How can you get tax exemption in India?

By Indolegal |

Taxation is one of the most unpleasant parts in the life of the average Indian. Even as Indian salaries grow slowly and steadily, the problem of taxation is always there. Unfortunately, tax system is a necessity for the country to grow and prosper. In fact, most of conveniences enjoyed by Indians can be somehow traced back to the tax money received by the government. Regular payment of taxes is also important to keep yourself in the right side of the law. Tax evasion can not only lead to embarrassment and a black mark in your career, but also to the payment of hefty penalties. Fortunately, the Indian government offers you several ways of tax exemption. can give you complete details and helpful advice on how to go about getting tax exemption. The tax exemption form can be downloaded from and then filled in with all the details.

Overview of Tax Exemption in India

A tax exemption, in simple terms, is a specified income based on which a person can get exempted from paying taxes. This means these forms of income would not come under the taxable income bracket and you can thus save your payable income tax through them. The reason that the government provides such income tax exemptions is that they make the market more favourable. For example, a person who has invested in shares in an agricultural firm would be exempt from the tax deductable from the agricultural income. This makes the agricultural industry more favourable.

Definition of Tax Exemption in India

The tax exemption rules and regulations in India are given in Chapter 3 of the Indian Income Tax Act, 1961. Section 80c of this Act is considered to be the most popular since it is related to tax exemption on life insurance or monthly savings. The maximum tax exemption allowed in this category is approximately Rs. 1, 50,000. There are several ways to benefit from tax exemption given in this Section 80c. Firstly, you can invest in a provident fund. A contribution to provident fund or voluntary provident fund, or even to a public provident fund, is eligible for tax exemption. A life insurance policy premium that is paid by you for your family, spouse or self also comes under the tax exemptions stated in Section 80c of the Indian Income Tax Act.

Other tax exemptions defined by this Section include the ELSS, or equity linked saving scheme. An investment in these schemes qualifies for tax exemption, but not all mutual fund schemes come under the ELSS bracket. You can also opt for Unit Linked Insurance Plan. Investments that are made in ULIPs of LIC of India or Unit Trust of India are eligible for tax exemptions.

Term deposits or bank deposits that have a term of greater than 5 years are also eligible for income tax exemption. If you are paying any monthly instalments for a housing loan, then the principal amount in each EMI is exempted from tax. The interest amount is also eligible for income tax exemption in India, but not under Section 80c. Another important investment eligible for tax exemption in Section 80c is through tuition fees for children. Other tax exemptions defined in this section include savings in National Saving Certificate, Infrastructure Bonds, and registration and stamp duty charges when buying a home.

The next section in the Act- Section 80d- also defines certain savings that can make you eligible for tax exemptions. These savings are especially useful if the company you work for does not give your medical or health benefits. According to this section, you can get an exemption on tax paid towards medical or health insurance premiums for your family, spouse or yourself. If you have any disabled members in your family, then you can find some useful tax exemption options in Section 80DD. This section provides a tax exemption on medical expenses incurred for disabled dependants. The dependant may be a brother, sister, child or spouse. Section 80GG of the Act is useful for those of you who pay rent. This section givens tax exemption for rent payments, so long as it meets the criteria listed.

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