Did you know about deductionsover and above Rs. 1,50,000
outside of Section 80C of Income TaxAct?
While large section of society is averse to pay taxes, people can always use
the rightful deductions to lower their taxes. To put it plainly, a tax
deduction lowers your taxable income, which therefore lowers your tax
liability. One should not misuse these deductions.
In our practical experience, taxpayers at large are well aware about the
deductions under section 80C available to them upto the amount of Rs.
1,50,000 and are investing in one or other mode as discussed in our
PERMISSIBLE DEDUCTIONS below
It may be important to know some of the following lesser known deductions
which are available over and above Rs. 1,50,000totaxpayers:
1. Principal Repayment on housing loan -Additional deduction up to
Rs.150,000*is allowed if the specified conditions are fulfilled.
2. Mediclaim Insurance, Preventive Health Checkup (including routine
medical tests conducted by assessee and his family members) and
amount of medical expenses actually incurred during the year – Rs. 25,000
for members less than 60 years of age and Rs. 50,000 for other members.
3. Interest on loan taken for purchase of Electric Vehicle up to Rs.1,50,000.
4. Investment in National Pension Scheme to the tune of Rs. 50,000 is
permissible as additional deduction.
5. In absence of HRA, rental accommodation is eligible for deduction of lower
of Rs. 5000 per month or 25% of Total Income or Rent Paid in excess of 10%
of Total Income, when assessee do not own any residential property,
subject to filing declaration in Form 10BA.
For more information and conditions of aforementioned deductions, please
refer ensuing paras of our knowledge.
Deductions under Chapter VI of the Income Tax Act, 1961
Life Insurance Premium
You can submit Life insurance Premium paid receipts. These receipts can
be in the name of self/spouse/children. Life cover should be at least 10
times of premium paid.
Contributions by an individual to EPF,PPF,RPF
Passbook copy of PPF (Public Provident Fund) or stamped Provident
Fund contribution receipts. This can be Self/Spouse/children
Deposit in Sukanya SamruddhiAccount Scheme
Sukanya Samruddhi Account passbook or Payment challan/slip
confirming the deposit.
Contribution to notified Unit-LinkedInsurance Plan (ULIP) of MutualFund
Statement of account of the units to the credit of his account or Receipt
of contribution made to ULIP during the financial year.
Stamp Duty and Registration Feespayments for purchase/construction
of residential house property
Receipt of Stamp duty, registration fees & other expenses, received while
purchasing of such residential house property.
Repayment of Principal amount of Housing Loan.
Loan Statement with the total interest and principal paid/due for current
financial year.
Purchase of electrical vehicle
From FY 2019-20, deduction up to 1,50,000 can be claimed on interest
portion of loan taken from financial institution for purchase of electrical
vehicle.
Contribution made to a Political Party
– Deduction under this section, is allowed to a taxpayer other than
company, local authority and an artificial juridical person wholly or
partly funded by the government, for any amount contributed to any
political party or an electoral trust.
– Deduction is allowed for contribution done by any way other than
cash.
– Receipt received from political party or electoral trust for contributions
made is required for claiming deduction.
Interest on loan taken for higher education:
Education loan certificate and interest certificate from Bank certifying
eligibility and amount for deduction
Donations to certain funds, charitable institutions, etc.
– Donation receipts are to be submitted. Confirm registration under
section 80Gmentioned on the donation receipt
– However, cash payments for more than Rs. 2,000 are not eligible for
such deductions.
Deduction for Rent paid
– Where no house property is owned by the assessee, deduction in respect
of Rent Paid for the rental accommodation can be claimed.
– Maximum deduction is lower of below:
• Rs.5000 permonth
• 25% of Total Income
• Rent Paid less 10% of Total Income
– Submit declaration in Form 10BA.
Documents required for claiming deduction for the allowances
received from your employer
• Leave Travel Allowance
The bills (travel tickets) for your travel against LTA can be claimed. LTA
can be claimed twice in a block of four years. The current block is 2018 to
2021.
• Other allowances to be claimed as deduction based on submission of
actual bills:
– Books and periodicals
– Mobile, internet and telephone
– Uniform Expenses
Important Note for Employees:
• It is advisable to keep copies of all your original documents for your
future reference.
• If you join a new company during the middle of the Financial Year, do
inform them about your previous income details and submit fresh
Income Tax declaration to new employer. Don’t claim deduction at both
employments, it may lead to tax payment at the time of return filing.
• Documents are to be submitted before February. However, you may
provide a declaration for recurring investments/payments to be made
for February and March of the year.
• Any deviation from amount declared to
employer and amount actually invested/paid will be adjusted in tax
deduction by employer for February and March.