Income Tax Saving – Part 2
If you are an employee or professional whose annual income is coming under the tax bracket, it is
essential to be aware of income tax applications and ways to save tax. While you may rely on a
Chartered Accountants to do ITR filing, it is important to be aware of ways through which you can
save money going towards Income tax.
The amount of income that is not chargeable to Income-tax in the case of an Individual is Rs. 2,50,000. Any income above this is taxable, yet there are many ways in which you can invest or allocate your
income so tax will be applicable only to the remaining income. The following are the main ways:
Investments up to Rs.1,50,000 can be shown under this section in any of the following categories:
a) Public Provident Fund
b) National Savings Certificate
c) Employees’ Provident Fund
d) Children’s Tuition fees
e) Post Office tax-saving deposits
f) Tax-saving bank deposits
g) Life Insurance Premium
h) Equity Linked Saving Schemes (Mutual Funds)
i) Principal repayment of home loan
j) Sukanya Samriddhi Account Deposit Scheme
k) Subscription to certain equity shares
The contribution made to the annuity plan of a life insurance provider towards pension.
Contribution to the Atal Pension Yojana or National Pension Scheme
80CCD 1 (B)
Contribution in NPS over and above 80CC. (up to Rs.50000)
Please note that the maximum total exemption under all three Sections together (80C, 80CCC,
80CCD) plus 80CCD1B is Rs.1,50,000 + Rs. 50,000 that is 2 lakhs.
This states premium paid for Medical Insurance.
For self, spouse, and dependent children it is ₹25,000 and for parents of less than 60 years of age,
₹25,000. For parents above the age of 60, the exemption is up to ₹50,000.
Expenses towards treating specified critical ailments for self and dependents: Up to ₹40,000
for senior citizens and ₹1,00,000 for super senior citizens.
In this section, you can show the total amount of interest paid toward the Higher Education loan of
yourself or dependent.
Any first-time home buyer in India can earn an additional tax deduction of up to Rs. 1.5 lakh.
Deduction towards interest payments made on loan for the purchase of Electric Vehicle where the loan
is sanctioned between 1st April 2019 to 31st March 2023.
Rent paid can be shown by those who neither own a residential house nor receive a House
Section 80TTA (upto10000)
Interest is 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
Loss on Income from House Property, that is interest paid on the housing loan and Municipal taxes
paid can be shown in this Section.
You may plan for the Investments at the beginning of the financial year, that is in April itself to avoid the
Sandhya Naren, MBA, CAIIB is a Branch Manager of a Public Sector Bank, a Writer, a storyteller, and a women’s coach on Personal Finance. She is the Co-founder of Manasa Learning Solutions, Life Skills Training Academy for women and children. Email: [email protected]