FY 2021-22: 12 Income Tax Saving Sections for Salaried
The financial year has started from April 2021-22. In this case, salaried class taxpayers should start a tax saving plan from the beginning of the financial year.
Taxpayers can avail tax exemptions in different sections of income tax by investing in different savings and financial products. For example, you can avail tax exemption on small savings schemes, home loans, life insurance, medical insurance, school fees for children.
12 tax saving sections for salaried taxpayers
(1) Section 80C
Under section 80C of Income Tax Act, you can earn tax exemption by investing up to a maximum of Rs 1.5 lakh. Under section 80C, you can claim tax exemption by repaying life insurance premium, ELSS, EPF contribution, premium payment of annuity plan, post office small savings schemes, PPF, tax saver FD, sukanya samriddhi scheme, contribution to annuity plan of Ulip, LIC, investment in NPS, repayment of principal amount of NABARD bond and home loan. In addition, salaried individuals can also save tax under 80C on tuition fees for their children.
(2) Section 80CCC
Under this section of income tax, a person can save tax on investment in any annuity plan of the insurance policy. But this plan should be a pension plan. Know that the amount or bonus taxable is including the pension earned from the annuity plan or the interest on surrendering this plan. Means, you have to pay tax on this.
(3) Section 80CCD (1) & (1B)
Section 80CCD (1) provides tax exemption to the person depositing in the pension account. Under this, salaried employees can get exemption by depositing up to 10% of their salary in pension account, which is a maximum of Rs 1.5 lakh.
Through the new section 80CCD (1B), the salaried person can get additional tax exemption by depositing it in NPS account. It will be up to Rs. 50,000.
Note: Tax exemption of more than Rs. 1,50,000 cannot be availed under sections 80C, 80CCC and 80CCD (1B).
(4) Section 80TTA
Under Section 80TTA of Income Tax, interest up to Rs. 10,000 is tax free from savings account in any bank, post office or co-operative society. It can be availed by the person or HUF (Hindu Undivided Family). However, interest earned from FD, RD or corporate bonds is not tax free.
(5) Section 80GG
Under this section of income tax, people who do not get HRA (House Rent Allowance) along with the salary get tax exemption on home rent. But the tax payer, his wife or minor child should not have any residential property.
The fare exemption under this section is as follows:
- Rent paid minus 10% of total adjusted income
- Rs. 5000 per month
- 25% of adjusted income
(6) Section 80E
This section is exempted on loans for higher studies. The loan can be for a taxpayer, wife, child or any student whose taxpayer is legal guardian. The benefit of tax exemption can be availed from the year the repayment starts till 8 years or till full interest is paid, whichever period ends earlier.
(7) Section 80D
Under the section 80D, tax exemption of up to Rs 25,000 on health insurance for spouse and children can be availed. If your parents are under 60 years of age and you are paying a healthy insurance premium for them, you can get an additional tax exemption of up to Rs. 25,000 in addition to Rs. 25,000 discount.
On the other hand, if the parents are over 60 years of age, the discount will be up to Rs. 50,000. If both taxpayer and his parents are 60 years of age or above, a maximum tax exemption of up to Rs 1 lakh can be availed through insurance premium under this section.
(8) Section 80DD
Under this section, the taxpayer can avail tax exemption on medical treatment, training, etc. of a dependent handicapped person. It also covers deposits in a specific scheme for the care of that relative.
- If dependent relatives are disabled 40% or more but less than 80%, the tax will be exempted from Rs. 75,000.
- If the relative is seriously disabled i.e. more than 80%, the tax exemption will be Rs 1.25 lakh.
- This claim will require a disability certificate from a valid medical authority.
(9) Section 80DDB
Under the section 80DDB of income tax, salaried tax payers can earn a maximum tax exemption of Rs. 40,000 on the treatment of a family member dependent on him/her or themselves in case of certain diseases.
In case of treatment of senior citizens, tax exemption can be availed on medical expenses up to Rs 1 lakh. For this, you need to show the treatment bill as a proof. However, if the cost of treatment is reimbursed by the insurance company or employer, the tax exemption will be on the remaining expenses.
(10) Section 80U
Under this section of income tax, if a person is physically or mentally challenged, he can avail tax exemption up to Rs. 75,000 under section 80U. This will also include blindness. In case of severe physical disability, the tax exemption can be up to Rs 1.25 lakh.
(11) Section 80G
Tax exemption can be obtained by donations made to organizations prescribed under Section 80G. This exemption can be up to 100% or up to 50% or unlimited in some cases. However, donations of more than Rs. 2000 in cash will not be exempted. The government has also imposed donations in the construction of Ram temple within the ambit of 80G in the year 2020.
In addition, there is section 80GGC under which taxpayer can claim exemption. Under this, tax exemption can be availed on donations made by a taxpayer to a political party or electoral trust. However it should not be in cash.
(12) Section 80TTB
Under this new section of income tax, senior citizens can save tax on interest earned on deposits. The maximum cap is Rs 50,000.
I am Nikesh Mehta, owner and writer of this site.
I’m an analytics and digital marketing professional and also love writing on finance and technology industry during my spare time. I’ve done online course in Financial Markets and Investment Strategy from Indian School of Business. I can be reached at [email protected] or LinkedIn profile.