Income Tax Rebate

1. Saving bank interest earned on the deposits upto Rs 10,000 under section 80TTA

2. Interest paid on home loan under section 80EEA

3. Loan taken for higher studies under section 80E

4. Health insurance premiums under section 80D

5. Life insurance premiums under section 80C

6. Donations to charity under section 80G.

 

Types of income tax rebate

 

Now, let us take a look at what makes you eligible for an income tax rebate:

1. Section 80C¹

   Some of the most well-known income tax rebates in the country come through Section 80C of the Income Tax Act. Here, you get to reduce your tax liability up to Rs. 1.5 lakhs. Individuals and HUFs are eligible for 80C if you invest in:

   1. Life Insurance Premium

   2. Public Provident Fund (PPF)

   3. Statutory Provident Fund (SPF)

   4. Recognised Provident Fund (RPF)

   5. National Pension Schema (NPS)

   6. Senior Citizen Saving Scheme (SCSS)

   7. Sukanya Samridhi Yojana (SSY) etc,.
      
      

2. Section 80D

   The premiums that Individuals and HUFs pay towards a health insurance premium qualify for tax benefits under section 80D. Take a look at the table¹ below to understand:
   
   

 

1. Section 24B²

   Under Section 24B of the Income Tax Act, you can claim a rebate on the interest paid toward home loan repayments. This rebate is capped at Rs. 2 lakh per financial year from your gross income for a self-occupied home, as long as the construction or acquisition of the property is completed within five years, providing significant relief to homeowners.
   Remember: Section 24B applies exclusively to home loans that are taken for residential properties.
   
   

2. Section 80E¹

   An income tax rebate is also available for the interest on loans taken for higher education. This is the meaning of income tax rebate under Section 80E.
   
   Note: The deduction for the total interest paid can be claimed over eight years( beginning from the year you start repaying the loan interest) or till the entire interest is paid, whichever is earlier .
   

3. Section 80G³

   To encourage and show support for charitable services, the government offers either 100% or 50% (with or without restriction) tax deductions. For instance, schemes like the National Defense Fund that have been set up by the Central Government, the Prime Minister’s National Relief Fund and funds that are set up by a state government for medical relief to the needy are eligible for a 100% deduction.
   

   Note: Donations such as Prime Minister’s Drought Relief Fund qualify for a 50% deduction.³
   
   

4. Section 80TTA

   Under Section 80TTA, individual or HUF can avail a tax rebate of up to Rs. 10,000 on the income/ interest that you earn on your savings deposits.¹
   
   

How to claim an income tax rebate?
 

Now that you have a fair idea of what is income tax rebate is, let us take a look at how you can claim it. Here’s a step-by-step guide:

1. Understand the eligibility

   Apart from the ones mentioned above, several other sections of the Income Tax Act,1961 offer income tax rebates. The deductions may be further divided into categories such as senior citizens, people with disabilities, etc.

2. Know your taxable income.
   Your taxable income is not just your salary; it also needs to include income from all other sources, such as any income from your business, capital gains, and interest earned. The net taxable income is determined by subtracting eligible exemptions from your total income.
   
   

3. Identify the section that you fall in

   You would now have to analyses your exemptions and the sections to determine what type of rebates you are eligible for.
   

4. Complete the paperwork

   The next important step in filing the claim is your documentation. Depending on the kind of rebate you are seeking, you will have to ensure you have all receipts, proofs, and certificates.
   

5. File the Income Tax Return

   The last step is filing the claim correctly. Make sure you understand the new and old tax regimes so that you can decide which regime offers you the maximum benefits. Now, file the ITR online or physically, as you deem right.

Conclusion
 

Understanding income tax rebates and how to make a claim correctly can be very helpful in making the most of the exemption allowed by the government. In case you need more help, reach out to a financial expert or a tax advisor who can help you manage your taxes.