How to Save More on Taxes: A Guide to Claiming Deductions Under Various Sections
Section 80C: If you invest in certain things like PPF, ELSS, NSC, life insurance, etc., you can reduce your taxable income by up to Rs. 1.5 lakhs.
Section 80D: If you pay for health insurance for yourself, your spouse, kids, or parents, you can reduce your taxable income. The maximum amount you can reduce depends on the age and health of the people you’re insuring.
Section 80E: If you, your spouse, or your kids took an education loan, you can reduce your taxable income by the interest you pay on the loan. You can do this for up to 8 years or until you finish paying the interest, whichever comes first.
Section 80G: This rule lets you save on taxes when you donate money to certain funds or charities. The amount you can deduct from your taxable income varies from 50% to 100%, depending on the eligibility of the charity or fund.
Section 80TTA: If you earn interest from a savings account, you can reduce your taxable income by up to Rs. 10,000.
Section 80TTB: This rule is for senior citizens (those 60 years or older). If you earn interest from deposits like fixed deposits, you can reduce your taxable income by up to Rs. 50,000. This is only for senior citizens.
Section 80CCC: This rule helps you save money on taxes. If you pay money towards pension funds or plans offered by insurance companies, you can reduce your taxable income. The most you can reduce is Rs. 1.5 lakhs, and this is part of the overall limit of Section 80CCE.
Section 80CCD: This rule is about saving taxes too. If you contribute to the National Pension System (NPS) or the Atal Pension Yojana (APY), you can reduce your taxable income. There are different parts to this rule:
- Section 80CCD(1): This part applies to everyone who puts money into NPS or APY, whether they work for someone else or are self-employed. The most you can reduce is 10% of your salary (if you’re an employee) or 20% of your total income (if you’re self-employed), up to Rs. 1.5 lakhs. This is also part of the overall limit of Section 80CCE.
- Section 80CCD(1B): This part lets you reduce an extra Rs. 50,000 if you put money into NPS or APY. This is in addition to the limit in Section 80CCE12.
- Section 80CCD(2): If your employer adds money to your NPS, this part applies. The most you can reduce is 10% of your salary (for non-government employees) or 14% of your salary (for central government employees). This is separate from the limit in Section 80CCE.
Section 80GG: This rule is for reducing taxes if you pay rent for a place to live and don’t get house rent allowance (HRA) from your employer or own a home. You can reduce the least of these three:
- Rs. 5,000 per month
- 25% of your total income
- Rent paid minus 10% of your total income12
Section 80U: If you have a physical or mental disability and live in India, this rule helps you reduce taxes. The amount you can reduce depends on how severe your disability is, as certified by a medical authority. Here are the amounts:
- Rs. 75,000 for a normal disability (40% or more but less than 80%)
- Rs. 1.25 lakhs for a severe disability (80% or more).
Section 80GGC: If you donate money to any political party or an electoral trust, you can reduce your taxable income. But this is only for individuals, not for any other type of taxpayer. There’s no limit on how much you can reduce, but the donation should not be in cash.
Section 80DDB: If you spend money on medical treatment for specific diseases for yourself or someone you take care of, you can reduce your taxable income. The amount you can reduce depends on the age of the person getting the treatment:
- Rs. 40,000 for someone below 60 years old
- Rs. 1 lakh for a senior citizen (60 years or above) or a super senior citizen (80 years or above).
Section 80EE: This rule helps you save on taxes if you have a home loan for your first house. You can reduce up to Rs. 50,000 per year on the interest you pay, in addition to the Rs. 2 lakh limit under Section 24. But, there are conditions:
- The loan is Rs. 35 lakh or less
- The house property value is Rs. 50 lakh or less
- The loan is approved by a financial institution between 01.04.2016 to 31.03.2017
- You don’t own any other house property when the loan is approved.
Section 80DD: This rule lets you reduce taxes if you spend money on taking care of someone with a disability. The amount you can reduce depends on how serious the disability is, as certified by a medical authority:
- Rs. 75,000 for a normal disability (40% or more but less than 80%)
- Rs. 1.25 lakhs for a severe disability (80% or more).
Section 80EEA: This rule helps you save on taxes if you have a home loan for an affordable house. You can reduce up to Rs. 1.5 lakh per year on the interest you pay, over and above the Rs. 2 lakh limit under Section 24. But, there are conditions:
- The loan is Rs. 45 lakh or less
- The stamp duty value of the house is Rs. 45 lakh or less
- The loan is approved by a financial institution between 01.04.2019 to 31.03.2022
- You don’t own any other house property when the loan is approved.
