Income Tax Law in India offers a range of deductions that can help you keep more of your hard-earned money in your pocket. While some tax-saving avenues are well-known, there are several lesser-known deductions that often go unnoticed. In this blog, we’ll unveil the top 10 overlooked tax deductions that can make a big difference in your salary payout, help you save money and optimize your tax planning.
- Interest on Education Loan – Section 80E
Have you borrowed an education loan for higher studies for yourself, your spouse or children? If yes, you are eligible to benefit from Section 80E. The interest paid on education loans for higher studies can be claimed fully as deduction under Section 80E. This deduction is available for a specific period of 8 years, starting from the year in which one commences the repayment of loan or until the interest is fully paid, whichever is earlier. It covers loans taken for the taxpayer’s education, or for the education of their spouse, children, or even for a student whom the taxpayer is a legal guardian.
- Deductions in respect of Medical Expenses incurred – Section 80DDB & 80DD
Healthcare costs can be a significant financial burden. However, Sections 80DDB and 80DD provide deductions for medical expenses related to specified diseases and for the maintenance of dependents with disabilities, respectively. Under Section 80DDB, deductions can be claimed for expenses incurred on treating specified diseases upto a limit of INR 40,000 in the case of non-senior citizens & INR 1,00,000 in the case of senior citizens or actual amount incurred whichever is lower. Under Section 80DD, deductions are available for the maintenance of dependents with disabilities. Flat deduction of INR 75,000 is available if the dependent person disability, irrespective of amount of expenditure incurred. If the dependent suffers from severe disability (80% or more), the deduction available if INR 125000.
- Charitable Donations – Section 80G
Contributing to charitable causes not only helps others but can also help you save on taxes. Donations made to eligible charitable institutions can be claimed as deductions under Section 80G. Keeping track of your donations can yield substantial tax savings.
- Interest on home loan for second property – Section 24(b)
If you own multiple house properties and have taken a home loan for the second or subsequent properties, you can still claim a deduction on the interest paid on the home loan under Section 24(b).
- Rent paid – Section 80GG
Are you a self-employed individual or an employee who doesn’t receive House rent allowance, paying huge rent for the accommodation? Section 80GG is your refuge. Individuals who do not receive house rent allowance but pay rent for the accommodation, can claim deduction under Section 80GG. Amount of deduction under this Section shall be the least of the following:
- Actual Rent paid reduced by 10 % of the adjusted total income.
- 5,000/- per month.
- 25% of Adjusted Total Income.
- Interest income – Section 80TTA & 80TTB
Interest earned on savings accounts is eligible for a deduction under Section 80TTA, up to a limit of INR 10,000, or actual interest income from savings account reported under Income from other sources whichever is lower. In the case of resident senior citizens, the deduction can be claimed under Section 80TTB to the extent of INR 50,000, for the interest earned on savings bank account, fixed deposit, post-office deposit, deposits held in co-operative society/banks.
- Investment in Fixed Deposit of a certain tenure in Scheduled banks
Interest earned on fixed deposits is taxable under the head income from other sources. However, if you invest in specific fixed deposits with a tenure of 5 years or more, you can claim a deduction on the invested amount under Section 80C.
- Interest on loan taken for renovation or repair of the house.
Expenditure incurred renovation, repair and maintenance of house property and interest paid on loan taken for such repairs and maintenance of house property by an individual are allowed as deduction under Section 24(b) while computing Income from House Property. Such deduction is available for both self-occupied and let out house property.
- Investment in National Pension Scheme (NPS)
In addition to the deduction under Section 80C, additional deduction under Section 80CCD(1B) to the extent of INR 50,000 can be claimed by an individual for his contribution to NPS.
- Relief under Section 90/91
An individual can claim foreign tax credits on doubly taxed income which is taxed in India as well as abroad provided that the conditions set forth by the Double tax avoidance agreement between India and such foreign country are met.
Conclusion:
The 10 tax deductions discussed in this article are often overlooked but can contribute significantly to reducing your tax liability ensure that you’re not leaving money on the table. To make the most of these deductions, it’s essential to understand the provisions of the Income Tax Act and stay updated with any changes in tax laws. We at BCL India, TDS service provider, is here to help you navigate these deductions and optimize your tax planning strategy to maximize your savings.
