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Tax Smart Tips

  • Section 80GG: Rent paid for accommodation - If you do not receive House Rent Allowance (HRA) as part of your salary, or if you are not a salaried employee, only then can you claim this deduction. It is available for the rent paid by the taxpayer for his accommodation in a financial year as per prescribed Limits.
  • You can contribute an additional amount up to Rs. 50,000, to the National Pension Scheme if cash flow permits and claim deduction under Section 80CCD (1B) of the I.T. Act.
  • The section 80E allows you to claim the interest amount being paid on education loan availed for self, children or spouse or the student for whom the individual is the legal guardian. There is no limit on the amount, but the deductions are valid until 8 years from the year of the first interest paid.
  • Section 80U allows deduction of Rs. 75,000 if you are suffering from a disability (40% disability). In case of severe disability (80% disability), the amount of deduction will be Rs. 1,25,000. However, the section covers only the taxpayer but not the dependents.
  • Joint home loan borrowers can claim the maximum tax benefits individually. It means each holder can get a tax rebate of Rs. 1,50,000 for principal repayment under Sec 80C and Rs. 2,00,000 for interest payment under Sec 24.
  • Keep saving taxes on your post-retirement fund by investing into a combination of Tax-saver FD to have liquidity & ELSS to enjoy tax-free higher returns!
  • HUF is a separate entity, and can claim deductions under various Sections of Income Tax.
  • Life insurance surrender value is tax-free, subject to certain conditions. For ULIPs the tax-free redemption period is 5 years while for regular plans the period is 2 years.
  • Debt mutual funds give you an indexation benefit which reduces your tax outgo if you redeem the funds after 36 months.
  • Section 80DDB: Expenses on treatments for specified diseases qualify for deduction from Total Income. The maximum amount of deduction is Rs. 40,000 for patients below 60 years, and Rs. 1,00,000 for senior citizens (Above 60 year of age). This exemption can be availed for treatment of self or dependents.
  • If you are an NRI (Non-Resident Indian), you can claim Income Tax relief granted under provisions of DTAA (Double Taxation Avoidance Agreement) or Section 91 of the Income Tax Act.
  • Section(s) 80QQB and 80RRB of the Income Tax Act, offer relief on royalty income for Authors and from artistic works or patents. Any royalty income from literary work is exempt up to Rs. 3,00,000 under 80QQB, similarly for patents the same exemption is provided under Section 80RRB.
  • Being a salaried employee, you can avail a standard deduction of Rs. 40,000 on your taxes.
  • Indian companies donating an amount to any political party, in any form other than cash, can avail for tax deduction under Section 80GGB.
  • Tax deductions are available on any donations made to political parties in any form other than cash by an individual under Section 80GGC.
  • Expenditure incurred on medical treatment of a dependent disabled relative are subject to tax deduction under Section 80DD. It is limited to Rs. 75,000 for disabled and Rs. 1,25,000 for the severely disabled individual.
  • If you are buying a home for the first time, you can claim income tax deduction on the home loan interest up to Rs. 50,000 per financial year, there are conditions for loan sanction period, value of property etc. You can continue to claim the deduction until you have fully paid your loan.
  • If you make frequent donations to registered charitable organisations or NGO’s, you can claim tax deductions from 10 to 100 percent depending upon the organisation, under Section 80G.
  • Donations made towards rural development and scientific research are eligible for tax deductions under Section 80GGA of the Income Tax Act.
  • You can get relief from capital tax gains under Section 54 of the Income Tax Act. If the proceeds of the house sold are used to purchase another residential property within prescribed time limits, the capital gains are exempted.
  • Any amount received in the form of gift up to Rs. 50,000 is not taxable in the hand of the receiver for a financial year under Section 56 of the Income Tax Act. However, if the amount goes above Rs. 50,000 that the whole received amount is taxable.
  • If you own a hotel or convention centre in specified districts having a world heritage site, you are eligible for tax exemption under Section 80-ID, subject to conditions.
  • If you are in a business of collection and processing of biodegradable waste to generate power or produce biological products than you can gain tax exemptions under Section 80JJA.
  • ULIPs can help you avail significant returns on short-term equity investments while reducing your taxable income by up to Rs. 1,50,000 under section 80C. With ULIPs, your investment returns are safe from the brunt of a short-term capital gain tax. Also, you have an opportunity to maximise your earnings by switching between multiple fund options for as many times as you want in a financial year, during the lock-in period.
  • A registered co-operative society that has income through specific business or activity can claim tax deduction under Section 80P if the income is included in the total gross income of the society.
  • If your annual income is less than Rs. 5,00,000 you can claim tax rebate under Section 87 A of the Income Tax Act. However, the rebate amount is only available for an individual assessee not to HUFs.