Income Tax saving: The Complete Guide

As March approaches and the financial year comes to an end, every person who earns any amount of income, readies to get into the taxpayer mode. For all the income earning individuals, tax is a bitter pill that they have to swallow every year in March but then all is not bitter about paying taxes. The government has given several exemptions and concession to the taxpayers under the different sections of the Income Tax Act, 1961. If you utilize these benefits you can save a good amount of tax and not feel bitter at all about paying the taxes. Here is taking a look at these sections and the exemptions they offer.

1. Section 80C – The most popular tax-saving section, it allows you to reduce your taxable income by Rs 1.5 lakh. Under this section, you can make investments in EPF (Employee Provident Fund), PPF (Public Provident Fund), NSC (National Savings Certificate), post office deposit, few types of FD (Fixed Deposit) Equity Linked Savings Scheme (ELSS), ULIP (Unit Linked Insurance Plan), SCSS (Senior Citizen Savings Scheme), and SSY (Sukanya Samridhi Yojna) and get tax exemption. Expense like life insurance premium and tuition fees of two children also qualify for exemption under this section. Last but not the least, the principal amount of home loan which is repaid is also eligible for deduction up to Rs 1.5 lakh.
2. Section 80CCD – This section allows additional exemption of Rs 50,000 to investment in NPS (National Pension System). You can get total tax benefit of Rs. 2 lakh under this section if you start investment in NPS. The totl deduction is calculated as, a maximum of Rs 1,50,000 for sec 80CCD(1) as a contribution of employee towards NPS account and additional deduction under section 80CCD(1B). 
3. Section 80D – Section 80 D allows a deduction on health insurance premium and medical expenses. An individual can get deduction of Rs. 25,000 for self insurance, spouse and dependent children. If the individual or spouse is above 60 years, then the deduction limit is Rs. 30,000. Also one can avail deduction on medical insurance for paying premium towards his/her parents. 
4. Section 80DDB – This section allows deductions on medical expenses incurred by taxpayers. A taxpayer below 60 years can claim deduction maximum Rs. 40,000 or accurate expenditure whichever is lower. While those in the age group above 60 can claim deduction of Rs 60,000 nd the mount is upto Rs 80,000 for citizen above 80 yrs of age. 
5. Section 80E – Under this section, you can claim deduction on education loan taken for higher studies for yourself, spouse, children or a child to whom you are legal guardian. The interest paid on education loan is free from taxation but this benefit extends up to 8 years only and includes the year from which you start paying the loan.
6. Section 80G – You can claim deduction on donations under this section. The donations can be made to government relief funds, foundations, trusts, institutions, etc. These are eligible for 100% and 50% deduction under this section.
7. Section 80GG – This section helps avail deduction on rent paid in cases where the company does not pay HRA. The lowest of these three- Rs. 5,000, 25% of total income or rent paid minus 10% of gross income is considered to be eligible for deduction under this section.
8. Section 80 TTA – This section allows deduction on interest earned from savings account deposit and the maximum deduction allowed is Rs. 10,000.
9. Section 80 U – This section gives tax exemptions to the physically disabled individual. A person suffering from 40% disability gets deduction of Rs. 75,000 while those with 80% disability get Rs. 1.25 lakh deduction. 
10. Section 24 – This section allows deduction on home loan interest and the maximum deduction amount is Rs. 2 lakhs.

Points to keep in mind

So, it is clear that you can save a significant amount of tax by availing the exemptions of the various sections of the Income Tax Act. Nevertheless, you need to be careful about some aspects to avail the benefits of these sections.

1. Check form 16 thoroughly – The employer issues a certificate for TDS deducted by them and it is called form 16. So, you should go through it thoroughly to make sure details have not been missed.
2. Plan income tax return in advance – It is in your interest to plan the income tax return much before the due date as it prevents last-minute hassles which often lead to losses for the taxpayer.
3. Submit necessary documents to employers in time – You should give details of investments and loans to your employer to avoid excess deduction.

If you keep the section benefits and the above points in mind, you will find that tax payment no longer is a bitter pill. You will look forward to it and also enjoy the return filing.