Income tax Exemptions

Tax saving is directly proportional to knowledge of tax saving intruments. So here is the list for all available tax saving clauses you can use to get max tax benefits -

Income Tax deduction - Section 80C
Tools - Provident Funds, Life Insurance premia, ELSS, Bank deposits (>5 yr.), tution fees, principal part of EMI on housing loan, etc.
Max Exemption limit - Rs. 1,00,000.

In budget 2010, the FM has also increased the limit of deduction available under section 80C. He has allowed an additional investment of Rs 20,000 for infrastructure bonds taking the total of the limit under section 80C from the current Rs 1 lakh to Rs 1.2 lakh

Income Tax deduction - Section 80D
Tools - Premium in health insurance of you, your spouse, children or dependent parents
Maximum Exemption limit - Rs. 15000(for senior citizen Rs. 20000)

Income Tax deduction - Section 80DD
Tools - Medical treatment (including insurance) of disabled dependent
Maximum tax exemption limit - Rs. 50000 (Rs. 75000 if disability is severe,e.g. >80%)

Income Tax deduction - Section 80E
Tools - Interest paid on educational loan taken for higher education of you, your spouse or children.
Maximum tax exemption limit - no limit :)

Income Tax deduction - Section 80GG
Tools - House rent in excess of 10% of income, if no HRA is received.
Maximum tax exemption limit - Rs. 2000 per month or 25% of your gross salary, whichever is less.

Income Tax deduction - Section 24
Tools - Interest paid on housing loan.
Maximum tax exemption limit - Rs. 1,50,000

Income Tax deduction - Section 80G
Tools - Donations
Maximum tax exemption limit - 100% of donation amount for special funds , 50% of donation amount for all other donations.

This is just a brief idea of what exactly you can think of regarding tax savings. you'll see detailed analysis of all the above in coming posts.