What are Tax Savings?

A tax saving is a reduction in the amount of taxes paid by an individual, business, or other taxpayers. They can be instrumental in reducing income tax withholding or total tax liability after filing an income tax return. Tax savings often results from deductions, exemptions, and credits. The more significant your tax savings and tax refunds are, the greater your financial security.

Tax Savings under the Income Tax Act

In India, tax saving components have been out outlined under various parts of Section 80 of the Income Tax Act. The most well-known tax saving components include:

• Standard Deduction: A standard deduction of Rs. 50,000 is given to all salaried employees regardless of their total salary amount.
• Section 80C: Section 80C allows deductions up to Rs. 1.5 lakhs. It offers tax savings for investments under certain schemes and specific expenses. These include:
  • Public Provident Fund
  • Equity Linked Savings Schemes
  • Senior Citizen Savings Schemes
  • Home Loan Payments
  • National Savings Certificates
  • Tax Saving Fixed Deposits
  • Life Insurance Premiums
  • Education Fees
• Section 80CCC: Tax savings can be made for payments made towards pension funds.
• Section 80CCD: This section allows tax savings under investments made in the National Pension System.
• Section 80D: Insurance premiums can contribute towards tax savings of up to 1 lakh.
• Section 80E: Employees can get tax savings on education loan repayments as well.
• Section 80EE: First time buyers can have tax savings on home loan repayments.
• Section 80G: This section allows tax savings on donations made to charitable organizations
• Section 80GG: Employees living in rented accommodations can have tax savings on HRA received as part of salary.
• Section 80GGC: This section can help with tax savings when contributions are made to a registered political party.
• Section 80TTA: Employees can claim tax savings up to Rs. 10,000 in interest income.
• Section 80DD: Tax savings can be made under this section for medical expenses for disabled individuals.
• Section 80DDB: This clause allows tax savings for medical treatment of sicknesses listed in this section.
• Section 80U: This section allows disabled individuals to have tax savings on expenses made towards medical expenses.