Tax Planning

The Indian Income Tax Act allows for certain deductions which can be claimed to save tax at the time of filing of Income Tax Return by all classes of Taxpayers (i.e. Salaried Individuals, Professionals, businessmen etc). These deductions help in saving tax and are only available if the taxpayer has done proper tax planning during the year.

If an Individual has done proper Tax Planning to save tax, such deductions would be subtracted from the gross total income and income tax would be levied on the balance income as per the income tax slabs in force.

1. Save Tax Under Section 80C, 80CCC, 80CCD

The Government allows deductions if investments are made under Section 80C, 80CCC, and 80CCD, with a maximum combined deduction of Rs. 1,50,000.

PPF Accounts
5 Year Tax Saving Fixed Deposit
Equity Oriented Mutual Fund
Pension Plans
Contribution to Employee Provident Fund
Life Insurance Policy
National Savings Certificate (NSC)

Additionally, an extra deduction of Rs. 50,000 under Section 80CCD is available for investment in the National Pension Scheme (NPS).

2. Save Tax Under Section 80D, 80DD, 80DDB

Deductions are available for medical insurance and health-related expenses:

Section 80D: Medical Insurance Premium of Self, Spouse, or Children
Section 80DDB: Treatment of Specified Diseases

3. Tax Planning Through Home Loan

If you have taken a home loan, you can claim deductions for:

Principal repayment under Section 80C
Interest paid on home loan under Section 24 (Up to Rs. 2,00,000 or unlimited in certain cases)

4. Save Tax Through Education Loan (Section 80E)

Interest paid on an education loan for higher education of self, spouse, children, or a legally dependent student qualifies for deduction under Section 80E.

5. Tax Planning Under Section 80CCG: RGESS

A taxpayer with an annual income below Rs. 12 lakh can claim an additional deduction under the Rajiv Gandhi Equity Saving Scheme (RGESS), applicable only to first-time investors in specified shares or mutual funds.

6. Tax Planning for Long-Term Capital Gains on Property Sales

Long-term capital gains on the sale of real estate can be exempt from tax if reinvested in specified instruments. Assets held for over 2 years qualify as long-term capital assets.

7. Income Tax Deductions for Donations (Section 80G)

Donations made to approved charitable institutions or national relief funds qualify for deductions:

Some donations qualify for a 100% deduction.
Others qualify for a 50% deduction.
Donations made in kind are not eligible.
For cash donations, only up to Rs. 10,000 is deductible, while higher amounts must be made via cheque or online payment.