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Four key deductions that taxpayers should not overlook while filing their Income Tax Returns (ITR) to reduce their total tax outgo:
- Section 80C Deductions: This section allows taxpayers to claim deductions up to ₹1.5 lakh on various investments and expenses. Common eligible investments include Public Provident Fund (PPF), Employee Provident Fund (EPF), National Savings Certificates (NSC), and life insurance premiums. Additionally, expenses such as children’s tuition fees and principal repayment on home loans also qualify under this section.
- Section 80D Deductions: Under this section, taxpayers can claim deductions for health insurance premiums paid for themselves, their family, and their parents. The maximum deduction available is ₹25,000 for self, spouse, and children, and an additional ₹25,000 for parents. If the parents are senior citizens, the deduction limit increases to ₹50,000.
- Section 24(b) Deductions: This section pertains to the interest paid on home loans. Taxpayers can claim a deduction of up to ₹2 lakh on the interest paid on home loans for a self-occupied property. For properties that are rented out, there is no upper limit on the interest deduction, but the overall loss from house property that can be set off against other income is capped at ₹2 lakh.
- Section 80E Deductions: This section allows for deductions on the interest paid on education loans. There is no upper limit on the amount that can be claimed, but the deduction is available for a maximum of eight years or until the interest is fully repaid, whichever is earlier. This deduction is applicable for loans taken for higher education for oneself, spouse, children, or a student for whom the taxpayer is a legal guardian.
By leveraging these deductions, taxpayers can significantly reduce their taxable income and, consequently, their tax liability. It is crucial to maintain proper documentation and ensure that all eligible deductions are claimed to maximize tax savings.
