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How to save Income Tax on salary for Individuals?

There are certain less-popular tax deductions which not only help you reduce your income tax outgo, but also the quantum of investment you need to make to avail tax breaks under the Section 80C.

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Most salaried people’s attention usually remains focused on availing the Section 80C deductions of up to Rs 1.5 lakh which may lead them to overlook many other tax benefits they are eligible for and eventually end up paying higher taxes to the government.

There are certain less-popular tax deductions which not only help you reduce your income tax outgo, but also the quantum of investment you need to make to avail tax breaks under the Section 80C of the Income Tax Act, 1961.

Here are some of such tax deduction schemes which may help you to save more tax:

Section 80GG- House Rent Paid:

If you don’t receive HRA (House Rent Allowance) but pay rent, you can still get a tax deduction on the rent paid under Section 80 GG of the Income Tax Act, 1961. The maximum deduction permitted under Section 80 GG is Rs 60,000 per annum (Rs 5,000 per month).

Section 80E- Interest on Education Loan:

A deduction is allowed to an individual for interest on a loan, taken for pursuing higher education. The 80E deduction is available for a maximum of 8 years or till the entire interest is repaid, whichever is earlier. There is no restriction on the amount that can be claimed. This loan may have been taken for the taxpayer, spouse or children or for a student for whom the taxpayer is a legal guardian.

Section 80G – Donations:

The various donations specified under Section 80G are eligible for deduction up to either 100% or 50% with or without restriction. The donations above Rs 2000 should be made in any mode other than cash to qualify as a deduction under Section 80G.

Section 80U – Physical Disability:

Under Section 80U, a deduction of Rs. 75,000 is available to a resident individual who suffers from a physical disability (including blindness) or mental retardation. In case of severe disability, deduction of Rs. 1,25,000 can be claimed.

Reinvest to Save on LTCG

Another less-known tax deduction is the deduction available on long-term capital gains under Section 54 and Section 54F. People who have bought a house can save tax on LTCG arising from the sale of long-term capital assets if such assets are sold within a year from the date of purchase of the house.

Tuition fees paid for kids:

On part of the parents, paying tuition fees for children’s education is a mandatory expense while only a few people know that this expense is tax deductible. Under Section 80C, the tuition fees paid for the education of children in school, college or university can be claimed as a tax deduction.

Section 80D – Medical Insurance:

A deduction of Rs 25,000 can be claimed for insurance of self, spouse and dependent children. An additional deduction for insurance of parents is available to the extent of Rs 25,000 if they are less than 60 years of age or Rs 50,000 if parents are more than 60 years old. In case, a taxpayers age and parents age is 60 years or above, the maximum deduction available under this section is to the extent of Rs. 100,000.

Section 80DDB – Medical Expenditure

The deduction that can be claimed is Rs 40,000. Such deduction, for an individual, is available in respect of any expenses incurred towards the treatment of certain specified medical diseases or ailments for himself or any of his dependents. In case the individual on behalf of whom such expenses are incurred is a senior citizen, a deduction up to Rs 1 lakh can be claimed by the individual. Also, remember that you need to get a prescription for such medical treatment from the concerned specialist in order to be able to claim such a deduction.

Section 80 TTA – Interest on Savings Account

A deduction of maximum Rs 10,000 can be claimed against interest income from a savings bank account. Interest from a savings bank account should be first included in other income and deduction can be claimed of the total interest earned or Rs 10,000, whichever is less.  Section 80TTA deduction is not available on interest income from fixed deposits, recurring deposits, or interest income from corporate bonds.

Section 80GGC – Contribution to Political Parties

Deduction under this Section 80GGC is allowed to a taxpayer except for a company, local authority and an artificial juridical person wholly or partly funded by the government, for any amount contributed to any political party or an electoral trust. The deduction is allowed for contribution done by any way other than cash.