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Wednesday, January 11, 2017


By investing in avenues specified by the government, you can reduce your tax burden, says Suraj Goel.

Most of us are aware of deductions available to a taxpayer on gross total income. The most popular deduction is under Section 80C, but there are more breaks available under various other sections of the Income Tax Act that you can make the most of to reduce your taxable income to the maximum possible.

If you have taken an education loan for self, spouse, children, or a student you are legal guardian to, you can claim this deduction under Section 80E for the interest paid on the loan amount. The entire interest paid in a financial year is eligible for deduction without any limit.
If you do not receive House Rent Allowance (HRA) as part of your salary, or you are not a salaried employee, you claim this deduction under Section 80GG. It is available for the rent paid by the taxpayer for his own accommodation in a financial year. The deduction amount will be the lower one of the following: Rent paid over 10% of salary (Basic + D.A.) 25% of the total income (before subtracting deductions) `5,000 per month

The amount paid as medical insurance premium is eligible for deduction under Section 80D. The maximum deduction that can be claimed under this section is `60,000, but there are many sub-limits.An individual can avail a maximum deduction of `25,000 for premium paid for self, spouse or dependent children. An additional deduction of `25,000 is allowed on premium paid for parents. If the policyholder is a senior citizen, then the deduction limit is `30,000. One can also claim a tax break of `5,000 on preventive health checks.

Repayment of the principal amount of a home loan is allowed as tax deduction under Section 80C. This deduction is available on payment basis irrespective of the year for which the payment has been made. The amount paid as stamp duty and registration fee is also allowed as a deduction under Section 80C.
A tax break for payment of interest on home loans is allowed under Section 24. The maximum tax deduction allowed under Section 24 of a self-occupied property is `2 lakh.
Section 80EE provides for an additional deduction of `50,000 for interest on home loans for first-time buyers. In this case, the loan amount should be below `35 lakh and the value of the house should be below `50 lakh.

This deduction under Section 80DD is available on expenditure incurred for the health and maintenance of a disabled, dependent family member. The maximum deduction that can be claimed is `75,000 per annum. If the dependent suffers from severe disability, then the limit is `1.25 lakh.

Interest earned on savings bank account is allowed as deduction under Section 80TTA. The maximum amount that can be claimed is `10,000. This does not mean that interest of up to `10,000 is exempted income. You should show this amount as income from other sources in your ITR and then claim deduction under Section 80TTA.

This deduction under Section 80DDB is available on expenditure incurred for the treatment of specified diseases for self, spouse or dependent family members.The deduction is equal to the amount actually expended or `40,000, whichever is less. If the person for whom the expenditure is made is 60 or more, the limit will be `60,000 and it will be `80,000 if the age is 80 or more. The list of specified diseases is available in Rule 11-DD of Income-tax Rules.

If you have donated to a fund notified by the central government under Section 80G, you would be eligible for deduction of the amount donated, but it should not exceed 10% of the adjusted gross total income. This deduction is also available for donations given for renovation of temples, mosques and churches approved by the government.If you have donated to an institution carrying out scientific research or to a university or college which is approved by the government, then the amount so contributed would be eligible for deduction under Section 80GGA. Deductions over and above `10,000 can be claimed only if the contribution has been made by any mode other than cash.If you have donated to a political party, then you can claim deduction under Section 80GGC equivalent to the amount actually donated. There is no ceiling on this deduction amount.


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