The IT department has offered a variety of deductions from taxable income under several sections to encourage taxpayers to save and invest. Despite the fact that 80C is the most well-known, there are other deductions that help taxpayers to lower their tax obligations. Tax exemptions and deductions are permitted under Income Tax (I-T) regulations for expenses other than Provident Fund, tax-saving mutual funds, insurance policies, home loans, and health insurance.
Lesser-known tax breaks
- Covid-19 treatment: The government declared in 2021 that there will be no tax on money that taxpayers receive from their employers, relatives, or friends for the treatment of COVID-19. Those who may have gotten ex-gratia from employers or well-wishers of a family member who passed away from COVID-19 are also eligible for the same compensation. Any such eligible sum that was received in FY2019, FY2020, or FY2021 can therefore be exempted from payment in the present assessment year.
- House Rent: HRA, is a tax benefit available only to salaried employees. Others, including salaried employees who don’t have HRA as part of their compensation package, can claim a tax deduction on rent under section 80GG.
- Medical expenses: Apart from the deduction on premium paid toward a health insurance policy, the income tax rules allow tax breaks for uninsured senior citizen parents, on specified diseases and preventive health check-ups. Taxpayers who pay for the medical treatment, regular-check ups or medicines of their senior citizen parents —those not covered under a medical insurance policy—can claim up to ₹50,000 tax deduction under Section 80D.
- Children’s tuition fee: One parent can claim for up to two children. Therefore, a maximum of 4 children’s deductions can be claimed, i.e. 2 by each parent. Each parent can claim a deduction of up to Rs 1.50 lakh separately every financial year. Please note that the aggregate amount of deduction under sections 80C, 80CCC and 80CCD shall not exceed INR 1,50,000 for the individual parent.
- Principal of home loan: Property should at least be held for five years.
- Stamp duty and registration fee on house purchase: Section 80C of the Income Tax Act allows a deduction for stamp duty, registration charges, and other expenses directly connected with the transfer. The maximum amount of deduction under this section is Rs. 1,50,000.
- Interest on NSC National Savings Certificate: Can be claimed for four years as interest is paid out in the fifth year.
- Interest in saving account: Up to Rs. 10,000 under BOTTA (not applicable to interest from the fixed deposit and recurring deposit)
- Donations: Donations made to a fund backed by the central government can be fully claimed, whereas those made to a private institution are eligible for a 50% deduction under section 80G. (cash donations above Rs. 2000 do not qualify).
- Interest on home improvement loan: Up to Rs. 30,000 under Rs. 2 lakh celling of Section 24 (expenses that add to the property’s value quality)
- Preventive health check-ups up to Rs.5000 quality for deduction under 80D: Deduction on preventive health check-ups falls under the overall Rs.25,000 (Rs.50,000 for senior citizens) ceiling of section 80D
- Deduction for pre-nursery Claim relief on children’s playgroup, pre-nursery and nursery fees: It is possible for any individual who has paid education fees for his or her children to claim this deduction under Section 80C. Parents can deduct the entire amount they have spent on the education of their children under Section 80C. However, the maximum amount of the deduction under Section 80C is Rs. 1,50,000.