What is the Income Tax?

Income tax is a portion of your income that you pay to the government. It is the tax collected on an annual basis where the authorities use this money to perform administrative tasks.

There is a host of ways of saving tax under the Income Tax Act, 1961. In this article, we cover all the major tax deductions under the Income Tax Act:

1.Use up your Rs 1.5 lakh limit under Section 80C The below-mentioned investments/deductions are all subject that falls under the Rs 1.5 lakh criteria includes:

• Tax-Saver FDs
• PPF (Public Provident Fund)
• ELSS Funds
• NSC (National Saving Certificate)
• Life Insurance Premiums
• National Pension System (NPS)
• Home Loan Repayment
• Payment of tuition fees
• Employee Provident Fund
• Senior Citizens Savings Scheme
• Sukanya Samriddhi Yojana

2.Contribute to the National Pension System: The NPS allows you to invest under Section 80CCD(1B) up to Rs 50,000 is only available for contributions to the NPS.

3.Pay Health Insurance Premiums: A deduction up to Rs 25,000 is available for health insurance premiums under Section 80D.

4.Get a deduction on your rent: You can claim a tax deduction on your House Rent Allowance (HRA) if you get HRA.

5.Get a deduction on the interest on your home loan: If you have a home loan, the interest payable on it is tax-deductible under Section 24 of the Income Tax Act up to Rs 2 lakh per annum.

6.Keep some money in your savings account: This is probably the easiest deduction under the Income Tax Act that individuals can claim.

7.Contribute to charity: You can get a tax deduction on your charitable donations. For most of the donations to NGOs, the limit is 50% of the donated amount and up to 10% of your adjusted total income.

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