Income Tax Exemptions FY 2017-18
According to the Income Tax Act, 1961, there are various exemptions and deductions for taxpayers in India. These exemptions, often revised during one or the other financial year (FY), reduce the tax liability of taxpayers, thereby helping them save a significant amount of money.
Following is a list of income tax exemptions for FY 2017-18.
1.Exemptions under Section 80C
You may avail of the numerous deductions under Section 80C, and enjoy a maximum exemption of up to INR 1.5 lakh. Investments made in various financial instruments fall under this category, which include the National Savings Certificates (NSC), Equity-Linked Saving Scheme (ELSS), Public Provident Fund (PPF), Employeesâ€™ Provident Fund (EPF), Sukanya Samriddhi Account Deposit Scheme, Senior Citizen Savings Scheme (SCSS), and National Pension System (NPS), among others. Other deductions allowed under Section 80C include tuition fees for children, stamp duty charges paid while purchasing a new home, and repayment of the principal amount of a home loan.
2.Deductions under Section 80CCC
Under this section, you may enjoy exemption on contributions made towards annuity plans purchased through any life insurance companies.
3.Exemptions under Section 80DD
In case any of your dependents suffer from 40% disability, you may claim up to INR 75,000 on medical expenses incurred by you. Such dependents may include your spouse, parents, siblings, or children. You may avail of a higher limit of INR 1.25 lakh in case your dependents suffer from 80% disability.
Individuals may claim deductions up to INR 40,000 on expenses incurred towards a treatment of specified critical illnesses. You may also claim this deduction in case any of your dependents suffer from a critical illness. Senior citizens may avail of a high exemption limit of up to INR 60,000, while super senior citizens (those who are 80 years and above) may enjoy deductions of up to INR 80,000 under this section.
Medical insurance is a popular option among taxpayers as it reduces tax liability up to INR 25,000. Individuals may claim deductions on the premium paid towards the health policy of themselves, spouse, and children. Senior citizens may enjoy a higher limit of INR 30,000.
6.Rebate available under Section 87A
Section 87A which offered INR 5,000 rebate to those earning up to INR 5 lakh per annum is now reduced to INR 2,500 for those earning between INR 2.5 to 3 lakh annually. This indicates that the tax liability for individuals earning up to INR 3 lakh would be zero. Besides, those in the income bracket of INR 3-3.5 lakh would face a lower tax burden of INR 2,500.
Besides the aforementioned tax exemptions, there are several others available under various sections of the Income Tax Act. Section 24 allows deduction on interest paid towards your home loan, while Section 80E allows interest on an education loan to be claimed as a tax benefit. As a diligent taxpayer, you should not only have an in-depth knowledge of these deductions, but also of the income tax slabs A.Y. 2020-21.
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