Individual taxpayers in India can benefit from various exemptions listed under the Income Tax Act, 1961. Some common exemptions applicable to individuals are:
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House Rent Allowance (HRA)
If you receive HRA as part of your salary and live in a rented accommodation, you may be eligible for an exemption on a certain portion of the HRA received, subject to specified conditions.
Leave Travel Allowance (LTA)
LTA allows exemptions on expenses incurred during domestic travel within India for self and family members, subject to certain restrictions and conditions.
Standard Deduction
Individuals are entitled to a standard deduction of Rs 50,000, which can be claimed as a deduction from their salary income or pension income.
Deductions under Section 80C
You can claim deductions for investments made in specified instruments such as Provident Fund (PF), Public Provident Fund (PPF), National Savings Certificates (NSC), life insurance premiums, and tuition fees, up to a maximum of Rs 1.5 lakh.
Tax Exemptions for Senior Citizens ( aged 60 years or above)
- Senior citizens enjoy a higher basic exemption limit. For the financial year 2022-23, it is Rs 3 lakh.
- Senior citizens can claim deductions under Section 80D for medical insurance premiums paid for themselves and their dependent family members, up to Rs 50,000 (Rs 1 lakh in case of specified critical illnesses).
- Senior citizens can avail of a deduction of up to Rs 50,000 under Section 80TTB on interest income earned from deposits held with banks, post offices, or cooperative societies.
Tax Exemptions for Business Owners
- Section 80DDB allows business owners to deduct medical expenses for the treatment of certain disorders for themselves and their dependents or members of the Hindu Undivided Family (HUF).
- Businesses operating in Special Economic Zones (SEZs) may enjoy a tax holiday under Section 10AA, wherein their profits derived from SEZ operations are exempt from tax for a specified period.
- Startup businesses may be eligible for tax exemptions under the Startup India initiative, subject to fulfilling certain conditions and compliance requirements.
By being aware of these exemptions, you can optimize your tax planning and potentially reduce your tax liability. Consult with a tax professional or refer to the Income Tax Act for detailed information on eligibility criteria and the documentation required to claim these exemptions.
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