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Some of the Lesser-Known Income Tax Deductions That Help You Save Money

IndianMoney.com Research Team | Updated On Saturday, November 30,2019, 02:49 PM

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Some of the Lesser-Known Income Tax Deductions That Help You Save Money

 

 

You may be aware of the income tax benefits under section 80C and 80D, as they are massively used to reduce the tax burden. But are you aware of other tax deductions available under different sections of the Income Tax Act? These deductions allow you to further reduce your tax outgo on income to the best possible limit. Let’s check the lesser-known tax saving provision under ITA, 1961:

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Some of the Lesser-Known Income Tax Deductions That Help You Save Money

Tax Benefit on NPS contributions:

The tax benefit under section 80CCD is only applicable to NPS investments. While many of us are aware that NPS comes with considerable tax benefits that offer section 80C deductions. Recently, the government has incorporated the Section 80CCD deduction with NPS and investors can now avail an additional deduction of Rs. 50,000 over and above the Section 80C limit.

Interest on Home Loan (Section 24):

A home loan works both ways for you. It helps you facilitate buying a house as it saves your taxes too. Individuals who have availed home loans and are paying home loan EMIs can claim tax deductions under section 24 of the Income Tax Act, 1961. You can claim tax benefits of up to Rs. 2 lakh on payment of home loan interest in a financial year.

Previously, there was a provision of claiming full tax exemption of payment of interest on a home loan of a rented property. In the year 201-18, tax deduction under section 24 has been capped at a maximum of Rs. 2 lakh per year.

See Also: 3 Popular Tax Deductions That May be Reversed

Interest on Education Loan (Section 80E)

Apart from helping students to pursue and fund higher education, education loans can also work as a tax-saving tool. The government offers tax benefits to students who pursue their education by taking an education loan. A person availing an education loan can claim full tax deduction under section 80E for the interest paid on the loan. The tax benefit can be availed by the person paying the loan EMIs. In case you have a co-borrower like a spouse or a parent then they are liable to get this benefit. However, the benefit can be used by one person only.

The deduction can be claimed only if the loan is availed for higher education which means courses that are to be pursued after the completion of the senior secondary examination. The tax deduction can be claimed for a maximum of 8 years from the time of sanction of the loan.

Tax benefit on Health Insurance (Section 80D)

Health insurance not only acts as the saver of your health but also the saver of your taxes. There is a provision that allows individuals to claim a tax deduction on premiums paid for the medical insurance policy for self or family. If you are paying a health insurance premium for self or for the family then you can claim a tax relaxation of Rs. 25,000 under section 80D of the Income Tax Act, 1961.

The provision also allows senior citizens to claim a tax deduction on health insurance premiums and the limit is capped at Rs. 50,000. Apart from this, the assessee can enjoy an additional tax benefit of Rs. 5000 for the expenses incurred on health check-up provided the premium is paid online or through cheque.

Stamp duty and Registration Charges (Section 80C):

This provision is lesser-known to many. You can claim tax exemption on stamp duty charges and registration charges incurred while buying a house. The claim can be made under section 80C of the ITA within 1-year of purchase of the property. Since there is no specified threshold limit for claiming of such deductions, which means such expenses can be fully claimed for deduction.

See Also: 3 Loans That Give You Great Tax Benefits

Tax benefit on Treatment of Specific ailments (Section 80DDB):

The deductions can be claimed by individuals and members of HUF for expenses incurred on the treatment of specific illnesses under section 80DDB. Tax benefits can be claimed for the treatment of diseases like renal failure, AIDS, cancer, neurological diseases etc. The tax deduction is capped at Rs. 40,000 from total income. The limit is slightly higher for senior citizens and is capped at Rs. 1 Lakh.

Tax deduction under this provision is only applicable if you have not reimbursed the cost of treatment from an insurance policy.

Further, to claim the deduction you need to submit a medical report to prove the severity of the ailment along with proofs verifying the need for the treatment. Also, you have to submit form 10-1 with approval from a specialist doctor working in a government hospital confirming the treatment of disease.

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