Tax Breaks beyond Sec 80C – Know them

Tax-Breaks

While most of us are aware and familiar with the tax deductions under Sec 80C, it is important that we do not miss out on the other available deductions. Here’s list of deductions you can avail.

  1. Medical Insurance Premium. Sec 80D: We sure cannot miss out on this one. When someone in the family, meets with an accident, or succumbs to an illness, the medical expenses can completely wipe out the savings of the family. Paying adequate medical insurance premium for a policy is a financial discipline,that not just safeguards the family’s savings but secures the health of the family too. Coming down to it being a tax deduction, Premium paid for medical insurance is eligible for deduction under Sec 80D.
    • An Individual can claim a maximum of 25000/- . Eligible if the premium is paid for spouse or any dependent child in the family.
    • HUF can claim a maximum of 60,000/- as deduction and the policy can be taken on any family member in the household.
    • If policy is taken for a parent, the individual can claim an additional 25000/-. If the parent is a senior citizen then the eligible deduction is 30000/-
    • Senior citizen paying a medical insurance premium is eligible for a deduction of INR 30000/-
  1. Expenses incurred on the health of a disabled person. Sec 80DD: A taxpayer can also avail deduction on the health and maintenance of a disabled person. The list of dependents include spouse, children, brother or sister.
    • Maximum deduction that can be claimed under this section Rs 75000/- per annum.
    • This amount can be increased to INR 125000/- depending on the severity of the disability.
    • A copy of a certificate issued by the civil surgeon or medical authority along with Form 10-1A is a must to claim the deduction.
    • Disability also includes autism, mental retardation and cerebral palsy.

 

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  1. Expenditure on a specified disease. Sec 80DDB: Avail the deduction under this section for expenses incurred for a spouse, dependent children, brother or sister if the disease is listed under Rule 11-DD of the Income Tax Act. Some of the diseases include malignant tumors, haematological disorders and AIDS.
    • The deduction will be the actual expense incurred or INR 40,000/- whichever is less.
    • If the expenditure is incurred for a senior citizen above the age of 60, the amount is 60,000 and if the person is over the age of 80 the deduction limit is 80,000/-
  1. Interest paid on educational loan. Sec80E: Any educational loan taken for self, spouse, children, brother or sister. Also if the taxpayer is a legal guardian of the student for whom the loan is availed.
    • There is no deduction on the limit.
    • The interest paid on the loan must be a one taken for higher education. Any education after completing class 12.
    • The deduction is available for 8 years from the year from which the interest payment began.
  1. Donations made to temples and certain funds. Sec 80G: A slightly tricky one to understand, the eligible deduction under this section should not exceed 10% of the adjusted gross total income. This is calculated as under

 

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A taxpayer is eligible for the deduction when the donation is towards a fund listed by the Central government. The deduction is also allowed when the amount is donated for the renovation of temples, mosques and churches.

Some funds as notified by the Central Government are the Jawaharlal Nehru Memorial Fund, Prime Minister’s Drought Relief Fund, National Children Fund, Prime Minister’s National Relief Fund, Swachh Bharat and the Clean Ganga Fund.

  • No deductions for cash donations made for an amount of above 10000/-
  1. Donation to specified institutions. Sec 80GGA: If the taxpayer has made donations for the purpose of research or for the development of science and technology to a university or college, approved by the Central government then such donation is also eligible for deduction.
    • Deduction not available to the taxpayer whose income is from a business or profession
    • No deductions for cash donations made for an amount of above 10000/-
  2. Donations made to political parties. Sec 80GGC: Claim the deduction under this section if you have donated to a political party. There is no ceiling for the donation, however cash donations above 10,000/- are not eligible for deduction.
  3. Royalty income to the Author. Sec 80QQB: If the taxpayer has authored a book the royalty received from the same, if lump-sum, the eligible deduction is INR 3,00,000/- . When the royalty is not received as a lump-sum, then the amount received as royalty that is eligible for deduction should not exceed 15% of the total book revenue.
  4. Interest earned from savings account. Sec 80TTA: Eligible deduction is INR 10,000/- This income will also appear under the head income from other sources before it is claimed as a deduction.

The above mentioned deductions are all subject to the maximum eligible deduction a taxpayer can avail under the tax bracket or under the income head. Call a financial advisor today to know more about your eligible tax deductions.

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