While preparing yourself to file your Income Tax Return (ITR) with the closure of the financial year 2018-19, you must be on your toes to maximise your tax savings by making appropriate investments. While most of us are well aware of general tax deduction provisions such as tax benefits on PPF and tax saver FD deposits, ELSS investments, life insurance etc; there are other lesser-known tax saving provisions under the Income Tax Act, 1961 which can reduce your net tax liability.
In this article, we shall discuss 9 such provisions which can provide you tax benefits and thereby, ease your tax burden.
- Tax Benefit for Investment in NPS (Section 80CCD)
While most of us know that one can invest in the National Pension System (NPS) upto Rs. 1.5 lakh and avail tax benefits under section 80C, very few are aware of the fact that apart from the investment made u/s 80C, a taxpayer can invest an additional amount of upto Rs. 50,000 in NPS under section 80CCD and claim a tax deduction on it.
However, it should be noted that while there are multiple investment option u/s 80C, the assessee can invest only in NPS to claim additional tax deduction over and above 80C.
Also Read: Know More About National Pension System
- Interest on Home Loan (Section 24)
Homeowners paying the EMIs of their home loans can claim tax deduction benefits upto Rs. 2 lakh on home loan interest under section 24 of the Income Tax Act.
Earlier, there was a provision under section 24 to claim a full tax deduction on the interest paid on home loan on a rented property. However, from FY 2017-18, the maximum tax deduction u/s 24 has been capped at Rs. 2 lakh irrespective of the use of the property.
Also Read: Section 24 of the Income Tax Act, 1961
- Tax Benefit on Rent Paid if Not Availing HRA (Section 80GG)
This tax benefit can be claimed either by self-employed individuals or such salaried individuals who do not have an HRA component in their salary structure. Such persons can claim a tax deduction under section 80GG on house rent paid upto Rs. 60,000 a year. However, it should be noted that individuals who own a house in their own name or in the name of their spouse or children can not claim such tax benefit. Eligible taxpayers are required to fill in Form 10BA to claim the tax deduction u/s 80GG.
- Interest on Education Loan (Section 80E)
Full tax deduction can be claimed under section 80E on the interest paid on loan taken by your or any other member of your immediate family (spouse, children). Higher education includes any course of study that has been pursued after the completion of the senior secondary examination. The deduction u/s 80E is available til 8 years after you start repaying your education loan.
Also Read: Section 80E: Tax Deduction Education Loan
- Premium Paid for Health Insurance (Section 80D)
Under section 80D of the Income Tax Act, 1961, you can claim a tax deduction on premium paid for a medical insurance policy for self or immediate family upto a limit of Rs. 25,000. Senior citizens can claim tax deduction upto Rs. 50,000 u/s 80D for the payment of health insurance premium.
Apart from the premium paid, amount upto Rs. 5000 can be claimed for a tax deduction on the expenses incurred for health check-ups. However, this can only be a part of the overall limit of Rs. 25,000 placed u/s 80D. Further, the premium must not be paid in cash. You can pay the premium via cheque/DD, credit/debit card or net banking.
- Stamp duty and Registration Charges (Section 80C)
This is a lesser-known provision under section 80C where you can claim tax benefits on stamp duty and registration charges paid while purchasing a house. Such claims can only be made in the year of the house purchase. There is no deduction limit which means such expenses can be fully claimed for tax deduction purposes.
Also Read: What are Section 80C Deductions?
- Deduction on Treatment Cost of Specific Diseases (Section 80DDB)
Under section 80DDB, such individuals or HUFs who have incurred expenses for treatment of specific diseases including neurological disease, cancer, AIDS, renal failure etc can claim an income tax deduction of upto Rs. 40,000. Expenses incurred on medical treatment of senior citizens have been capped at actual amount paid or Rs 1 lakh whichever is less.
You can not claim for tax benefits u/s 80DDB if you have been already reimbursed the treatment cost under any insurance policy. Further, to claim the deduction you need to have proof of the need for treatment and another proof of the treatment actually being taken.
Also Read: Know More About Section 80DDB
- Deduction in case of Person with Disability (Section 80U & Section 80DD)
Taxpayers suffering from some specific kind of disability or severe disabilities can claim tax benefits under section 80U. Individuals suffering from a disability can claim a tax deduction of upto Rs. 75,000 while those who are suffering from a severe disability can claim tax deduction upto Rs. 1,25,000. However, a taxpayer claiming such deduction need to be certified from a medical authority about the extent of his disability.
On the other hand, you can claim tax benefit under section 80DD if any of the dependent members of your family is suffering from a disability. Dependents can be spouse, children, parents or siblings.
- Deduction on Donations (Section 80G)
Section 80G basically provides tax benefits on donations made to relief funds and charitable organizations. All donations are not eligible for tax exemption. Only contributions made towards prescribed funds are eligible for claiming tax deduction.
Donations exceeding Rs. 2000 should not be made in cash to avail of the tax benefits. Contributions made to relief funds such as National Defense Fund, PM National Relief Fund, National Sports Fund, Clean Ganga Fund etc. are eligible for 100% deduction without any qualifying limit.
Whereas donations made to some other funds such PM Drought Relief Fund, Rajiv Gandhi foundation etc. are eligible for only 50% deduction of the amount contributed.
Also Read: How Donations Can Save Your Tax?