All about tax deductions

A tax deduction is the reduction you can claim under different heads to cut your tax liability, thereby reducing your income tax. The income tax act in India has made allowances for deductions in various sections, and these are listed below. Section 80C Section 80C offers a window of investment opportunities of up to Rs 1.5 lakh in each financial year. This benefit is available to everyone, irrespective of their income levels. For instance, if you are in the highest tax bracket of 30 per cent, the investment of Rs 1.5 lakh under this section will save you Rs 46,800 (including education and Secondary and Higher Education cess) each year. The various financial products that qualify for Section 80C benefits are as follows: Life Insurance premium payment Home loan principal repaid, wherein the principal portion of the home loan EMI qualifies for deduction under Section 80C Employees Provident Fund (EPF) where 12 per cent of your salary is deducted every month, and an equal amount is contributed by your employer and put into a fund maintained by the government or your company's provident fund trust. Only your contribution towards the fund is eligible for deduction from taxable income of the basic salary. Tuition fees for up to two children can be claimed. However, any payment towards any development fees or donation to institutions is exclude

This article was originally published on March 25, 2022.