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SAVE TAX 2020

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 Below enlisted are few of the best ways to save taxes in India:


How can I save income tax?

Here are few deductions that can help you save income tax in India:

  • Deduction on rent
  • Deduction on higher education loan
  • Deduction on donations
  • Deduction for physical disability
  • Deduction on kids’ tuition fees
  • Deduction on expenses incurred on specified diseases’ treatment such as AIDS, Cancer, etc.
  • Deduction on bank savings account’s interest
  • Deduction on personal loan interest (taken for the purpose of house purchase)
  • Deduction on interest paid on the loan for revamp/reconstruction of home
  • Deduction on Long-term Capital Gains (LTCG) investments under Section 54 and 54F

80C

Claim Deductions up to Rs. 150,000 U/S80C

Section 80C consists of multiple investments and expense items. If you invest money in any of the products or expenses listed below, you can reduce your taxable income by up to Rs. 150,000.

1. Home Loan Principal Repayment

Applicable to the first house property.
Home loan EMI consists of two major components: Principal and Interest.
Section 80C allows you to claim tax benefits on the principal paid.

2. Life Insurance Premiums

Life insurance premium, includingpayments for unit linked insurance plans, are eligible for tax benefits under section 80C.
The limit for claiming the benefits is Rs. 1.5 lakhs, which means if you make no other investments but pay Rs. 2 lakhs towards your life insurance policy, then Rs. 1.5 lakh will be eligible for tax benefits.

3. Five-Year Bank Fixed Deposits

Term deposit with a tenure of at least five years qualifyfor deduction under section 80C.

4. Equity Linked Savings Schemes (ELSS)

Investment in mutual funds, especially the equity-linked savings scheme makes you eligible for tax exemption under this section.
ELSS funds provide maximum tax benefit up to Rs. 1.5 lakhs per annum and come with a lock-in period of 3 years.

5. Provident Funds

All contributions made under different types of provident funds like PPF (Public Provident Fund), EPF (Employee Provident Fund) and VPF (Voluntary Provident Fund) are eligible for tax benefits under Section 80C.

6. National Pension Scheme (NPS)

Investment into Tier I account (meant for retirement) of NPS, is eligible for deduction under sec 80C
National Savings Certificate (NSC)
Investment made in these certificates, which come with a maturity period of 5 and 10 years, is also eligible for tax benefits up to Rs. 1.5 lakhs.

7. Sukanya Samriddhi Account

Announced by the Indian government in early 2015, this specialaccount allows parents to open an account for their girl child. Parents can deposit money up to Rs. 1.5 lakhs each year and earn an interest of 8.1percenton it.

8. School/College Education Expenses

The amount paid by parents as tuition fees of their children, (at the time of admission or thereafter), is eligible as a deductionunder Section 80C.
However, the fees should be paid to a school, college, or university in India only.

9. Pension Funds

You can secure your retirement by investment in pension funds and become eligible for deduction under this section.

10. Senior Citizen Saving Scheme

This scheme is available only for individuals in 60 or above age group. The investment made into thisschememakes you eligible for tax benefits under this section.

11. Post Office Time Deposits

Similar to bank fixed deposits, time deposits held at post office also are eligible for tax benefits under section 80C.

80CCC
To whom the deduction is available u/s 80CCC: The deduction u/s 80CCC is available to an individual assessee only as the wording of section 80CCC(1) starts as “Where an assessee being an individual…..”. Thus its only the individual who is eligible for deduction u/s 80CCC. The deduction under this section is also available to a non resident individual.

in simple words contributions made towards pension plans of LIC or other insurers are eligible for deduction u/s 80CCC. Amount of Deduction: The amount of deduction u/s 80CCC together with deduction available u/s 80C, 80CCD cannot exceed more than Rs. 1 Lakh. Where deduction has been allowed u/s 80CCC, deduction u/s 80C will not be available in respect of the payment towards such annuity plan.

80CCD

Increasing Your Deduction to Rs. 200,000 U/S 80C

Section 80CCD(1B) - For NPS Subscribers

This is possible only for NPS subscribers.Under section 80CCD(1) subscribers of NPS Tier-I (retirement savings account) can claim deduction up to the normal 80C limit of Rs. 150,000.

However, they also have an option to claim a deduction on additional voluntary contribution to this account. The only condition is, it should be voluntary and above their mandatory limit of contribution, which is 10% of basic salary.

Thus, getting a Rs. 200,000 deduction [80CCD(1) + 80CCD(1B)] means:

  •     If 10% of your basic salary is Rs. 150,000, you can invest additional Rs. 50,000 and increase your deduction to Rs. 200,000.
  •     If 10% of your basic salary is Rs. 200,000, your maximum eligible deduction is Rs. 150,000. You will need to invest additional Rs. 50,000 to increase your deduction to Rs. 200,000

80D

Deductionup toRs. 75,000 U/S 80D for Medical Insurance & Expenses
Section 80D offers a tax deduction for the following investments/expenses:
Premiums paid for Mediclaim/Health Insurance

      Premium paid for critical illness health insurance plans
      Preventive health check expenses
      Healthcare expenses for senior citizen parents                    

Preventive healthcare expense of up to Rs. 5000 is part of the maximum limit under this section.

80DD

Expenses on a handicapped dependent
80DD
For Disability up to 80%: Rs. 75,000
For severe disabilities (above 80%): Rs.1.25 Lakhs

80DDB

Treatment of specified illnesses

Based on Taxpayer’s Age:
Up to 60 years - UPTO Rs. 40,000
60 to 80 years -UPTO Rs. 60,000
Above 80 years -UPTO Rs. 80,000


80E

Education loan interest payment - Actual interest paid


80CCG

Home loan interest payment for first-time home-owners

Up to Rs. 50,000 (additional deduction over sec. 24B)


80G

Donations to approved charitable institutes

50% or 100% of the donated amount


80GGB, 80GGC

Contributions made to a political party by companies and individuals respectively


80TTA

Saving account interest - Up to Rs. 10,000


80U

Handicapped tax-payers can claim this deduction

Disability up to 80% - Rs.75,000
Severe disabilities - Rs.1.25 lakhs


80RRB

Royalty or patent income - Up to Rs. 3 lakhs


56(2)

Gift received - upto Rs. 50,000