Tax season can be stressful, especially when you’re unsure if you’ve claimed all the deductions available to you. Every year, many taxpayers in India miss out on several deductions that could help reduce their tax burden. This article will take you through some of the most commonly missed tax deductions in India, ensuring you don’t leave any money on the table when filing your taxes.
A tax deduction in India refers to a reduction in your taxable income, which in turn reduces the total tax you need to pay. These deductions are available under various sections of the Income Tax Act, 1961. Understanding and claiming these deductions can significantly reduce your tax liability. However, many people either don’t know about these deductions or fail to claim them correctly.
The most well-known deduction under Indian tax law is Section 80C, which allows deductions of up to ₹1.5 lakhs. However, most people think of just Life Insurance Premiums or EPF (Employee Provident Fund) contributions under this section. But there are many more eligible investments that people miss out on.
- Life Insurance Premiums
- Employee Provident Fund (EPF)
- Public Provident Fund (PPF)
- National Savings Certificates (NSC)
- Tax-saving Fixed Deposits (FDs)
- Equity Linked Savings Schemes (ELSS)
- Principal repayment on home loans
If you haven’t maxed out your 80C limit, look into these investments—they could provide both tax savings and good returns.
Another commonly overlooked deduction is the one for health insurance premiums under Section 80D. You can claim up to ₹25,000 for premiums paid for yourself, your spouse, and your children. For senior citizens, the limit increases to ₹50,000.
If you’re paying premiums for your parents who are senior citizens, you can claim an additional deduction of ₹50,000. This means, in total, you can claim up to ₹1 lakh if you and your parents are covered under health insurance.
If you have taken a home loan, don’t forget to claim the interest paid on it under Section 24(b). You can claim up to ₹2 lakhs as a deduction for the interest paid on a home loan for a self-occupied house.
For a second house, the deduction limit on interest is higher, as there’s no cap on the interest deduction for a second home loan. This is a crucial benefit that many property investors fail to utilize fully.
The National Pension Scheme (NPS) offers an additional deduction of up to ₹50,000 under Section 80CCD(1B). This deduction is over and above the ₹1.5 lakh limit under Section 80C. If you’re contributing to NPS, make sure to claim this deduction as it provides both tax benefits and retirement security.
If your employer contributes to your NPS account, that amount is also tax-deductible under Section 80CCD(2), up to 10% of your salary (basic + dearness allowance). Many employees are unaware of this and fail to claim it.
Interest earned on a savings account is often overlooked, but under Section 80TTA, you can claim a deduction of up to ₹10,000 on the interest earned from savings accounts. If you are a senior citizen, this limit is higher under Section 80TTB, which allows a deduction of up to ₹50,000 on interest earned from savings, FDs, and post office deposits.
If you have multiple savings accounts, combine the interest earned from all accounts. You can still claim up to ₹10,000 in deductions, reducing your taxable income effectively.
If you or your children are repaying an education loan, you can claim the interest paid on the loan under Section 80E. This deduction is available for up to 8 years from the year you start repaying the loan.
Loans taken for higher education for yourself, your spouse, or your children qualify for this deduction. This is an excellent benefit for individuals who have availed loans for studies in India or abroad.
Charitable donations made to eligible organizations can be claimed as a deduction under Section 80G. Depending on the organization, you can claim either 50% or 100% of your donation as a deduction. However, donations made in cash exceeding ₹2,000 are not eligible for deductions, so ensure you donate through cheque or online transfers.
Ensure that the charity is recognized and eligible for tax deductions under the Income Tax Act. Always ask for the donation receipt as proof for claiming this deduction.
If you are caring for a dependent with a disability, you can claim deductions under Section 80DD. The deduction limit is ₹75,000 for individuals with 40-80% disability and ₹1.25 lakhs for individuals with more than 80% disability. If you have a disability yourself, you can claim a deduction under Section 80U.
To claim this deduction, you will need to provide a medical certificate from a government hospital or relevant authority confirming the disability.
If you’re self-employed or don’t receive HRA (House Rent Allowance) from your employer, you can claim a deduction for rent paid under Section 80GG. The deduction is capped at ₹5,000 per month or 25% of your total income, whichever is lower.
This deduction is beneficial for those who don’t receive HRA as part of their salary. However, you must not own a house in the city where you are claiming rent.
Under Section 80D, in addition to claiming health insurance premiums, you can also claim up to ₹5,000 spent on preventive health check-ups. This amount is within the overall deduction limit of ₹25,000 (or ₹50,000 for senior citizens).
Always keep the receipts for any health check-ups done to claim this deduction during tax filing.
Conclusion :
Tax planning is essential to maximize your savings and reduce your tax liability. Many of these deductions are often overlooked simply because people are unaware of them or don’t maintain the required documentation. By being proactive and keeping track of your expenses, you can make sure you claim all the deductions you’re entitled to. If you’re unsure about any deductions, it’s always a good idea to consult a tax professional to avoid missing out on potential savings.
FAQs :
Q.1 What is the maximum deduction under Section 80C?
The maximum deduction under Section 80C is ₹1.5 lakhs.
Q.2 Can I claim both Section 80D and preventive health check-up deductions?
Yes, you can claim up to ₹25,000 (or ₹50,000 for senior citizens) under Section 80D, including ₹5,000 for preventive health check-ups.
Q.3 Are NPS contributions tax-deductible?
Yes, contributions to NPS are deductible up to ₹50,000 under Section 80CCD(1B), in addition to the ₹1.5 lakh limit under Section 80C.
Q.4 Can I claim a deduction for rent if I don’t receive HRA?
Yes, under Section 80GG, you can claim a deduction for rent if you don’t receive HRA.
Q.5 What’s the limit for the home loan interest deduction?
You can claim up to ₹2 lakhs for home loan interest under Section 24(b) for a self-occupied house.
Q.6 Are donations to all charities tax-deductible?
No, only donations made to recognized 501(c)(3) organizations under Section 80G are tax-deductible.
Q.7 Can I claim the education loan interest deduction for studying abroad?
Yes, you can claim the interest paid on education loans for studies abroad under Section 80E.
Q.8 Is the interest earned on savings accounts taxable?
Interest earned up to ₹10,000 is deductible under Section 80TTA (₹50,000 for senior citizens under Section 80TTB).
Q.9 Can I claim medical expenses for a dependent with a disability?
Yes, under Section 80DD, you can claim deductions for medical expenses for a dependent with a disability.
Q.10 Are health insurance premiums for parents deductible?
Yes, you can claim up to ₹50,000 for health insurance premiums paid for senior citizen parents under Section 80D
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