Income Tax Deductions in India

1️⃣ Tax Exemption 🏦
✔ Certain types of income are fully or partially exempt from tax.
✔ Exempt income is not included in total taxable income.
✔ Examples: Agricultural income, PPF interest, gratuity received by government employees, and allowances like HRA (House Rent Allowance).

2️⃣ Tax Deduction 💰
✔ A specific amount is deducted from your gross total income, reducing the taxable income.
✔ Available under various sections like 80C, 80D, 80E.
✔ Examples: Investments in PPF, EPF, NSC (80C), health insurance premium (80D), and home loan interest (Section 24(b)).

3️⃣ Tax Rebate 🔄
✔ A direct reduction in tax liability (not taxable income).
✔ Given after calculating the tax payable.
✔ Example: Section 87A rebate (₹25,000 for income up to ₹7L in the new tax regime).

1️⃣ Flat Standard Deduction: ₹75,000
✔ Available to all salaried individuals and pensioners.

2️⃣ Professional Tax: Up to ₹2,500
✔ Deductible if paid (varies by state).

3️⃣ HRA (House Rent Allowance) - If Applicable
✔ Deduction based on actual rent paid, salary, and city of residence.

4️⃣ Leave Travel Allowance (LTA)
✔ Tax-free if used for domestic travel expenses (twice in 4 years).

5️⃣ Deductions Under Section 80C (₹1.5L Limit)
✔ PPF, EPF, Life Insurance, ELSS, etc.

6️⃣ Medical Insurance Premium (Section 80D)
✔ Up to ₹25,000 (₹50,000 for senior citizens).

7️⃣ Home Loan Interest (Section 24b & 80EEA)
✔ Up to ₹2L for self-occupied property.

Under Section 80C of the Income Tax Act, you can claim deductions up to ₹1.5 lakh by investing in the following instruments:

1️⃣ Provident Funds & Retirement Savings

✔ Employees' Provident Fund (EPF) – Contribution by employees is eligible for deduction.
✔ Public Provident Fund (PPF) – Government-backed, 15-year lock-in, tax-free interest.
✔ National Pension System (NPS) [also under 80CCD(1B)] – Additional ₹50,000 deduction.

2️⃣ Tax-Saving Fixed Deposits (FDs)

✔ 5-Year Bank FD – Tax benefits but interest is taxable.

3️⃣ Equity-Linked Savings Scheme (ELSS)

✔ Mutual funds with tax benefits, lowest lock-in (3 years), market-linked returns.

4️⃣ National Savings Certificate (NSC)

✔ Government-backed, 5-year tenure, interest reinvested for deduction.

5️⃣ Life Insurance Premium

✔ Premiums paid for self, spouse, or children are eligible for deduction.

6️⃣ Home Loan Principal Repayment

✔ Deduction available for principal repayment on a home loan.

7️⃣ Sukanya Samriddhi Yojana (SSY)

✔ For girl child savings, highest tax-free returns under 80C.

8️⃣ Senior Citizens Savings Scheme (SCSS)

✔ Best for retirees, 5-year scheme, safe returns.

Yes! You can claim EPF, PPF, and ELSS together under Section 80C, but the total deduction limit is ₹1.5 lakh per financial year.

Example:

If you invest:
✔ EPF Contribution – ₹50,000
✔ PPF Investment – ₹60,000
✔ ELSS Mutual Fund – ₹50,000

Your total investment = ₹1.6 lakh
But only ₹1.5 lakh is eligible for deduction under Section 80C.

Section 80D allows deductions for health insurance premiums and preventive health check-ups for self, family, and parents.

1️⃣ For Self, Spouse & Children

✔ ₹25,000 – If policyholder & family members are below 60 years.
✔ ₹50,000 – If policyholder or spouse is 60 years or above (senior citizen).

2️⃣ For Parents' Health Insurance

✔ ₹25,000 – If parents are below 60 years.
✔ ₹50,000 – If parents are senior citizens (60+ years).

3️⃣ Preventive Health Check-ups

✔ Up to ₹5,000 (within the ₹25,000/₹50,000 limit).

Total Deduction Possible

✔ ₹75,000 (Self + Senior Citizen Parents)
✔ ₹1,00,000 (If both self & parents are senior citizens)

For senior citizen health insurance under Section 80D, you can claim:

✔ ₹50,000 – If you or your spouse (aged 60+) pay health insurance premiums.
✔ ₹50,000 – If you pay for your senior citizen parents' health insurance.

Total Deduction Possible:

✔ ₹1,00,000 – If both self and parents are senior citizens.
✔ Includes ₹5,000 for preventive health check-ups within the limit.

Claim both 80C & 24(b) to maximize tax benefits on your home loan! 🏡😊

If you receive HRA as part of your salary, you can claim a deduction under Section 10(13A) based on the lowest of the following three amounts:

1️⃣ HRA Calculation Formula:

Deduction = Minimum of
✔ Actual HRA received from the employer.
✔ 50% of salary (for metro cities: Delhi, Mumbai, Kolkata, Chennai) or 40% of salary (for non-metro cities).
✔ Rent paid - 10% of salary.

2️⃣ Documents Required for HRA Claim:

✔ Rent Receipts (if rent exceeds ₹3,000 per month).
✔ Rental Agreement (if required by your employer).
✔ PAN of Landlord (if rent exceeds ₹1,00,000 annually).

3️⃣ What If You Don’t Get HRA?

✔ Claim deduction under Section 80GG (up to ₹60,000 annually) if you don’t receive HRA and don’t own a house.

✔ What is Covered?
– Interest paid on education loans for higher studies (in India or abroad).
– Loan taken for self, spouse, children, or legal guardian.

✔ Maximum Deduction?
– No upper limit on the deduction amount.
– Only interest is deductible (not principal repayment).

✔ Loan Must Be Taken From?
– A bank, financial institution, or approved charitable trust (not from friends or relatives).

✔ Deduction Period?
– 8 years or until interest is fully repaid (whichever is earlier).