10 lesser known Income Tax Deductions:

We all know about the
popularly know
deductions like
deduction u/s. 80C &
80D. But many times
we use to forget to
claim many other
deductions which are
available under the
Income Tax Act, which
can reduce our tax
burden significantly. In
this article we
discussed 10 such
lesser know deductions
which taxpayers tend to forget to claim while filing there Income Tax Return.

1. Set off of Capital Loss Against Capital Gain
While most of us know that we need to pay taxes on short term or long term
capital gains, not many are aware of the fact that capital losses, if any, can be
balanced off against gains. So, for instance, if you have made a long-term capital
gain of Rs 15 lakh by selling off your property and long-term capital loss of Rs 3
lakh by selling stocks which are either not listed or are sold off market , the total
taxable amount would Rs 12 lakh.
Please note Capital Gain on Sale of Shares sold through Stock Exchange can not
be set off against other capital gain as profit from sale of shares of listed
companies through stock exchange in exempt.
It is important to note that short term losses can be balanced off against both
short term as well as long term capital gains. However, long term capital losses
can only be balanced off against long term capital gains.
Read more – Carry Forward and Set Off of Losses – Income Tax

2. Deductions under section 80GG in respect of rent paid : Deduction to the extent
of Rs 2,000 per month or 25 per cent of total income (whichever is less) is
available under Section 80GG of the I-T Act in respect of rent paid by an
individual on his accommodation, provided the individual does not get any house
rent allowance.
Read More on this – Section 80GG Deductions – For rent paid

3. Medical treatment of specified ailments under section 80DDB:- Deductions of
expenses on medical treatment of specified ailments (such as AIDS, cancer and
neurological diseases) can be claimed under Section 80DDB. The maximum
amount of deduction allowed from gross total income is restricted to Rs 40,000
(which goes up to Rs 60,000 if the age of the person treated is 60 years or more)
on condition that no medical reimbursement is received from any insurance
company or employer for this amount.
In order to claim this deduction, however, you will have to submit Form 10-1 from
a specialist doctor working in a government hospital in India, confirming the
treatment of the disease.
Read More on section 80DDB – Deduction under section 80DDB with FAQ

4. Deduction under section 80U for Person with disability:- Under Section 80U of
the Act, an individual who is certified by the prescribed medical authority to be a
person with disability shall be allowed a deduction of Rs 50,000 and an individual,
who is certified as a person with severe disability, shall be allowed a deduction of
Rs 75,000. W.e.f. 01.04.2010 this limit has been raised to Rs. 1 lakh.
Read More on Deduction Under Section 80U – Deduction U/s. 80U for disabled
persons

5. Charitable deductions under section 80G: Deduction is also available under
Section 80G of the I-T Act in respect of donations made by an individual to
certain funds, charitable institutions and so on. There is no restriction on the
amount of charity. The rate of deduction, however, is either 50 or 100 per cent,
depending on the choice of trust. Also, donations must be made to registered
institutions only.This includes any amount contributed to a recognised political
party. It can be claimed as a deduction under Section 80GGC (80GGB for
corporates). This is a new deduction and was introduced in April 2010.
Donations to institutions involved in scientific research or rural development get
exemption under Section 80GGA. The donation can also be made to an electoral
trust that works for conducting elections. Interestingly, unlike other deductions,
there is no ceiling on the amount that can be claimed as deduction. Of course,
this doesn’t mean one can claim deduction for cash payments. The deduction is
available only if the sum goes into the party coffers. The quantum of deduction
depends on the nature of the organisation. For instance, money given to certain
establishments, such as the National Defence Fund, the Prime Minister’s National
Relief Fund and the Chief Minister’s Relief Fund enjoy 100% deduction.On the
other hand, NGOs such as Child Rights and You, Helpage India and the National
Children’s Fund give you only 50% deduction. So, it’s a good idea to find out how
much deduction is available before you write out a cheque. However, you cannot
use this route to evade tax by bringing down your income tax slab. There is a
ceiling on the deduction a taxpayer can claim in a year. The quantum of
deduction is limited to 10% of the gross total income of the donor. Also, only
cash donations are taken into account. Donations of food, clothes and medicines
do not qualify for such a deduction.
Read more on Deduction Under Section 80G – Deduction U/s. 80G of Income Tax
Act, 1961 for donation

6. Interest on loan taken for higher education & vocational courses. :- Taxpayers
also tend to forget that the interest paid on an education loan taken for higher
studies or vocational curses qualifies for deduction under Section 80E of the I-T
Act. Also, effective April 1, 2008, the said deduction is also available where the
loan is taken for the purpose of higher education of spouse or children of the
individual or the student for whom the individual is a legal guardian. Thus, if you
have taken a loan for higher education, don’t forget to make your claim. Also
remember that the deduction benefit on interest is allowed for maximum eight
years, or till the interest is fully paid.
Read more on Deduction Under Section 80E – Education Loan – The Mantra to
Save Tax under section 80E

7. Interest paid on a second home loan is fully deductible :- The tax benefits of a
home loan are well known. Under Section 24b, one can claim a deduction of up to
Rs 2 lakh a year for the interest paid. If the taxpayer buys a second house
through another home loan and gives it on rent, the entire interest paid on the
home loan during a given year can be claimed as deduction. If you have more
than one house, any one is deemed to be rented out. So the interest income on
the home loan for that house can be claimed entirely for deduction, provided the
rental income or deemed income is taxable.
Taxability of second House under Income Tax Act,1961

8. HRA as well as home loan benefits :-
If you took a home loan and are still living in a rented place, you will be entitled
to:
1. Tax benefit on principal repayment under Section 80C
2. Tax benefit on interest payment under Section 24
3. HRA benefit
Of course, you can claim tax benefits on the home loan only if your home is
ready to live in during that financial year. Once the construction on your home is
complete, the HRA benefit stops. If you took a home loan, got possession of the
house, have rented it out and stay in a rented accommodation, you will be entitled
to all the three benefits mentioned above. However, in this case, the rent you
receive would be considered as your taxable income.
House Rent Allowance (HRA) Taxability & calculation

9. Save tax through your family - Simplest way of saving tax is by investing
through parents, parent in laws, wife and children. If you invest in the right
instrument, the rate of return may be higher as well. Here is how we can save tax
through our family members. Read Following Post for more details :- Tax
Planning- Save tax through your family

10. Repairs and maintenance of house property – You will never forget to claim
deduction of interest on repayment of your home loan, but not many people know
that any interest paid on home loan for reconstruction or repair of the “house
property” qualifies for deduction of up to 30,000, subject to the overall limit of
2,00,000. – Also Read- All about Income from House Properties
(Republished with amendments)

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CA SANDEEP KANOI