Income Tax Saving Investments For Salaried Individuals

Many individuals who are receiving income under the head salary ask about the methods which can legally help in saving tax on salaried people. It is a fact that are not allowed to claim expenses except those specified under the Income Tax Act. Therefore, they can only invest in or claim certain expenses which are discussed below in details:

Deduction under section 80C of the Income Tax Act

This section of income tax specifies various types of investments that can be allowed to be deducted from the taxable income. The maximum exemption under this section is allowed to Rs. 1, 50,000/-. For claiming deduction for a particular financial year, payment for investment should be made in that financial year only. For instance, Payment of insurance premium paid in FY 2019-2020 will be allowed as deduction for filing income tax return for FY 2019-2020 only.

Few illustration of investments specified under section 80C is as follows:

• Insurance premium paid for himself, spouse and children’s.
• Investment in Public Provident fund.
• Investment in 5 year fixed deposits.
• Tuitions fee of maximum 2 children’s
• Investment in NSC.

Deduction under section 80D of the Income Tax Act

This section allows deductions for payment of medical premiums during the financial year. This includes payment for himself, spouse, children’s and dependent parents. Amount of deduction allowed under this section is Rs. 25,000/- for himself, spouse, children’s and for dependent parents is Rs. 25,000/- i.e. maximum to total Rs. 50,000/-. If your parents are senior citizens then this deduction will increase to Rs. 50,000/- in case of Rs. 25,000/-. Additional Rs. Up to 5,000/- can be claimed for preventive checkups.

Deduction under section 80DD of the Income Tax Act

If a person is bearing the medical expenses of a handicapped independent relative then he is allowed deductions from taxable income.  The amount of deductions will be Rs. 75,000/- if the disability is more than 40% but up to  80%. .  The amount of deductions will be Rs1, 25,000/- if disability is more than 80%.

Deduction under section 80E of the Income Tax Act

If a person is paying interest on an education loan then he is allowed to claim interest paid on an education loan as an income tax deduction. Only individuals are allowed to take deductions under this section. It is important to note that a loan should be taken for himself, spouse or children for higher studies. There is no bar on the amount of deduction that is allowed as deduction. In other words, any amount paid as interest on an education loan is allowed as deduction from taxable income.

Deduction under section 80EE of the Income Tax Act

This section allows taxpayers to claim deductions of Rs. 50,000/- for interest paid on home loans against residential homes. This deduction is in addition to deduction of home loan interest allowed under section 24 of the Income Tax Act. You must fulfil the following conditions to claim this deduction:

• The price of a house property should be Rs. 50 lakh or below,
• The amount of the loan should be Rs. 35 lakh or below,
• The loan should be passed during the period of 01.04.2016 to 31.03.2017 and at the time of taking loan, the individual must not be the owner of another residential housing property.

Deduction under section 80G of the Income Tax Act

This section allows taxpayers to claim deductions on the amount of donations given to a charitable origination.  The condition of deduction is that the charitable organization must be registered with the income tax department under section 80G. The amount of donation can be 50% to 100% of donation made. The amount donated in cash exceeding Rs. 2,000/- is not eligible for deductions from taxable income.

Deduction under section 80CCD(1B) of the Income Tax Act

If you are making an investment under the National Pension Scheme then he can claim deductions of up to Rs. 50,000/- under section 80CCD (1B) of the Income Tax Act.

Deduction under section 80TTA of the Income Tax Act

In terms of this section, if a person is earning interest income on a savings bank account then interest earned on a savings bank account is exempted up to Rs. 10,000/-. Interest earned above Rs. 10,000/- will be liable to be taxed. This section also includes interest earned from a post office savings bank account.

Deduction under section 80DDB of the Income Tax Act

If a person is bearing the medical expenses of an independent relative, then he is allowed deductions from taxable income.  The amount of deductions will be Rs. 40,000/- .  The amount of deductions will be Rs. 1, 00,000/- if a relative is a senior citizen. For the purpose of this section, independent relatives include parents, children, spouse, brother and sister. This section is applicable only for notified diseases. Notified diseases are as follows:

(i) Neurological Diseases where the disability level has been certified to be of 40% and above,—

(a)  Dementia;

(b)  Dystonia Musculorum Deformans ;

(c)  Motor Neuron Disease;

(d)  Ataxia;

(e)  Chorea;

(f)  Hemiballismus ;

(g)  Aphasia;

(h)  Parkinson’s Disease;

(ii)  Malignant Cancers;

(iii)  Full Blown Acquired Immuno-Deficiency Syndrome (AIDS);

(iv)  Chronic Renal failure;

(v)  Hematological disorders:

(i) Hemophilia;

(ii) Thalassaemia.