Tax Savings – Rs. 4,44,200
Contrary to its nature, Income Tax laws in India do give some tools of tax savings which the assessee can get benefited with. These tools are in the form of deductions.
There are a host of benefits and deductions given under the Act. The most common deductions that every individual avails the benefit of, irrespective of whether he is a salaried employee or self employed, are interest on housing loan, life insurance premiums, mediclaim deduction and so on.
A deduction is basically a sum which is reduced from the income. Now on gaining conceptual clarity of what a deduction is, let us address a few of them. It is to be noted that one should not confine himself to deductions under Section 80C only as there are other sections as well that offer suitable benefits.
First, let us discuss a section that everyone is aware of, yes Section 80C. To understand the gist of this section, it is based on deduction when certain investments are made. In addition to these investments, payments towards the principal portion of the home loan, payment for tuition fees of children, are also eligible for deduction.
On stating that 80C is linked to investments, it is imperative to discuss the same. The list of eligible investments includes Public Provident Fund, Life insurance premium, Equity Linked Savings Scheme, National Savings Certificate, the newly introduced Sukanya Samriddhi Account, Pension Funds, ULIPs, etc.
A short summary of the other eligible deductions (apart from 80C) includes premium paid towards medical insurance, treatment of serious illness for yourself and persons dependent on you, donation to approved charitable funds, adhoc deduction in the event if you are physically disabled, interest received in Savings Account, etc.
Now, coming back to the title of the article! The words Tax Savings are understandable but why ₹ 4,44,200. It is pertinent to note that this was one of the highlights of this year’s budget presented by the honourable Finance Minister. During his budget speech he did address that a salaried individual can save up to ₹ 4,44,200. Now the next question is how? So, you have it here now.
|Deduction under Section 80 C||₹ 1,50,000.00|
|Deduction under Section 80CCD – Contribution to National Pension Scheme||₹ 50,000.00|
|Interest on house property loan||₹ 2,00,000.00|
|Transportation Allowance||₹ 19,200.00|
|Health Insurance Premium||₹ 25,000.00|