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4 Lesser Known Tax Deductions You Can Claim To Save More Money
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Disclaimer: This Article is for information purposes only. The views expressed in this Article do not necessarily constitute the views of Kotak Mahindra Bank Ltd. (“Bank”) or its employees. The Bank makes no warranty of any kind with respect to the completeness or accuracy of the material and articles contained in this Article. The information contained in this Article is sourced from empanelled external experts for the benefit of the customers and it does not constitute legal advice from the Bank. The Bank, its directors, employees and the contributors shall not be responsible or liable for any damage or loss resulting from or arising due to reliance on or use of any information contained herein. Tax laws are subject to amendment from time to time. The above information is for general understanding and reference. This is not legal advice or tax advice, and users are advised to consult their tax advisors before making any decision or taking any action.
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You may have heard of the many ‘popular’ ways to save tax — like investing in the Public Provident Fund (PPF), purchasing a life insurance policy, putting your money in a tax-saver FD, or taking a home loan for buying or building a house.
But the Income Tax Act, 1961 has many lucrative provisions that can help you optimise your tax savings further. And you may not even be aware of these lesser-known deductions and benefits.
Not to worry though, because today, we’ll take you through 4 income tax deductions that are not as commonly known.
1. Section 80D: Medical expenses and the cost of preventive health check-ups
You may be familiar with the fact that health insurance premiums are paid for policies taken for yourself, your spouse, dependent children, or your parents. Did you know you can also claim various other costs under this section as deductions? That’s right, here’s a preview of what else qualifies for deduction under section 80D.
Preventive Health Check-ups:
Medical Expenses
Medical expenses incurred by senior citizens (60 years and above), and who do not have any active health insurance policies
Self, spouse, or dependent children
lower of ₹ 50,000 or actual expenses
Parents
lower of ₹ 50,000 or actual expenses
2. Section 80G: Specific donations made
In the past year, you may have made some donations to organisations that offered relief during the pandemic. Alternatively, you may even have the habit of regularly contributing to various funds backed by the government or run by private institutions.
Section 80G of the Income Tax Act, 1961 recognises many such donations as eligible deductions. Here is a preview of some such donations that qualify.
Funds or organisations to which donations are eligible for a 100% deduction
Funds or organisations to which donations are eligible for a 50% deduction
Funds or organisations to which donations are eligible for 100% deduction are subject to a qualifying limit of 10% of adjusted gross total income*
Funds or organisations to which donations are eligible for 50% deduction are subject to a qualifying limit of 10% of adjusted gross total income*
*Adjusted gross total income refers to gross total income as reduced by any income on which income tax is not payable under Income Tax provisions and by any amount in respect of which the assessee is entitled to a deduction under sections 80C to 80U except 80G.
3. Section 80C: Tuition fees for your children
If you are the parent of children who are pursuing full-time education, you will no doubt agree that the fees of education are becoming very essential. While that may be a downer, the good news is that the tuition fees paid for any ‘2’ children qualify for tax deductions under Section 80C of the Income Tax Act, and the same is subject to a maximum limit of ₹1.5 lakhs.
The said full time education fees should have been paid to universities, colleges, schools or other educational institutions situated within India. This is one of the lesser-known tax benefits that Section 80C offers.
4. Section 24(b): Home improvement loan repayment
Taking a home loan to purchase or construct a house qualifies for tax deduction. But did you know that a loan taken for home repairs and improvements can also give you tax benefits?
Yes, that’s right! As per Section 24(b) of the Income Tax Act, home repairs and improvement loans and home renovation loans give you tax benefits too. The interest component of your loan repayments is tax deductible up to ₹30,000 per financial year.
Conclusion
Now that you are aware of these lesser-known deductions offered by the Income Tax Act, 1961 you can optimise your tax planning and maximise your tax savings. Check if you are eligible for any of these deductions before you file your Income Tax Return and claim them so that you can reduce your tax liability as much as possible. And if you still need to pay taxes on your income, you can do so easily with Kotak’s seamless tax payment solutions. Whether you are a Kotak customer or not, you’ll find that paying your taxes on the e-filing portal through the Kotak net banking portal or the Kotak payment gateway is quick, simple and easy. So, choose Kotak to make your tax payments effortless and hassle-free!
This Article is for informational purposes only. The views expressed in this Article do not necessarily constitute the views of Kotak Mahindra Bank Ltd. ("Bank") or its employees. The Bank makes no warranty of any kind with respect to the completeness or accuracy of the material and articles contained in this Article. The information contained in this Article is sourced from empanelled external experts for the benefit of the customers and it does not constitute legal advice from the Bank. The Bank, its directors, employees and the contributors shall not be responsible or liable for any damage or loss resulting from or arising due to reliance on or use of any information contained herein. Tax laws are subject to amendment from time to time. The above information is for general understanding and reference. This is not legal advice or tax advice, and users are advised to consult their tax advisors before making any decision or taking any action.
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