Sunday, August 21, 2016

Income Tax Deductions under Section 80C to 80U

Taxes are an integral component in our country, with them accounting for a major portion of the income earned by the government, income which is utilised to provide certain basic provisions to citizens. Individuals who earn more than a certain amount are expected to pay taxes, as per the existing tax slabs. While these taxes can be harsh on the bank balance of a taxpayer, the government also provides certain provisions wherein one can save tax. Tax deductions can help one reduce the taxable income, lowering their overall tax liability and thereby helping them save on taxes. The deduction one is eligible for depends on a number of factors, with different limits set for different purposes.
What is Tax Deduction?

Tax deduction helps in reducing your taxable income. It decreases your overall tax liabilities and helps you save tax. However, depending on the type of tax deduction you claim, the amount of deduction varies. You can claim tax deduction for amounts spent in tuition fees, medical expenses and charitable contributions. Also, you can invest in various schemes such as life insurance plans, retirement savings schemes, and national savings schemes etc. to get tax deductions. The government of India offers tax exemptions for various expenses incurred in different activities to encourage individuals and commercial institutions take part in activities having social benefits.

A number of day-to-day expenditures qualify for deductions, with information about them being crucial to help us save money. Tax deduction can be claimed on money spent for education, medical expenses, charitable contributions, investments in insurance, retirement schemes, etc. These deductions have been put in place to encourage members of the society to participate in certain useful activities, helping everyone involved in the process.
Tax Deductions under Section 80C:
Section 80C of the Income Tax Act provides provisions for tax deductions on a number of payments, with both individuals and Hindu Undivided Families eligible for these deductions. Eligible taxpayers can claim deductions to the tune of Rs 1.5 lakh per year under Section 80C, with this amount being a combination of deductions available under Sections 80 C, 80 CCC and 80 CCD.

Some of the popular investments which are eligible for this tax deduction are mentioned below.
Payment made towards life insurance policies (for self, spouse or children)
Payment made towards a superannuation/provident fund
Tuition fees paid to educate a maximum of two children
Payments made towards construction or purchase of a residential property
Payments issued towards a fixed deposit with a minimum tenure of 5 years

This section provides for a number of additional deductions like investment in mutual funds, senior citizens saving schemes, purchase of NABARD bonds, etc.

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