The maximum reduction available in Section 80C is Rs.1,50,000 and salaried citizens whose gross salary is Rs.2,50,000 or more are entitled to use the full Rs.1,50,000 limit.
Individuals who make monetary infusions of over Rs.1,50,000 in Section 80C in selected areas fail to understand that the advantages are limited. In spite of investing Rs.1,10,000 and Rs.50,000 in Public Provident Fund and ELSS respectively, the amount entitled by the investor is only Rs.1,50,000.
Some of the investments/contributions that meet the criteria for Section 80C reduction are given below :
• Public Provident Fund
• Accrued interest on National Saving Certificate
• Life Insurance Premium
• National Saving Certificate
• Tuition fees paid for children’s education (maximum 2 children)
• Principal component of home loan repayment
• 5-Year fixed deposits with banks and Post Office
• Equity Linked Savings Schemes (ELSS)
• Sukanya Samriddhi Yojna
• Varishtha Pension Bima Yojna
Total amount allowed as deduction is limited to Rs. 1,50,000 inclusive of deductions as per Section 80C , 80CCC, 80CD(1) and Section 80CCE
If your salary surpasses Rs.250,000 per annum and the reductions under Section 80C are not enough to minimize the general tax liability, consider the following –
Section 80CCD(2)
NPS Contribution: The amount as contributed by the employer up to 10% of the employee’s salary, over above the contribution of the employee, shall enjoy extra deductions without any upper limit.
Section 80CCD(1B)
National Pension Scheme: Exemption up to Rs.50,000 pa is allowed.
Section 24
Home loan:
Tax Benefits
First Home – Self Occupied
On Principal Repaid
No change – Upto Rs. One Lakh Fifty Thousand (Rs. Two Lakh for senior citizens)
On Interest Repaid
No change – Up to Rs. Two Lakh if completed within 3 years from the end of the fin. year in which loan is taken, else Rs. 30,000
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Tax Benefits
First Home – Rented/ Vacant
On Principal Repaid
No change – Upto Rs. One Lakh Fifty Thousand (Rs. Two Lakh for senior citizens) if staying in a different city for work
On Interest Repaid
No change – On entire interest paid without any limit
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Tax Benefits
Second Home
On Principal Repaid
None
On Interest Repaid
No change – On entire interest paid without any limit
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Tax Benefits
Under Constructions
On Principal Repaid
None
On Interest Repaid
No change – The interest paid can be claimed in equal parts in five fin. years post completion or handing over.
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Section 80D
Medical insurance: A deduction of upto Rs.25,000 pa applicable under this.For Senior Citizens it has been increased to Rs 30,000 from the existing Rs 20,000.
For very senior citizen above the age of 80 years, not eligible to take health insurance, deduction is allowed for Rs 30,000 toward medical expenditure.
Section 80G
Donations: Tax advantages entitle the donations to particular funds/institutions.
Section 80CCG
RGESS: 50% on an investment of maximum Rs. 50,000 is available for deductions and the scheme is meant only for First Time Investors in the equity market.
Section 80DD
Maintenance: Maintenance including medical treatment of handicapped dependent. Maximum deductions available is Rs. 75,000.00
Section 80DDB
Terminal Ailments: Only selected diseases as are prescribed by the CBDT are entitled for deduction. LIMIT Rs. 40,000/- for general, Rs. 60,000/- for senior citizens and Rs 80,000/- for very senior citizens.
Section 80E
Higher Studies: Deduction on interest of loan for Higher Studies is permissible for 8 years.
Section 80GG
House Rent: Paid in excess of 10% of total income, but subject to a ceiling 25% thereof, OR Rs. 2000/- per month whichever is less, subject to certain conditions.
Section 80TTA
Savings Bank Interest: Interest accrued up to Rs. 10,000/- is exempted.
Section 80U
Permanent Disability: Exemption up to Rs. 75,000/- for a totally blind , physically handicapped or mentally retarded individual OR Rs. 1,25000/- for severe disability. Disability Certificate from the a certified medical authority is required.
Transport Allowance
Exemption of transport allowance Rs 19,200 (Increased from Rs 800 pm to Rs 1600 pm).