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Find the Ultimate Guide to Tax-Saving Sections Here

Dec 11, 2019 | 4 months ago | Read Time: 3 minutes | By iKnowledge Team

During the Annual Budget, income taxpayers look forward to the deductions for that year. It is important to know about the tax saving sections so that you plan your finances well.

Complete list of tax deductions for FY 2020-21 and AY 2021-22:

  • Section 80C

You can claim a maximum of Rs.1.5 lakhs deduction here, when you choose investments like provident funds, post office savings scheme, life insurance premiums, etc.

To claim tax benefits on a term life insurance policy, you need to choose your policies carefully. For example, when you choose a term insurance plan from Aegon Life, you not only get the benefit of financial protection for your family but also tax benefits for the premiums that you have paid.

  • Section 80CCC

The maximum tax deduction that you can claim under section 80ccc is Rs.1.5lakh. Life insurance annuity plans, and pension plans are some investment options that fall under this section.

  • Section 80CCD

Contributions to Government Pension Schemes qualify for deductions under this section. Salaried individuals should invest a maximum of 10% their salary and self-employed individuals a maximum of 20% of their gross income, to claim tax savings under Sections 80CCD (1b) and 80CCD (1) respectively.

The maximum deductions that you can claim under Sections 80C, 80CC and 80CCD shouldn’t exceed Rs.1.5 lakhs per year. However, salaried individuals can claim an additional Rs.50000 deduction under Section 80CCD (1b).

  • Section 80D

When you, your spouse, dependent kids or parents (one or both) are less than 60, you can claim a maximum deduction of Rs. 25,000 towards your health insurance plans. If the age crosses 60, you can claim a maximum deduction of Rs. 50,000. These deductions also include a maximum of Rs. 5,000 per family towards expenses paid for preventive health check-ups.

  • Section 80DDB

A maximum of Rs. 40,000 can be claimed as deductions for individuals less than 60, towards treatment of critical ailments. This amount is fixed at Rs. 80,000 for citizens more than 60.

  • Section 80CCG

Though the Rajiv Gandhi Equity Savings Scheme is not tax deductible anymore, you can still claim deductions on it for this year, if you had invested in it a couple of years ago.

  • Section 24(B)
  1. A maximum of Rs.2lakh for home loan repayment for second home
  2. 30% of the net asset value after paying municipal taxes towards tax deductions.
  • Section 80E

Tax deductions under 80E are applicable for the interest paid on your education loan. There is no limit for these deductions, but you can claim it for 8 years or till you pay the interest, whichever comes first.

  • Section 80EE

A maximum of Rs. 50,000 can be claimed as deductions by first-time home buyers, towards interest repayment on their home loans. Refer to the IRDAI website for the terms under this section, for more clarity.

  • Section 80G

If you have made contributions to relief funds, charitable organisations and political parties, you can claim deductions under Sections 80G and 80GGC. Under Section 80G, a maximum deduction of 50% is allowed to companies and 55% to other taxpayers. Under Section 80GG, the entire amount is exempt from tax.

  • Section 80GG

A maximum of Rs.60000 per year can be claimed as a deduction under this section by people who don’t own a home and don’t have a house rent allowance as well.

  • Sections 80TTA and 80TTB

The new section 80TTB allows senior citizens to claim a maximum deduction of Rs.50000 for interest earned on their FDs or RDs. 80TTA gives you a maximum deduction of Rs.10000 for the interest earned on your deposits. This will stop if you have already claimed benefits under the new section, 80TTB.

  • Section 80U

This section allows for tax deductions on health insurance policies (like Section 80DD) but for taxpayers who are differently abled.

  • Rebates

Section 87A gives you certain tax rebates, provided your annual net income is a maximum of Rs 5 lakhs. The maximum rebate that you can claim is Rs.12500.

  • Standard Deduction

You are eligible for a standard deduction of Rs.50000 per annum if you are a salaried individual or a pensioner. This deduction will replace all medical and travel reimbursement procedures that were done earlier.

New tax regime introduced in Budget 2020

The following table elucidates the difference in tax rates between the two slab structures.

Total Income (in Rs.) Tax rates as per the new slab structure Tax rates as per the existing slab structure
Up to Rs. 2,50,000 Nil Nil
Rs. 2,50,000 to Rs. 5,00,000 Nil 5%
Rs. 5,00,001 to Rs. 7,50,000 10% 20%
Rs. 7,50,001 to Rs. 10,00,000 15% 20%
Rs. 10,00,001 to Rs. 12,50,000 20% 30%
Rs. 12,50,001 to Rs. 15,00,000 25% 30%
Rs. 15,00,000 and above 30% 30%

According to the new tax regime, taxpayers can now choose between either of the two tax regimes based on their income and investments. Taxpayers who opt for the new regime get to enjoy significantly lower tax rates. Click here to know more.


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