The higher the deduction you can apply on your income, the lesser will be your net taxable income and hence, the lower will be your income tax outgo. You can claim certain income tax deductions under different heads and therefore reduce your overall income tax liability. Most of these deductions are available for those taxpayers who choose the old income tax regime. The question now is how much tax you can save with and without investing your hard-earned money. ET Wealth Online explains the various income tax deductions you can avail to save your income tax for the financial year 2023-24.
Section 80C offers a tax deduction of up to Rs 1.5 lakh
Section 80C of the Income-tax Act, 1961 is one of the most widely used deductions that offers a deduction of up to Rs 1.5 lakh in each financial year. You have to invest in various financial products by March 31, 2024, to avail the benefits of Section 80C. Here is a list of financial instruments that qualify for Section 80C benefits as follows
1) Life insurance premium payment
2) Public Provident fund contribution
3) Tax-saving fixed deposit investment
4) Investment into post office time deposits with a lock-in period of five years
5) National Savings Certificate investments
6) Investments in Equity-Linked Savings Scheme (ELSS)
7) Investments in pension plans or deferred annuity plans
8) Sukanya Samriddhi Yojana investments
9) Contribution towards EPF
10) Tuition fees paid for up to two children in any university, college, school or other educational institution situated within India
This tax deduction benefit is available to all, irrespective of their income levels. Do note that the Section 80C deduction is available only under the old income tax regime.
NPS contributions can offer an additional deduction of up to Rs 50,000
If you invest in the National Pension System (NPS), you can claim an additional deduction of Rs 50,000 under Section 80CCD (1B) of the Income-tax Act, 1961. It is over and above the overall limit of Rs 1.5 lakh under Section 80C.
So, if you have exhausted the limit of Rs 1.5 lakh under Section 80C by investing in other financial instruments that are eligible for deduction under the mentioned section, you can contribute to NPS and claim the additional deduction of Rs 50,000 under Section 80CCD(1B).
Tax-deductions a salaried taxpayer can claim in FY2023-24 (without home and HRA)
|How to avail
|For contributions towards PPF, LIC, Sukanya Samriddhi Scheme, ELSS, NPS and other financial products
|Rs 1.5 lakh
|Health insurance premium payments
|Up to Rs 25,000 for self and family (including spouse and child)
|Up to Rs 50,000 for self, family and parents
|Up to Rs 75,000 for self, family and senior citizen parents
|Section 80CCD 1(B)
|Contributions towards NPS
|Up to Rs 50,000 for self, family and parents
|Savings account interest
|Up to Rs 10,000
|Section 16(ia) (Standard deduction)
|No investment is required
Section 80D can help you claim a tax deduction of up to Rs 75,000
In today’s day and age, it is a must to have medical insurance. If you have bought medical insurance policies for yourself, your family, or your elderly parents, you are eligible to claim a deduction against them under Section 80D of the Income-tax Act, 1961. The Section 80D deduction is available only under the old income tax regime.
If you are below the age of 60 years and have paid a premium of health insurance for yourself, your spouse, and dependent children, you can claim a deduction of Rs 25,000 under Section 80D.
If you pay premiums of the health insurance policy for your parents who are below the age of 60, then you can claim an additional tax deduction of Rs 25,000. If your parents are senior citizens, then you can claim a tax deduction of Rs 50,000 for your paying the premium of their health insurance policies. So, those taxpayers who are below the age of 60 years and pay health insurance premiums for senior citizen parents, can claim a maximum tax deduction of up to Rs 75,000 under Section 80D.
Section 80A offers a tax deduction of up to Rs 10,000
If you have a savings account, you can claim a tax deduction of up to Rs 10,000 from the net total interest earned from the account. The savings account should be held with a bank, co-operative or post office. If you have multiple savings accounts in different banks, they will be clubbed together and treated as a single account.
This income tax deduction is available only under the old tax regime. Do keep in mind that interest earned from other sources such as fixed deposits or recurring deposits, will not qualify for deductions under Section 80TTA.
Standard deduction: Claim a flat deduction of Rs 50,000
The standard deduction is a flat deduction salaried individuals can claim against taxable salary income without requiring any proof of actual expense incurred. Salaried taxpayers can claim a standard deduction of Rs 50,000 in a financial year without any investments. This deduction is available under both old and new income tax regimes.