The Buyt Desk
Have you invested in haste just before March-end to take a tax benefit under Section 80C of the Income Tax Act? Tax planning is crucial for finance management. Hasty investments can be a disaster. Spend time to understand different investments and tax-saving options before diving into one. You can save tax up to 1 lakh just by utilizing four sections of the IT Act – 80C, 80D, 80CCD (1B), and 24 (B). Here we discuss some of the tax-saving sections under the Act.
Section 80C
A commonly used tax saving option, Section 80C of the IT Act offers a maximum tax rebate of Rs.1.5 lakhs. The acceptable investments under this section are EPF, PPF, NPS, principal amount of a home loan, child’s school fees, and ELSS mutual funds.
Section 80CCD (1B)
In addition to creating a retirement fund, the National Pension Scheme (NPS) can provide a tax deduction of up to 2lakhs. An investment option for Section 80C, it also offers the additional tax rebate of Rs.50, 000 under Section 80CCD (1B).
Section 80D
The Government gives tax incentives to encourage you to adopt good financial management practices. It is best to buy insurance covers for protection against various calamities. As a nudge for buying health insurance, the Government allows Rs.25, 000 tax rebate against health insurance premium for self, spouse, or dependents. If you pay a health insurance premium for your senior citizen parents, you can avail an additional Rs.50, 000 tax rebate under Section 80D. When the taxpayer and the dependent parents are senior citizens, Section 80D can provide a maximum of Rs.1 lakh as a tax deduction in a year.
Now, you can even avail of Rs.50, 000 as a tax deduction under Section 80 D for medical bills of your senior citizen parents. However, it is possible only if they do not have health insurance.
Section 80E
If you are repaying an education loan, you can deduct the interest amount from the income in Section 80E. There is no upper limit assigned. You can take the deduction when you begin repaying the loan until the next eight financial years.
Section 24
The interest you pay on a home loan can be deducted from the income under Section 24. However, the property should be self-occupied. If you are paying interest on a home loan for a house under construction, you can avail of the tax deduction only after possession. A maximum rebate of Rs.2 lakhs is possible under Section 24.
Section 80EE
Being a first-time homeowner, you can avail of an additional tax rebate of Rs.50, 000 on the interest payment of a home loan under Section 80EE. This rebate is over and above the Rs.2 lakhs rebate under Section 24. The house’s worth should be less than Rs.50 lakhs for this rebate, and the loan amount should be Rs.35 lakhs or less.
Other sections of the IT Act, namely 80DDB, 80U, 80EEA, 80G, 80TTB, can also reduce your tax liabilities. We will discuss these sections in detail in another article.
