India is big economic but only 5 to 10 percent people in India pay income tax. This is the main cause of high tax rate in India.
But when we consider the whole income tax. Income Tax has a lot of tax planning section. If a taxpayer properly plans according to all deduction mention in income tax act, then a taxpayer easily claim deduction in income tax
Tax saving section in India
Major deduction in income tax is section 80 c. U/s 80 c, a taxpayer can claim Rs.1,50,000 deductions in total income. Due to this reason this section is playing a major role in tax planning.
Tax saving option under section 80 C to 80 U
1.Deduction in respect of Life Insurance premium, Contribution to Provident Fund, PPF.
Individual spouse and child
Tuition fee for children
Repayment of housing loan
2.Loan Taken for Higher Education Under section 80E
If any taxpayer has taken loan for higher education purpose, any family member a
son, daughter, wife, brother and any other family member. In this case a taxpayer plan income tax deduction. The principle amount of loan not allow but interest amount of loan taken allow.
Note: For a period of 8 years from the year he starts paying interest
Self, spouse, child
- Under section 80g of income, tax donation is exempt
Finance minister specific some criteria for deduction in u/ s 80g as some donation are 100 percent deductible or some 50 percent.
- Deduction in respect of rent paid under section 80GG
If a taxpayer living in rented house, then u/c 80gg claim deduction in rent paid. Most of the person not aware this section.
Limit of deduction: Maximum 5000 p.m. or 25 percent of adjusted GTI or Excess of rent paid over 10 percent of adjusted GTI
- Deduction in respect of interest on deposits in savings account
Interest received on saving account is considering as an income, therefore consider as a taxable income.
Individual and HUF
Deduction limit: Above the 10000 consider taxable income
Deduction allows in U/ s 80D is Rs.15,000 and Rs.20, 000
Under section 80 is 15000 exempt from income tax
In case of Business deduction
- 100 percent deduction of profit from the eligible business of the eligible startup
2.Deduction in Royalty Income under section 80QQB
Note: Individuals who are resident in india and are authors
100 Percent of such income or 300000 whichever is less