Tax Savers and Various Sections & Ceilings for Tax Saving – FY 2017-18( AY 2018-19)
Timely payment of tax is an obligation on the tax payer. Government of India provides various tax saving investment options to tax payers. The multiple investment/deduction options provided for tax saving are known as tax savers. They reduce tax incidence and simultaneously take care of wealth building, estate planning and hospitalization expenses. Tax planning is a part of financial planning. The major tax savers are covered in this article.
Tax savers cover a wide ambit. Provident Fund, Public Provident Fund(PPF), National Savings Deposits (NSC), Home loans, Pension funds, National Pension System, Life Insurance Policy, Health Insurance Policy, Equity Linked Saving Scheme (ELSS) etc are some of the major tax savers in India.
Planning for tax saving minimizes actual outflow of taxes. There are short term and long term tax savers. Many wait till the year ends and then hastily make investment decisions. To take full advantages of the various benefits associated with tax savers, tax planning has to be a year-round exercise.
What are the major tax savers? Which are the related sections?
Major sections that offer tax saving avenues and their ceilings are mentioned below. This applies for the Financial Year 2016-2017 (Assessment Year 2017-2018).
|
Section |
More About The Section |
Maximum Permissible limit |
Eligible claimants |
|
|
INVESTMENTS
|
|
|
|
Sec 80C |
Tax Saving Investments in multiple instruments |
Rs. 1,50,000 (aggregate of 80C,80CCC and 80CCD) |
Individuals/HUF |
|
Sec 80CC |
Investment in annuity plan |
Rs.1.50,000 (aggregate of 80C,80CCC and 80CCD) |
Individuals |
|
Sec 80CCD |
Contribution to National Pension Scheme(NPS) from salary |
Rs.1.50,000 (aggregate of 80C,80CCC and 80CCD) |
Individuals |
|
Sec 80CCD(1B) |
Voluntary contribution to NPS |
Rs. 50,000 |
Individuals |
|
Sec 80CCF |
Notified Long Term Infrastructure Bonds |
Rs. 20,000 |
Individuals/HUF |
|
Sec 80CCG |
Rajiv Gandhi Equity Saving Scheme |
Rs. 25,000 |
Specified Resident Individuals |
|
|
TOWARDS HEALTH INSURANCE & MEDICAL TREATMENTS
|
|
|
|
Sec 80D |
Medical Insurance Premium paid for self, spouse, dependent children & parents |
Rs. 25,000 self, spouse and dependent children + Rs. 25,000 parents (Rs. 25,000 becomes Rs. 30,000 in both cases for senior citizens) |
Individual /HUF |
|
Sec 80DD |
Medical Treatment of Handicapped Dependents-For spouse, children, siblings and dependent parents |
Rs.75,000 ( Rs.1,25,000 for severe disabilities)
|
Resident Individual/HUF |
|
Sec 80DDB |
Medical Treatment of Specified Diseases for self, spouse, children, siblings and dependent parents |
Rs. 40,000 (Rs. 60,000 for Senior Citizens) |
Resident Individual/HUF
|
|
Sec 80 U |
Tax payer with disabilities |
Rs.75,000 Rs. 1,25,000 for severe disability |
Resident Individual |
|
|
INTEREST PAYAMENTS ON LOANS
|
|
|
|
Sec 80E |
Interest on Education Loan from a recognized financial institution/approved charitable institution for full time course for self, spouse or child |
Entirely exempt for eligible loans – (The amount of interest paid during initial year and 7 immediately succeeding assessment years. ) |
Individual |
|
Sec 24B |
Interest on Home Loan & Home improvement loans |
Upto Rs. 2,00,000 for first home; Upto Rs.50,000 home improvement loan |
Individual |
|
Sec 80 EE |
Interest on Housing Loan up to Rs. 35 lakhs by taxpayer from any financial institution, for the purpose of acquisition of a residential hous whose value doesn't exceed Rs. 50 lakhs. Should not have another house in his name at the time of availing loan.
Donations
|
Additional Upto Rs. 50,000 Loan sanctioned during the FY 2016-17, |
Individual |
|
Sec 80G |
Donations to prescribed funds |
100% of donation to specified funds and institutions OR 50% of donation to specified funds and institutions OR 50% of deduction subject to 10% of adjusted gross income to certain other specified funds/institutions.
|
Individual/firm/company/ other person |
|
Sec 80GGA |
Donations for scientific research or rural development |
100% of donation to specified funds and institutions
|
Individuals |
|
Sec 80GGC |
Donation to political parties |
100% of donation to registered political parties |
Non-corporate tax payers.
|
|
|
OTHER MAJOR ITEMS
|
|
|
|
Sec 80GG |
Rent Payment towards own accommodation- Those who do not get any HRA |
Rs. 2000 p.m |
Individual |
|
Sec 80TTA |
Interest income on Savings Bank account |
Upto Rs. 10,000 |
Individual/HUF |
