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6 little-known income tax deductions

May 15, 2014 16:32 IST

6 little-known income tax deductions

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A V Suresh

There is more to tax deductions than Section 80C. These six can help you optimise your tax savings.

You might have already submitted your tax saving and investment declaration to your employer. But, are those the only deductions available to you?

The answer is NO.

You will have a second chance to claim further deductions when you actually file your tax returns. While doing this, you can also claim those deductions which you might have missed communicating to your employer.

Here are six lesser known deductions which you can make use of for tax filing process:

1. Section 80G

Income Tax Act provides an opportunity to claim deduction on charities to certain recognised organisations.

You can claim anywhere from 50 to 100 per cent of such donations u/s 80G of the Income Tax Act. Hence, you can check if the list of recognised institutions includes your donated institution too.

Keep the receipts handy while filing, though.

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2. Section 24

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This section is also popularly known as tax benefits under home loan.

There is a popular myth that the tax deduction limit under this section is Rs 1,50,000.

However, this limit only applies to self occupied houses.

For rented homes, there is no upper limit on the amount that can be claimed.

Hence, you can claim as much as interest you are paying on the home loan taken for a house which you have rented.

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3. Section 80EE

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This is a newly introduced section for home loan buyers. It is an additional tax benefit on home loan available only for the first time home buyers.

You can claim up to Rs 1 lakh through this section.

In case you are not able to exhaust this limit, you can even carry forward the balance for the next assessment year.

There are limits of Rs 25 lakh on home loan sanctioned and Rs 40 lakh on value on residential property.

This is a boost for all first time home buyers.

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4. Section 80DD/DDB

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This is also a neglected section.

Under section 80DD, you can claim deduction on medical expenses paid for handicapped dependents.

Limit for deduction is up to Rs 50,000 and Rs 1 lakh depending on severity.

Under section 80DDB, costs incurred for treating specified illnesses can be claimed up to Rs, 40-60,000 per annum.

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5. Section 80TTA

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Until couple of years back, the entire savings bank interest would have been added to the total income and taxed.

However, a new section 80TTA says that deduction up to Rs 10,000 is provided for interest on savings bank account.

This can be claimed during tax filing.

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6. Section 80GG

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This is another lesser known deduction available in the Income Tax Act.

It is a section available exclusively for those who do not receive HRA from their employer. You can claim deduction up to Rs 2,000 per month.

It is also available for self-employed people.

Conclusion

Most of the people concentrate on sections like 80C and ignore many other sections. Hence, before filing your taxes, carefully list down all the deductions available in the Income Tax Act for individuals and then take the full benefit of all these sections.


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