It’s that time of the year, when one needs to calculate tax liabilities. However before you do so, remember to analyse various sections of tax deductions under the Income Tax Act as tax planning does not end with Section 80C. Apart from this, there are other tax deductions provided by the Income Tax Act, 1961. Let’s understand them:
Tax deduction section 80D qualifies for mediclaim policies. The premium, which is paid for medical insurance policy for self and family members to protect them from sudden medical expenses, comes under this section. The maximum amount allowed for exemption annually for self, spouse and dependent parents/children is R15,000. In case of a senior citizen, the maximum amount extends up to R20,000. If you are paying the premium for your parents (whether dependent or not), you can claim an additional maximum deduction of R15,000.
According to the Income Tax Act, if you are paying a premium to Life Insurance Company (LIC) or any other insurance company (approved by the Income Tax board) for the medical treatment of a ‘dependent’ physically disabled person, you can avail exemption under the section 80DD. Here, the ‘dependent’ should be none other than your spouse, children, parents or sibling. If the person is suffering from 40% of any disability, a sum of R50,000 can be claimed in a year. Similarly if the disability is 80%, the sum goes up to R1,00,000 per year. For initiating the process of deduction you need to submit the medical certificate issued by a medical authority along with the return of income.
If you have incurred expenses on medical treatment of self or your ‘dependents’, you can claim a deduction of up to R40,000 or the actual amount paid, whichever is less, under the section 80DDB. For a senior citizen, the maximum exempted amount is R60,000 or the amount actually paid for medical expenses. To claim deduction, you need to submit a certificate from a doctor working in Government hospital.
The interest paid on loan taken for pursuing higher education of self or any dependant is exempted from tax under section 80E. An education loan can be taken for wife, children and minors for whom you are the legal guardian. This deduction is applicable for a period of 8 years or till the interest is paid, whichever is earlier. The deduction is only approved for higher studies, which means full time graduate or postgraduate courses in engineering, management or applied sciences, pure sciences including mathematics or statistics. However, from 2011 onwards, the scope of this exemption has been extended to cover all fields of studies including vocational studies after completing the Senior Secondary examination or equivalent. No exemption is applicable on part-time courses.
One often donates a certain amount on philanthropic grounds to help the destitute. Such an amount can be donated to trusts, charitable institutions, approved educational institutions and qualifies for deduction under Section 80G. The exemptions can be up to 50% or 100% of the donations made. Funds in which the donations are eligible for tax exemptions include the National Defense Fund, Prime Minister Drought Relief fund, National Foundation for communal Harmony, National Children’s Fund and Prime Minister’s National Relief Fund. One needs to attach a proof of donation with their return of income to avail this exemption.
If a salaried or self employed person staying in a rented house does not receive any kind of HRA, they can claim a deduction under this section. However, you cannot avail any such benefit if you, your spouse and/or your child owns any residential accommodation in India or abroad. You can claim the least of the following under Section 80GG:
25% of the total income
Rs 2000 per month
Excess of rent paid over 10% of total income
Any monetary contribution to any political party or electoral trust is eligible for tax exemption. Thus, your contribution, as a matter of appreciation for their work, will serve both the purposes.
A resident of India suffering from any kind of specified disability is eligible to claim tax deduction under this section. In order to enjoy this opportunity, one should be suffering from not less than 40% of the following diseases — Blindness, low vision, mental illness, loco motor-disability, mental retardation and hearing impairment. The deduction provided is flat R50,000, irrespective of the expense incurred. If the disability is severe, the deduction can be up to Rs 1 lakh. One needs to provide a copy of all the certificates issued by a medical authority in order to avail this benefit.
The Finance Act 2012 introduced a new Section 80CCG to offer 50% tax break to new investors who invest up to Rs 50000 and whose GTI is less than or equal to Rs10 lakhs. It has been introduced for budding investors entering the equity markets for the first time and is a once-in-a-lifetime benefit. Hence, there are several sections apart from 80(c) that can help an individual benefit from tax exemptions.