Skip to content
logo
  • Cryptocurrency
  • Finance Tips
  • Investing
  • Make Money Online
  • Work From Home
  • Quiz
  • About Us
  • Privacy Policy

Different Types of Tax Deductions an Individual can avail

Posted on June 21, 2022April 8, 2022 By Avantika Ginodia No Comments on Different Types of Tax Deductions an Individual can avail
Finance Tips

What exactly are tax deductions?

A tax deduction is a claim made to lower your taxable income as a result of certain investments and costs undertaken by a taxpayer. As a result, an income tax deduction lowers your overall tax payment. It is a type of tax break that allows you to save money on your taxes. The amount of tax you can save, however, is determined by the sort of tax advantage you claim.

The Advantages of Tax Deductions

There are several advantages to a tax deduction, which include:

  • Tax deductions allow you to minimise your taxable income and save money. When you claim an income tax deduction, the amount of your income that is liable to tax is reduced.
  • A lower-taxed income allows you to save and invest in other areas.
  • Tax deduction decreases income due to the higher tax bands initially. As a result, you can claim a tax deduction for tuition, medical expenditures, and charitable contributions.
  • Income Tax Returns are required, and you cannot avoid paying tax entirely. However, with careful preparation, you may lower your taxable income.

In India, there are several types of tax deductions that an Individual can avail of.

Increase your deductions to minimise your taxable income. There are several investment alternatives and types of expenditure that might help you reduce your taxable income. The Indian Income Tax Act contains several provisions for this. A variety of tax-deductible alternatives are discussed below.

  • Public Provident Fund (PPF)

Contributing to your PPF account qualifies you for a tax deduction under Section 80C of the Indian Income Tax Act of 1961.

  • Premiums for Life Insurance

Section 80C of the Indian Income Tax Act, 1961 allows you to claim an income tax deduction for paying premiums on life insurance plans for yourself, your spouse, and your children. The amount received at insurance maturity is tax-free.

  • Certificate of National Savings (NSC)

The money invested in NSC is tax-deductible under Section 80C of the Indian Income Tax Act of 1961. National Saving Certificates are one of the most secure investment options in India. However, the interest collected on NSC is taxed. Because an NSC is a cumulative plan, interest is reinvested and taxed.

  • Fixed Deposits at Banks (FDs)

Under Section 80C of the Indian Income Tax Act, 1961, you can claim a tax deduction for investing in fixed deposits for a period of five years. Many Indian banks provide tax-free fixed deposits. However, the interest earned on FDs is taxed.

  • Senior Citizen Savings Plan (SCSS)

Senior citizens can earn a tax break by investing in a bank’s Senior Citizen Savings Scheme. Section 80C of the same statute allows for tax deductions for certain plans. The interest generated by these programmes is completely taxed.

  • Postal Service Time Deposit (POTD)

If you invest in a five-year POTD, you can claim a tax deduction under Section 80C. The interest, on the other hand, is completely taxed.

  • Unit-linked Insurance Contracts (ULIP)

If you invest in ULIPs for yourself, your spouse, and your children, you can claim tax breaks under Section 80C.

  • Home Loan EMIs

Section 80C of the same statute allows for income tax deductions on equated monthly instalments paid to repay the principal amount of your house loan.

  • ELSS & Mutual Funds

Investing in mutual funds and equity-linked savings schemes entitles you to tax breaks under Section 80C of the Indian Income Tax Act of 1961.

  • Stamp Duty and Registration Fees for a House

Under Section 80C of the Indian Income Tax Act of 1961, stamp duty and registration fees paid for transferring property are deductible from income tax.

Tags: Equity Finance Tips Investing Stocks

Post navigation

❮ Previous Post: Cambly Platform: Translation Jobs to Make Money Online
Next Post: EPFO Revised Rate: How it will affect Employees? ❯

You may also like

Finance Tips
Google Pay: Check Limit On Daily Remittance Across India
October 21, 2022
Finance Tips
Revolving vs. non-revolving debt
April 4, 2022
Finance Tips
6 Best Cashback Credit Cards in India: Review 2022
July 31, 2022
Tracking Expenses
Finance Tips
Everything you need to know about tracking expenses and budgeting
February 11, 2022

Leave a Reply Cancel reply

Your email address will not be published. Required fields are marked *

You may also like:

  • What is RBI’s Digital Rupee?
  • Top Money Management Apps
  • Loan Settlement and How Does It Affect Your Credit Score?
  • How to avoid the Debt Trap?
  • Essential Tips for Money Management
  • Buy Now Pay Later vs Personal Loan vs Credit Card
  • Google Pay: Check Limit On Daily Remittance Across India
  • Tax Saving Bank FD Vs Post Office TD: Where Should You Invest To Earn High Returns?
  • Exhausted Section 80C? Here Are Other Ways To Save More Taxes
  • LIC IPO 2022
  • What is FIRE- Financial Independence/Retire Early
  • Beginner’s Guide: Decentralised Finance (DeFi)
  • How To Choose The Best Term Life Insurance Policy?
  • How To Buy, Sell and Gift Digital Gold Through Airtel Payment Bank?
  • What Elon Musk would do with Twitter
  • What Can You Do in Decentraland’s Metaverse?
  • Investing lessons from Raamdeo Agrawal
  • How to Calculate Your DeFi, NFT, and Airdrop Taxes for 2022
  • How to Become Eligible for Token Airdrops
  • Investing tips from V. Vaidyanathan
  • Cryptocurrency
  • Finance Tips
  • Investing
  • Make Money Online
  • Work From Home
  • Quiz
  • About Us
  • Privacy Policy