How to save income tax? Here are a few options for the salaried class

An individual can claim a deduction of the health insurance premium paid for self, family and dependent parents. The deduction limit is Rs 25,000 annually for the premium paid for self or family. In case the premium is paid for senior citizen parents, then an individual can claim up to Rs 50,000 in a financial year. A deduction of Rs 5,000 on the health checkups can be claimed. However, this is included in the overall limit mentioned above.

Another key to save taxes is paying interest on housing loan. Individuals, who are homeowners, can claim a deduction up to Rs 2 lakh for interest paid on home loan for a self-occupied property. For a let out property, one can claim entire interest paid on home loan in a financial year. However, from FY 2017-18 onwards, loss from house property that can be set off against other sources of income is restricted to Rs 2 lakh. Taxpayers can also claim a deduction for principal repayment of a housing loan under section 80C, where the overall limit is Rs 1.5 lakh.

The act provides a deduction for interest paid on higher education loan in a financial year. The loan should have been taken from a bank or a financial instruction for pursuing higher studies in India or abroad. The individual can claim a deduction under section 80E if he himself pursues higher studies or he is sponsoring his spouse’s or child’s higher education.

An individual making donations to charitable institutions can claim a deduction under section 80G of the amount paid as donation. The donation must be paid through channels other than cash. The maximum cash donation allowed is Rs 2,000. Also, the eligible deduction amount depends on the organisation receiving the donation, in some case deduction is 50 percent or could be 100 percent of the amount donated, with or without certain restrictions.

Income tax law offers a deduction of Rs 10,000 on income earned from savings account interest to individuals and HUFs. Senior citizens can claim a deduction of Rs 40,000 under section 80TTB, however, this deduction is for interest from deposit accounts only.

Homeowners are allowed to claim a deduction of Rs 50,000 in addition to deduction under section 24, for interest payment on a housing loan during a financial year. Provided, the loan must exceed Rs 35 lakh and value of the property should not be more than Rs 50 lakh. The loan should have been taken in the FY 2016-17. An individual will be able to claim this deduction only if he does not have any other property registered under his name as on the date of sanction of the loan.