Even though the last date for filing income tax returns (ITR) for the current assessment year is more than two months away, it is advised that you start the process now. Among the many reasons, filing ITR in advance will give you ample time to evaluate all the deductions, small and big, that you can claim.
Apart from the sought-after deductions under Section 80C on insurance premium, equity-linked savings schemes (ELSS) and Public Provident Fund (PPF), interest on home loan and medical insurance premium under Section 80D, there are a bunch of lesser-known deductions that taxpayers often miss out on.
Mint lists out four lesser-known tax deductions:
Medical tests for prevention
Karan Batra, founder, charteredclub.com, said very few people claim deduction on preventive health check-ups. “One can avail up to ₹5,000 on preventive check-up for self, dependent children, spouse or parents below 60 years of age under Section 80D. For parents 60 years or above, ₹ 7,000 can be claimed,” said Batra. Preventive health check-up includes medical tests that are undertaken to screen and detect any possible diseases.
Earlier, payments made in cash towards preventive health check-up was not allowed for deduction, however the same is allowed now.
Medical expenses of senior citizen parents
If your parents aged 60 years or above are not covered under a medical insurance policy, you can still claim deduction on the money spent on their medical bills.
Section 80D allows deduction up to ₹50,000 on medical expenses. “Most people easily spend ₹50,000 in a month on medicines of their senior citizen parents, and yet don’t claim deduction on it due to lack of awareness,” said Batra.
It should be noted that these expenses can be claimed for deduction only when paid in any mode other than cash.
That said, if a taxpayer had paid in cash due to unavoidable circumstances, he could still claim a deduction, said Sudhir Kaushik, co-founder, Taxspanner.com. “As long as you justify the cash mode of payment, you can still claim deduction on them. There could be cases where cheque payment couldn’t get through before deadline or there was not an alternative available.”
Section 80C fine print
Very few people know that there a host of deductions that are available under the ₹1.5 lakh ceiling of Section 80C.
First, those servicing a home loan can claim a deduction on the principal component of the loan as well. It is a known fact that the interest on home loan can be claimed as deduction under Section 24 and Section 80EE, as applicable to the taxpayer. The principal part of the loan qualifies for deduction within the ₹1.5 lakh limit of Section 80C.
The condition here is that you don’t sell the property within five years of possession.
Second, the stamp duty paid towards registering a house can also be claimed as deduction under Section 80C.
Kaushik said that it is common for taxpayers to forget about tax deduction available on reinvested interest on National Savings Certificate (NSC). “Interest on NSC is not paid to the taxpayer and instead gets reinvested. One can claim deduction on the interest earned.”
Donations
“Last year, in the wake of covid-19, many people must have made donations that can be claimed as deductions if they have receipts,” said Batra.
Donations made to a fund backed by the central government can be fully claimed, whereas those made to a private institution are eligible for 50% deduction.
