Discover 10 Surprising Tax Deductions: No Investments Required!
Paying income tax is a civic duty that all Indian citizens must fulfill, but the good news is that there are several income tax deductions available that can help reduce your tax liability. While most tax-saving investments require a considerable amount of money, there are also several deductions that can be availed without making any investments. In this article, we will discuss ten income tax deductions that can be availed in the Indian context without any investment.
- Standard Deduction: Standard deduction is a fixed amount that can be deducted from your taxable income, irrespective of your actual expenses. For the financial year 2021-22, the standard deduction is Rs. 50,000 for salaried individuals.
- Leave Travel Allowance (LTA): LTA is a component of your salary that can be claimed as a tax deduction when you go on vacation. This deduction is available for two journeys in a block of four years. The LTA amount that can be claimed is limited to the actual travel expenses incurred by the employee.
- Medical Allowance: Medical allowance is a component of your salary that can be claimed as a tax deduction. The maximum limit for claiming this deduction is Rs. 15,000 per annum.
- House Rent Allowance (HRA): HRA is a component of your salary that can be claimed as a tax deduction if you live in a rented accommodation. The HRA amount that can be claimed is limited to the actual rent paid by the employee, subject to certain conditions.
- Interest on Saving Bank Account: Interest earned on your savings bank account is eligible for tax deduction up to Rs. 10,000 per annum under Section 80TTA.
- National Pension Scheme (NPS): Contributions made to the National Pension Scheme are eligible for tax deduction under Section 80CCD(1B). An additional deduction of up to Rs. 50,000 per annum can be claimed under Section 80CCD(1B).
- Education Loan: Interest paid on an education loan taken for higher studies can be claimed as a tax deduction under Section 80E. There is no limit on the amount that can be claimed as a deduction.
- Health Insurance Premium: Premiums paid towards health insurance for self, spouse, and dependent children can be claimed as a tax deduction under Section 80D. The maximum limit for claiming this deduction is Rs. 25,000 per annum.
- Treatment of Specified Diseases: Expenses incurred towards the treatment of specified diseases can be claimed as a tax deduction under Section 80DDB. The maximum limit for claiming this deduction is Rs. 40,000 per annum for non-senior citizens and Rs. 1,00,000 for senior citizens.
- Donations: Donations made to certain charitable institutions and organizations can be claimed as a tax deduction under Section 80G. The amount of deduction varies based on the institution or organization to which the donation is made.
In conclusion, these ten income tax deductions can help reduce your tax liability without making any investments. By availing these deductions, you can effectively lower your taxable income and save money on income tax. It is essential to keep accurate records of all the deductions claimed and to submit them with your income tax return to avoid any penalties or legal issues. Additionally, it is advisable to consult a tax professional to ensure that you are availing all the deductions that you are eligible for and to stay up-to-date with any changes in tax laws. With proper planning and knowledge, you can effectively reduce your tax liability and achieve your financial goals.