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The ultimate tax saving guide for salaried employees

Health insurance is an excellent tax-saving instrument that can help you save taxes. Also, if you have a life insurance plan, you are eligible to enjoy tax-deductions. Having said that, tax-saving instruments aren't limited to insurance only.

Written by: India TV Business Desk, New Delhi [ Updated: January 11, 2018 13:18 IST ]
Picture for representational purpose.
Picture for representational purpose.
With the tax season around the corner, everyone (especially salaried employees) wants to avail tax benefits. Salaried persons represent a major section of the total taxpayers in our country. Their contribution to tax collection is substantial. The income of salaried employees is transparent and the Income Tax department has all the information regarding their earnings. 
 
If you are a salaried employee who wishes to save tax, the income tax rules may seem too complicated to comprehend. Income tax rules are dynamic, and individuals related to the non-finance industry struggle while interpreting them. There are times when taxpayers aren't able to avail the maximum tax benefits due to the lack of information. In this article, we will clear all the confusions so that you can understand the details of tax provision with ease and enjoy the eligible tax deductions.  
 
Health insurance is an excellent tax-saving instrument that can help you save taxes. Also, if you have a life insurance plan, you are eligible to enjoy tax-deductions. Having said that, tax-saving instruments aren't limited to insurance only. 
 
Income Tax Exemptions 
Here are different tax exemptions that you can avail under Section 80C. The highest tax benefit limit, as per Section 80C, is Rs 1, 50,000 only. 
 
Here are the different investment instruments that can avail you tax deductions as per section 80C. 
 
1. Public Provident Fund 
2. Children's Tuition Fees
3. Employees' Provident Fund  
4. National Savings Certificates 
5. Post office Tax Saving Deposits
6. Equity Linked Saving Schemes Mutual Funds
7. Post office Senior Citizen Savings Scheme 
8. National Pension System 
9. Home Loan's Principal Repayment
10. Life Insurance Premium 
11. Sukanya Samriddhi Account Deposit Scheme
 
Under Section 80D
Here are the tax exemptions offered under section 80D of Income Tax Act. 
 
1. For people under 60 years of age, a tax deduction of up to Rs 25,000 is offered for the premium paid towards health insurance. 
 
2. For people over 60 years (senior citizens) the offered limit is Rs 30,000. 
 
3. People over 80 years (very senior citizen) who don't have any health insurance cover are allowed a deduction of up to Rs 30,000 for incurred medical expenses.
 
For preventive medical checkups, a deduction is offered up to Rs 5,000 for each family. 
Note- These limits are included in the maximum individual limit of Rs. 60,000. 
 
Under Section 80DD
Those who have paid for the health treatment of your dependents, such as parents, children, or siblings having 40 per cent disablement, can claim a deduction to an extent of Rs, 75,000. 
 
In case of severe disablement, deduction of up to Rs 1,25,000 is permissible.
 
Under Section 80DDB
In order to claim tax benefits as per Section 80DDB, it's a must to obtain Doctor Certificate or health specialists' prescription.
 
Here are the tax exemptions under section 80DDB of Income Tax Act.
 
1. People below 60 years of age can claim up to Rs 40,000 for the medical treatment of pre-defined critical illnesses. This can be availed on dependents' behalf as well.
2. For senior citizens, the deduction limit is up to Rs 60,000.
3. For very senior citizens the limit is up to Rs 80,000.
  As per Section 80DDB, the ailments specified below are eligible for a claim. 
a. Neurological diseases that trigger disability and the disablement level has been certified to be 40 percent or above.
b. Dementia 
c. Dystonia Musculorum Deformans (DMD)
d. Ataxia
e. Motor Neuron Disease
f. Chorea
g. Hemiballismus
h.Parkinson's Disease
i. AIDS (Acquired Immuno-Deficiency Syndrome) 
j. Malignant Cancers
k. Hematological disorders
l. Chronic Renal failure
m. Hemophilia
n.Thalassaemia
o. Aphasia
 
Under Section 80EE
If you are a first time home buyer, you can claim tax deductions to an extent of Rs 50,000 against the payment made for your home loan under section 80EE. 
 
Under Section 80G
If you have made contributions to charitable institutions or particular relief funds, you can claim a deduction; but only if you have made the monetary contribution(s) as per Section 80G of the IT Act. 
 
Under Section 80GG
If you don't own a house and you don't get any House Rent Allowance from your employer, then you can claim tax deduction of up to Rs 60,000 as per Section 80GG. 
 
Under Section 80GGC
If you have made donations to any political party, tax benefits of up to Rs. 2000 can be claimed as per section 80GGC.
 
Under Section 80U
This is similar to Section 80DD. It offers tax benefits to the taxpayers who are physically/mentally challenged.
 
Under Section 80 TTA
It offers a deduction, from the total income of an individual taxpayer or Hindu Undivided Family (HUF), of up to Rs. 10,000 on the interest earned from savings deposits in a bank account even an account with a co-operative society or post office. As per Section 80TTA, the deduction isn't applicable on interest earned from fixed deposits.
 
Wrapping it up
Last minute tax planning leads to last-minute tax filing mistakes. If you buy health insurance/ life insurance policy with the sole-objective of enjoying tax benefits, you might end up falling for an inadequate insurance coverage. It's wise to plan your taxes in the initial stages of a financial year and on the basis of your personal financial goals to enjoy maximum tax benefits.

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