Income tax return: 9 deductions to claim
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ET Bureau :Most
taxpayers are aware of the deductions available underSection
80C,
the tax benefits
of medical insurance and the advantages of a home loan. But there are also some
inconspicuous sections of the Income Tax Act, which offer further savings to
taxpayers. If you satisfy certain conditions, you can use these to bring down
your tax liability.
Most taxpayers are aware of the deductions available underSection
80C,
the tax benefits
of medical insurance and the advantages of a home loan. But there are also some
inconspicuous sections of the Income Tax Act, which offer further savings to
taxpayers. If you satisfy certain conditions, you can use these to bring down
your tax liability.
The problem is that many tax filing portals don't give the taxpayer the option
to claim these deductions. If the portal does not ask the relevant questions,
you forego your right to claim these benefits. Admittedly, some of these
deductions are available only in extraordinary circumstances. Even so, find out
if you are eligible and how you should go about claiming them.
1.Gain from losses in stocks
Believe it or not, the losses you made in stocks this year can bring down your
tax. If you have made any long-term capital gains from the sale of property,
gold or debt funds, you can set them off against short-term capital losses in
stocks and reduce your tax liability. The short-term capital losses can be set
off against both short-term capital gains as well as taxable long-term capital
gains. This can be especially useful for someone who has booked profits in gold
ETFs and physical gold this year.
Suppose you made a long-term capital gain of Rs 6 lakh by selling gold ETFs. The
tax payable on this amount is Rs 60,000. If, on the other hand, you sold some
stocks within a year of buying and made a short-term loss of Rs 3 lakh, you can
set this off against the gains from gold ETFs. So the gain from gold will be
reduced to only Rs 3 lakh and the payable tax will be Rs 30,000.
The losses that have not been adjusted can be carried forward for up to eight
years. Besides, only short-term capital losses from stocks can be adjusted
against other gains or carried forward. So, the stocks you bought more than a
year ago will not be eligible.
2.Rent is deductible even if you don't get HRA
In metros and large cities, house rent can
account for as much as 40-50% of the total household expense. This is the reason
that house rent allowance (HRA) for salaried individuals is exempt from tax to a
certain limit. But what if your salary does not include an HRA component
or you are a self-employed professional or businessman? Under Section 80GG, you
can claim deduction for the rent paid even if you don't get HRA. Not many people
are aware of this deduction.
However, there are stiff conditions to be met. The least of the following three
can be claimed as deduction: rent paid, less 10% of total income; or Rs 2,000 a
month; or 25% of the total income. Also, the taxpayer should not be drawing any
HRA or any other housing-related benefit.
Besides, he or his spouse or minor child should not own a house in the city
where he lives and he should not claim tax benefits for some other self-occupied
house. If you satisfy these conditions, you can avail of the tax benefit. Though
you cannot claim more than Rs 2,000 as deduction per month, it can bring down
your tax by Rs 7,400 a year in the highest tax bracket.
3.Certain diseases get tax benefits
The treatment of a chronic illness can be a
drain on the finances of a taxpayer. This is why the Income
Tax Actallows a deduction of Rs
40,000 if one has a dependant who suffers from any of the ailments specified
under Section 80DDB. The deduction is higher at Rs 60,000 if the patient is a
senior citizen.
The illnesses include neurological diseases
(dementia, dystonia musculorum deformans, motor neuron disease, ataxia,
chorea, hemiballismus, aphasia and
Parkinson's disease), malignant cancers, full-blown AIDS, chronic kidney failure
and haematological disorders (haemophilia and thalassaemia).
Dependants can include spouse, children, parents and siblings. However, there
are a few conditions. The patient should be wholly or mainly dependent on the
taxpayer and should not have a separately claimed deduction for the disability.
If the amount spent is reimbursed by the employer or an insurance company, there
is no deduction. If the taxpayer gets a partial reimbursement for the expenses,
the balance can be claimed as deduction.
4.Disabilities also eligible for deduction
If you suffer from a disability, you can
claim a deduction of Rs 75,000 under Section 80U. If you have a disabled
dependant, you can claim Rs 50,000 under Section 80DD. Disability includes blindness,
low vision, leprosy, hearing
impairment, loco-motor
disability, mental retardation and mental illness.
The deduction is available only if the impairment is at least 40%. If the
disability is severe (80% or above), the deduction is Rs 1 lakh a year. The
dependant could include spouse, children, parents and siblings. Incidentally,
the deduction is offered as a lump sum and does not depend on the actual amount
that the taxpayer may spend on himself or on the disabled dependant.
5.Donations
get you tax benefits
6.Education
loan interest is fully deductible
7.Interest
paid on a second home loan is fully deductible
8.HRA
as well as home loan benefits
9.Your
family can reduce your tax
(
Read the full article from The Economic Times )
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