A penny saved is a penny earned. There are many income tax deductions you can avail of while filing your income tax returns. Since salaried individuals constitute the major chunk of taxpayers, they should know about all possible deductions to claim while filing the form to maximise their returns. Allowances take up a significant part of salaried employees’ compensation packages, which can be claimed to reduce their tax burden. From House rent allowance, deductions based on education loans, medical insurance, home loans, etc. the options are many. Before you begin filing your ITR make sure to gather all relevant documents and receipts to substantiate your claims and streamline your filing process.
First up, Section 80C
This is the most popular deduction which allows you to claim up to Rs 1.5 lakh for investments and expenses like Public Provident Fund (PPF), Employee Provident Fund (EPF), National Savings Certificate (NSC), Life Insurance Premiums, and even tuition fees for children.
Dedication under this section can be claimed by individuals and Hindu Undivided Families (HUFs). A maximum deduction of up to Rs.150,000 can be claimed every year from the Gross total income.
Note: Companies, partnership firms, and LLPs cannot avail the benefit of this deduction.
Section 80D: Medical Insurance
Under this section, you can claim deductions up to Rs 25,000 for insurance premiums paid for yourself, your spouse, and children.
In case, both the taxpayer (you) and your parent(s) are 60 years or above, the maximum deduction available under 80D will be up to Rs.1 lakh.
Section 24B: Tax Benefit on Home Loans
This one is very important for the homeowners. Under Section 24B, you can get a deduction of up to Rs 2 lakh for interest paid on home loans for a self-occupied property. In case the property is rented out, there is no upper limit for the deduction on interest paid.
Section 80E - Education Loan Interest
Education is an investment in your future. Under Section 80E, you can deduct the interest paid on education loans for higher studies. This benefit is available for up to 8 years or until the interest is fully repaid, whichever is earlier. Moreover, there is no ceiling limit for the amount of interest that can be claimed under this section.
The education loan can be taken for your own needs, spouse, or children, or for a student for whom the taxpayer is a legal guardian.
Section 80G - Donations to Charities
Donations to approved charities and relief funds can be claimed under Section 80G. Depending on the organization to which you donate, you can claim up to 100 per cent of the donated amount as a deduction. But remember to keep those receipts handy to claim deduction under this section.
Section 10(13A) - House Rent Allowance (HRA)
Section 10(13A) of the Income Tax Act allows salaried individuals to claim exemptions for HRA. The deduction amount depends on your salary, rent paid, and the city of residence. A salaried individual living in a rented accommodation can avail the benefit of HRA which could be totally or partially exempted from income tax.
Apart from the above-mentioned dedication, here are a few lesser-known deductions that you must know about:
Section 80TTA can be used to claim a deduction for savings account interest up to Rs 10,000
Section 80TTB concerns senior citizens, allowing them a deduction of up to Rs 50,000 on interest from deposits.
Knowing which deductions, you can claim can significantly reduce your tax burden and increase your refund
Maximizing tax deductions is an effective way to reduce your taxable income and increase your returns. Remember, by strategically planning your investments and expenses, you can make the most of the available deductions.
