How to Save Income Tax for the F.Y.2020-21 If you choose the Old Tax Regime U/s 115 BAC for F.Y.2020
There is a large group of whole legitimate ways of
saving tax under the Income Tax Act, 1961. These include tax-saving mutual
assets, NPS, insurance expenses, medical insurance and many others. In this
article, we spread all the major tax deductions under the Income Tax Act
1. Go through your Rs 1.5 lakh limit under Section 80C
The
below-referenced investments/deductions are all dependent upon a cap of Rs 1.5
lakh. In other words, they are either/or investments and making one sort of
the investment will decrease space for another:
2. PPF (Open Opportune
Store): Open Fortunate Reserve is a legislature established savings conspire
with a residency of 15 years available at most banks and mail depots in India. Its rate
changes each quarter, however, is as of now 8%. The interest on PPF is without
tax..
3. NSC (National Saving
Certificate): A National Savings Certificate has a residency of 5 years and a
fixed rate of interest. The rate is presently 8%. The interest on NSC is also automatically
tallied towards the Rs 1.5 lakh 80C cutoff and is tax-deductible if no other
investments are using up the breaking point.
4. Life coverage Expenses:
Charges for various kinds of insurance arrangements including ULIPs, term
insurance and blessing strategies are tax-deductible up to Rs 1.5 lakh. Anyway,
the insurance spread must be at least multiple times the annual charge.
5. National Benefits
Framework (NPS): This deduction is available under Section 80CCD up to Rs 1.5
lakh for commitments to NPS. This is well beyond the Rs 50,000 deduction available
under Section 80CCD(1B)
6. Home Loan Repayment:
Repayment of the principal amount on a home loan is tax-deductible up to Rs 1.5
lakh per annum.
7. Payment of education
costs: Payment of education costs for your kids is tax-deductible up to Rs 1.5 lakh
per annum.
8. EPF: Under the EPF Act.
12% of the pay of workers in the organized sector is deducted towards
Representatives Fortunate Store. This deduction checks towards the Rs 1.5 lakh
limit under Section 80C.
9. Senior Residents Savings Plan: Commitment to the SCSS is tax-deductible up to Rs 1.5 lakh. SCSS has a residency of 5 years and is available to those above 60. The rate for SCSS is higher than prevailing FD rates and is as of now 8.7% (it is taxable).10) Pay Health Insurance Premiums
10) Pay Health Insurance Charges
A
deduction up to Rs 25,000 is available for health insurance charges under
Section 80D. This is far beyond the deductions listed above. For senior
residents, this cutoff is increased to Rs 50,000. Individual contributing health
insurance for himself and senior resident parents can avail of the combined
deduction up to Rs 75,000 for every annum.
11) Get a
deduction on your home lease/rent
You can claim tax deduction on your Home Lease Allowance (HRA) in the event that you get HRA. There is no furthest breaking point for this except for there are a lot of decides that cap the maximum HRA deduction. In the event that you don't get HRA yet pay lease, you can claim a deduction under Section 80GG up to Rs 60,000 for each annum.
12) Get a
deduction on the interest on your home loan
If
you have a home loan, the interest payable on it is tax-deductible under
Section 24 of the Income Tax Act up to Rs 2 lakh per annum. If you give out the
house on rent, there is no upper limit. However, the total loss that can be
claimed on the broader head of income from house property is capped at Rs 2
lakh.
13) Keep some cash in your savings account
This
is probably the easiest deduction under the Income Tax Act that individuals can
claim. Interest on savings accounts is sans tax up to Rs 10,000 every year
under Section 80TTA. This breaking point is Rs 50,000 for senior residents for
both FD and savings account interest under Section 80TTB..
14) Add to charity
You
can get a tax deduction on your charitable donations. There is no upper limit
but different rules restrict the tax deduction amount available on your
charitable contributions. For most donations to NGOs, the limit is 50% of the
donated amount and up to 10% of your adjusted total income. NGOs under this
section are required to have an 80G certificate for you to be able to claim
this deduction.
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