Want to reduce your taxable income to Rs 5 lakh? Here’s a list of all deductions you can claim

The Interim Budget 2019 introduced some goodies for those earning below INR 5 Lakh per year. So, if your annual gross income ranges between INR 6 to 11 lakhs, you can now try and claim certain tax deductions in order to reduce your taxable income. With the low and middle income group in mind, the Interim Budget 2019 put forth a proposal under Section 87A on full income tax liability for those earning up to 5 lakh taxable income for FY 2019-20.

Before we begin, a quick primer on income tax – which is calculated as follows:
* The sum of all sources is added up to calculate gross total income
* Addition of deductions and other exempted allowances are subtracted
* The net result is termed as the taxable income

It is the above resulting figure that decides the 100% tax rebate as per the 2019 Budget proposals. Now, let’s move to the deductions available (to most individuals) under the Income Tax Act:

1. Income Tax Deductions of Investment under Section 80C
A popular Income Tax Deduction method lies under Section 80C, that allows investments in specified instruments.
These can include:
PPF accounts
Tax Saving Mutual funds
Tax Saving Fixed Deposits
National Savings Certificate
Repayment of Principal on Housing Loan
Premium on Life insurance policy
Equity Oriented Mutual funds
Contribution to Employee provident fund

2. Income Tax Deductions for contribution to pension funds under Section 80CCC and 80CCD
These are income tax deductions which allow payments (of any amount), helping in the initiation of annuity plans of any insurance company receiving pensions. The person is allowed a deduction for the same amount paid under Section 80CCC.
If the person makes the contribution to a notified pension scheme of the Central Government like the National Pension Scheme (NPS), they too are allowed a deduction under Section 80CCD.

3. Income Tax Deduction for Interests on Savings Account under Section 80TTA
A deduction of Rs. 10,000 under Section 80TTA (Chapter VI-A) can be claimed from the interest earned on your Savings Bank Account. This interest income is added under ‘Income from Other Sources’ and then a deduction is provided.

4. Income Tax Deduction for Interests on House Loans under Section 24
Under Section 24, a person with any home loan is allowed to claim deductions for the interest levied on it. It is vital to understand that the deduction is for the levied interest amounts, and not for the paid ones.
Furthermore, under Section 80C, the principal amount of Home Loan repaid is also allowed a deduction.

5. Deduction for Investment made under an Equity Saving Scheme under Section 80CCG
Also known as the Rajiv Gandhi Equity Savings Scheme, this income tax deduction is allowed to all who invest in listed shares or listed mutual funds in a given financial year. The deduction claim includes up to 50% of the amount invested. This is also subjected to a maximum of Rs. 25,000 only.
It is also important to note that this deduction is only applicable for first time investors with a lock-in period of 3 years from the date of acquisition.

6. Deduction for payment of Medical Insurance Premium & Health Check-up under Section 80D
If a person makes any payment for a medical insurance premium either for themselves, their spouse, or their children, they are allowed to claim an income tax deduction for it under Section 80D. This deduction is dependent on whether the individual insured is a senior citizen or a non-senior citizen.
Further, if any amount has been paid for preventive health check-up, deductions are allowed for them as well.

7. Income Tax Deduction for Disability under Section 80DD and 80U
Disabled individuals are allowed deductions under Section 80DD. Dependent family members of disabled persons are allowed deductions under Section 80U. These disability deductions are also defined in the Income Tax Act.
Income Tax Deduction for Treatment of Specified Diseases under Section 80DDB

8. Income Tax Deductions are also provided for treatment of specific diseases for individuals with the disease or for those dependent on the diseased. The deduction is allowed for the actual amount paid for the treatment or a minimum amount of Rs. 40,000 or higher.

9. Income Tax Deduction for Interest on Education Loan under Section 80E
A person is allowed to claim an income tax deduction under Section 80E for the Repayment of Interest on Home Loan taken for Higher Education of Self, Spouse or Dependent Children.
However, it is necessary to understand that this deduction can be claimed only for the repayment of interest on education loan and not for the actual principal amount of repayment. An advantage of this deduction is that there is no maximum limit on the amount to be claimed.
This Deduction is allowed for all Education completions in India as well as outside India.

10. Income Tax Deduction for Donations under Section 80G, 80GGA, 80GGB, and 80GGC
A person can claim income tax deduction for any donation made during the given financial year.
Deduction under Section 80G is a general deduction while the deductions under Section 80GGA, 80GGB & 80GGC are specific deductions. Section 80GGA includes Donation for the purpose of Scientific Research or Rural Development whereas Section 80GGB & Section 80GGC include donations towards all registered Political Parties of the government.

11. Income Tax Deduction for Rent under Section 80GG
If salaried employees who pay house rent, and have no deduction claims of rent (like the HRA exemption) under any other Sections (of the Income Tax Act), then they can claim a deduction under Section 80GG.
Deductions are key income saving tools. With the help of such deductions and exemptions offered by the government itself, there exists a substantial chance of reducing your overall tax payments and maintaining your acquired incomes.