Because of a mix of exclusions and deductions, your taxable income may be affected by a substantial amount. So, in order to maximize your earnings, savings, and assets each year and keep your taxable income to a minimal, tax planning is essential.
While exemptions are part of your salary, like the House Rent Allowance (HRA) and Leave Travel Allowance (LTA), deductions allow you to lower your tax amount by investing, saving, or spending on specific items. The biggest section for deduction is Section 80c through which you can bring down your taxable income by ₹ 1.5 lakh. Apart from this, there are several other sections that let you take tax deductions on things ranging from interest on your loans (home and education) to premiums you pay for health insurance.
| Deductions | Exemptions |
|---|---|
| Public Provident Fund | House Rent Allowance |
| Equity Linked Savings Scheme (ELSS) | Leave Travel Allowance |
| Employee Provident Fund | Mobile and Internet Reimbursement |
| Life Insurance Premium | Food Coupons or Vouchers |
| Principal and Interest Component of Home Loan | Company Leased Car |
| Children Tuition Fees | Standard Deduction |
| Health Insurance Premiums | Uniform Allowance |
| Investment in NPS | |
| Tuition Fee for Children | – |
| Saving Account Interest | – |