In India, income tax is a tax imposed by the government on the income earned by individuals and organizations. The income tax is calculated based on the income earned in a financial year, which runs from April 1st to March 31st. The income tax rate varies depending on the income bracket and can range from 5% to 30%.
There are several types of deductions available in India to reduce the overall tax liability. These include:
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Section 80C: This deduction is available for investments made in specified savings schemes such as Public Provident Fund, National Savings Certificate, and Equity-Linked Saving Scheme. The maximum limit for this deduction is INR 1.5 lakhs.
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Section 80D: This deduction is available for expenses incurred on medical insurance for self, spouse, and dependent children. The maximum limit for this deduction is INR 25,000 for self and family and an additional INR 50,000 for senior citizens.
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Section 80E: This deduction is available for the interest paid on education loans taken for higher education.
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Section 80GG: This deduction is available for individuals who do not receive house rent allowance from their employer and pay rent for their accommodation. The maximum limit for this deduction is INR 60,000 per annum.
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Section 80TTA: This deduction is available for interest earned on savings bank account. The maximum limit for this deduction is INR 10,000 per annum
CONCLUSION: By taking advantage of these deductions, taxpayers can significantly reduce their overall tax liability. It is important to consult with a tax professional or use the services of a tax preparation software to ensure that you are taking advantage of all available deductions and credits.
