be deducted.
Under this section, tax deduction on educational loans for higher studies can be claimed. It could be a loan on children, spouse or by a local guardian on a student.
It can be availed only on the interest component of a loan. The loan should be from a registered financial institution. It is available for a period of 8 years. That is, even after 8 years if the taxpayer continues to repay the loan, this deduction won’t be applicable. The amount to be claimed depends on the interest part of monthly EMI. However, it should not exceed Rs.40, 000.
It is a tax deduction on home loans. It is applicable only to individuals and first time home buyers. Which means the taxpayer should not possess any house property up to the date of approval of the loan.
Here, tax deduction is relevant on the interest of home loan. The maximum deductable amount is limited to Rs.50, 000 during a fiscal year. The house value should be limited to Rs.50 Lakhs or less and the total loan should be Rs.35 Lakhs or less.
Under this section of income tax act, there is a deduction on income received from the royalty of a patent. It could be income from artwork, music etc.
Individuals can receive income from royalty of a patent as well as from other sources. This deduction is applicable only on the income received from the royalty of a patent. It is limited to Rs.3Lakhs.
A few criteria have to be satisfied to claim this deduction. The individual has to be an Indian resident. The taxpayer should be the patent himself. The patent should be registered under Patent Act of 1970.
It is a tax deduction on savings bank account. It is deducted from the interest accumulated on this account.
It can be claimed only on savings account and do not apply on fixed deposits, recurring deposits etc. Savings account could be from a bank, post office or cooperative society. The amount to be deducted is limited to a maximum of Rs.10, 000.
This is a tax benefit applicable to disabled individuals. If the taxpayer himself is a person with some medical disability he is privileged to have a tax deduction.
Here, a disability could be a mental or physical disability and should be approved by a medical authority. The person should be at least 40% disabled to be eligible for this law. Such people can claim a deduction of Rs.75, 000. People with 80% disability are tagged as severely disable and can claim an amount of Rs.1, 25,000.
It is again a tax deduction on home loan. It is based on the income gained from the housing property. This means income received from renting out your house, or if you own more than one house then the net value of these houses will be considered.
Two deductions are possible under this section. First being the standard deduction of 30% of the annual net value is exempted from tax. Then there is a deduction on the interest on loans taken. If this is for the individual’s self-occupied property, then he/she can claim up to Rs.2 Lakhs.
There are a number of tax benefits for each section of the society as well as for different purposes. Just a little amount of self-education would help all the taxpayers save money in the right way.
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