Return filing has its benefits; one of which is that it allows you to paint a complete financial picture of the year that was and make informed decisions for the year that is and make smarter choices for the years to come.
The date for tax filing has been extended to August 31st. While most of us have already filed our income tax returns for the financial year 2017-18, for those who have not, this extension comes as a welcome relief. Return filing has its benefits; one of which is that it allows you to paint a complete financial picture of the year that was and make informed decisions for the year that is and make smarter choices for the years to come.
Let’s say, Simran who earned Rs 15 lakh last year is adjusting her tax liability. After claiming a deduction of Rs 1.5 lakh under section 80C, her taxable income stood at Rs 13.5 lakh. Had she planned ahead, she could have claimed additional deductions of up to Rs 4.5 lakh ending up with a taxable salary of Rs 9 lakh, thus saving Rs 1,35,000 in taxes.
Like Simran, If you have exhausted the deductions available under section 80C, here are a few tips to plan your taxes:
Section 80 CCD (1B): National Pension System (NPS)
The Contribution made towards NPS can be claimed as a deduction under section 80CCD(1B). This sub-section provides an additional deduction, i.e. the ceiling of Rs 1,50,000 under section 80CCE will not be applicable to this contribution.
Amount of deduction: up to Rs 50,000
Applicability: Any individual taxpayer who has deposited any amount in his NPS account. The NPS covers New pension scheme and Atal Pension Yojna.
Section 80D: Medical Insurance
Mediclaim insurance premium paid is eligible for deduction under Section 80D. Such medical insurance policy can be for family (self, spouse and dependent children) or parents (dependent or otherwise)
Amount of deduction* :
|Beneficiary||In case of Individual||In case of HUF|
|For Individual / Family||Parents||Any member of HUF|
|Maximum Deduction |
(applicable in case of Medi-claim policy taken on life of senior citizen)
* From Assessment Year 2019-20
- Any individual taxpayer (resident/ non-resident)
- Hindu Undivided Family (resident/ non-resident)
- Payments should be made by any mode other than cash
Section 24: Interest on Home Loan
If you are paying an interest on loan taken for the purpose of purchase, construction, repair, renewal or reconstruction of house property, then you can claim the deduction for the interest amount of the loan under section 24.
Amount of deduction: up to Rs 2,00,000
Applicability: A loan is taken for the purpose of acquiring or constructing a property and interest is payable thereon.
Acquisition or construction should be completed within 5 years from the date of borrowing
Section 80GG: Interest on Home Loan
Interest paid on home loan is also eligible for deduction under section 80EE. This is an additional incentive provided to first-time buyers. In other words, it is over and above the deduction of Rs 2,00,000 under section 24.
Amount of deduction: up to Rs 50,000
Applicability: Any individual who has taken a loan for the acquisition of a residential house property (provided that he/ she does not own any residential house property on the date of sanction of a loan)
Loans should be sanctioned between April 1 2016, and March 31 2017
Amount of loan is below Rs 35 lakh
Value of house property is below Rs 50 lakh
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Section 80GG Rent Paid
Expenditure towards payments of rent for any self-occupied accommodation is eligible for deduction under section 80GG
Amount of deduction :
Amount deductible is the least of the following:
1) Rs 60,0000
2) 25% of total income
3) Rent paid less 10% of total income
Applicability: Self-employed individual
A salaried individual who is not in receipt of House Rent Allowance (HRA)
Such individual’s spouse or minor child should not own any residential accommodation in India or abroad
Section 80TTA – Interest on deposits in savings accounts
Income derived from any deposit in a savings bank with a banking company, a co-operative society or a post office is eligible for deduction.
Amount of deduction: up to Rs 10,000
Applicability: Any individual or HUF.
Section 80 DD: Medical treatment of a person with disability
This section allows for a deduction in respect of expenditure incurred for medical treatment or maintenance of a dependent person with a disability. Dependent person includes spouse, children, parents, brother and sisters of the individual. In the case of HUF, for the treatment of any dependent member thereof.
Amount of deduction: up to Rs 75,000. Rs 1,25,000 in case of severe disability
Applicability: Resident individual or HUF, With a condition that such disabled dependent person should not claim deduction under section 80 U. Moreover, should be as per section 2(i) of the Persons with Disabilities (Equal Opportunities, Protection of Rights and Full Participation) Act, 1995
Severe disability includes disability of 80% and above
Section 80DDB: Medical treatment for a specified disease
This section allows for a deduction in respect of expenditure incurred for medical treatment of a specified disease. The expenditure incurred could be for the treatment of self or a dependent spouse, children, parents, brother and sisters of the individual. In the case of HUF, for the treatment of any dependent member thereof.
Amount of deduction: up to Rs 40,000. Rs 1,00,000 in case of senior citizen
Applicability: Resident individual or HUF
Specified disease or ailment should be as prescribed by the Board under rule 11DD
Section 80G: Donations to certain funds, charitable institutions
If you are a philanthropist and have made a donation to funds and charitable institutions notified by the Government, then you can claim deduction under section 80G. Such donation should be given by cheque if it exceeds Rs 2,000. Any donation made in excess of 10% of your Adjusted Gross Total Income (GTI) shall be ignored while computing your aggregate deduction
Amount of deduction: 100% or 50% of the donation*
Any taxpayer (individual, company, firm or any other person i.e. resident or non-resident)
*100% and 50% Deductions
National Funds (100%)
National Defence Fund
Prime Minister’s National Relief Fund
Prime Minister’s Armenia Earthquake Relief Fund
Africa (Public Contributions-India) Fund
National Foundation for Communal Harmony
Approved university/educational institution
Chief Minister’s Earthquake Relief Fund
Zila Saksharta Samiti
National Blood Transfusion Council
Medical Relief Funds of state govt
Army Central Welfare Fund, Indian Naval Ben. Fund, Air Force Central Welfare Fund.
National Illness Assistance Fund
Chief Minister’s or Lt. Governor’s Relief Fund
National Sports Fund
National Cultural Fund
Govt./ local authority/ institution/ association towards promoting family planning
Central Govt.’s Fund for Technology Development & Application
National Trust for Welfare of Persons with Autism, Cerebral Palsy, Mental Retardation & Multiple Disabilities
Indian Olympic Association/ other such notified association
Andhra Pradesh Chief Minister’s Cyclone Relief Fund
Charitable Institutions (50%)
Jawaharlal Nehru Memorial Fund
Prime Minister’s Drought Relief Fund
National Children’s Fund
Indira Gandhi Memorial Trust
Rajiv Gandhi Foundation
Donations to govt./ local authority for charitable purposes (excluding family planning)
Authority/ corporation having income exempt under erstwhile section or u/s 10(26BB)
Donations for repair/ renovation of notified places of worship
World Vision India
( By Tanvi Loond Chopra, CEO and founder, Insta C.A)