In this chapter, you will know about the most important tax deductions that you can claim under the old tax structure.
#1. Principal Repayment of Home Loan
The amount of home loan principal repaid in the present financial year can be included as a deduction under section 80C.
The maximum principal amount that you can claim as a deduction is up to Rs. 1,50,000.
#2. Children’s Tuition Fee
The amount of tuition fees paid for two children’s education can be claimed as a deduction under section 80C of the IT Act.
#3. Contribution to NPS
If you are registered under NPS then your contribution to the NPS account (maximum up to Rs. 1,50,000) under section 80CCD(1) can be claimed as a deduction.
#4. Additional Contribution to NPS
Over and above Rs. 1.5 Lakhs an additional contribution of Rs. 50,000 to the NPS account under section 80CCD(1B) can be claimed as a deduction.
#5. Interest Income From Savings Account
The amount of interest that you receive on your savings account up to Rs. 10,000 is tax free under section 80TTA(1).
#6. Rent Paid When HRA is Not Received From Employer
Under section 80GG the lower of the following amount can be claimed as a deduction when you have paid the rent from your pocket and HRA is not received from the employer.
Lower of the;
- Rent paid minus 10% of total income
- Rs. 5000/- per month
- 25% of total income
#7. Interest on Education Loan
The amount of interest repaid on your existing education loan can be taken for deduction under section 80E without any upper limit.
#8. Medical Insurance
Under section 80D you can claim a deduction for medical insurance as under;
- Medical insurance of self, spouse, children – deduction of Rs. 25,000
- Medical insurance of parents – deduction of Rs. 50,000
#9. Medical Treatment
The amount spent by you on the medical treatment for handicapped dependent or payment to specified scheme for maintenance of handicapped dependent can be claimed as deduction under section 80DD.
- If the disability is 40% or more but less than 80% – then the deduction allowed is Rs. 75,000
- If the disability is 80% or more – then the deduction allowed is Rs. 1,25,000
#10. Contribution to Political Parties
All the money contributed to political parties that is not in cash can be claimed as a deduction under section 80GGC of the IT Act.
Under section 80G, eligible donations of 100%/ 50% of the amount donated in specified funds are eligible for deduction.
#12. Interest on Housing Loan
The interest repaid on the housing loan up to Rs. 2,00,000 can be separately claimed as a deduction under section 24.
#13. Standard Deduction
Salaried persons can claim a standard deduction of Rs. 50,000 while computing tax liabilities.
#14. Leave Travel Allowance (LTA)
Under section 10(5), if you are a salaried employee and if your employer gives you the benefit of LTA, then you can use it for the expenses on domestic vacations without paying tax.
LTA covers the expense of travel tickets for you and your family.
#15. House Rent Allowance (HRA)
If HRA is part of your salary and you live in a rented house then you can lower your taxes by claiming HRA.
The lower of the following amount is exempted as HRA:
- The actual HRA received from your employer
- The actual rent paid by you for the house, minus 10 percent of your salary (including your allowances)
- 50 percent of your basic salary (for a metro) or 40 percent of your basic salary (for non-metro).
#16. LIC Life Insurance Premium
You can save tax on all the amounts paid as a premium for life insurance under section 80CCC. The premium paid can be for self, wife or children.
The deduction can be claimed only when the premium amount is less than 10% of the sum assured.
Finally, I will share the tax-saving investments.