Understanding Deductions and Exemptions
in Your Income Tax Return
Filing your Income Tax Return (ITR) can be simplified by understanding the various deductions and exemptions available to you. These echanisms are designed to reduce your taxable income, thereby lowering your overall tax liability.
Deductions are specific expenses that can be subtracted from your total income. Key deductions include:
- ♦ Section 80C: Allows up to ₹1,50,000 per year for investments like Public Provident Fund (PPF), Employee Provident Fund (EPF), life nsurance premiums, and home loan principal repayments.
- ♦ Section 80D: Permits up to ₹25,000 for health insurance premiums for yourself and your family, and up to ₹50,000 for senior citizens.
- ♦ Section 80E: Covers the interest paid on education loans without any upper limit.
- ♦ Section 24(b): Offers up to ₹2,00,000 for interest on home loans for self-occupied roperties
Exemptions refer to income that is not taxable. Important exemptions include:
- ♦ House Rent Allowance (HRA): If you live in rented accommodation, HRA can be partially or fully exempt based on rent and salary structure.
- ♦ Leave Travel Allowance (LTA): Exempt for travel expenses within India.
- ♦ Agricultural Income: Fully exempt from tax.
To claim these benefits, proper documentation is essential. Keep receipts, investment certificates, and other relevant documents handy when filing your TR. Staying informed about current tax laws and consulting with a tax professional can help you maximize these benefits.
Understanding and utilizing the various deductions and exemptions available can significantly reduce your tax liability. It is essential to stay informed about the latest tax laws and consult with a tax professional if needed to ensure you are making the most of these benefits.
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