Category: Investment Management

Tax Planning for the Financial Year

Tax Planning for the Financial Year

When it comes to tax planning, it's crucial to make the most of the opportunities provided by the Income Tax Act. One such avenue is Section 80C, which offers a range of investments and expenses that allow individuals to claim deductions of up to Rs. 1.5 lakhs in a financial year.

Section 80D: Payment of Medical Insurance Premium

Under Section 80D, individuals can claim deductions for the amount paid as a medical insurance premium (mediclaim). This deduction applies to policies in the individual's or spouse's name, as well as dependent parents and children.

Section 80DD: Expenditure on the Health of Disabled Persons

This section offers deductions for the expenses incurred by individuals in caring for disabled dependents, including parents, spouse, children, or siblings. The maximum deduction under this section is Rs. 75,000 per annum.

Section 80DDB: Expenditure on a Specified Disease

Individuals can claim deductions for the expenses incurred on the treatment of specified diseases for themselves, spouses, dependent parents, children, siblings, or any other dependents. The deduction is equal to the actual amount spent or Rs. 40,000, whichever is lower.

Section 80E: Payment of Interest on Education Loan

This section allows individuals to claim deductions for the interest paid on education loans taken from financial institutions for self, spouse, or children.

Section 80EE: Payment of Interest on Home Loan

Deductions can be claimed for the interest paid on loans taken to purchase residential properties. The maximum deduction under this section is Rs. 50,000 per annum.

Section 80G: Donations Made to Certain Funds and Temples

Donations to funds notified by the central government under this section qualify for deductions. However, the deduction amount should not exceed 10% of the adjusted gross total income. It also applies to donations for temple, mosque, or church renovation projects approved by the central government.

Section 80GG: Rent Paid for Accommodation

To avail this deduction, individuals must submit a declaration in Form 10BA.

Section 80GGC: Donations to Political Parties

This section has no ceiling on the deduction amount, provided that payments are made through non-cash modes.

Section 80QQB: Royalty Income to Authors

Individuals can claim deductions for royalty income, with a maximum of Rs. 3 lakh when received in a lump sum.

Section 80RRB: Royalty Income from Patents

For patent royalties received after April 1, 2003, individuals can claim deductions under this section, with a maximum of Rs. 3 lakh.

Section 80TTA: Interest on Savings Account

Interest earned on savings and post office savings accounts can be claimed as deductions, up to a maximum of Rs. 10,000.

Section 80TTB: Interest on Deposits with Banks and Post Offices

Senior citizens can claim deductions for interest earned on deposits with banks, post offices, or cooperative societies. The maximum deduction under this section is Rs. 50,000 in a financial year.

In addition to these sections, individuals can explore various tax-saving options under Section 80C, such as Equity-linked savings schemes (ELSS), the National Pension Scheme (NPS), the Public Provident Fund (PPF), Senior Citizens' Saving Scheme (SCSS), Sukanya Samriddhi Yojana, ULIPs, National Savings Certificates (NSCs), and tax-saving fixed deposits.

These options provide individuals with opportunities to save on taxes while securing their financial future. The choice of investment depends on one's financial goals, risk tolerance, and personal circumstances.

Income Tax Slabs

The income tax rates for the assessment year 2019-20 and financial year 2018-19 vary based on the age group. Individuals less than 60 years have different tax rates, while those between 60 and 80 years, and those above 80 years have their own tax brackets.

It's important to note the applicable rates and deductions to effectively plan for tax savings.

Debalina Roy Chowdhury


Dilzer Consultants