Deductions From Income in Income Tax
Everyone wants to save income tax outflow from his pocket and so everyone is looking for ways to save income tax. Below we will list out some deductions available in the Income Tax Act,1961, from the total income of individual which reduces amount of income on which tax is calculated.
On the basis of Investment made/Expenses incurred:-
1.LIC premium deduction is well known but there are some other deductions which are available on other investments e.g. amount invested in PPF, Five years tax saving FD in a scheduled bank, Tuition fees of children, Stamp duty and registration charges paid for registration of house and Repayment of the Principal component of housing loan.
2.Amount invested in pension fund set up by LIC or other insurer or contribution towards notified pension scheme is also deductible from total income of person
3.One has to keep in mind while investing that maximum deductions available from total income for amount invested under point no 1 and 2 is Rs. 1,00,000/-
4.Investment made under new equity saving scheme for new retail investor which has a lockin period of 3 years in specified securities, is allowed as deductions from total income to the extent of 50% of amount invested or Rs. 25,000/- whichever is lower.
Mediclaim:-
1. Mediclaim insurance premium paid by person for his family i.e. spouse and dependent children is allowed as deductions from total income up to Rs. 15,000/- and additional deductions of Rs. 5,000/- is available if he or his spouse is a senior citizen.
2.Additional deduction of Rs. 15,000/- is available for mediclaim insurance premium paid for parents of the person, even if parents are not dependent on the person. And an additional deduction of Rs. 5,000/- is also available if the amount of mediclaim is paid for senior citizen parents.
Loans:
1.Everyone knows that Home loan interest paid is deductible from total income of a person. But if home loan is taken during the FY 2013-14 for first home then an additional deduction of Rs. 1,00,000/- is available only for FY 2013-14 to person for home loan interest paid during the year and when specified conditions are satisfied by the person.
2.Interest paid on educational loan for higher studies for self or for children is allowed as deduction from total income.
Donations:
A Specific amount is allowed as deduction from total income of a person if donations are made to certain funds, charitable institutions or trusts registered under Income Tax Act.
Deduction on the basis of disability:
Amount of Rs. 50,000/- is allowed as deduction from total income of the person for maintenance (including medical treatment)of a dependent person with disability.
Also, a deduction of Rs.50,000/- from income of a disabled person with disability up to 40% which is certified by medical authorities can be claimed and a higher deduction of Rs 1,00,000/- can be claimed if person is disable up to 80% or more which is certified by medical authorities.
Above we discuss some deductions available in income tax to reduce taxable income of a person and to reduce annual tax bill of a person.
On the basis of Investment made/Expenses incurred:-
1.LIC premium deduction is well known but there are some other deductions which are available on other investments e.g. amount invested in PPF, Five years tax saving FD in a scheduled bank, Tuition fees of children, Stamp duty and registration charges paid for registration of house and Repayment of the Principal component of housing loan.
2.Amount invested in pension fund set up by LIC or other insurer or contribution towards notified pension scheme is also deductible from total income of person
3.One has to keep in mind while investing that maximum deductions available from total income for amount invested under point no 1 and 2 is Rs. 1,00,000/-
4.Investment made under new equity saving scheme for new retail investor which has a lockin period of 3 years in specified securities, is allowed as deductions from total income to the extent of 50% of amount invested or Rs. 25,000/- whichever is lower.
Mediclaim:-
1. Mediclaim insurance premium paid by person for his family i.e. spouse and dependent children is allowed as deductions from total income up to Rs. 15,000/- and additional deductions of Rs. 5,000/- is available if he or his spouse is a senior citizen.
2.Additional deduction of Rs. 15,000/- is available for mediclaim insurance premium paid for parents of the person, even if parents are not dependent on the person. And an additional deduction of Rs. 5,000/- is also available if the amount of mediclaim is paid for senior citizen parents.
Loans:
1.Everyone knows that Home loan interest paid is deductible from total income of a person. But if home loan is taken during the FY 2013-14 for first home then an additional deduction of Rs. 1,00,000/- is available only for FY 2013-14 to person for home loan interest paid during the year and when specified conditions are satisfied by the person.
2.Interest paid on educational loan for higher studies for self or for children is allowed as deduction from total income.
Donations:
A Specific amount is allowed as deduction from total income of a person if donations are made to certain funds, charitable institutions or trusts registered under Income Tax Act.
Deduction on the basis of disability:
Amount of Rs. 50,000/- is allowed as deduction from total income of the person for maintenance (including medical treatment)of a dependent person with disability.
Also, a deduction of Rs.50,000/- from income of a disabled person with disability up to 40% which is certified by medical authorities can be claimed and a higher deduction of Rs 1,00,000/- can be claimed if person is disable up to 80% or more which is certified by medical authorities.
Above we discuss some deductions available in income tax to reduce taxable income of a person and to reduce annual tax bill of a person.
