Every taxpayer in India looks for ways to save tax legally. The Income Tax Act, 1961 provides various deductions that reduce taxable income. By claiming these deductions, you lower your overall tax liability and increase savings. Understanding the deduction sections and their limits helps individuals and businesses plan their finances better.
What are Income Tax Deductions? 🔍
Income tax deductions are specific expenses or investments allowed under the law that can be subtracted from your gross total income. After claiming them, you pay tax only on the remaining income.
👉 Example: If your annual income is ₹7,00,000 and you claim deductions of ₹1,50,000, then tax is calculated on ₹5,50,000.
Key Income Tax Deductions and Their Limits 📊
Here’s a table of the most common deductions available to taxpayers:
| Section | Deduction Type | Maximum Limit |
|---|---|---|
| 80C | Investments in PPF, ELSS, LIC, 5-year FD, NSC | ₹1,50,000 |
| 80CCD(1B) | Additional NPS Contribution | ₹50,000 |
| 80D | Medical Insurance Premium | ₹25,000 (₹50,000 for people aged 60 years and above) |
| 80E | Interest on Education Loan | No limit (actual interest paid) |
| 80G | Donations to Charitable Institutions | 50%–100% (subject to conditions) |
| 80TTA/80TTB | Interest on Savings Account | ₹10,000 (₹50,000 for people above 60 years) |
| 24(b) | Home Loan Interest (self-occupied property) | ₹2,00,000 |
| 10(14) | HRA (House Rent Allowance) | As per rules (based on rent, salary, city) |
| 54, 54EC, 54F | Capital Gains Exemptions | Depends on reinvestment conditions |
Why Claim Deductions? ✅
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They reduce your taxable income.
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They encourage long-term savings and investments.
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They provide relief on essential expenses like education, health, and housing.
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They motivate contributions to social causes through donations.
Tips for Tax Planning 💡
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Always plan deductions at the start of the financial year.
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Keep all investment proofs and receipts ready for smooth filing.
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Use deductions smartly along with rebates and exemptions for maximum benefit.
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Consult a tax advisor if you have multiple sources of income.
Conclusion 🏁
Income tax deductions are powerful tools for reducing tax liability while securing your financial future. By utilizing sections like 80C, 80D, 24(b), and 80G, taxpayers can legally save money and invest for long-term growth. To avoid missing benefits, track eligible expenses and plan investments wisely.