When you say exemption from taxation, as the name suggests certain taxpayers are freed from the tax. Certain transactions are free from taxes. Without these exemptions they would have been subject to tax. Indian tax exemptions are almost always considered as mere privileges. The government offers a wide range of Indian tax exemptions to boost investments and promote specific economic activities like, it provides tax exemptions for individuals on insurance premiums to inspire more people to purchase life cover.
Tax exemptions for individuals are a practical way to reduce their taxable income and save tax, and make some good long-term investments. By demanding tax exemptions, an individual can save all or part of his tax amount. Tax exemptions are provided to boost certain economic activities.
Tax exemptions for individuals are a practical way to reduce their taxable income and save tax, and make some good long-term investments. By demanding tax exemptions, an individual can save all or part of his tax amount. Tax exemptions are provided to boost certain economic activities.
Service Tax Exemption
Service Tax is tax levied by the government on the services offered on certain service transactions that are borne by the consumers. The tax on service is only payable when the value of services offered in the financial year exceeds Rs.10 lakhs. The new Service Tax Rate is 14%. Some of the exemptions are:
1.Tax Exemption on Education Loan
Deduction is permitted under Section 80E for the interest that you pay towards the loan if you have taken an educational loan. But, you must:
- Be an individual taxpayer.
- The deduction is permitted towards the interest paid.
- The loan should be taken from a financial institution or an approved charitable institution only.
- The loan is occupied towards higher education for yourself, your spouse and children or to a student who you are a legal guardian to.
The interest should be paid from your income which is subject to tax. It is not limitless to the amount of interest that you can insist on deduction for. The deduction is accessible till the loan is paid or for 8 years, which is sooner. The loan can be accessed for higher studies in India or abroad.
2.Tax Exemption on Car Loan
You will not avail the tax benefits on the interest paid towards the car loan if you are a salaried individual. This deduction can be accessed if you are self-employed or a businessman and when you claim a profit or capital gain attained on the business and if you have owned the car for the business goal. Then you will obtain exemption on the interest and also depreciation of the vehicle.
3.Tax Exemption for women’s
Tax exemption to ladies are allowed under Section 80C and 80D to 80U. They are as follows:
- Public provident fund
- National savings certificate
- 5 year fixed deposit
- Life insurance corporation policies
- Equity linked savings scheme
- Pension plans
- Employee provident fund
- Health insurance
- Education loan
- Donation to political parties and donations to research and development programmes.
4.Leave Travel Allowance Exemption
LTA is paid by the employer for employee’s and his family’s travel and is tax free under Section 10(5) of the Income Tax Act, 1961. The exemption can be claimed:
- When an employer offers LTA to the employee for leave to any destination in India, then the actual travel costs gained are exempt.
- If the travel is within India and not overseas.
- If the exemption is on the travel cost only and not on the food, stay, etc.
- If the family includes spouse, children, parents and siblings.
How to Save Tax under 80G?
Around 8.45 crore people at the end of the financial year in India pay their income tax. In the Income Tax Act, Section 80 lists different deductions that can be made on how much of income is calculated as taxable decreasing the tax burden on the individual benefitting these deductions.
Like savings on tax payments can be made on a variety of deductions which includes deductions on house rent, investments, medical insurance, interests on savings accounts, and more. All these deductions are the government’s way of lowering the burden on the taxpayers who qualify and for encouraging those activities for which deductions are relevant.
80g tax exemption is one of the important tax-saving options where donations are made to specific charitable organisations.
Section 80G
Contributions made to particular charitable institutions and relief funds can be claimed as a deduction under Section 80G tax exemption of the Income Tax Act. However, all donations are not available for deductions under Section 80G tax exemption.
- Submit the name and address of the trust
- The name of the Donor
- The investment under 80g tax exemption or the amount donated; both in words and figures
- Remember to submit the registration number of the trust, as provided by the Income Tax Department along with its validity.
