There are various deductions a taxpayer can claim from his total income which would bring down his taxable income and thereby reduce his tax outgo. Discussed in this article are some of the important deductions under Section 80C a taxpayer is eligible to claim.
Under section 80C, a deduction of Rs 1,50,000 can be claimed from your total income. In simple terms, you can reduce up to Rs 1,50,000 from your total taxable income through section 80C. This deduction is allowed to an Individual or a HUF. A maximum of Rs 1, 50,000 can be claimed for the FY 2018-19, 2017-18 and FY 2016-17 each.
If you have paid excess taxes, but have invested in LIC, PPF, Mediclaim, incurred towards tuition fees etc. And have missed claiming a deduction of the same under 80C, you can file your Income Tax Return, claim these deductions and get a refund of excess taxes paid
Deduction under this section is available to an individual or a HUF. A deduction of Rs. 25,000 can be claimed for insurance of self, spouse and dependent children. An additional deduction for insurance of parents is available to the extent of Rs 25,000 if they are less than 60 years of age or Rs 50,000 (has been increased in Budget 2018 from Rs 30,000) if parents are more than 60 years old.
In case, a taxpayers age and parents age is 60 years or above, the maximum deduction available under this section is to the extent of Rs. 100,000.
Example: Rohan’s age is 65 and his father’s age is 90. In this case the maximum deduction Rohan can claim under section 80D is Rs. 100,000.
From FY 2015-16 a cumulative additional deduction of Rs. 5,000 is allowed for preventive health check up to individuals.
This deduction is available to a resident individual or a HUF and is available on:
1. Expenditure incurred on medical treatment (including nursing), training and rehabilitation of handicapped dependent relative
2. Payment or deposit to specified scheme for maintenance of dependent handicapped relative.
Where disability is 40% or more but less than 80% – fixed deduction of Rs 75,000.
Where there is severe disability (disability is 80% or more) – fixed deduction of Rs 1,25,000.
To claim this deduction a certificate of disability is required from prescribed medical authority.
From FY 2015-16 – The deduction limit of Rs 50,000 has been raised to Rs 75,000 and Rs 1,00,000 has been raised to Rs 1,25,000.
Section 10(10D) of Income Tax exempts any income received from an Insurance Policy from Income Tax. This benefits policies such as Endowment Plans, Whole-life Plans and Unit Linked Plans, all of whose returns and bonuses become tax-free.
Eligibility for 10(10D) exemption
Any amount you get from a life insurance product- be it ULIP, traditional policy or term plan does not form part of your income that is taxable.
Maximum deduction limit under 10(10D)
There is no cap on the extent of tax free income from life insurance proceeds. Any amount received is exempted from income tax as long as conditions above are fulfilled.
Fin total comment
Surrender value is also exempt from income tax as per section 10(10D) provided conditions above are not violated.