

However, the maximum allowed deduction for self & family is ₹25,000 per year. Premiums for health insurance for self, spouse & dependent children (family) and parents can be claimed as a deduction. Section 80D: Under this section, the premium paid towards a health insurance policy can be claimed as a tax deduction.This limit is over and above the limit prescribed under 80CCD(1). Additional benefit of up to ₹50,000/- has been granted under section 80CCD(1B), post a new amendment in union budget of 2015 - 16.įurthermore, sub section 80CCD(2) allows employer's contribution to Pension Schemes subject to a maximum of 10% of basic salary + dearness allowance, to be claimed as a tax benefit.One can claim a maximum deduction up to 10% of basic salary + dearness allowance.Under the provisions of section 80CCD(1): This section has been further divided into two sub sections: 80CCD(1) & 80CCD(2). Section 80 CCD: This section encourages investments in two pension schemes - Atal Pension Yojna (APY) & National Pension Scheme (NPS).Maximum available deduction unders section 80C is ₹1,50,000/. Section 80C: Under this section, all investments made towards ELSS Mutual Funds, Tax saving Fixed Deposits, Term Life Insurance Premium, Pension Schemes, Provident Fund etc.Here are the sections under which one can claim tax deduction: There are certain investments that help you bring down tax - these include life insurance plans, health insurance plans, retirement schemes or even NSC. One can claim a tax deduction on the money he/she spends on medical expenses or on charity. Tax deductions under different sections of the Income Tax ActĪs the name suggests, tax deductions help to save tax on your total income. Otherwise, you can continue paying your annual taxes through the old system. As a taxpayer, you can migrate to the new system if it offers you better advantages. The Finance Minister also announced that the new tax system is not compulsory. But you should note that there would be no exemptions or deductions under the new system. Under the new system, there would be more tax slabs and lower tax rates. However, in the 2020 Budget announcement, the Indian Finance Minister Nirmala Sitharaman announced a new tax regime for investors. There were multiple exemptions and deductions available under this regime. Under this system, tax rates were applicable to people based on their gross income and age. Until FY 2019-20, there was only one income tax regime in India. Income from other sources: Any income that can't be bracketed under the other four heads of income will come under the head income from other sources.Īll above components put together constitute your Gross Income.

