These deductions can help lower your taxable income: Check list
What's the story
The Indian Income Tax Act, 1961, offers a variety of deductions to help taxpayers reduce their taxable income. However, many people tend to overlook these provisions that could significantly lower their tax liability. While popular sections like 80C (investments) and 80D (health insurance) are widely utilized, others are often missed due to lack of awareness or understanding. Here are some of those sections that you can claim before filing your income tax return.
Rent deduction
Section 80GG
Section 80GG of the Income Tax Act allows a deduction for rent paid without House Rent Allowance (HRA). The deduction is available up to ₹5,000 per month or 25% of total income, whichever is lower. However, this section applies only if you do not own a house in the same city as your workplace.
Medical deduction
Section 80DDB
Section 80DDB provides a deduction for expenses incurred on the treatment of specified diseases like cancer or Parkinson's. The deduction is available up to ₹40,000 for individuals and ₹1 lakh for senior citizens. To avail this benefit, one needs to have a prescription from a specialist doctor recommending such medical treatment.
Disability care
Section 80DD
Section 80DD offers a deduction of ₹75,000 (normal disability) or ₹1.25 lakh (severe disability) for expenses incurred on the care of a disabled dependent. The expenses can be for medical treatment, training, and also for life insurance premiums of the dependent. This section helps taxpayers claim deductions for their contributions toward caring for differently-abled family members.
Personal disability
Section 80U
Section 80U provides a flat deduction of ₹75,000 (40-80% disability) or ₹1.25 lakh (severe disability, 80% or more) to taxpayers with disabilities. Unlike Section 80DD which benefits family members of disabled taxpayers, this section directly helps the individual taxpayer with a disability. To claim this deduction, only a medical authority's certificate certifying the disability is required.
Education loan
Section 80E
Section 80E allows parents/students who have taken loans for higher education to claim a 100% deduction on the interest paid for eight years (or until full repayment). There is no limit on this deduction and it applies to higher education in India or abroad. This section helps taxpayers reduce their taxable income by claiming deductions on interest payments made toward educational loans taken for themselves or their children.
Homebuyer benefit
Section 80EE
Section 80EE applies to first-time homebuyers who bought their first home between April 1, 2016, and March 31, 2017. The property value must be less than or equal to ₹50 lakh, and loan sanctioned amount should be less than or equal to ₹35 lakh. An additional deduction of up to ₹50,000 per year on the interest paid on the home loan can be claimed under this section.
Affordable housing
Section 80EEA
Finally, introduced in Budget 2019, Section 80EEA offers an additional deduction of up to ₹1.5 lakh for interest on loans taken for affordable housing. The stamp duty value of the property must be less than or equal to ₹45 lakh, and the loan should have been sanctioned between April 1, 2019, and March 31, 2022. This section is applicable only if you're not claiming a deduction under Section 80EE.