ax Planning through Deductions
Tax Planning plays a vital role in managing one’s taxation. It involves many parts and Deductions are one of them. Deduction is a powerful weapon when known better and applied best, can reduce an individual’s tax liability to a great extent.
To make it little easy, out of many deductions available, today we will know key deductions available for salaried employees.
To start with:
- Standard Deduction: Standard Deduction is a rejoice for many middle-class tax payers. Under section 16ia of Income Tax Act, Standard deduction is a flat deduction of Rs.50,000/- to your “Income taxable under the head salaries”.
- Section 80TTA: Under Section 80TTA, a deduction of Rs 10,000 on interest income is available to individuals, HUF.
- Section 80TTB: Under Section 80TTB, a resident senior citizen, aged 60 years and above at any time during a Financial Year (FY), can claim Rs 50,000 as deduction on interest income from savings and Fixed deposit account.
- Section 80D: To encourage medical insurance, Section 80D, allows a taxpayer to avail tax deduction on premium paid towards medical insurance.
- Section 80C: Section 80C of Income Tax Act, involves a bunch of deductions that an individual can claim on various investments and expenditures. Full utilisation of this deduction can save up to Rs 46,800 (inclusive of cess at 4%) for those in the highest tax bracket of 30%.
This section allows up to 1,50,000 as deduction from a tax payer’s Total Taxable Income.
Some of the investments and expenditures that enjoy tax benefit under Section 80C are:
- National Pension Scheme: One can avail up to Rs.1,50,000 under Section 80C for NPS along with Additional Benefit of Rs. 50,000 under Section 80CCD (2).
- Tax Deduction on Home Loan Interest: Everybody dreams of owning a house one day. Section 24 of IT Act allows Deduction up to Rs 2,00,000 p.a for interest on home loan. Also, interest on borrowed funds for repair/ reconstruction of house property can be availed to the extent of Rs. 30,000 pa.
Claiming Deductions is a subtle approach towards reducing tax liability. We at Right Value Services, are happy to help our clients get their Tax Planning Done. To avail our services revert on this mail or connect with us. We would be happy to help.