Deductions in Income Tax returns
Income tax is one thing that makes people as passionate about talking as politics used to do. And without doubt, this is no one’s favourite topic.
But deductions allowed in Income tax return filing is favourite for sure. Afterall this is what allows us to retain most of our earnings.
The issue is that despite so many topics, marketing emails on this topic, most of the taxpayers, mainly salaried people, are focussed on availing the Section 80C deductions of up to Rs 1.5 lakh.
Or if you have a home loan, then the deductions allowed on the same.
But, there are more deductions available under other sections which you can use to save more tax. The exhaustive list is present here at Income Tax Website (but it requires some expert to decipher correctly).
Here let’s take a look at some of such deductions which will help you save more tax:
# Deduction on interest earned from Savings Account
Interest earned on savings in the bank, be it simple 4% return or FD based return is taxable. Your bank is liable to deduct such tax as TDS and issue you a certificate which you can attach to your return.
But, do you know that interest up to ₹10,000 can be claimed as a tax deduction?
The provisions related to this tax benefit are covered under Section 80TTA of the I-T Act.
# Deduction on interest paid for Education Loan
Under Section 80E, interest paid on education loan is tax deductible. Just to be clear, this deduction is allowed only for interest paid and not on the principal amount.
The other benefit of education loan is low rate of interest. And, in most cases, taking loan for higher education, is something that makes you rethink about how seriously you want to do it and value you can drive from it.
# House rent deduction – salaried & self-employed
This is not little know deductions but most of time only salaried people covered under HRA take full benefit of this deduction.
Just like your salaried peers who can take benefit of HRA under Section 80GG, If you a self-employed or freelancer, and you are paying house rent, then this is also deductible in Income Tax returns.
This is a touchy topic though. The deductions allowed to salaried people is much more than to self employed ones. Plus there are two additional conditions of not owning any other residential property in self or in spouse’s name.
But, if you are salaried person with HRA function, then there is no such issue. The deductions range is much higher. It is best if you consult your company’s HR department or online portal like cleartax.in to file this section properly.
# Deduction for Medical Expenditure on Self or Dependent Relative
Over and above tax deduction allowed for paying medical premium, under Section 80DDB, if you made an expense on self or dependent relative for medical treatment of specified disease or ailment.
A claim of Rs. 40,000 or the amount actually paid, whichever is less is available for deduction to a resident individual or HUF.
From FY 2018-18 onwards, in case of senior citizen or very senior citizen, the deduction can be claimed up to Rs 1,00,000 or amount actually paid, whichever. Earlier, the deduction that could be claimed was Rs 60,000 and Rs 80,000 respectively.
# Deduction on contributions given by any person to Political Parties
Under section 80GGC, is allowed to a taxpayer for any amount contributed to any political party or an electoral trust. Deduction is allowed for contribution done by any way other than cash.
This deduction is not allowed for a company, local authority and an artificial juridical person wholly or partly funded by the government. So if you have political leanings and have contributed to any such party, save the receipt.
There are more deductions available but they require assistance of an expert to be claimed correctly. Claiming a right deduction in wrong way is an issue that even IT department has warned against.
If you don’t have multiple sources of income or have salary, house rent & stocks as your sources of income, then it makes sense to file your income tax online. You can use any of the online tax filing portal. They have simplified the process and it is quite cheap.
You can check out CleatTax or hrblock. For simple queries, they do provide paid qualified CA assistance.