Saving taxes, for most taxpayers, largely means putting money in instruments approved under Section 80C of the Income Tax (I-T) Act. But that is not enough.
Take the example of Mysore-based telecommunications engineer Ashutosh Panda. When he got his first salary, he was told he would fall under the 10 per cent tax bracket for which he needed to save. He assumed putting money in instruments approved under Section 80C meant he would not be taxed. Sadly, that's not true.
Here are some tax deductions, you might not be aware of, but can help you save.
Section 80E
Many may know the interest paid on an education loan taken for higher studies can be claimed for deductions. But, not many know the same can be claimed for loans taken for vocational courses, too.
Says Vineet Agarwal, director at KPMG, “Taxpayers may not know there is no cap on the amount of interest you can claim under Section 80E. And, this deduction is also available for loans taken for higher study of specified relatives (like spouse, children or someone whom you are playing legal guardian to).” This deduction is allowed for eight years, or till the interest is fully paid.
Section 24
Under this section, you can claim a deduction of up to Rs 1.5 lakh annually for the interest repayment towards a housing loan. If the taxpayer buys a second house on another home loan and gives it on rent, the entire interest paid on the home loan during a given year can be claimed as deduction. If you have more than one house, one of the two is deemed let out. So, the interest income on the home loan for that house can be claimed entirely for deduction, provided you pay tax on the rental income earned, say industry experts.
Says Vaibhav Sankla, director of H&R Block, a Pune-based tax consultancy firm, had earlier told Business Standard, “You need a second property to get unlimited benefit on interest repayment on house loan. Even if you have only one house and let it out, you can get unlimited benefit on interest repayment. Of course, you’ll have to pay tax on rental income from the property.”
More From This Section
Also, not many know any interest paid on home loan for reconstruction or repair of a house property qualifies for a deduction of up to Rs 30,000, subject to the overall limit of Rs 1.50 lakh, says Agarwal.
Section 80GG
Those who do not earn a house rent allowance are eligible for a deduction of up to Rs 2,000 a month or 25 per cent of his/her total income (whichever is less) for paying a rent for accommodation.
Section 80DDB
Expenses made towards treatment of certain specified ailments can be claimed for under this section. Ailments that qualify for a deduction here are AIDS, cancer and neurological diseases, to name a few. You can claim a maximum deduction of Rs 40,000 from your gross income. This limit can go up to Rs 60,000 if the age of the patient, you spent on, is above 60 years.
But there are conditions. This deduction is allowed only if you haven't got any refund from any health policy either individual or employer provided. Also, you will have to submit Form 10-1 from a specialist doctor working for a government hospital.
Section 80U
Under this section, a person with certain disabilities can claim special deduction. The disability can be blindness or low vision, hearing impairment, autism, mental illness or retardation, leprosy or multiple such disabilities, say experts. Such individuals should have doctor’s certificate stating their condition.
A person with up to 40 per cent disability is allowed a deduction of Rs 50,000 and one with 80 per cent disability is allowed a deduction of Rs 1 lakh.