There are various deductions available through which you can save your tax. Utilise the investment process properly for your tax planning.
Deduction under Section 80C
Under Section 80C of the Income Tax Act, a deduction of Rs 1,50,000 can be claimed from your total income. In simple terms, you can reduce up to Rs 1,50,000 from your total taxable income through Section 80C. This deduction is allowed to an individual or an Hindu Undivided Family (HUF).
If you have paid excess taxes, but have invested in life insurance, National Savings Certificate, 5-year fixed deposit, Sukanya Samridhi Account, Public Provident Fund, Employees’ Provident Fund, or paid principal amount of housing loan paid, school fees of children or any other investments eligible for 80C deduction then you can file your income tax return and get a refund.
Deduction under Section 80D
You can avail tax deduction under Section 80D if you have paid any premium on mediclaim policy taken for yourself, your spouse, dependent children or your parents (parents need not be dependent on you). For payment of health insurance premium of parents also, you can claim tax deduction under Section 80D. You can claim deduction up to `25,000 for AY 2018-19 for self, spouse and dependent children. Deductions for senior citizen under Section 80D are higher. If you are a senior citizen then you can claim deduction up to `30,000 for AY 2017-18.The deduction for senior citizen has been increased from `30,000 to `50,000 from FY2018-19 onwards.
Deduction under Section 80E
The deduction of income under Section 80E for payment of interest on educational loan is available to an individual but not to HUF or other type of assessee. The actual amount of interest paid is eligible for deduction and there is no cap on the amount to be deducted. You can deduct the entire interest amount from your taxable income. However, there is no benefit available on the repayment of principal amount of the loan.
Deduction shall be allowed in computing the total income in respect of the initial assessment year and seven assessment years immediately succeeding the initial assessment year or until the interest is paid by the assessee in full, whichever is earlier. Hence, it is better that the education loan is repaid within eight years.
Deduction under Section 80TTA
Section 80TTA provides a deduction of `10,000 on interest income. This deduction is available to an individual and HUF. This deduction is allowed on interest earned from a savings account with a bank, from a savings account with a co-operative society carrying on the business of banking and from a savings account with a post office.
The maximum deduction is limited to `10,000. If your interest income is less than `10,000, the entire interest income will be your deduction. If your interest income is more than `10,000, your deduction shall be limited to Rs 10,000. You have to consider your total interest income from all banks where you have accounts. First add your total interest income under the head ‘income from other sources’ in your income tax return.