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Not just Section 80C: Know all other key deductions for maximum income tax savings

Not just Section 80C: Know all other key deductions for maximum income tax savings

Not just Section 80C: Know all other key deductions for maximum income tax savings
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By CNBCTV18.com Jan 28, 2022 7:50:45 PM IST (Published)

While Section 80C is a familiar concept for taxpayers, there are several lesser-known sections that allow income tax deductions for a range of expenses like medical treatment of the elderly to interest on education loans, among others.

Most Indian taxpayers are very familiar with Section 80C of the Income Tax Act. The section allows tax deductions of up to Rs 1.5 lakh in a financial year based on investment in certain securities and assets.

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These include PPF, EPF, LIC premium, equity-linked saving schemes (ELSS), principal amount payment towards home loan, stamp duty and registration charges for the purchase of property, Sukanya Smriddhi Yojana (SSY), National Saving Certificate (NSC), Senior Citizen Savings Scheme (SCSS), ULIP, tax-saving FD for five years and infrastructure bonds, among others.
But while Section 80C has a total limit of Rs 1.5 lakh as deductions, the tax code presents other opportunities for individuals to claim deductions on top or in conjunction with Section 80C. Here are some of them:
Section 80CCD: Pension contribution
Under Section 80CCD, you can take an additional deduction of Rs 50,000 for contributions to the National Pension Scheme (NPS) accounts on top of the Rs 1.5 lakh limit of Section 80C.
Section 80CCG: Rajiv Gandhi Equity Saving Scheme
First-time investors in India’s domestic equity markets can claim a 50 percent deduction of the investment amount of up to Rs 50,000 as a tax exemption.
Section 80D: Medical insurance deductions
Section 80D allows an individual or a HUF to claim a tax deduction for payments made towards medical insurance premiums for the individual or their spouse, dependent children and parents. Other health-related costs like preventive medical check-ups and medical expenditure for a senior citizen who is not covered under any health plan are also eligible. The total limit of deductions is Rs 25,000 per year, and Rs 50,000 per year for senior citizens.
Section 80DD: Dependent with disability
Individuals who have a dependent with disability of 40 percent or more can claim deduction to their income tax regardless of their actual taxable income under Section 80DD. The deduction amount is Rs 75,000 when disability is more than 40 percent but less than 80 percent and Rs 1,25,000 when it is more than 80 percent.
Section 80DDB: Medical treatment of a dependant who is suffering from a specified disease
Taxpayers can claim the costs borne for the treatment towards a dependent who is suffering from a specified disease as a deduction in their income tax. The deduction is Rs 40,000 or the cost of the treatment, and Rs 1 lakh or the cost of the treatment for senior citizens, the lower amount in either case.
Section 80E: Interest on education loan
If you, your spouse, children or ward have taken an education loan, then you are eligible to claim tax deductions under Section 80E. Under 80E, individuals are able to claim the interest paid towards settling an education loan during a financial year as tax deductions. The deduction is not available on the principal amount of the loan but only the interest paid, but has no limit for the deduction that can be claimed.
Section 80G: Donations to charitable causes
Individuals who are donating to prescribed charitable trusts, funds or organisations can claim the amount donated as a tax deduction. However, the donations must be made to organisations that have registered under Section 12A of the Act and have been notified by the government. The deduction limit is based on the organisation receiving the donation.
Section 80GGC: Donations to political parties and electoral trusts
Donations made by an individual towards a political party or to an electoral trust can be claimed as a deduction through Section 80GGC. However, the amount claimed for deduction cannot be higher than the total taxable income in a year.
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