In the context of the Indian Income Tax Act, 1961, taxpayers have the opportunity to reduce their taxable income by availing various deductions under different sections. These deductions can significantly lower the tax liability, making it essential for taxpayers to understand and utilize them effectively. Below is a detailed guide on the key deductions available for the financial year 2023-24.
Section 24: Home Loan Interest
- Details: Interest paid on home loans.
- Maximum Deduction: ₹2,00,000.
Section 80C: Investments and Expenses
- Details: Includes investments in LIC, PPF, KVP, EPF, SSY, NSC, home loan principal repayment, school fees, ELSS, and stamp duty.
- Maximum Deduction: ₹1,50,000.
Section 80CCD(1B): National Pension System (NPS)
- Details: Additional deduction for contributions to NPS.
- Maximum Deduction: ₹50,000.
Section 80DD: Dependent with Disability
- Details: Expenses for the medical treatment of a dependent with a disability.
- Maximum Deduction: ₹75,000 for regular disability; ₹1,25,000 for severe disability.
Section 80U: Self with Disability
- Details: Deduction for individuals with a physical disability.
- Maximum Deduction: ₹75,000 for regular disability; ₹1,25,000 for severe disability.
Section 80TTA: Interest on Savings Account
- Details: Interest earned on savings accounts, applicable to individuals other than senior citizens.
- Maximum Deduction: ₹10,000.
Section 80TTB: Interest on Savings Account for Senior Citizens
- Details: Interest on savings accounts and deposits with banks, post offices, and co-operative banks for senior citizens.
- Maximum Deduction: ₹50,000.
Section 80G: Donations to Charitable Institutions
- Details: Donations made to specified funds and charitable institutions.
- Conditions: Only if paid by cheque or bank mode.
- Maximum Deduction: 100% or 50% of the donation or 10% of adjusted gross total income, whichever is lower.
Section 80GG: Rent Paid
- Details: Deduction for rent paid by individuals not receiving HRA.
- Eligibility: Least of the following:
- Rent paid minus 10% of adjusted total income.
- ₹5,000 per month.
- 25% of adjusted total income.
Section 80D: Medical Insurance
- For Self, Spouse, and Dependent Children:
- Details: Premium paid for medical insurance.
- Conditions: Only if paid by cheque or bank mode.
- Maximum Deduction: ₹25,000 (₹50,000 if the insured is a senior citizen).
- For Parents:
- Details: Premium paid for medical insurance.
- Conditions: Only if paid by cheque or bank mode.
- Maximum Deduction: ₹25,000 (₹50,000 if the insured parent is a senior citizen).
Section 80E: Education Loan Interest
- Details: Interest paid on loans taken for higher education.
- Maximum Deduction: Entire interest paid for a maximum of 8 years.
Section 80GGB/80GGC: Contributions to Political Parties
- Details: Contributions made to political parties.
- Conditions: Should not be in cash.
- Eligibility:
- 80GGB: Applicable to Indian companies.
- 80GGC: Applicable to any person other than local authorities and artificial judicial persons.
Section 80TTA: Interest on Savings Account for Non-Senior Citizens
- Details: Interest on savings accounts up to ₹10,000.
- Eligibility: Applicable to individuals and HUFs other than senior citizens.
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By understanding and utilizing the deductions available under the Income Tax Act, 1961, taxpayers can effectively reduce their taxable income and, consequently, their tax liability. Each section caters to different expenses and investments, encouraging taxpayers to invest in insurance, education, and savings while supporting charitable causes. Taxpayers should carefully evaluate their eligible deductions to maximize their tax benefits.
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