Based on a list of investments and expenses you save for and incur through the year, you are eligible to claim deductions from your taxable income. These claims are processed once a year at the end of the previous financial year. You need to have a thorough record of these and mention the details under the respective sections or subsections to claim an exemption. Section 80C, 80D and 80G are the few most common sections listed under the Income Tax Act, which allow you to save the most.
Take a look at how much you can save under each section individually.
You can claim deductions of up to Rs. 1.5 lakh in a financial year under this section. Here the investments and expenses you make as an individual or on behalf of a Hindu Undivided Family (HUF) are taken into consideration. You can make these payments or investments in your name or that of your spouse and children. Even though you can claim tax deductions for investments and expenses made for your immediate family, the maximum cap remains Rs. 1.5 lakh.
Here’s a list of investments for which you can claim tax deduction under this section.
- Life insurance policy premium
- Your contribution towards Employees' Provident Fund Scheme
- Your contribution to Public Provident Fund
- Subscription to Sukanya Samriddhi Account Scheme
- Subscription to National Savings Certificates
- Contribution to ULIP
- Subscription to equity shares or debentures
- Term deposits with a lock-in period of at least 5 years
- Investment in bonds issued by the NABARD
- Deposit in Senior Citizen Savings Scheme Rules, 2004 (subject to certain conditions)
Certain expenses such as tuition fees for up to 2 children, the principal repayment amount on a home loan, the amount paid towards stamp duty and the registration fee of your property, etc., which you can claim alongside investments under 80C. However, the maximum cap allowed will always remain Rs. 1.5 lakh.
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You can claim deductions against the premium payments you make on your medical insurance policies under this section. Here you can claim up to Rs. 25,000 for insurance premiums you pay on a policy in your name, your spouse’s name or the name of your dependent children. You can also claim an additional deduction for insurance premium paid your parent’s medical insurance. In this case, you can again claim a maximum of Rs. 25,000 if they are less than 60 years of age or Rs. 50,000 in case both of them are above 60 years of age. An additional deduction brought to action from FY 2015-2016, allows you to claim Rs. 5,000 for the payments made towards preventive health check-up.
You can claim deductions against the list of donations you make in one financial year under this section. Here the donations need to correspond to the ones specified by the Income Tax department. You can either claim 100% or 50% of what you donate via cheque. Donations in cash up to Rs. 2,000 are allowed for deduction. Donations in kind, in the form of clothes, food, groceries, etc., are not permissible for deductions. There is no cap on the upper limit of your claim for donations made towards valid enterprises and organisations specified by the Indian Government.
A few of the notable places you can donate to claim 100% deductions are:
- Fund for Technology Development and Application
- National Children’s Fund
- Swachh Bharat Kosh
- Clean Ganga Fund
- National Fund for Control of Drug Abuse
- National Defence Fund set up by the Central Government
- Prime Minister’s National Relief Fund
- National Foundation for Communal Harmony
- National Sports Fund
- National Cultural Fund
Some of the notable places you can donate to claim 50% deductions are:
- Jawaharlal Nehru Memorial Fund
- Prime Minister’s Drought Relief Fund
- Indira Gandhi Memorial Trust
- The Rajiv Gandhi Foundation
These sections of the IT Act allow you to claim at least a total of Rs. 3 lakh in deduction. So, plan your investments and expenses to claim maximum cumulative deduction under Section 80C, 80D and 80G.
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