5 Income Tax Deductions Nobody Told You About

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income-tax-2012-india-3341090 It’s again the tax time. There are lots of doubts and panics among taxpayers with lots of questions and doubts. Here are 5 Income Tax Deductions Nobody Told You About and learning each of this would save you time and money to a great extend..

1. Expenses for Treatment of AIDS, Parkinson’s, Thalassaemia, etc …

If you have spent money on treatment of a disease like Parkinson’s Disease, Malignant Cancers, Acquired Immune Deficiency Syndrome (AIDS), Chronic Renal failure, Hemophilia or Thalassaemia, you can get an income tax deduction for the same. The upper limit for deduction is Rs. 40,000, or Rs. 60,000 in case of treatment of a senior citizen. Treatment can be for self or a dependent.

2. Donations made to Help Age India, Prime Minister’s Relief Fund, Indian Red Cross Society etc …

A very large number of organizations are covered under 80G, including some of your local charitable trusts. A donation made to any of these organizations is allowed as an income tax deduction. In some cases the deduction is limited to 50% of contributed amount, and in some cases, 100%. Examples of certain organizations which allow 100% deduction:

1. Prime Minister’s National Relief Fund 2. National Defence Fund 3. Prime Minister’s Armenia Earthquake Relief Fund 4. The Africa (Public Contribution – India) Fund 5. The National Foundation for Communal Harmony 6. Approved university or educational institution of national eminence 7. The Chief Minister’s Earthquake Relief Fund, Maharashtra 8. Donations made to Zila Saksharta Samitis. 9. The National Blood Transfusion Council or a State Blood Transfusion Council.

10. The Army Central Welfare Fund or the Indian Naval Benevolent Fund or The Air Force Central Welfare Fund.

3. Rent Paid

If you are a salaried individual receiving HRA, you must be aware that it is partly exempt from income tax. But what if you have to pay rent but do not receive HRA? Or are self-employed? In these cases, rent paid is still allowed as a deduction, but under 80GG; a relatively unknown deduction. However, this deductions is not allowed if: – You, your spouse or minor child own a house in the place where you normally conduct business – You are a member of an HUF (Hindi Undivided Family), and the HUF owns a house in the place where you normally conduct business – You own a house at any other place and claim it as ‘self-occupied’ – You receive / received HRA during the year

Also, the deduction allowed is the least of the following three:

1. Rent paid less 10% of total income 2. Rs. 2,000 per month 3. 25% of total income

4. Contributions made to Congress, BJP etc …

That’s right – contributions to political parties are allowed as a tax deduction under section 80GGC. And what is the upper limit for such a deduction? None! Donations made to electoral trusts are also allowed as a deduction

5. Your Child’s Education Expenses

Many taxpayers don’t know that tuition fee(s) paid for their children are allowed as an income tax deduction under 80C. However, payments in the nature of development fees or donations do not qualify for the same. Also, you can get an income tax deduction for repayment of an education loan taken for higher studies. The loan can be taken for self, spouse or children. But there is a catch here: only the amount of interest is allowed as a deduction; the principal portion of the repayment is disallowed. The deduction here is allowed only for a period of 8 years. Also, you can ask your employer to pay you Children’s Education Allowance and Children’s Hostel Allowance. The former is exempt at Rs. 100 per month, for a maximum of two children, and the latter at Rs. 300 for a maximum of two children.

Author bio: This is a guest article by TaxFile.in – an online portal for efiling of income tax returns