What is deduction?
Deductions help you pay less amount as tax. You basically invest in a specified instrument which is deductible or on which deduction can be availed and lower your taxable income by that extent.
Several instruments offer the deduction benefit under various sections of the Income-tax Act.
Under section 80C: Life insurance premiums for self, spouse or children are tax deductible under this section. Keep in mind that any premiums in excess of 10%, as proposed in the Budget, of the sum assured won’t be eligible for deductions.
Under section 80D: Health insurance premiums paid for self, spouse or children are tax deductible. The deduction is R15,000 for an individual and R20,000 for a senior citizen.
Under section 80E: Repayment of education loan (only interest) taken for higher studies for self, spouse or children when taken from authorised lenders. This deduction is allowed for eight assessment years or till the entire interest is paid, whichever is earlier.
Under section 80CCF: Last two financial years, you got deductions up to Rs. 20,000 for investing in long-term infrastructure bonds under this section. However, this year the finance minister was silent on the section.
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