What Are Income Tax Deductions and Exemptions?

In India, income tax deductions and exemptions play a crucial role in reducing an individual’s tax liability. These deductions and exemptions are essentially deductions made from your total income, thereby reducing the amount of income that is subject to taxation. Here are some common income tax deductions and exemptions in India:

1. Standard Deduction: All salaried individuals in India are eligible for a standard deduction of Rs. 50,000 per year. This deduction is applied to your gross salary income before calculating your taxable income.
2. Section 80C: Under this section 80C, taxpayers can claim a deduction of up to Rs. 1.5 lakhs per year for investments in certain instruments such as Public Provident Fund (PPF), Equity Linked Saving Scheme (ELSS), National Pension System (NPS), and tax-saving fixed deposits.
3. Leave Travel Allowance (LTA): LTA is a component of the salary package provided by an employer to cover expenses incurred during travel. Employees can claim this exemption twice in a block of four years, subject to certain conditions.
4. House Rent Allowance (HRA): HRA is a component of the salary package provided by an employer to cover the rent paid by an employee. A portion of this allowance is exempt from taxation, subject to certain conditions.Leave Travel Allowance (LTA): LTA is a component of the salary package provided by an employer to cover expenses incurred during travel. Employees can claim this exemption twice in a block of four years, subject to certain conditions.

Click ‘Income Tax Deductions & Exemptions in India’ to help you reduce your taxable income and maximize your savings. It is important to keep track of all the investments and expenses that qualify for these deductions and exemptions to ensure that you can avail of them when filing your tax returns.