Most of us are aware of the concept of deductions from gross total income available to a taxpayer. One can claim deductions from one's gross total income by investing in avenues specified by the government. These deductions are available under different sections of the Income Tax Act, 1961. The most popular deduction is under Section 80C, but there are other deductions also which may be available to you but you might miss out on them due to lack of knowledge.
Here's a list of deductions that you can claim under different sections of Income Tax Act. Make the most of it and reduce your taxable income to the maximum possible.
Section 80D: Payment of medical insurance premium
A mediclaim policy is a must nowadays because if you or your family fall sick or, meet with an accident, your medical bills could wipe out your savings. The amount paid as medical insurance premium (mediclaim) is eligible for deduction under this section. One can take the policy in his or spouse's name, dependent parents and children. If you are a Hindu Undivided Family (HUF), then the policy can be taken in the name of any family member.
To claim deduction, you have to first pay the premium by any mode other than cash. Also, the insurer should be approved by either the central government, or the Insurance Regulatory and Development Authority of India (IRDAI).
The maximum deduction amount that can be claimed under this section by an individual or HUF is Rs 60000, but there are many sub-limits that one has to take care of.
An individual can avail a maximum deduction of Rs 25000 for the premium paid for himself, spouse or dependent children. He can get an additional deduction of Rs 25000 for the premium paid for his parents. If the person in whose name the policy has been taken is a senior citizen ( 60 years or more), then the limit of Rs 25000 in each case would be increased to Rs 30000.
As an HUF, you can get a maximum deduction of Rs 25000 for the premium paid for any member. If the insured person is a senior citizen then the above maximum limit of Rs 25000 will be increased to Rs 30000. One can claim a maximum deduction of Rs 5000 for preventive health check-up and the same can be paid in cash too.
80DD: Expenditure on the health of disabled person
This deduction is available to a taxpayer for the expenditure incurred by him on the health and maintenance of disabled persons -- spouse, children, brother and sister -- who are dependent on him. In the case of an HUF, they can be any family members. The maximum deduction amount that can be claimed under this section is Rs 75000 per annum. The same will be increased to Rs 125000 in case the dependent is suffering from a severe disability. To claim this deduction, you need to attach a copy of the certificate issued by the medical authority (a neurologist or a civil surgeon) along with form 10-IA when you file your return.
Disability includes autism, cerebral palsy and mental retardation. A person with severe disability would be one who has 80 per cent or more of any of these disabilities, i.e., a medical authority has certified that his level of disability is greater than 80 per cent.
Section 80DDB: Expenditure on a specified disease
This deduction is available on the expenditure incurred by a taxpayer on the treatment of specified diseases for self or spouse, and dependent parents, children, brother and sister. In the case of an HUF, this deduction can be claimed for expenditure made for any family member. The deduction amount will be equal to the amount actually expended or Rs 40000, whichever is less. If the person for whom the expenditure is made is 60 or more, then the limit of Rs 40000 will be taken as Rs 60000 and the same will be taken as Rs 80000 if the age is 80 or more. If you have received any sum from any insurer as reimbursement for the expenditure incurred by you, then the amount received as reimbursement would be reduced from the amount of deduction under this section.
The list of specified diseases covered in the section is available in Rule 11-DD of Income-tax Rules. Some of them include neurological diseases, AIDS, malignant cancers, hematological disorders.
Section 80E: Payment of interest on education loan
If you have taken an education loan from any financial institution for self, spouse, children, or a student whose legal guardian you are, then you can claim this deduction for the interest paid by you on the loan amount. The amount paid as interest in a financial year is eligible for deduction without any limit. To claim this deduction, make sure that the oan is taken for higher education, i.e., any course pursued after completing 12th standard. This deduction is available for eight years, starting from the year in which the interest payment began.
Section 80EE: Payment of interest on home loan
This deduction is available to an individual for the amount paid as interest on loan taken for the purchase of a residential property. The maximum deduction that can be claimed under this section is Rs 50000 p.a.
There are many conditions one has to fulfil to avail this deduction:
* The loan must be taken between 1.4.2016 and 31.3.2017.
* The loan amount should be below Rs 35 lakh.
* The value of the house should be below Rs 50 lakh.
* The said house property should be the only one in the individual's name.
Further, if you claim deduction under this section, then a similar deduction which can be claimed under section 24(b) of the act cannot be claimed for that financial year.
Section 80G: Donations made to certain funds, temples
If you have donated to a fund notified by the central government under this section, then you would be eligible for deduction of the amount donated, but it should not exceed 10 per cent of the adjusted gross total income. This deduction is also available for donations given for renovation of temples mosque, church, which are approved by CG.
Some of the funds notified by he government include National Defence Fund, Jawaharlal Nehru Memorial Fund, Prime Minister's Drought Relief Fund, National Children Fund, Prime Minister's National Relief Fund, Swachh Bharat Kosh, Clean Ganga Fund, etc. Here is how you can compute your adjusted gross total income
|Income Tax Deductions Allowed Beyond 80C Which You May Miss|
|Income Tax Deductions Allowed Beyond 80C Which You May Miss|
Cash donations of only up to Rs 10000 can be made. No deduction would be allowed over and above 10000 if the amount is paid in cash.
Section 80GG: Rent paid for accommodation
If you do not receive House Rent Allowance (HRA) as part of your salary, or are not a salaried employee only then can you claim this deduction. It is available for the rent paid by the taxpayer for his own accommodation in a financial year. A declaration in Form 10BA has to be submitted to avail this deduction. The deduction amount will be the lower one of the following:
* Rent paid over 10 per cent of salary (Basic + D.A.).
* 25 per cent of the total income (before subtracting any deductions).
* Rs 5000 p.m.
If you have a house (either owned by you, your spouse or in the name of your minor child) at the place where you are residing, then you can't claim this deduction.
Section 80GGA: Donation to specified institutions
If you have donated to an institution carrying on scientific research or to a university or college which is approved by the government (under 35(1)(ii), 35(1)(iii), 35CCA, 35CCB) for the time being, then the amount so contributed would be eligible for deduction under this section. Deductions over and above Rs 10000 can be claimed only if the contribution has been made by any mode other than cash. This deduction is not available to the taxpayer who has income from business or profession.
Section 80GGC: Donations to political party
If you have donated to a political party, then you can claim deduction under this section equivalent to the amount actually donated. There is no ceiling on this deduction amount that can be claimed under this section. The only condition to claim this deduction is that the payment should be made by any mode other than cash.
Section 80QQB: Royalty income to author
If you are the author of a book (other than textbooks for schools and colleges) and have received payment in royalty, either in lump sum or otherwise, then you can claim that amount as deduction from your royalty income under this section. The maximum deduction that can be claimed when royalty is received in lump sum is Rs 300000. When royalty is not received is lump sum then the amount of deduction will be restricted to 15 per cent of the book's revenue that year.
Section 80RRB: Royalty income from patents
If you are a patentee and have registered any patent after 1/4/2003 and receive royalty income for it, then you can claim deduction under this section for the amount received as royalty. The maximum deduction that can be claimed under this section is Rs 300000.
Section 80TTA: Interest on savings account
Interest earned on savings bank account is allowed as deduction. The maximum amount that can be claimed as deduction under this section is Rs 10000. This does does not mean that interest of up to Rs 10000 is exempted income; rather you should show this amount as your income from other sources in your ITR and then claim deduction under section 80TTA.