Tax Planning for Individuals under Income Tax

Individuals and members of the Hindu Undivided Family are eligible for advantages under deductions under Sections 80C and 80CC of the Income Tax Act, 1961. If the policy is taken out in the individual’s name, the name of his/her spouse, or the names of his/her children, the premiums paid during the policy duration are eligible for tax savings under this provision.

Only premium amounts whose values do not exceed 10% of the total amount covered in the policy issued on or after April 1, 2012, are eligible for this sort of deduction. The deduction will be permitted for premium payments of up to 20% of the aggregate insured amount for policies issued before March 31, 2012.

These advantages are available on investments up to 1, 50,000 in life insurance products in accordance with Section 80C of the Income Tax Act, 1961.

• Under Section 80CCC: Only pension plans are eligible for deductions. For up to one lakh fifty thousand in premiums paid to the plan, deductions are permitted.
• Under Section 80D: Along with policies purchased in the names of a person, his or her spouse, and any dependent children, deductions are available for individuals or a member of a Hindu Undivided Family. The highest amount that may be deducted is 25000 rupees. However, if the policy is in the name of the parents, an extra deduction advantage of 25,000 rupees can be obtained.
• Under Section 80DD: The annual deduction for premiums paid on insurance taken out in the name of a dependant who is disabled is INR 75,000 (disability is greater than 40% but less than 80%). For persons who are severely handicapped (disability is greater than 80%), a deduction of INR 1, 25,000 is permitted. This deduction has a set amount that is made regardless of actual spending.
• Under Section 10 (10D): Taxes are not applied to benefits received under a life insurance policy. Such benefits also include any money received from the insurance under Section 80DD (3), the Key Man Insurance Policy, or in bonus form.
• Under Section 80C: Through tax-saving investment programs, Section 80C allows taxpayers to save up to INR 1, 50,000 per year in taxes. The best of these is the equity-linked savings scheme (ELSS), which provides a dual advantage of tax reduction and financial gain. Other government savings programs, like as Public Provident Fund (PPF), tax-saving FDs, and National Savings Certificate (NSC), are also quite advantageous and provide deductions of up to INR 1.5 lakh when cumulative deposits are made in these choices. Payments paid for children’s school or tuition fees and principal repayment on house loans are also eligible for deductions under Section 80C.
• The HRA Exemption: Taxpayers who rent an apartment are entitled to claim an HRA exemption on the rent they pay as long as they present the rent receipts issued by their landlord. The least of the following amounts of exemption is available for the claim:
  • The total HRA granted.
  • 10% of the base pay minus the total amount of rent paid.
  • Taxpayers who reside in non-metropolitan areas pay 40% and 50% of their basic salaries, respectively.

• Under Section 80E: When an education loan has been taken out, it is possible to deduct the interest paid (a component of the EMI) on that loan under Section 80E of the Income Tax Act, 1961. Deduction Amounts claimed under Section 80E may be used for up to 8 years or until the interest has been paid, whichever comes first. The amount of the deduction has no upper limit.