Home Loans for tax savings
There are three amazing ways in which you can save taxes on home loans for tax savings income
Under Section-80C, you can claim a deduction of Rs.1,50,000 on the principal amount repaid in the current financial year.
Section 24 allows you to claim a deduction on the interest paid on your home loan during the current financial year. The maximum limit for this is Rs.2,00,000.
First-time time home buyers can claim a deduction of up to Rs. 50,000. Such home buyers can get an easy loan if they are purchasing a second home in the same residency as their first home. There is no limit on the tax deduction for the second home loan. This is covered under Section-80EE.
Education
- Section-80E allows for a tax deduction on the interest paid on educational loans. There is no ceiling amount. Such loans can be for self, spouse, or children.
- Scholarships or awards granted to students are absolutely tax-free. No tax is charged on them. There is no higher limit to the amount.
- Saving Account Interest Interest income earned on savings account deposits up to a maximum of Rs.10,000 is allowed for tax deduction under Section-80TTA. Any interest earned over and above Rs.10,000 is taxable.
Insurance for tax savings
There are tax savings available for various types of insurance:
Life insurance for tax savings
Premium paid-for life insurance policies are tax-exempted under Section- 80C.
Unit-linked Insurance Plans-
Financial investments done under ULIPs are exempted from taxation under Section-80 C.
Health Insurance-
A taxpayer aged below 60 years can claim a deduction of Rs.25,000 for the premium paid towards health insurance done for self, spouse, and dependent children. If he has insured his parents aged below 60 years, he can claim an additional Rs.25,000.
A taxpayer aged above 60 years of age can claim Rs.50000 for the same. In the case of his parents, who would also be above 60 years, he can claim an additional deduction of up to Rs.50,000. This comes under Section- 80D of the IT Act. The maximum deduction available is Rs.1,00,000.
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Agricultural tax savings Income
The majority population of India belongs to the rural area, 65.07% to be precise. They heavily rely on farming and other agricultural activities for their income. To support them, any income generated from agricultural activities is tax-exempted.
Investments
Section-80C provides a tax deduction or tax savings income on investments of up to Rs.1,50,000. What are the investments that are allowed for such deduction?
- Equity-linked Savings Scheme
- National Savings Certificate
- National Pension Scheme
- Insurance as discussed above
- Fixed Deposit with banks
- Fixed Deposit with post offices
- Public Provident Fund