Topic 4: Tax Deductions: Quick Summary
Every Person wants to SAVE TAXES..!! Isn’t it..? But how could anyone do that?? How and where to Invest? What is the most tax efficient investment? Pretty much Confused. Right..??
These are some of the very common questions which can easily be seen floating around. To achieve that purpose we need to understand the concept of TAX DEDUCTIONS. Tax Deductions are the reduction in your overall tax liability when you invest in some of the specified investments. So, today we are gonna have a quick summary of the entire deductions. So, Let’s understand them:
1. Deduction u/s 80C [Most Popular Deduction]
Eligible Assessee: Individual & HUF
Deduction for: Various Type of INVESTMENTS. Some of the most common investments are as follows:-
– Payments made Toward Life Insurance Premium (for Self, Spouse, and Children)
– Payments made towards Provident Fund with a Lock in Period – 15 years
– Equity Linked Saving Scheme (ELSS) with a min. lock-in period of 3 years
– Payment made towards the Principal amount of Housing Loan
– Having a Fixed Deposit/Deposit in Post Office (Now IPPB) with a min. lock-in of 5 Years
– Amount Deposited in Sukanya Samridhi Account
– National Saving Certificate
– Purchasing Bonds of NABARD.
Max. Deduction: Rs. 1,50,000/-
2. Deduction u/s 80CCC:
Eligible Assessee: Individual Only.
Deduction for: Premium Paid for Annuity Plan of LIC or Any other Insurer.
Max. Deduction: Rs. 1,50,000 (combined with 80C)
3. Deduction u/s 80CCD:
There is a further classification of this particular Section.
Section 80CCD(1)
Eligible Assessee: Individual Only (whether Employed or Not).
Deduction for: Payment towards the NPS Pension Account.
Max. Deduction: 10% of Salary (Basic+DA only) /20% of GTI (in case of Self Employed) [but deduction allowed in combination with 80C]
Section 80CCD(1B)
Eligible Assessee: Individual Only (whether Employed or Not).
Deduction For: Payment toward the NPS Account made by the Employee/Self Employed person can be diverted to this section when 80CCD(1) limit has exhausted
Max. Deduction: Rs. 50,000 – THIS IS AN ADDITIONAL DEDUCTION i.e. allowed without combining with 80C.
Section 80CCD(2)
Eligible Assessee: Individual Only (must be Employed)
Deduction For: Employer contribution towards the NPS account of Employee.
Max. Deduction: 10% of Salary (Basic+DA only) – THIS IS AN ADDITIONAL DEDUCTION i.e. allowed without combining with 80C
4. Deduction u/s 80D:
Eligible Assessee: Individual & HUF
Deduction For: Amount paid for Medical Insurance Premium / Medical Expenditure / Preventive Health Check.
5. Deduction u/s 80E:
Eligible Assessee: Individual Only.
Deduction For: Interest on Loan for Higher Education paid during the relevant previous year.
Max. Deduction: 100% Interest amount
6. Deduction u/s 80EE:
Eligible Assessee: Individual only (and only when he is purchasing First home ever)
Deduction For: Payment of Interest on Housing Loan which has been taken for the First Home Purchase.
Max. Deduction: Rs. 50,000
But deduction would be allowed subject to following conditions:
– Value of Property to be purchased should be Max. 50 Lakhs.
– Value of Loan taken should be Max. 35 Lakhs.
– The Loan must have been taken between 01 April 2016 to 31st March 2017.
7. Deduction u/s 80TTA:
Eligible Assessee: Individual & HUF
Deduction For: Interest on Savings Account (not on FD/RD)
Max. Deduction: Rs. 10,000/-
8. Deduction u/s 80TTB:
Eligible Assessee: Individual (Senior Citizen) Only
Deduction For: Interest on Any Account (including FD/RD)
Max. Deduction: Rs. 50,000/-
9. Deduction u/s 80U:
Eligible Assessee: Individual (Resident) only
Deduction For: Flat Deduction even without any expense incurred.
Max. Deduction: Fixed Deduction of Rs. 75,000 (if Disability is 40% or More) / Rs. 1,25,000 (If Disability is 80% or more). And here we go..!! Now you are all set to save some good amount of tax and make some good investments as well.
Source: taxguru.in
1. Deduction u/s 80C [Most Popular Deduction]
Eligible Assessee: Individual & HUF
Deduction for: Various Type of INVESTMENTS. Some of the most common investments are as follows:-
– Payments made Toward Life Insurance Premium (for Self, Spouse, and Children)
– Payments made towards Provident Fund with a Lock in Period – 15 years
– Equity Linked Saving Scheme (ELSS) with a min. lock-in period of 3 years
– Payment made towards the Principal amount of Housing Loan
– Having a Fixed Deposit/Deposit in Post Office (Now IPPB) with a min. lock-in of 5 Years
– Amount Deposited in Sukanya Samridhi Account
– National Saving Certificate
– Purchasing Bonds of NABARD.
Max. Deduction: Rs. 1,50,000/-
2. Deduction u/s 80CCC:
Eligible Assessee: Individual Only.
Deduction for: Premium Paid for Annuity Plan of LIC or Any other Insurer.
Max. Deduction: Rs. 1,50,000 (combined with 80C)
3. Deduction u/s 80CCD:
There is a further classification of this particular Section.
Section 80CCD(1)
Eligible Assessee: Individual Only (whether Employed or Not).
Deduction for: Payment towards the NPS Pension Account.
Max. Deduction: 10% of Salary (Basic+DA only) /20% of GTI (in case of Self Employed) [but deduction allowed in combination with 80C]
Section 80CCD(1B)
Eligible Assessee: Individual Only (whether Employed or Not).
Deduction For: Payment toward the NPS Account made by the Employee/Self Employed person can be diverted to this section when 80CCD(1) limit has exhausted
Max. Deduction: Rs. 50,000 – THIS IS AN ADDITIONAL DEDUCTION i.e. allowed without combining with 80C.
Section 80CCD(2)
Eligible Assessee: Individual Only (must be Employed)
Deduction For: Employer contribution towards the NPS account of Employee.
Max. Deduction: 10% of Salary (Basic+DA only) – THIS IS AN ADDITIONAL DEDUCTION i.e. allowed without combining with 80C
4. Deduction u/s 80D:
Eligible Assessee: Individual & HUF
Deduction For: Amount paid for Medical Insurance Premium / Medical Expenditure / Preventive Health Check.
5. Deduction u/s 80E:
Eligible Assessee: Individual Only.
Deduction For: Interest on Loan for Higher Education paid during the relevant previous year.
Max. Deduction: 100% Interest amount
6. Deduction u/s 80EE:
Eligible Assessee: Individual only (and only when he is purchasing First home ever)
Deduction For: Payment of Interest on Housing Loan which has been taken for the First Home Purchase.
Max. Deduction: Rs. 50,000
But deduction would be allowed subject to following conditions:
– Value of Property to be purchased should be Max. 50 Lakhs.
– Value of Loan taken should be Max. 35 Lakhs.
– The Loan must have been taken between 01 April 2016 to 31st March 2017.
7. Deduction u/s 80TTA:
Eligible Assessee: Individual & HUF
Deduction For: Interest on Savings Account (not on FD/RD)
Max. Deduction: Rs. 10,000/-
8. Deduction u/s 80TTB:
Eligible Assessee: Individual (Senior Citizen) Only
Deduction For: Interest on Any Account (including FD/RD)
Max. Deduction: Rs. 50,000/-
9. Deduction u/s 80U:
Eligible Assessee: Individual (Resident) only
Deduction For: Flat Deduction even without any expense incurred.
Max. Deduction: Fixed Deduction of Rs. 75,000 (if Disability is 40% or More) / Rs. 1,25,000 (If Disability is 80% or more). And here we go..!! Now you are all set to save some good amount of tax and make some good investments as well.
Source: taxguru.in