InvestorQ : How much can an individual save if the deduction on Section80C as well as the deduction limit on housing loan is hiked by Rs 50,000?
priya Shah made post

How much can an individual save if the deduction on Section80C as well as the deduction limit on housing loan is hiked by Rs 50,000?

Answer
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simran Kaur answered.
1 year ago


The common man has been awaiting a Union Budget that helps him/her save more tax. Two of the most important areas where one is looking for at least Rs 50,000 hike in deduction limits are:

- Section 80C deduction limit - Home loan interest deduction limit

From a numbers point of view, here’s how hiking the Section 80C limit will change your finances:

- If you have a taxable income up to Rs 5 lakh, then you stand to save tax up to Rs 2,500 (5% of Rs 50,000 excluding cess) if you exhaust the entire Rs 50,000 additional limit provided in tax-saving instruments. - If you have a taxable income up to Rs 10 lakh, then you stand to save tax up to Rs 10,000 (20% of Rs 50,000 excluding cess), if you exhaust the entire Rs 50,000 additional limit provided in tax-saving instruments. - If you have taxable income above Rs 10 lakh, then you would be able to save tax up to Rs 15,000 (30% of Rs 50,000 excluding cess and surcharge, where applicable), if you exhaust the entire Rs 50,000 additional limit provided in tax-saving instruments.

Here: - The tax rate is levied according to one’s taxable income - Rs 50,000 is the difference between the minimum tax exemption amount- Rs 3 lakh – Rs 2.5 lakh.

Similarly, if the deduction limit on home loan interest amount is hiked, one can end up saving the following amount, if they pay Rs 2.5 lakh or more towards their home loan interest:

- If you have a taxable income up to Rs 5 lakh, then you stand to save tax up to Rs 2,500 (5% of Rs 50,000 excluding cess) if you exhaust the entire Rs 50,000 additional limit provided in tax-saving instruments. - If you have a taxable income up to Rs 10 lakh, then you stand to save tax up to Rs 10,000 (20% of Rs 50,000 excluding cess), if you exhaust the entire Rs 50,000 additional limit provided in tax-saving instruments. - If you have taxable income above Rs 10 lakh, then you would be able to save tax up to Rs 15,000 (30% of Rs 50,000 excluding cess and surcharge, where applicable), if you exhaust the entire Rs 50,000 additional limit provided in tax-saving instruments.