Some Important Sections of the Income Tax Act You Should Know About

Some Important Sections of the Income Tax Act You Should Know About

Here are some important sections about exemptions and deductions allowed under the Income Tax Act:

These sections tell us about the deductions and exemptions that apply to our income. Each category has a limit up to which tax exemption can be claimed.

Section 80C

Interest earned on investments and payments made on investments (like stamp duty) up to ₹1,50,000 is not taxable.
Section 80CCD

It says that along with the deduction of Section 80C, an additional ₹50,000 will not be taxed if it is invested in National Pension Scheme or Atal Pension Yojana.
Section 80D

Medical insurance premium of up to Rs. 50,000 is exempted from tax if the insurance is in our name. An additional ₹50,000 is exempted if we have taken medical insurance for senior citizen parents.
Section 80EE

You can claim tax deduction for interest payable on home loan for up to ₹50,000.
Section 10D

The sum assured received through a life insurance claim is exempted from tax.
Section 80DD

Deduction on expenses incurred for the treatment of disability for up to ₹75,000.
Section 80DDB

Deduction on expenses incurred for the treatment of specific diseases like dementia, Parkinson’s, cancer, AIDS, etc.
Section 80TTA

Deduction up to ₹10,000 on interest earned through a savings bank a/c.
Section 54 & Section 54F

Exemption is given to income earned through long-term capital gains if this income is used to purchase or construct a residential house.
Section 44AD

This eases the tax burden on small business owners whose total income does not exceed ₹50 lakhs in a year, and the total turnover of the business does not exceed ₹2 crores. This is also applicable to independent consultants, practitioners, CS, film actors, and freelancers under legal, medical, engineering, accounting etc.

Activity

Here’s a quick activity to help improve your understanding.

Can you identify which of these are tax evasion tactics and which are tax planning?

Lekha does not disclose the income she gets from renting a part of her house.

Lekha claims tax deduction for interest payable on a home loan she took.

Vaishnavi does not pay tax on the life insurance money she got from the death of her husband.

Rutuja claims tax exemption on the ₹50,000 premium she pays for medical insurance in her name. She claims an additional ₹50,000 tax exemption for the premium she pays for her old parents’ medical insurance.

Lata claims tax deduction on the ₹8,000 interest she earned through the money in her savings bank account.

Navmi discloses a lower value of the property she is buying on the agreement to attract low stamp duty.

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Some Important Sections of the Income Tax Act You Should Know About

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