Income tax calculator: After the announcement of budget proposal for FY2023-24, middle class salaries and other earning individuals are busy calculating their tax saving options, which they can exercise to save beyond ₹7 lakh annual limit. However, these benefits would be applicable only under old income tax regime and those who want to claim these benefits need to choose old tax regime because from 1st April 2023, new income tax regime would be the by default tax regime for an earning individual.
1] NPS: In National Pension System (NPS) scheme, an earning individual is given an additional ₹50,000 tax deduction under Section 80CCD (1B). So, if an earning individual has exhausted its ₹1.50 lakh per annum investment limit, he or she can claim income tax rebate on one's investment in NPS account under this section. In this section , one can claim tax exemption on up to ₹50,000 investment in one financial year.
2] Health insurance premium: Under Section 80D of the income tax act, a taxpayer can claim tax rebate on premium paid on health insurance during the assessment cycle. The rebate ranges from ₹25,000 to ₹1 lakh in one financial year. A taxpayer can claim tax rebate on the health insurance premium paid up to ₹25,000 if he or she is below 60 years of age. If the taxpayer is paying health insurance premium of its parents, who are below 60 years of age, then in that case the taxpayer can claim an additional tax rebate on up to ₹25,000 health insurance paid for is parents.
In case of parents being senior citizens, then in that case this amount limit goes up to ₹50,000 per annum. However, in both cases both parents and child can't claim tax rebate on same health insurance premium. However, if the taxpayer is a senior citizen, then in that case ₹25,000 annual limit goes up to ₹1 lakh. Hence, if a taxpayer is senior citizen and it is paying health insurance premium for its parents as well, then in that case the taxpayer would be able to claim tax rebate on up to ₹1 lakh ( ₹50,000 for himself and ₹50,000 for parents) under Section 80D.
3] Tax rebate on home loan: A tax payers who is paying home loan EMI, he or she can claim tax rebate on up to ₹2 lakh home loan interest paid in the assessment cycle. However, the home loan borrower should be living in the unit or the unit has to be self occupied.
4] Interest on savings account deposits: Under Section 80TTA, a savings account depositor can claim TDS exemption on up to ₹10,000 interest incurred in single financial year. This amount is applicable on all bank savings account. So, if some one has more than one savings account, then the taxpayer is advised to calculate entire savings account interest of all bank accounts. In case of senior citizens, the non taxable limit is ₹50,000 under Section 80TTB.
5] Donations to charitable institutions: Under Section 80CCC, if a taxpayer has paid donation to an approved charitable institution, then in that case one can claim tax exemption under Section 80CCC. However, in case of donation in cash, the limit is capped at ₹2,000. So, in case of donation exceeding ₹2,000, one should pay via bank cheque. But, only paying through cheque won't work as you need stamped receipt of donation by the trust with mention of its address, PAN card with name of the trust written on it.
This article taken by livemint.com
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