Income Tax Exemptions

The government provides multiple sections under which you may claim benefits to reduce your income tax liability. Here are 19 deductions that are available:

You may claim deductions of up to INR 1.5 lakh under Section 80C of the income tax act. Some of the eligible investments include Public Provident Fund (PPF), Equity-Linked Savings Scheme (ELSS), tax-saving fixed deposits (FDs), and others.

Deposits made to a pension account are eligible for tax benefits. The deduction is 10% of your income if you are salaried or 20% of gross income if you are self-employed within the overall limits. An additional deduction of INR 50,000 for investment in the National Pension Scheme (NPS) is available.

There are several forms such as Form 16, Form 26AS, and Forms 15G and 15H that are required while you file your ITR. These include information related to advance tax, self-assessment tax, and Tax Deducted at Source (TDS) and these forms are necessary while filing the returns. The tax guide explains each of these forms in details along with answers to commonly asked questions.

Individual and Hindu Undivided Family (HUF) taxpayers are eligible for this income tax exemptions according to tax slabs in India. An amount of up to INR 10,000 received, as savings bank account interest is eligible for deduction.

Under the section 80GG, if you do not have a self-occupied home and reside in a rented house but do not receive HRA, this deduction is available. It is the least of:

• INR 5,000 per month
• Actual rent minus 10% of adjusted income
• 25% of adjusted income

If you have availed of an education loan for pursuing higher studies, interest on the same is tax eligible. Under section 80E you can avail this benefit for a maximum period of eight years commencing from the year interest is paid.

If the home loan is availed in FY 2017-18, this deduction is available for FY 2018-19. It is available only for first-time buyers where the property value does not exceed INR 50 lakh and the home loan amount should not be more than INR 35 lakh.

If your gross income is less than INR 12 lakh and you are a new investor, the deduction under this section is available. The benefit is lower of 50% of the investment amount in equity shares or INR 25,000 for three consecutive years.

Medical insurance premium paid for self, spouse, and dependent children is eligible for tax deductions. These benefits are also available for insuring senior and super senior parents.

It is available for the treatment, training, and rehabilitation of a dependent relative. If the disability is between 40% and 80%, the deduction is INR 75,000. If the disability exceeds 80%, it is INR 1.25 lakh.

Medical expenses incurred to treat certain specified diseases for self and dependents are eligible for tax benefits. The deduction is available for individuals and HUF.

If you suffer from a physical disability or mental retardation, deduction under section 80U is available.

Certain deductions under this section are eligible for 50% of the amount while others are eligible for 100% of the donation amount. Any donation exceeding INR 20,000 must not be in cash and donations must be made to qualifying charities.

Any contribution made to a political party in any mode except cash is eligible for deduction under this section.

An amount of INR 3 lakh or actual income (lesser of the two) as royalty for a patent registered post-April 1, 2003 is eligible for tax benefits.

You may claim a deduction of up to INR 50,000 for interest earned on deposits provided you are a senior taxpayer.

Interest paid of up to INR 2 lakh on home loan availed for a self-occupied property is eligible for tax benefits.

During Budget 2018, a standard deduction of INR 40,000 for salaried taxpayers was introduced.

LTA for two years in a four-year block is eligible for tax benefits. It is available only for domestic travel done through rail, public transport, or air. The aforementioned tax benefits are beneficial and allow you to reduce your tax liability. It is recommended you plan your taxes at the start of the financial year to maximize the benefits.

If you are planning to purchase health insurance then you can also claim tax benefits on the health insurance premium. Explore our guide about income tax basics, tax slabs, income tax sections and forms to learn more.