Deductions on premium for health insurance of parents are allowed to a limit of up to Rs.25,000 if they are less than 60 years of age or Rs.50,000 if any or both of the parents are over the age of 60 years. However, the maximum allowed deduction for self & family is ₹25,000 per year. Premiums for health insurance for self, spouse & dependent children (family) and parents can be claimed as a deduction.

Section 80D: Under this section, the premium paid towards a health insurance policy can be claimed as a tax deduction.

This limit is over and above the limit prescribed under 80CCD(1).

Additional benefit of up to ₹50,000/- has been granted under section 80CCD(1B), post a new amendment in union budget of 2015 - 16.įurthermore, sub section 80CCD(2) allows employer's contribution to Pension Schemes subject to a maximum of 10% of basic salary + dearness allowance, to be claimed as a tax benefit.

One can claim a maximum deduction up to 10% of basic salary + dearness allowance.

Under the provisions of section 80CCD(1): This section has been further divided into two sub sections: 80CCD(1) & 80CCD(2).

Section 80 CCD: This section encourages investments in two pension schemes - Atal Pension Yojna (APY) & National Pension Scheme (NPS).

Maximum available deduction unders section 80C is ₹1,50,000/.

Section 80C: Under this section, all investments made towards ELSS Mutual Funds, Tax saving Fixed Deposits, Term Life Insurance Premium, Pension Schemes, Provident Fund etc.

Here are the sections under which one can claim tax deduction: There are certain investments that help you bring down tax - these include life insurance plans, health insurance plans, retirement schemes or even NSC. One can claim a tax deduction on the money he/she spends on medical expenses or on charity. Tax deductions under different sections of the Income Tax ActĪs the name suggests, tax deductions help to save tax on your total income. Otherwise, you can continue paying your annual taxes through the old system. As a taxpayer, you can migrate to the new system if it offers you better advantages. The Finance Minister also announced that the new tax system is not compulsory. But you should note that there would be no exemptions or deductions under the new system. Under the new system, there would be more tax slabs and lower tax rates. However, in the 2020 Budget announcement, the Indian Finance Minister Nirmala Sitharaman announced a new tax regime for investors. There were multiple exemptions and deductions available under this regime. Under this system, tax rates were applicable to people based on their gross income and age. Until FY 2019-20, there was only one income tax regime in India.

Income from other sources: Any income that can't be bracketed under the other four heads of income will come under the head income from other sources.Īll above components put together constitute your Gross Income.Income from rent on House property: The next head - Income from House property - includes any rental income that an individual earns from a residential or commercial property and is subject to taxation.

This gain is further categorized as Short- Term Capital Gains (STCG) and Long- Term Capital Gains (LTCG). Income from capital gains: Any profit or gain that arises from sale or transfer of capital assets (such as stocks, Mutual Funds, Real estate etc.) is taxable under the head capital gains.Income from Business or Profession: The income that one earns through business or profession is also taxable.The aggregate of the above-mentioned incomes is called Gross Salary. Allowances on transport, medical expenses etc.Annuity & gratuity benefits, if paid in that financial year.The salary amount can include these components: Income from Salary: This is the monthly income one receives from the employer they work for.Income is classified into five categories: Sources of Income & Calculation of Gross Income

Long term stock profit calculator