2) Saving Tax Beyond Section 80 C
By investing in avenues specified by the Government, you can reduce your tax burden, says Suraj Goel.
Most of us are aware of deductions available to a taxpayer on gross total income. The most popular deduction is under Section 80C, but there are more breaks available under various other sections of the Income Tax Act that you can make the most of to reduce your taxable income to the maximum possible.
Education Loan
If you have taken an education loan for self, spouse, children, or a student you are legal guardian to, you can claim this deduction under Section 80E for the interest paid on the loan amount. The entire interest paid in a financial year is eligible for deduction without any limit.
House Rent
If you do not receive House Rent Allowance (HRA) as part of your salary, or you are not a salaried employee, you claim this deduction under Section 80GG. It is available for the rent paid by the taxpayer for his own accommodation in a financial year. The deduction amount will be the lower one of the following: Rent paid over 10% of salary (Basic + D.A.) 25% of the total income (before subtracting deductions) Rs. 5,000 per month
Medical Insurance Premium
The amount paid as medical insurance premium is eligible for deduction under Section 80D. The maximum deduction that can be claimed under this section is Rs. 60,000, but there are many sub-limits.An individual can avail a maximum deduction of Rs. 25,000 for premium paid for self, spouse or dependent children. An additional deduction of Rs. 25,000 is allowed on premium paid for parents. If the policyholder is a senior citizen, then the deduction limit is Rs. 30,000. One can also claim a tax break of Rs. 5,000 on preventive health checks.
Health Of Disabled Person This deduction under Section 80DD is available on expenditure incurred for the health and maintenance of a disabled, dependent family member. The maximum deduction that can be claimed is Rs. 75,000 per annum. If the dependent suffers from severe disability, then the limit is Rs. 1.25 lakh.
Interest On Savings Account Interest earned on savings bank account is allowed as deduction under Section 80TTA. The maximum amount that can be claimed is Rs. 10,000. This does not mean that interest of up to Rs. 10,000 is exempted income. You should show this amount as income from other sources in your ITR and then claim deduction under Section 80TTA.
Specified Diseases This deduction under Section 80DDB is available on expenditure incurred for the treatment of specified diseases for self, spouse or dependent family members. The deduction is equal to the amount actually expended or Rs. 40,000, whichever is less. If the person for whom the expenditure is made is 60 or more, the limit will be Rs. 60,000 and it will be Rs. 80,000 if the age is 80 or more. The list of specified diseases is available in Rule 11-DD of Income-tax Rules.
Donations If you have donated to a fund notified by the central government under Section 80G, you would be eligible for deduction of the amount donated, but it should not exceed 10% of the adjusted gross total income. This deduction is also available for donations given for renovation of temples, mosques and churches approved by the government. If you have donated to an institution carrying out scientific research or to a university or college which is approved by the government, then the amount so contributed would be eligible for deduction under Section 80GGA. Deductions over and above Rs. 10,000 can be claimed only if the contribution has been made by any mode other than cash. If you have donated to a political party, then you can claim deduction under Section 80GGC equivalent to the amount actually donated. There is no ceiling on this deduction amount.
Source: ET Wealth
Most of us are aware of deductions available to a taxpayer on gross total income. The most popular deduction is under Section 80C, but there are more breaks available under various other sections of the Income Tax Act that you can make the most of to reduce your taxable income to the maximum possible.
Education Loan
If you have taken an education loan for self, spouse, children, or a student you are legal guardian to, you can claim this deduction under Section 80E for the interest paid on the loan amount. The entire interest paid in a financial year is eligible for deduction without any limit.
House Rent
If you do not receive House Rent Allowance (HRA) as part of your salary, or you are not a salaried employee, you claim this deduction under Section 80GG. It is available for the rent paid by the taxpayer for his own accommodation in a financial year. The deduction amount will be the lower one of the following: Rent paid over 10% of salary (Basic + D.A.) 25% of the total income (before subtracting deductions) Rs. 5,000 per month
Medical Insurance Premium
The amount paid as medical insurance premium is eligible for deduction under Section 80D. The maximum deduction that can be claimed under this section is Rs. 60,000, but there are many sub-limits.An individual can avail a maximum deduction of Rs. 25,000 for premium paid for self, spouse or dependent children. An additional deduction of Rs. 25,000 is allowed on premium paid for parents. If the policyholder is a senior citizen, then the deduction limit is Rs. 30,000. One can also claim a tax break of Rs. 5,000 on preventive health checks.
Health Of Disabled Person This deduction under Section 80DD is available on expenditure incurred for the health and maintenance of a disabled, dependent family member. The maximum deduction that can be claimed is Rs. 75,000 per annum. If the dependent suffers from severe disability, then the limit is Rs. 1.25 lakh.
Interest On Savings Account Interest earned on savings bank account is allowed as deduction under Section 80TTA. The maximum amount that can be claimed is Rs. 10,000. This does not mean that interest of up to Rs. 10,000 is exempted income. You should show this amount as income from other sources in your ITR and then claim deduction under Section 80TTA.
Specified Diseases This deduction under Section 80DDB is available on expenditure incurred for the treatment of specified diseases for self, spouse or dependent family members. The deduction is equal to the amount actually expended or Rs. 40,000, whichever is less. If the person for whom the expenditure is made is 60 or more, the limit will be Rs. 60,000 and it will be Rs. 80,000 if the age is 80 or more. The list of specified diseases is available in Rule 11-DD of Income-tax Rules.
Donations If you have donated to a fund notified by the central government under Section 80G, you would be eligible for deduction of the amount donated, but it should not exceed 10% of the adjusted gross total income. This deduction is also available for donations given for renovation of temples, mosques and churches approved by the government. If you have donated to an institution carrying out scientific research or to a university or college which is approved by the government, then the amount so contributed would be eligible for deduction under Section 80GGA. Deductions over and above Rs. 10,000 can be claimed only if the contribution has been made by any mode other than cash. If you have donated to a political party, then you can claim deduction under Section 80GGC equivalent to the amount actually donated. There is no ceiling on this deduction amount.
Source: ET Wealth