Updated on: 10th August, 2023
Income tax filing is one of the most important tasks for every Indian citizen, whether a salaried individual or a businessman. In light of this, every year, the Finance Ministry of India rolls out a budget explaining IT deductions’ dos and don’ts. At the same time, every citizen is perplexed about making an investment that will assist them in saving taxes.
Although this might seem like everyone has to pay some amount of tax every year, there are a few ways by which you can save the taxes or get a rebate. Tax-saving investment options like PPF, EPF, and others are commonly used, and they give you tax exemption under section 80C. Similarly, other such sections can help you save taxes, but you might not have heard of them.
Key takeaways
- Salaried employees are eligible for a standard deduction, which has been increased in this financial year. This deduction reduces the taxable income and, in turn, the overall tax liability.
- The transport allowance and medical reimbursement components, which were previously tax-exempt, have been replaced with the new regime.
- The tax exemption limit for employee contributions to the National Pension System (NPS) and Employee Provident Fund (EPF) has been increased.
This blog will explain the tax exemptions available under Sections 80C, 80D, and 80DDB. Income tax is a percentage of income paid to the government by the taxpayers for the betterment of the public in general.
What are Tax Deductions?
Tax deductions are specific expenses or investments that reduce an individual’s taxable income, thus lowering the amount of income tax they are required to pay. These deductions are allowed by the government to encourage individuals to save and invest, purchase insurance policies, and contribute to specific funds and schemes.
Benefits of Tax Deductions
While tax deductions may seem complex and overwhelming, understanding their benefits can lead to more strategic financial planning and responsible decision-making. Read ahead to explore the benefits of tax deductions, which range from encouraging investment to supporting charitable contributions.
Reduced Tax Liability
One of the most apparent benefits of tax deductions is that they help reduce an individual’s or business’s overall tax liability. By deducting eligible expenses and investments from their taxable income, taxpayers can lower the portion of their income that is subject to taxation. This results in more money staying in the hands of individuals and businesses, enabling them to reinvest in their ventures, purchase goods and services, or save for the future.
Encouragement of Charitable Contributions
Tax deductions play a significant role in encouraging charitable giving. Many governments offer tax deductions to individuals who donate to registered charities or non-profit organizations. By providing this incentive, governments hope to promote philanthropy and support the vital work carried out by charitable entities. Not only does this benefit society as a whole, but it also allows individuals to contribute to causes they are passionate about while simultaneously reducing their tax burden.
Stimulating Investment and Economic Growth
Tax deductions targeted at businesses can serve as powerful tools for stimulating investment and economic growth. Governments often grant deductions for capital expenditures, research and development, and other business-related expenses. By doing so, they encourage businesses to reinvest their earnings back into the economy, which can lead to job creation, innovation, and increased productivity. In turn, a thriving business environment fosters a more robust economy, benefiting individuals and society as a whole.
Promoting Homeownership and Real Estate Investments
Many countries offer tax deductions related to homeownership and real estate investments. Deductions for mortgage interest, property taxes, and certain home improvements aim to make homeownership more accessible and affordable. These incentives can motivate individuals to invest in real estate, fostering a stable housing market and supporting the construction industry. Moreover, homeownership often builds equity for individuals, helping them build wealth over time.
Facilitating Education and Skill Development
Tax deductions can also be advantageous in the realm of education and skill development. Various governments provide tax breaks for expenses related to higher education, including tuition fees and interest on student loans. Additionally, certain professional development expenses may be deductible for individuals seeking to enhance their skills and expertise. By encouraging investment in education and continuous learning, tax deductions contribute to a more skilled and competitive workforce.
Tax Exemption vs. Tax Deduction
Now that you know what tax deduction is, it is now time to shed light on the fundamental dissimilarities between tax exemption and tax deduction.
Aspect
|
Tax Exemption
|
Tax Deduction
|
Definition
|
Tax exemption is a total exclusion of income or transactions from taxable calculations.
|
Tax deduction allows a portion of eligible expenses to be subtracted from taxable income.
|
Applicability
|
Usually granted to specific entities, such as non-profit organizations or certain government bodies.
|
Available to individuals and businesses for qualifying expenses.
|
Types
|
Personal Exemption
Corporate Exemption
|
Standard Deduction
Itemized Deduction
|
Impact on Taxable Income
|
Directly reduces the total taxable income.
|
Indirectly reduces the taxable income after qualifying expenses are deducted.
|
Dependency on Income
|
Independent of income levels.
|
Deductible amount may vary depending on income, expenses, and filing status.
|
What is Tax Deducted at Source?
Tax Deducted at Source (TDS) is a mechanism employed by tax authorities to collect income tax directly from the source of income rather than waiting for taxpayers to pay their taxes at the end of the financial year. In this system, the person or entity making the payment deducts a certain percentage of the payment as tax before transferring the remaining amount to the payee. The deducted tax amount is then deposited with the government on behalf of the recipient.
The TDS system applies to various types of income, including salaries, interest on fixed deposits, rent, commission, professional fees, and various other payments. The provisions for TDS are generally governed by the tax laws of each country, and rates can vary depending on the nature of income and the overall tax structure.
Various Types of Tax Deductions in India
Understanding the nuances of tax deductions is crucial for taxpayers to make informed decisions about their financial choices and ensure compliance with tax regulations. This knowledge empowers individuals and businesses to explore legitimate ways to maximize tax benefits while contributing to the nation’s economic growth.
- Section 80C Deductions
Section 80C is one of the most popular tax-saving provisions in India. Under this section, taxpayers can claim deductions up to ₹1.5 lakhs in a financial year. Some eligible investments and expenditures under Section 80C include
a. Employee Provident Fund (EPF)
b. Public Provident Fund (PPF)
c. Equity-Linked Savings Scheme (ELSS)
d. National Savings Certificate (NSC)
Section 80D Deductions
Section 80D provides deductions on health insurance premiums paid by individuals and HUFs (Hindu Undivided Families). The eligible deduction amount varies based on the age of the insured and the number of family members covered under the policy. Additionally, deductions for preventive health check-ups are also available.
Section 24(b) Deductions
Section 24(b) deals with deductions on the interest paid on home loans. For self-occupied properties, taxpayers can claim up to ₹2 lakhs per annum. In the case of let-out properties, there is no upper limit on claiming the interest paid on the home loan.
Section 80E Deductions
This section allows taxpayers to claim deductions on the interest paid for education loans. These loans must be taken for higher education, either for the taxpayer, spouse, children or for a student the taxpayer is the legal guardian of.
Section 10(14) Deductions
Section 10(14) offers deductions on various allowances received by salaried individuals, such as House Rent Allowance (HRA), conveyance allowance, and medical allowance.
Section 80G Deductions
Donations made to specified funds and charitable institutions are eligible for deductions under Section 80G. The deduction varies from 50% to 100% of the donated amount, depending on the nature of the recipient organization.
Section 80TTA and 80TTB Deductions
Under Section 80TTA, individuals can claim deductions of up to ₹10,000 on interest earned from savings accounts. For senior citizens, Section 80TTB provides deductions of up to ₹50,000 on interest earned from savings accounts, fixed deposits, and recurring deposits.
Income Tax Deduction Under Section 80
Section 80 of the Income Tax Act encompasses various sub-sections, each catering to different types of deductions. These deductions are designed to incentivize taxpayers to save, invest, and spend on eligible avenues while reducing their overall taxable income.
Let us explore some of the essential subsections of Section 80 and the deductions they offer:
- Section 80C
This is one of the most popular and widely used subsections under Section 80. It allows individuals and Hindu Undivided Families (HUFs) to claim deductions of up to ₹1.5 lakhs on specified investments and expenses.
Section 80D
This section allows deductions on health insurance premiums paid for self, family, and parents. Taxpayers can claim a deduction of up to the income tax slab ₹25,000 for premiums paid for themselves, their spouse, and dependent children. Additionally, an additional deduction of up to ₹25,000 can be claimed for premiums paid for parents. For senior citizens, the maximum deduction limit for health insurance premiums is ₹50,000.
Section 80G
Donations made to eligible charitable organizations and specific government funds are eligible for deductions under Section 80G. The deduction amount can range from 50% to 100% of the donated amount, depending on the type of organization and the specific scheme.
Section 80E
This section allows for deductions on the interest paid on educational loans. The deduction is available for a maximum of 8 years or until the interest is fully repaid, whichever is earlier.
Section 80TTA and 80TTB
Under Section 80TTA, individuals and HUFs can claim deductions of up to ₹10,000 on interest earned from savings accounts. For senior citizens, Section 80TTB provides a deduction of up to ₹50,000 on interest earned from bank deposits, post office deposits, or senior citizen savings schemes.
Taxable and Non-taxable Components of Your Salary.
Being knowledgeable about the taxable and non-taxable components of your salary allows you to optimize your tax planning and take advantage of legitimate tax-saving opportunities. By strategically structuring your salary package and availing the available tax exemptions, you can potentially maximize your take-home pay and save on taxes.
In this guide, we will delve deeper into the distinct elements that constitute taxable and non-taxable components of your salary. Understanding the nuances of each category will empower you to make well-informed financial decisions and manage your finances prudently while staying compliant with tax regulations.
Taxable Components
Basic Salary
The basic salary is the core component of your salary package and forms the foundation for various other allowances and benefits. It is fully taxable, and the income tax rate is applied to this amount based on the prevailing tax laws of your country.
House Rent Allowance (HRA)
HRA is given to employees who live in rented accommodation. The taxability of HRA depends on whether the employee is staying in a rented house, own house, or living with parents.
Conveyance Allowance
This allowance is given to meet expenses related to commuting between home and office. In some countries, a specific amount of conveyance allowance is exempted from tax.
Bonus
Bonuses received periodically or annually are also fully taxable unless a specific bonus is exempted under tax laws.
Non-Taxable Components
Provident Fund (PF) Contributions
The employer’s contribution to the Employee Provident Fund (EPF) is tax-exempt under most tax jurisdictions, subject to certain conditions. However, the interest earned on EPF is taxable if withdrawn before the completion of five years of continuous service.
Gratuity
Gratuity is a lump sum payment made by the employer to the employee upon retirement or resignation. It is partially or fully tax-exempt, depending on the country’s tax rules and the number of years of service completed.
Medical Allowance
Reimbursements for medical expenses incurred by the employee or their family may be tax-exempt up to a certain limit, as per the tax laws of the country.
Education Allowance
Certain countries provide tax exemptions for education allowances, helping employees manage the education expenses of their children.
For individuals (resident or non-resident) less than 60 years of age at any time during the previous year:
Old Tax Regime
|
New Tax Regime u/s 115BAC
|
Income Tax Slab
|
Income Tax Rate
|
Income Tax Slab
|
Income Tax Rate
|
Up to ₹2,50,000
|
Nil
|
Up to ₹2,50,000
|
Nil
|
₹2,50,001- ₹5,00,000
|
5% above ₹2,50,000
|
₹2,50,001- ₹5,00,000
|
5% above ₹2,50,000
|
₹5,00,001- ₹10,00,000
|
₹12,500 + 20% above ₹5,00,000
|
₹5,00,001- ₹7,50,000
|
₹12,500 + 10% above ₹5,00,000
|
Above ₹10,00,000
|
₹1,12,500 + 30% above ₹10,00,000
|
₹7,50,001- ₹10,00,000
|
₹ 37,500 + 15% above ₹ 7,50,000
|
| |
|
₹10,00,001- ₹12,50,000
|
₹ 75,000 + 20% above ₹ 10,00,000
|
| |
|
₹12,50,001- ₹15,00,000
|
₹1,25,000 + 25% above ₹ 12,50,000
|
| |
|
Above ₹15,00,000
|
₹1,87,500 + 30% above ₹ 15,00,000
|
For individuals (resident or non-resident) 60 years or more but less than 80 years of age anytime during the previous year:
Old Tax Regime
|
New Tax Regime u/s 115BAC
|
Income Tax Slab
|
Income Tax Rate
|
Income Tax Slab
|
Income Tax Rate
|
Up to ₹ 3,00,000
|
Nil
|
Up to ₹2,50,000
|
Nil
|
₹3,00,001- ₹5,00,000
|
5% above ₹3,00,000
|
₹2,50,001- ₹ 5,00,000
|
5% above ₹2,50,000
|
₹5,00,001- ₹10,00,000
|
₹10,000+20% above ₹5,00,000
|
₹5,00,001- ₹7,50,000
|
₹12,500 + 10% above ₹5,00,000
|
Above ₹10,00,000
|
₹1,10,000+30% above ₹10,00,000
|
₹7,50,001- ₹10,00,000
|
₹37,500 + 15% above ₹7,50,000
|
| |
|
₹10,00,001- ₹12,50,000
|
₹75,000 + 20% above ₹10,00,000
|
| |
|
₹12,50,001- ₹15,00,000
|
₹1,25,000 + 25% above ₹12,50,000
|
| |
|
Above ₹15,00,000
|
₹1,87,500 + 30% above ₹15,00,000
|
For individuals (resident or non-resident) 80 years of age or more anytime during the previous year:
Old Tax Regime
|
New Tax Regime u/s 115BAC
|
Income Tax Slab
|
Income Tax Rate
|
Income Tax Slab
|
Income Tax Rate
|
Up to ₹5,00,000
|
Nil
|
Up to ₹2,50,000
|
Nil
|
₹5,00,001- ₹10,00,000
|
20% above ₹5,00,000
|
₹2,50,001- ₹5,00,000
|
5% above ₹2,50,000
|
Above ₹10,00,000
|
₹1,00,000+30% above ₹10,00,000
|
₹5,00,001- ₹7,50,000
|
₹ 12,500 + 10% above ₹5,00,000
|
| |
|
₹7,50,001- ₹10,00,000
|
₹ 37,500 + 15% above ₹7,50,000
|
| |
|
₹10,00,001- ₹12,50,000
|
₹75,000 + 20% above ₹10,00,000
|
| |
|
₹12,50,001- ₹15,00,000
|
₹1,25,000 + 25% above ₹12,50,000
|
| |
|
Above ₹15,00,000
|
₹1,87,500 + 30% above ₹15,00,000
|
Income Tax Exemptions for Salaried Employees 2023 – 24
As per the new tax regime, all categories’ tax rates are the same. This includes individuals and HUF below 60 years of age, senior citizens or those above 60, and super senior citizens or those above 80 years of age. Therefore, there has been no increase in the basic exemption limit benefit for senior and super-senior citizens.
Taxpayers now have two options; they can either take up the new tax regime and choose to pay income tax at lower rates without a few income tax exemptions and deductions. Or, they can continue with the old tax regime and pay higher rates but avail of certain deductions and exemptions.
However, a few deductions are allowed under the new tax regime. They are as follows:
70 exemptions and deductions are not a part of the new tax regime. The most common exemptions under this list include –
Professional tax, House Rent Allowance (HRA), Children’s education allowance, Leave Travel Allowance (LTA), daily expenses incurred during employment relocation allowance, and Conveyance allowance, Interest on housing loan under Section 24. Other special allowances [Section 10(14)] helper allowance standard deduction on salary.
2023 to 24: Income Tax Exemptions for Salaried Employees
It is crucial for salaried employees to stay well-informed about these changes to take full advantage of the available exemptions and optimize their tax planning strategies. Join us on this journey of understanding the new income tax exemptions for salaried employees in the financial year 2023-24. Together, we will navigate the complexities of tax laws, unlocking new possibilities and opportunities for a brighter financial future.
- Section 80C – Deductions On Investments
One of the most well-liked and popular sections among taxpayers is Section 80C because it enables taxpayers to lower their taxable income by making tax-saving investments or incurring qualified costs. The highest annual deduction from the taxpayer’s gross income is ₹1.5 lakhs.
Both individuals and HUFs are eligible to take advantage of this discount. Businesses, partnership businesses, and LLPs are not eligible for this deduction.
Subsections 80CCC, 80CCD (1), 80CCD (1b), and 80CCD are all part of Section 80C.
The overall ceiling for claiming a deduction, including the subsections, is ₹1.5 lakhs, with the exception of an additional deduction of ₹50,000 permitted under Section 80CCD (1b).
Section 80D – Medical Insurance
Deduction for Medical Insurance Premium
Section 80D allows you (as a person or HUF) to deduct ₹25,000 for insurance for yourself, your spouse, and your dependent children. If your parents are under 60, you may also deduct an additional ₹25,000 from their insurance. In the 2018 Budget, this sum was doubled from ₹30,000 to ₹50,000 for parents who are older than 60.
If both the taxpayer and the taxpayer’s parent(s) are 60 years of age or older, the maximum deduction allowed by this clause is ₹100,000.
Section 80DDB– Medical Expenditure
Medical Expenses On Oneself Or A Dependent Relative: A Deduction
For people and HUFs under the age of 60
A resident individual or a HUF is eligible for a deduction of up to ₹40,000. It can be used to cover any costs associated with the treatment of specific medical conditions for the owner or any of his dependents. Such a deduction is possible for a HUF in relation to medical costs related to these designated illnesses for any HUF member.
For the elderly and extremely elderly
The individual or HUF taxpayer may claim a deduction of up to ₹100,000 if the elderly person for whose benefit the costs were incurred. Up till FY 2017–18, a senior citizen and a super senior citizen may each claim a deduction of ₹60,000 and ₹80,000. Unlike before, this is now a standard deduction that is available to all senior citizens, including super senior citizens, up to ₹100,000.
The amount of the deduction that the taxpayer may claim under this section shall be reduced by any reimbursement of medical expenditures by an insurance or employer.
For claims of reimbursement,
Also, keep in mind that in order to claim such a deduction, you must have a prescription for such medical treatment from the relevant physician. Take a look at our in-depth article on Section 80DDB.
Additionally, there is a surcharge of 10% if the total income exceeds ₹50,00,000 and a surcharge of 15% if the total income is more than ₹1 crore. There is also an education cess of 3% applicable over and above the surcharge.
The income tax exemption limit for all individuals below 60 years is ₹25,00,000; for individuals between 60 years and less than 80 years, ₹300,000 and for individuals above 80 years is ₹500,000.
Every individual is eligible for a deduction on the income invested in specific securities. We have listed all the deductions for FY 2023-24, which will help you easily prepare your income tax returns and make the most of the available tax deductions.
Here is a list of income tax deductions for FY 2023-24 as per various sections of the Income Tax Act 1961:
1. Income Tax Deduction under Section 80C
This is the most crucial section for deductions for every taxpayer. The maximum exemption limit in the section is ₹1,50,000. Various avenues, like PPF, EPF, term insurance, NPS, etc., could be claimed under section 80C. Below is the complete list:
1. Public Provident Fund
2. National Savings Certificate
3. National Pension Scheme
4. Employees’ Provident Fund
5. Tuition fees
6. Post Office tax-saving deposits
7. Five-year bank deposit
8. Life Insurance Premium
9. Equity Linked Saving Schemes
10. Sukanya Samriddhi Account Deposit Scheme
11. Post Office Senior Citizens Savings Scheme
2. Income Tax Deduction under section 80CCC
This section allows a maximum deduction of ₹15,00,000, and it includes the contribution made to the annuity plan of a life insurance provider to obtain a pension from the fund.
3. Income Tax Deduction under section 80CCD
This section includes the contribution to the Atal Pension Yojana. It allows a contribution of up to 10% of the total salary of salaried employees and 20% of the gross income of non-salaried to the government-notified pension schemes. The contribution can be deducted from the taxable income under Section 80 CCD (1). If the employer also contributes to the scheme, the entire contribution amount can be claimed as a tax deduction under Section 80CCD (2).
It is important to remember that the complete deduction under Section 80C, Section 80CCC, and Section 80CCD (1) cannot exceed ₹15,00,000 in aggregate. However, the additional tax deduction amounting to ₹50,000 under Section 80CCD (1B) is above this limit.
4. Income Tax Deduction under Section 80D
Income Tax Deduction under Section 80D is for the premium paid for Medical Insurance. This section allows deductions on the health insurance premium paid by an individual or HUF. You can claim a deduction of ₹25,000 for self, spouse, and dependent children and an additional deduction for insurance of parents of less than 60 years of age, which is up to ₹25,000. Parents above the age of 60 can seek a deduction of ₹50,000, which was increased in Budget 2018 from ₹30,000.
And if the taxpayer and parent(s) are above 60 years of age, then the maximum deduction under section 80D is up to ₹1,00,000.
5. Income Tax Deduction under Section 80DD
An amount of ₹75,000 may be claimed as a deduction for spending on medical treatments of dependents with a 40% disability. This limit is ₹1,25,000 in case of severe disability.
6. Income Tax Deduction under Section 80DDB
Deduction for Medical Expenditure on Self or Dependent Relative:
- Deduction for Medical Expenditure for individuals and HUFs below age 60
- Income Tax Deduction under Section 80DDB, a deduction of up to ₹40,000 is available to an individual or a HUF below 60 years of age. It is for any expenses towards treating specified critical ailments for self and dependents.
- Deduction for Medical Expenditure for senior citizens and super senior citizens
- Previously, for FY 2017-18, the limit was ₹60,000 for senior citizens and ₹80,000 for super senior citizens. It has been changed to ₹1,00,000 for all senior citizens, including super senior citizens.
7. Income Tax Deduction under Section 80CCG
This section which offered the tax benefits of the Rajiv Gandhi Equity Savings Scheme, has been withdrawn. Still, if an individual has claimed a deduction in the previous financial year, you are eligible to continue with the same for the next two financial years.
8. Income Tax Deduction under Section 24B
This section allows individuals to claim a deduction for the loss under the head Income from House Property. It allows a tax benefit on the repayment of a second house loan up to ₹2,00,000. The unclaimed amount of loss may be carried forward for eight years and set off against house property income. Any interest paid on the housing loan is also eligible for a tax benefit. Municipal taxes, interest paid on loans taken for the house, and 30% of the net annual income are allowed as a deduction.
9. Income Tax Deduction under Section 80E
Interest on a loan paid for education is eligible for Section 80E. Please note that principal repayment on a loan cannot be claimed as a deduction. The loan should have been taken for yourself, your children, and your spouse or for an individual for whom you are a legal guardian.
10. Income Tax Deduction under Section 80EE
Individuals buying a home for the first time may claim an additional deduction of ₹50,000 on the home loan interest paid. This includes a clause that the loan should be sanctioned in or after FY 2016-17, and the loan amount should be less than ₹35,00,000. Furthermore, the house’s value should not exceed ₹50,00,000, and the individual should not own any other residential house under his name.
11. Income Tax Deduction under Section 80EEA
Section 80EEA allows a deduction for interest payments up to ₹15,00,000. This deduction is over and above the deduction of ₹2,00,000 available under section 24. An individual should not own any house on the date of a loan sanction to claim this deduction.
12. Section 80G Income Tax Deduction
Section 80G encompasses all donations to charitable organizations and disaster relief funds. The contribution should be provided by check, cash, or draught. The amount of deduction eligible is ₹2,000. Moreover, for donations made to political parties, the same deduction could be claimed under 80GGC.
13. Income Tax Deduction under Section 80GG
The deduction amount for this section is ₹60,000 per annum, and the section applies to only those who neither own a residential house nor receive a House Rent Allowance. Therefore, the amount of deduction will be the least of the following:
25% of the total income ₹5,000 per month amounts of 10% of the adjusted total income deducted from the rent paid
14. Income Tax Deduction under Section 80TTA
This section allows a deduction of ₹10,000 from the total gross income of individuals or Hindu Undivided families. The deduction is allowed for the interest earned on the deposits made in a savings account in a bank, cooperative society or post office. However, the deduction will not be applicable for the interest earned from fixed deposits in the bank.
15. Income Tax Deduction under Section 80U
This section allows a deduction for individuals who are physically and mentally challenged.
Income Tax Exemptions for Salaried Employees 2023-24
Here is the income tax exemption list for 2023-24:
House Rent Allowance (HRA)
Leave Travel Allowance (LTA)
Food coupons
Salary component
Rent amount for residential housing
Rent receipts, PAN of the employer (mandatory for rent > ₹1 Lakh annually)
Leave travel allowance (LTA)
Traveling costs within India, such as air and rail fare
Air and train tickets, bus or cab receipts/bills
Telephone reimbursement
Landline, inclusive of broadband, mobile phone
Telephone bills
Books and periodicals
Cost of books and periodicals
Bills or invoices for the books and periodicals
Wrapping Up
It is advisable to plan the investment to avoid last-minute hassles. If you cannot invest in the right products, you will have to pay the entire tax depending on your income. The above income tax deductions list will help you plan and achieve your financial goals
FAQs
1
Can I claim the 80C deductions at the time of filing the income tax return in case I have not submitted proof to my employer?
No, you cannot claim deductions under Section 80C at the time of filing your income tax return if you have not submitted the necessary proof of investments or expenses to your employer. To avail of the deductions, you must provide the relevant proof to your employer during the income tax declaration submission period, usually at the beginning of the financial year. Your employer will consider these proofs and adjust your TDS (Tax Deducted at Source) accordingly.
2
I have availed a loan from my employer to pursue higher education. Can I claim the interest paid on such a loan as a tax deduction under Section 80E?
Yes, you can claim the interest paid on a loan taken from your employer for pursuing higher education as a tax deduction under Section 80E. This deduction is available for a maximum of 8 years or until the interest is fully repaid, whichever is earlier. However, please note that this deduction is only applicable for loans taken for the individual’s own education or for the education of their spouse, children, or a student for whom they are a legal guardian.
3
Is there any restriction or maximum limit up to which I can claim a tax deduction under Section 80E?
Yes, there is a restriction on the maximum amount you can claim as a tax deduction under Section 80E. The entire interest paid on the education loan is deductible without any upper limit. However, please note that the deduction is only applicable to the interest component of the loan and not the principal amount.
4
Can a company or firm reap the benefits of Section 80C?
No, Section 80C deductions are not available to companies or firms. Section 80C provides tax-saving benefits on various investments and expenses for individual taxpayers only. Some of the eligible deductions under Section 80C include investments in Public Provident Fund (PPF), Employee Provident Fund (EPF), Equity-Linked Saving Scheme (ELSS), National Savings Certificate (NSC), and payment of life insurance premiums, among others.
5
Can a company claim a deduction for donations made under Section 80G?
Yes, companies can claim a deduction for donations made to eligible charitable institutions under Section 80G of the Income Tax Act. The deduction amount varies based on the type of charitable organization and can be either 50% or 100% of the donated amount. However, it’s important to ensure that the charitable institution is registered under Section 80G to avail of this deduction.
6
Are the tax exemptions available under Section 80D available to corporates?
No, the tax exemptions available under Section 80D are not available to corporates. Section 80D provides deductions for medical insurance premiums paid by individual taxpayers for themselves, their spouses, children, and parents. It is a benefit exclusively for individual taxpayers and Hindu Undivided Families (HUFs) and does not apply to companies or firms.
7
What are the tax exemptions available under Section 80DD?
Section 80DD provides tax exemptions to individual taxpayers and HUFs who incur expenses for the maintenance, medical treatment, and rehabilitation of a dependent with a disability. The deduction amount is up to Rs. 75,000 and can go up to Rs. 1,25,000 in case of severe disabilities. The disability must be at least 40% as certified by a competent medical authority.
8
Are bank recurring deposits eligible for tax deduction?
No, bank Recurring Deposits (RDs) are not eligible for tax deduction under Section 80C. The only term deposits that qualify for tax deduction under Section 80C are Fixed Deposits (FDs) with a minimum lock-in period of 5 years in a scheduled bank.
9
Are all allowances taxable for salaried individuals?
No, all allowances are not taxable for salaried individuals. Some allowances are fully taxable, while others are partially or fully exempt from tax. For example, the House Rent Allowance (HRA) can be partially exempt if certain conditions are met. Similarly, the Leave Travel Allowance (LTA) and certain allowances for specific purposes may also be exempted up to prescribed limits.
10
Can both earning members of a family claim tax deductions for a home loan taken as co-applicants?
Yes, both earning members of a family who are co-applicants of a home loan can claim tax deductions individually. Each co-applicant can claim deductions on the principal amount under Section 80C and on the interest paid under Section 24(b) of the Income Tax Act, subject to specified limits.
11
Can self-employed individuals claim the HRA benefit?
No, the House Rent Allowance (HRA) benefit is available only to salaried individuals and not to self-employed individuals. Self-employed individuals cannot claim HRA as they do not receive a fixed salary from an employer, which is a prerequisite for claiming HRA deductions.
12
How can I save tax on an education loan?
You can save tax on an education loan by claiming deductions on the interest paid under Section 80E of the Income Tax Act. Ensure that the loan is taken for higher education for yourself, your spouse, children, or a student for whom you are a legal guardian. There is no upper limit on the deduction, and you can claim it for a maximum of 8 years or until the interest is fully repaid, whichever is earlier.
13
What are the examples of income tax exemptions?
Examples of income tax exemptions include the House Rent Allowance (HRA) received by salaried individuals, Leave Travel Allowance (LTA), certain agricultural income, interest earned on tax-saving bonds, income from dividends on certain mutual funds, and exemptions provided for certain allowances for specific purposes.
14
What are the examples of income tax deductions?
Examples of income tax deductions include deductions under Section 80C for investments in PPF, EPF, ELSS, NSC, and payment of life insurance premiums, deductions under Section 80D for medical insurance premiums, deductions under Section 80G for donations to charitable institutions, and deductions under Section 80E for interest paid on education loans, among others.
