Are you one of them who rush into gathering resources in the last-minute to save tax? Often, many fail to plan their tax deduction and still many are not aware of the investments and expenses that can be claimed for tax deductions under various sections of the income tax act. To help you out, we have compiled 10 most overlooked tax deductions that can fetch you tax benefits.
1. Donations – 80G
Donations made toward social causes is eligible for tax deductions under section 80G of income tax act. However, for funds exceeding INR 2000, the payment cannot be made in cash to claim tax deduction. One should also note that donations made to registered charitable institutions are only allowed for tax benefits. Tax deduction is allowed either up to 50% or 100% depending on the causes.
2. ELSS Mutual Funds – 80C
Equity Linked Saving Scheme (ELSS) mutual fund is not only an investment instrument, but it can also fetch you tax benefits for up to INR 1.5 Lakhs under section 80C. ELSS funds have lock-in period of 3 years.
3. Tax-saving Fixed Deposits – 80C
One can claim tax deduction for up to 1.5Lakhs through tax-saving fixed deposits. This type of investments has a lock-in period of 5 years. You cannot withdraw prematurely and get loan against this fixed deposit.
4. Tuition Fees- 80C
Not many are aware that tuition/ education fees paid for their children can get tax deduction for up to INR 1.5 Lakhs under section 80C. This is much helpful when you did not have investments eligible under this section which usually come with a lock-in period.
5. Life and Medical Insurance Premiums- 80C & 80D
The life insurance taken for your family is completely non-taxable and moreover you can claim tax deduction for up to INR 1.5 Lakhs under section 80C.
For medical insurance taken for a senior citizen is eligible for tax deduction of up to INR 30,000 and INR 25,000 for others under section 80D.
6. Public Provident Fund (PPF) – 80C
One can claim tax deduction for up to INR 1.5 Lakhs through PPF account under section 80C of the income tax act. PPF investment will have a lock-in period of 15 years. However, you can make partial withdrawals from 7th year onwards.
7. Interest on Education Loan- 80E
Interest paid in education loan is eligible for tax deduction benefits for up to 7 years under section 80E of the income tax act.
8. Disabilities- 80DD
Individuals having 40% of specified disabilities can get a flat tax deduction for up to 75,000 and up to 1.25 lakhs for severe disabilities. This can be availed by the person who is taking care of the disabled individual. To get the tax benefit, the disability should be certified by a Government hospital.
9. Home Improvement Expenses- 24B
Loans taken towards home repair or reconstruction is eligible for tax deduction under section 24B. You can claim tax deduction for up to INR 30,000.
10. Medical Treatment Towards Specified Illnesses- 80DDB
Expenses on medical treatments for severe illnesses such as cancer, AIDS, neurological ailments etc can be claimed tax benefits under section 80DDB. One can claim tax deduction for up to INR 40,000 and INR 1,00,000 for senior citizens.
Look back at the financial year and check if you had made investments in any of the above-mentioned items to claim tax-benefits.