Tax deductions are claims made to reduce taxable income that come from a taxpayer’s various investments and other additional costs. The advantage of taking an income tax deduction is that it lowers your overall tax payment, thereby allowing you to save money on your taxes.
Various Types of Deductions According to Sections
Tax paying individuals have many tax-saving instruments and investments that help them save on their taxes significantly as per the following sections of the Income Tax Act of 1961:
Section 80C
Under this section of the Income Tax Act, an individual can claim deductions worth ₹1,50,000 on their taxable income. Both individuals and the Hindu Undivided Family (HUF) are eligible for deductions and benefits under Section 80C. Any Indian citizen who has an income higher than the exempted limit as per the act can seek exemptions under this section.
Section 80CCC
Contributions or installment payments made towards annuity or pension plans are qualified for an Income tax deduction under Section 80CCC Income Tax. The amount paid on the acquisition of new insurance, as well as payments made toward the renewal or continuation of an existing policy, is included in the Section 80CCC exemption limit. /p>
Section 80CCD
Income Tax 80CCD deals with the contributions that are made to the below-mentioned pension schemes:
- National Pension Scheme (NPS)
- Atal Pension Yojana is APY.
Segment 80CCD (1)
It deals with the tax deductions that are available to the independently employed/Central Government/Other Employer. Salaried workers are qualified for a most extreme allowance of 10% of their salary, while independently employed citizens can deduct 10% of their gross income.
Segment 80CCD (2)
This part examines the employer’s contributor towards the NPS commitment. The limit is 10% of the employee’s salary as a part of the Income Tax 80CCD.
Area 80CCD (1B)
Under this section, an individual can opt for an additional tax benefit of ₹50,000 for investments that have been made in the NPS. The total savings can hence, amount to a sum of ₹2,00,000.
Section 80D
A tax exemption is accessible under tax-saving under 80D for the charge paid for health insurance. A citizen can deduct up to ₹25,000 for protection for themselves, their companion, and their dependent children under Section 80D. Assuming your family elders are under 60 years of age, you can get an extra derivation for their protection up to ₹25,000 under tax-saving under 80D. Furthermore, if they are past the age of 60, they can deduct ₹50,000 under this section. Additionally, the deduction allowed as per this section is ₹1 lakh if both the family members and the parent(s) are over 60 years of age.
Section 80CCC of the Income Tax Act as well as other sections in the IT Act as prominent tax saving options that help individuals save money on the contributions made in certain specific funds that are mostly offered by life insurance. So, investing in such tax-saving schemes and reaping their benefits is always a good option!
