Tax Deductions

Tax Deductions or tax-deductible expenses imply the deduction of a certain amount of money from the gross income of the individual for the payment of taxes. Every individual has to pay a certain amount of tax depending on his/her income range but tax-payers are eligible for certain tax-deductions depending of their investments.

The taxpayer is liable to pay a sum as tax which is deducted from his/her gross income on a monthly basis. This is a mandatory rule which needs to be abided by all those who have surpassed the amount from where the income tax issue starts. Till a certain level of income, there is no tax deduction levied but after reaching the level which demands income tax, all assessees have to abide by tax rules. Tax deductions depend largely on the level of income an individual.

The more the income of a person, the higher will be the tax deductible expenses. This rule is set for every earning person irrespective of their social status or other factors. Tax deductions are decided by the income range and this has got no special quota – it is equal for everyone in the country. The tax deduction program reduces the total taxable income.

In case of construction of a building or organization, the person who finances it is liable for the tax deduction. This means that the tax deductible expenses are carried out by the building owner who has financed it. But in some rare cases such as HVAC or projects on lighting efficiency, the tenant might have to bear the tax deduction program. In case of government-owned buildings, the one who designed or prepared the architecture of the building will have to bear the tax deductible expenses.

In India, under section 80CCC, the individuals who invests in the life insurance corporation of India or in any other insurance firms, are subjected to a tax deduction of the value of annuity paid or Rs. 10,000, whichever is of lower value. Under section 80CCD, employees working under the central government are liable to bear the tax deductions in the pension scheme – especially those who have been elected by the central government after the year 2004. The central government also makes contributions to the fund in the pension schemes under this section. Under section 80D, those who opt for medical insurance are liable for the tax deduction of a sum of Rs.10,000, including the insurance for senior citizens, dependent parents, or spouse.