This article is all about how to save Income tax in India and describes means and ways mentioned under Income tax Act to reduce Income tax in India. Proper tax planning during a financial year can help in reducing Income tax while filing return. Various options of Income tax rebate are mentioned under different Sections of Income tax Act. Government launches various tax saving schemes and investment options which by way of saving & investments allow direct deduction on Income for calculation of Income tax.
We have tried to consolidate all the Income tax rebate options and tax saving schemes under different Sections from 80C to 80U in a more simplified way. An individual can maximise investment in tax saving schemes to get more deductions from their gross total Income and save good amount of Income tax.
Table.1 Investment Limits and Corresponding Sections for Tax Saving in Year 2016-2017
At first refer to the Table-1 above which list out all the Income tax saving options for financial year 2016-2017 (AY 2017-2018) in priority order. The priority is set on the basis of investment limits or maximum deduction allowed under each Section and on the most preferred option by the people. Another Table-1a given just below it includes special cases of physical disability, special diseases and income from royalty. The investment or deduction limits mentioned in these tables are for normal age group people,whereas for senior and super senior citizens of country the deduction are more. The limits for senior citizens are mentioned in detail in Table-2.
Different Sections (80C to 80U) specially for Income tax rebate are listed in drop down Table-2 click below. Complete information are given on each Section tab. Click on the Sections tab to find a short descriptions, deduction limits and list of tax saving schemes under the Sections of Income tax Act.
Actual tax saving will depend upon your income and the tax slab it belongs.
Refer Income Tax slab for year 2016-2017.
Table.3 Sections of Income Tax Act 1961 with details of tax saving schemes
- 80C Investment Limits
- Tax Saving Schemes u/s 80C
• Employee’s share of PF contribution (Provident Fund)
• NSCs (National Saving Certificates)
• Life Insurance Premium payment
• Children’s Tuition Fee
• Principal Repayment of home loan
• Investment in SukanyaSamridhi Account. Maximum 1.5 lakhs can be deposited in one financial year.
• ULIPS (Unit Linked Insurance Policy Scheme)
• ELSS (Equity Linked Saving Schemes). Mutual fund under ELSS category, where 3 years locking period is mandatory.
• Sum paid to purchase deferred annuity
• Five year deposit scheme
• Senior Citizens savings scheme
• Subscription to notified securities/notified deposits scheme
• Contribution to notified Pension Fund set up by Mutual Fund or UTI.
• Subscription to Home Loan Account Scheme of the National Housing Bank
• Subscription to deposit scheme of a public sector or company engaged in providing housing finance
• Contribution to notified annuity Plan of LIC
• Subscription to equity shares/ debentures of an approved eligible issue
• Subscription to notified bonds of NABARD
- 80CCC Investment Limits
- Tax Saving Schemes u/s 80CCC
- 80CCG Investment limits
- Tax Saving options u/s 80CCG
- Rs 25,000
- 50% of investment
which ever is lower.
- Equity shares of top 100 listed companies declared in “BSE-100″ or ” CNX-100″.
- Equity shares of (PSEs) Public Sector Enterprises which are categorized as Maharatna, Navratna or Miniratna by the Central Government
- Units of Exchange Traded Funds (ETFs) or Mutual Fund (MF) schemes which have securities eligible RGESS as underlying, provided they are listed and traded on a stock exchange and settled through a depository mechanism.
- Follow on Public Offer (FPOs) of eligible securities.
- New Fund Offers (NFOs) of eligible ETF’s and mutual funds.
- Initial Public Offer (IPO) of a Public Sector Undertaking wherein the government shareholding is at least 51%. which is scheduled for getting listed in the relevant previous year and whose annual turnover is not less than four thousand crore rupees during each of the preceding three years
- 80D Investment limits
- Tax Saving options u/s 80D
For self, spouse and children
- Maximum limit is 25,000 per year for health Insurance of self, spouse and children
- Maximum limit is 30,000 per year for health Insurance of self, if above 60 years of age
For Parents of Assesse
- Maximum limit is 25,000 per year for health Insurance of Parents below 60 years of age.
- Maximum limit is 30,000 per year for health Insurance of Parents above 60 years of age
- Premium for health Insurance policy of self and family.
- Premium for health Insurance policy of parents.
- Expenses on preventive health check-up (up to 5000).
- 80DD Investment limits
- Tax Saving options u/s 80DD
- Expenditure incurred on medical treatment, (including nursing), training and rehabilitation of handicapped dependent.
- Payment or deposit to specified scheme of LIC or UTI or any other insurer for maintenance of dependent handicapped.
- 80DDB Deduction limits
- Specified Diseases u/s 80DDB
- 60,000 for senior citizens
- 80,000 for super senior citizens (above 80 years)
- Neurological Diseases where the disability level has been certified to be of 40% and above,—
- Dystonia Musculorum Deformans
- Motor Neuron Disease
- Parkinsons Disease
- Malignant Cancers
- Full Blown Acquired Immuno-Deficiency Syndrome (AIDS) ;
- Chronic Renal failure
- Hematological disorders
- 80E Investment limits
- Tax Saving options
- 80G deduction limits
- Donation options u/s 80G
- National Defence Fund set up by the Central Government
- Prime Minister’s National Relief Fund
- National Foundation for Communal Harmony
- An approved university/educational institution of National eminence
- Zila Saksharta Samiti constituted in any district under the chairmanship of the Collector of that district
- Fund set up by a State Government for the medical relief to the poor
- National Illness Assistance Fund
- National Blood Transfusion Council or to any State Blood Transfusion Council
- National Trust for Welfare of Persons with Autism, Cerebral Palsy, Mental Retardation and Multiple Disabilities
- National Sports Fund
- National Cultural Fund
- Fund for Technology Development and Application
- National Children’s Fund
- Chief Minister’s Relief Fund or Lieutenant Governor’s Relief Fund with respect to any State or Union Territory
- The Army Central Welfare Fund or the Indian Naval Benevolent Fund or the Air Force Central Welfare Fund, Andhra Pradesh Chief Minister’s Cyclone Relief Fund, 1996
- The Maharashtra Chief Minister’s Relief Fund during October 1, 1993 and October 6,1993
- Chief Minister’s Earthquake Relief Fund, Maharashtra
- Any fund set up by the State Government of Gujarat exclusively for providing relief to the victims of earthquake in Gujarat
- Any trust, institution or fund to which Section 80G(5C) applies for providing relief to the victims of earthquake in Gujarat (contribution made during January 26, 2001 and September 30, 2001) or
- Prime Minister’s Armenia Earthquake Relief Fund
- Africa (Public Contributions — India) Fund
- Swachh Bharat Kosh (applicable from financial year 2014-15)
- Clean Ganga Fund (applicable from financial year 2014-15)
- National Fund for Control of Drug Abuse (applicable from financial year 2015-16)
Donations with 50% deduction without any qualifying limit.
- Jawaharlal Nehru Memorial Fund
- Prime Minister’s Drought Relief Fund
- Indira Gandhi Memorial Trust
- The Rajiv Gandhi Foundation
Donations to the following are eligible for 100% deduction subject to 10% of adjusted gross total income
- Government or any approved local authority, institution or association to be utilised for the purpose of promoting family planning
- Donation by a Company to the Indian Olympic Association or to any other notified association or institution established in India for the development of infrastructure for sports and games in India or the sponsorship of sports and games in India.
Donations to the following are eligible for 50% deduction subject to 10% of adjusted gross total income
- Any other fund or any institution which satisfies conditions mentioned in Section 80G(5)
- Government or any local authority to be utilised for any charitable purpose other than the purpose of promoting family planning
- Any authority constituted in India for the purpose of dealing with and satisfying the need for housing accommodation or for the purpose of planning, development or improvement of cities, towns, villages or both
- Any corporation referred in Section 10(26BB) for promoting interest of minority community
- For repairs or renovation of any notified temple, mosque, gurudwara, church or other place.
- 80GG Deduction limits
- Tax Saving options u/s 80GG
- House Rent paid minus 10% of total income
- Rs. 5000/- per month (for financial year 2016-17, previously it was 2000)
- 25% of total income for the year
- 80GGB deduction limits
- Donation u/s 80GGB
- 80GGC deduction limits
- Donation u/s 80GGC
- 80RRB deduction limits
- Contribution options
- 80RRB deduction limits
- Contribution options
- 80U deduction limits
- Tax saving options u/s 80U
- Low Vision:
- Hearing Impairment:
- Leprosy Cured:
- Mental Retardation:
- Loco Motor Disability:
- Mental Illness:
On the basis of above two Table one can find out the different tax saving options available as per prevailing Income tax Act and what will be his eligibility with each options. He can calculate the total saving on income tax that he can do by using the those options. Keeping all these options in mind you can do the proper tax planning every Financial year.