On National Income Tax day, it would be interesting to note a few of the lesser-known deductions that you might have missed.
To start with, this is the 162nd occasion of the National Income Tax day. It is observed on July 24 every year in India. It was in 1860, when the British Raj first levied income tax in India in the form of a duty. Now, this day is observed to honour the importance of income tax towards nation building.
According to experts though, while everyone is aware of the 80C deductions, there are still a bunch of other tax deductions that the income taxpayers are not aware of.
Says Suneel Dasari, founder and CEO, EZTax.in, an online income tax filing portal: “There is a limit of Rs 1.5 lakh for the most popular 80C deductions taken for tax rebate. However, there are many other investment options and expenditures, eligible for a tax rebate,”
Here are five other tax avoidance options, before the current financial year ends that you might want to know about.
Mediclaim insurance (Section 80D): The insurance premium paid for self, spouse, and children are allowed for tax deduction for up to Rs 25,000. In addition, a separate tax deduction of Rs 25,000 is available for parents aged below 60 years. This figure goes up to Rs 50,000 for parents aged above 60 years of age. That said, one can claim for the payment only if it is done in forms other than the cash mode. In addition to medical insurance premium, an individual can also claim deduction for the medical expenses incurred on senior citizens, provided they are not covered by any health insurance policy.
Rent paid (80GG): The self-employed or the person receiving salary without housing rent allowance (HRA) can claim a tax rebate on rent paid on house property. One can claim such a deduction after declaring in Form 10BA through the e-filing portal. Having said that, the spouse, minor child, and the assesse must not own any house at the place of his/her duty.
Education loan interest (80E): You can claim a deduction for interest paid on self, spouse, or children’s education loan. You can claim a tax rebate up to eight years from the date when the education loan started. However, the deduction only works on the interest amount, and not on the principal amount.
National Pension Scheme or NPS (80CCD (1B) and 80CCD (2)): Investments in NPS are allowed as deduction within the total limit of Rs 1.5 lakh under Section 80C. However, an additional tax rebate of up to Rs 50,000 is allowed for investment in NPS Tier 1 account under Section 80CCD (1B). The deduction is above the limit of 1.5 lakh prescribed under Section 80C. Moreover, any employer contribution to an employee’s NPS account is allowed as a deduction of up to 10 per cent of the basic salary plus dearness allowance (up to 14 per cent of basic salary plus dearness allowance in the case of central and state government employees) under Section 80CCD(2) of the Income Tax Act, 1961.
Donation (80G): One can claim deduction on contributions made to prescribed funds. That said, it is important to keep in mind that the limit of the deduction is based on the category of funds. According to the provisions of the Income Tax Act, 1961, various specified donations are eligible for either 50 per cent or 100 per cent deduction. That said, donations made in kind are not allowed for tax deduction. They can be in any other mode, such as cash, cheque, or demand draft. That said, cash donations in excess of Rs 2,000 are not allowed.