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Deductions on rent
If you are a salaried employee, you benefit from House Rent Allowance (HRA). However, if you are a self-employed individual and do not receive an HRA, you can claim a deduction of the rent you pay under Section 80GG. The lowest value among the following three is what you can avail of under HRA.
- Rs 5,000 per month or
- 25% of the total income or
- actual rent paid (-) 10% of annual income.
Deductions for interest on education loan
Apart from facilitating higher studies, an education loan can also help you save taxes. Under Section 80E, you can claim a deduction of the interest paid on an education loan. You can avail of this on loan for the higher education of your spouse, children or a student of whom you are a legal guardian. This deduction can be availed for a period of eight years starting from the year you start paying the loan.
Deduction on premium paid on health insurance
Medical expenses can cause a significant dent in your budget. A health insurance helps by acting as a cushion during a medical emergency and save taxes too. Under Section 80D, you can request a deduction of the premium paid on you and your family’s medical insurance up to a value of Rs 25,000. You can also claim a deduction on the insurance premium of your parents to a value of Rs 25,000 if they are below the age of 60 and Rs 50,000 if they are above 60 years of age. Moreover, if you are above the age of 60, you can claim an amount up to Rs 1,00,000 deductions on the premium you pay for your and your parent's Health Insurances.
Deductions made towards donations
It is said that ‘the good you do comes back to you’. Whenever you contribute towards a charity or make a donation, you can claim a deduction on the donated amount. The amount eligible for deduction in respect of donations to some specified institutions have a limit of 10% of the total income as reduced by amount deductible under other provisions of Chapter VI-A (Sec. 80C, 80D, etc.) For instance, if you donate towards the Prime Minister’s Relief Fund, the Chief Minister's Relief Fund, etc., you can claim 100% deduction. However, money given to establishments like HelpAge India or Child Rights and is eligible for 50% deduction.
There are ample tax benefits apart from Section 80C deductions available under the Income Tax Act that you can avail of by investing in the right instruments. By knowing the various deductions and benefits available, you can save taxes while also earning returns. Therefore, the next time you file your Income Tax returns, look into such lesser-known deductions and save your taxes.
Well you should consult your taxation adviser as we are a SEBI Regd stock market advisory service and a tax adviser will be able to look into your taxation needs with a better perspective. If you are in high tax bracket their is no harm in paying a Chartered Accountant (CA) as he is your best tax adviser.
