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2015

The Expenses You must Claim for Tax Benefits

Tax deductions you hardly knew

  • Although 80C deductions are the most popular ones there are some less known deductions that may also provide some major tax savings.
  • Though most deductions need to be claimed before your employer has deducted the income tax, the income tax return filing stage is your last chance to claim the missed tax benefits.
  • Check this list of deductions often forgotten by taxpayers to avoid remorse later.

Medical Expenditure

  • While many are aware of the medical insurance premium that can be claimed as deduction, few are aware that the expenses incurred on preventive medical tests too can be claimed. Note that the total amount that you can claim for expenditure incurred for preventive medical tests of self, spouse, dependent children and parent would be restricted to Rs 5,000.
  • Expenditure incurred for treatment of prescribed ailments of self, spouse, dependent children or parent can be claimed for an amount up to Rs 40,000 and Rs 60,000 for treatment of senior citizens (Rs 80,000 for treatment of super senior citizens from FY 2015-16) under Section 80DDB.

Education Loan

  • It is a misnomer that only the education loan taken for your child can be claimed for tax benefit. You can claim deduction for the entire interest paid on education loan, even if it is meant for the higher studies of your spouse or yourself. There are no restrictions on the amount you can claim.
  • Hitherto, this deduction was available only for regular courses, but the scope was widened under the Union Budget 2009. Now, the interest on loans taken for vocational courses too can be claimed under the Section 80 E.

NPS

  • You can save not just by your own savings, but what your employer has paid for you. Starting April 2011, employer contributions to NPS up to 10% of the employee’s salary qualify for an additional deduction under Section 80 CCD (2).
  • An additional allowance of Rs 50,000 has been granted under the Section 80 CCD 1(B), starting financial year 2015-16 for direct investment into NPS by the individual taxpayers.

First Home

  • First home buyers can claim a separate deduction of Rs 1 lakh under freshly laid Section 80EE, only for Assessment Years 2014-15 and 2015-16. So, those who have availed of a loan of up to Rs 25 lakh during FY 2013-14 can claim this deduction. However, the value of your home shouldn’t be more than to Rs 40 lakh if you want to save tax using this house property deduction. This is a limited term tax benefit and this assessment year is your last chance to claim this.

Pre-EMI Interest

  • Have you booked a home during an under-construction phase using a loan? Don’t worry about the pre-EMI interest outgo before possession. You can claim tax benefit on the interest paid during the construction period in five equal installments starting from the year you get the possession.

Repairs

  • If you own a home and taken loan for carrying out repairs, then the interest on the loan can be claimed as deduction for an amount up to Rs. 30,000. However, if the house is let out then the limit of Rs. 30,000 shall not apply.

New equity investors

  • If you have taken baby steps into stock-market investing during the last financial year then you can claim 50% of the amount invested as deduction. The government has capped the total tax benefit for first time equity investors to Rs 25,000. So, if you invest Rs 50,000 in the stock market for the first time in accordance with the Rajiv Gandhi Equity Savings Scheme, then you can claim deduction of Rs 25,000 ( 50% of the amount invested) under section 80CCG. Your annual taxable income shall not be more than Rs. 12 lakhs

Losses can be carried forward

  • You might panic when you have made losses in stock market investing or even in property transactions. But these losses can come to your rescue in axing the taxes. If you have made a short-term loss then the same can be adjusted against the capital gains you made – whether short-term or long-term. But long-term capital losses can be adjusted only against long-term capital gains.
  • So, if you made loss of Rs 3 lakh, by selling shares within a year of buying, then it would be termed short-term loss. This loss can be adjusted against gains of say Rs 10 lakh that you made on selling your property, thus bringing down the liability to Rs 7 lakh.
  • Even if you don’t have any capital gains to adjust the loss during a particular financial year, you can carry forward such a loss, upto four to eight succeeding years, depending on the type of loss incurred.
  • If you failed to claim these deductions while filing returns, you always have the option to rectify your return instead of foregoing a wholesome tax deduction.
Financial Management