Tax deductions

Vineet Golani

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All of us love saving taxes in the most legal manner right? But yet at the same time we end up filling our taxes at the last minute finding it such a hassle to deal with, hence forgetting about various benefits available. These benefits are more formally known as ‘deductions’ while filing your income tax returns.

Today with this blog, Equiseed Wealth aims at breaking down tax deductions available and decoding them to aid in better understanding. We have made a tax deduction guide to help you save on taxes paid.

1.Deductions available under section 80C: One of the most popular deductions available has to be section 80C, it is the most commonly claimed deduction too. It allows a maximum deduction of Rs 1.5 lakh from the taxpayer's taxable income. There are alot of investments to choose from under section 80C such as:

2.Public Provident Fund (PPF): Minimum investment requirement starts at Rs 500 and goes upto Rs 1,50,000. The original duration of PPF is 15 years, which can be extended later on. The interest accrued on the amount is at 7.10% currently PPFs are known to have a comparatively lower risk as compared to other investment avenues under section 80C.

3.Employees provident fund (EPF): EPF is a fund where the employee has to contribute a certain amount to the fund and the same is contributed by the employer. On retirement, the employee gets this amount as a lumpsum and it also includes the amount that the employer has contributed. However to avail EPF, the employees salary must be lower than 15,000 a month.

4.LIC premium: This is one of the most popular deductions selected by taxpayers. As indicated, the taxpayer takes life insurance for himself or his spouse/children and can avail of this deduction of a maximum of Rs 1,50,000.

5.Equity linked savings scheme (ELSS): ELSS also known as Equity Linked Savings Scheme has a mandatory lock in period of three years. ELSS is treated as a long term gain on maturity. This is the best deduction available under section 80C with an average return of 12-13%, however there is high risk associated with ELSS as all the money is directly invested into equity schemes.

**6.Section 80 CCD ** It encourages its taxpayers to invest in pension schemes provided by the government of India.

7.NPS: Under Section 80CCD, NPS also known as National Pension Scheme enables one to plan for his/her retirement at an early age. The funds that are contributed to an NPS account are managed by the fund manager with the option left to the investor if they want an aggressive or conservative return on investment. There is no restrictions on investments with investments amount starting at just Rs 500 The maximum deduction allowed for NPS is Rs 50,000.

8.Section 80TTA- Interest accrued on savings account Under section 80TTA the taxpayer can claim a maximum deduction of an amount upto Rs 10,000. This amount can be claimed from interest on savings accounts, co-operative society.

Section 80G- Donations

1.Section 80E- Interest on Education Loan As the name suggests this deduction can be availed by those who apply for education loans. The interest that the tax payer incurs on the loan is refunded to him/her. This loan can be taken for one’s spouse, children, or the taxpayer themselves. There is no restriction on the amount that can be claimed and is available for a tenure of 8 years. Subsection 80EE: Under this only individual taxpayers are eligible who have taken a loan for acquiring residential property.

2.Section 80D- Medical Insurance/ Mediclaim This deduction is available for premium paid on Mediclaim insurance. Under section 80D one can get a deduction on their total taxable income for a maximum amount upto Rs 1 lakh. For individuals under the age of 60, the deduction amount is capped at Rs 25,000. For individuals above the age of 60, the amount is capped at Rs 50,000. In a scenario where the taxpayer and his/her parents are senior citizens a maximum deduction of 1lakh is allowed. 3.Section 80DDB: Treatment of illness Under this section, the taxpayer can get a maximum deduction of Rs 40,000 for treating their illness.

4.Section 80DD: Disabled Dependant Under Section 80DD if the taxpayer is taking care of a relative who is disabled, then he/she can avail a deduction of 75,000. Incase of severe disability the amount can go upto 1,25,000.

5.Section 80U: Physical Disability Under section 80U, if the taxpayer is physically disabled, then he/she can avail a maximum deduction of Rs 75,000 Incase of severe disability the deduction can go upto 1,25,000

6.Section 80TTB: This section is of use to Senior citizens. This section was newly introduced in Budget 2018, wherein interest income from senior citizens deposits will be permitted. The maximum deduction allowed is capped at Rs 50,000