A tax deduction lowers your taxable income and thus reduces your tax liability. You subtract the amount of the tax deduction from your income, making your taxable income lower. The lower your taxable income, the lower your tax bill.
TAX SAVING WITH NPS ( SECTION 80CCD (1B ):
Taxpayers can save additional tax by investing up to Rs. 50,000/- in NPS. This is over and above the benefit, they can claim on contributions under Section 80C. They also have the option of utilizing NPS for the Rs.1,50,000/- limit of Section 80C. This combination will take total deduction one can claim with NPS to Rs. 2,00,000/-
TAX SAVINGS ON HEALTH INSURANCE PREMIUMS ( SECTION 80D )
In computing the total income of an assessee, being an individual or a Hindu undivided family, there shall be deducted such sum, as specified in sub-section (2) or sub-section (3), payment of which is made by any mode as specified in sub-section (2B), in the previous year out of his income chargeable to tax.
Where the assessee is an individual, the sum referred to in sub-section (1) shall be the aggregate of the following, namely:—
(d) the whole of the amount paid on account of medical expenditure incurred on the health of any parent of the assessee, as does not exceed in the aggregate Rs.50,000/- (fifty thousand rupees).
TAX SAVINGS ON MEDICAL EXPENSES TOWARDS DISABLED DEPENDENT (SECTION 80DD):
As per section 80DD, the assessee is eligible to claim a deduction of Rs. 75,000/- from his gross total income. However, in case the dependant is a person with severe disability, the assessee is eligible to claim a deduction of Rs.1,25,000/-.
DEDUCTION IN RESPECT OF INTEREST ON LOAN TAKEN FOR RESIDENTIAL HOUSE PROPERTY( SECTION-80EE):
Tax benefits under Section 80EE can only be claimed by first-time home buyers. In order to claim this deduction, the individual must have taken the loan from a financial institution for buying his/her first residential house property. Section 80EE is applicable on a per person basis rather than a per property basis. The deduction under this section shall not exceed Rs. 50,000/-.
DEDUCTION IN RESPECT OF PURCHASE OF ELECTRIC VEHICLE ( SEC-80EEB WEF AY 2020-21)
Interest payable on loan taken by an individual from any financial institution for the purpose of purchase of an electric vehicle subject to certain condition. The deduction under this section shall not exceed 1,50,000.
DONATIONS TO CHARITABLE INSTITUTIONS(SECTION 80G)
Donations made to government-approved charitable institutions can be claimed as a deduction under this section. The donation can be for the renovation of a place of worship like temples, mosques, and churches, given that they are approved by the central government. Some of the funds approved by the government include the National Defence Fund, Prime Minister’s National Relief Fund, Clean Ganga Fund, National Children Fund, etc.( two category of deduction are there 50% and 100%)
INTEREST ON SAVING BANK ACCOUNTS( SECTION 80TTA)
Interest on deposits in savings bank accounts shall not exceed Rs. 10,000 per year. For Senior citizen its shall not exceed Rs. 50,000/- Per year.
REBATES ( SECTION 87A)
Tax rebate in case of individual resident in India, whose total income does not exceed Rs. 5,00,000 quantum of rebate shall be an amount equal to hundred per cent of such income-tax or an amount of Rs. 12,500, whichever is less.
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