Most
taxpayers are familiar with the tax deductions under Sec 80C and 80D. But there are
several other deductions that a taxpayer can avail. We list out a few.
Home loan processing fee and other charges
Home loan customers are aware of the tax benefits on the loan interest and principal repayment. But even the processing fees qualifies for deduction under Section 24. "The processing fees and other charges are considered as interest and can be claimed as a deduction," says Vaibhav Sankla, Director, H&R Block. This even includes the prepayment charges.
Interest on personal loan for down payment
Section 24 covers more than just interest on the home loan. It also includes the interest paid on any loan taken for the purchase, renovation or reconstruction of a house. "The tax laws do not specify that only interest on a 'housing loan' would be eligible for deduction," says Sankla.
Even loans taken from friends or family members are eligible for deduction under Section 24. But the taxman may want to see a loan agreement between the two parties and the interest earned by the lender will be taxed as his income.
Tax deduction for disabilities
If a taxpayer suffers from 40% disability (as certified by a government hospital), he can claim deduction of Rs 50,000 under Sec 80U. For a disabled dependent, he can claim a deduction of Rs 50,000 under Sec 80DD. In both cases, if the disability is severe (80% or above), the deduction is Rs 1 lakh.
This is a flat deduction and does not depend on actual amount spent. However, the disabled person should be wholly or mainly dependent on the taxpayer for maintenance, and should not have claimed deduction for disability under Section 80U separately.
Clubbing income of disabled child
If you invest in the name of your spouse or minor child, the income from the investment will be clubbed with your income under Sec 64 and taxed accordingly. However, if the child is disabled, the income from investments made in his name will not be clubbed with the income of parents. Parents can use this provision to invest in taxable instruments like fixed deposits and debt funds.
Deduction for specified illnesses
A deduction of up to Rs 40,000 can be claimed if a taxpayer suffers from any ailment specified under Sec 80DDB or has a dependent who is a patient. For senior citizens, the deduction is higher at Rs 60,000. The diseases include certain neurological ailments, cancers, AIDS, kidney failure and haematological disorders.
However, if the amount spent is reimbursed by the employer or insurance, the taxpayer is not eligible for deduction. If he gets partial reimbursement of the expenses, the balance can be claimed as deduction.
Home loan processing fee and other charges
Home loan customers are aware of the tax benefits on the loan interest and principal repayment. But even the processing fees qualifies for deduction under Section 24. "The processing fees and other charges are considered as interest and can be claimed as a deduction," says Vaibhav Sankla, Director, H&R Block. This even includes the prepayment charges.
Interest on personal loan for down payment
Section 24 covers more than just interest on the home loan. It also includes the interest paid on any loan taken for the purchase, renovation or reconstruction of a house. "The tax laws do not specify that only interest on a 'housing loan' would be eligible for deduction," says Sankla.
Even loans taken from friends or family members are eligible for deduction under Section 24. But the taxman may want to see a loan agreement between the two parties and the interest earned by the lender will be taxed as his income.
Tax deduction for disabilities
If a taxpayer suffers from 40% disability (as certified by a government hospital), he can claim deduction of Rs 50,000 under Sec 80U. For a disabled dependent, he can claim a deduction of Rs 50,000 under Sec 80DD. In both cases, if the disability is severe (80% or above), the deduction is Rs 1 lakh.
This is a flat deduction and does not depend on actual amount spent. However, the disabled person should be wholly or mainly dependent on the taxpayer for maintenance, and should not have claimed deduction for disability under Section 80U separately.
Clubbing income of disabled child
If you invest in the name of your spouse or minor child, the income from the investment will be clubbed with your income under Sec 64 and taxed accordingly. However, if the child is disabled, the income from investments made in his name will not be clubbed with the income of parents. Parents can use this provision to invest in taxable instruments like fixed deposits and debt funds.
Deduction for specified illnesses
A deduction of up to Rs 40,000 can be claimed if a taxpayer suffers from any ailment specified under Sec 80DDB or has a dependent who is a patient. For senior citizens, the deduction is higher at Rs 60,000. The diseases include certain neurological ailments, cancers, AIDS, kidney failure and haematological disorders.
However, if the amount spent is reimbursed by the employer or insurance, the taxpayer is not eligible for deduction. If he gets partial reimbursement of the expenses, the balance can be claimed as deduction.
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Interest from savings accounts
The interest you earn is fully taxable but there is a small
window of exemption. Up to Rs 10,000 interest earned on savings banks account
is exempt under Sec 80TTA. Also, up to Rs 3,500 interest from a post office
savings account is exempt from tax under Sec 10(15)(i).
If you hold a joint account, the exemption is higher at Rs 7,000. "Since both provisions are separate, one can claim the benefits under both sections," says Suresh Surana, Founder, RSM Astute Consulting.
House rent exemption without HRA
Many pay house rent but cannot avail exemption because there is no HRA component in their salary. Under Sec 80GG, you can claim a deduction for the rent even if you don't get HRA. However, the taxpayer should not be drawing any housing benefit.
Nor should he or spouse or child be owning a house in the city where he stays. The exemption is limited to the least of the following: rent paid less 10% of total income; or Rs 2,000 a month; or 25% of total income.
Adjusting losses against gains
If you lost money in stocks or on other investments during the previous financial year, there is a silver lining. You can adjust some losses against capital gains from the sale of stocks, property, gold or debt funds. Shortterm capital losses can be set off against both short-term capital gains as well as taxable long-term capital gains.
However, long term capital losses can only be set off against taxable long-term capital gains. Long-term losses from stocks and equity funds cannot be adjusted against any gain.
Section 80G donations
Donations under Sec 80G are generally not included in Forms 16. "The CBDT circular on TDS does not clarify as to whether deduction under Sec 80G needs to be considered by employers," says Surana.
You will have to claim this deduction at the time of filing your return. Depending on the organisation or fund you have contributed to, you can claim a deduction of 50-100% of the donated amount. But the deduction cannot be more than 10% of your gross total income.
If you hold a joint account, the exemption is higher at Rs 7,000. "Since both provisions are separate, one can claim the benefits under both sections," says Suresh Surana, Founder, RSM Astute Consulting.
House rent exemption without HRA
Many pay house rent but cannot avail exemption because there is no HRA component in their salary. Under Sec 80GG, you can claim a deduction for the rent even if you don't get HRA. However, the taxpayer should not be drawing any housing benefit.
Nor should he or spouse or child be owning a house in the city where he stays. The exemption is limited to the least of the following: rent paid less 10% of total income; or Rs 2,000 a month; or 25% of total income.
Adjusting losses against gains
If you lost money in stocks or on other investments during the previous financial year, there is a silver lining. You can adjust some losses against capital gains from the sale of stocks, property, gold or debt funds. Shortterm capital losses can be set off against both short-term capital gains as well as taxable long-term capital gains.
However, long term capital losses can only be set off against taxable long-term capital gains. Long-term losses from stocks and equity funds cannot be adjusted against any gain.
Section 80G donations
Donations under Sec 80G are generally not included in Forms 16. "The CBDT circular on TDS does not clarify as to whether deduction under Sec 80G needs to be considered by employers," says Surana.
You will have to claim this deduction at the time of filing your return. Depending on the organisation or fund you have contributed to, you can claim a deduction of 50-100% of the donated amount. But the deduction cannot be more than 10% of your gross total income.
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