Understanding income tax slabs and filing your ITR is a process that almost all earning citizens of the country have to go through. If you have continued with the old regime of income tax, you can claim exemptions under the various sections of the Income Tax Act, 1961. You can check these sections to see whether you can apply for exemptions. You can also use an income tax calculator to figure out how you can manage all your exemptions.
Here are a few sections of the Income Tax Act, 1961, that taxpayers should acquaint themselves with.
Deductions under Section 80C
This is one of the most well-known sections of the Income Tax Act, 1961. It offers a number of avenues of exemptions. Almost every exemption made under this section has a maximum limit of Rs. 1.5 lakhs per year. Here are some of the categories included under Section 80C, which can be used to claim exemptions.
- Fixed deposit
- Life Insurance Premium
- Equity-linked Saving Schemes
- Home loan principal repayment
- Sukanya Samriddhi Yojana (if you have a girl child)
- Senior Citizens Savings Scheme
- PPF (Public Provident Fund)
- NSC (National Savings Certificate)
- NPS (National Pension Scheme)
- EPF (Employees’ Provident Fund)
- Tuition fees
- Post Office deposits (five years or over)
If you make more than one of these contributions, you can use an income tax calculator to figure out how you can make the most of this section to claim exemptions. Remember that the upper limit for exemptions under this section is Rs. 1.5 lakhs.
Deductions under Section 80CCC
This is a section that can prove helpful to save taxes for you if you are engaged in retirement planning. If you have purchased an annuity plan from an insurance provider and are paying premiums for the same, you can claim them under this section.
Deductions under Section 80CCD
If you are making contributions to the Atal Pension Yojana (APY) or the National Pension Scheme (NPS), you can claim an exemption under Section 80CCD of the Income Tax Act, 1961. The Atal Pension Yojana is a pension scheme offered by the Government of India. The National Pension Scheme is also a similar one. If you are a salaried employee, this section allows for deductions of up to 10% of your salary. For non-salaried employees, 20% of their gross income can be claimed as contributions to these pension schemes.
Deductions under Section 80D
This section pertains to premiums paid for medical insurance. This is the type of insurance you take to protect yourself against financial strain in case you were to face a health emergency. You can take this cover for your parents, spouse, as well as children under a certain age. A deduction of up to Rs. 25,000 per year can be claimed under this section. The limit increases if the parents are older. If your parents are over the age of 60 years, and you are paying medical insurance premiums for them, you can claim a deduction of up to Rs. 50,000. Moreover, if you are also over the age of 60 years and paying premiums for your parents, your claims limit is Rs. 1 lakh.
Deductions under Section 80DD
This section offers some special exemptions that may not be applicable to everyone. In case the taxpayer has a dependent with a 40% disability, an amount of Rs. 75,000 can be claimed as a deduction for the medical expenses of the said dependent. In cases of severe disability, the limit for exemption is Rs. 1.25 lakhs. It is advisable to use an income tax calculator to figure out how much taxes will such a claim save you based on your related expenses and the other claims you may be making.
Deduction under Section 80DDB
If you want to claim medical expenditures for yourself or a dependent, you can do so under this section. If you are an individual below 60 years of age, you can claim deductions of up to Rs. 40,000. The limit is Rs. 60,000 for seniors and Rs. 80,000 for super senior citizens, i.e., people above 80 years of age.
Deduction under Section 80G
If you are making any monetary donations or charitable contributions to NGOs, relief funds, or such, you are eligible for a tax exemption under Section 80G. An amount of up to Rs. 2,000 can be claimed. The payments should be made via draft, cheque, or cash. Don’t forget to add your donations when using your income tax calculator.
These are a few of the commonly known sections which you can use to claim exemptions on your income tax. Remember that these sections may not be applicable if you have opted for the new tax regime. Only the old tax regime allows for tax deductions under the various sections. Under the new tax regime, you are required to file your taxes as per the tax slab introduced.
It is also necessary to select the right type of ITR form when filing your ITR, to ensure that all your tax processes go through successfully. You may consult your tax advisor to understand which type of ITR is suitable for you.