Get more Tax Rebate with Sections other than Section 80C

Income Tax Exemptions – a timely alert

Tax Exemption means for many people it is Section 80C only, but in fact there are many tax exemptions available in the Income Tax. Act.  Interest paid, health care expenses and some types of investments made within the IT Act provisions are also eligible for IT exemption. Let us get acquainted with them.

Income Tax exemption is available to individuals or to Hindu un-divided families up to one lakh of rupees under Section 80C of the Act. In case, you have already invested some amounts, just review them. Remember that tax planning also is an integral part of your financial planning. Check-up whether you have still some more investible funds for getting the tax exemptions. Note that such amounts should be invested before 31.03.2013.

·         Recollect whether you have informed your employer about your savings / investments made for availing IT exemption.

·          Public Provident Fund (maximum one lakh rupees), National Savings Certificates, Life Insurance policies, tuition fees paid for your children’s’ (maximum two children) education, ELNS, Post Office Savings Deposit, 5-year Bank Fixed Deposits come within the purview of this section.

·          Along with the above, Stamp Duty paid for registration for purchase of a house, come under this section and exemption can be claimed on them.

Exemption on interest paid on housing loan

Individuals, who go in for housing loans can get exemption by deducting a maximum amount of Rs.1,50,000/- from the total income. Of course, it applies only for self-occupied houses. In case it is let out, exemption can be claimed on the entire interest paid without any limitation on such amount.

·          Interest paid on loans obtained for repairs to the house, is eligible for exemption; however, the principal amount of loan is not eligible for.

For both…

Exemption is available when you are residing in a rented accommodation, subject to the conditions relating to House Rent Allowance. Lease Agreement, Rent receipts will have to be submitted to your employer. Note that this exemption applies only when the rent is actually paid.

·          Even when you have your own house at one place and you are working at another place and paying rent for your residence at that place, you are eligible for exemptionalso for the rent you are paying.

Health Insurance Section - 80D

Applies to - Premia paid for Health Insurance cover and policies taken on the lives of wife, children and parents.

Documents to be submitted

Proof of payment of the premium through cheque.

Tax Exemption

Up to Rs.15,000; for senior citizens (aged above 60 years), it is Rs.20,000.

·          Exemption is available on another Rs.15000 on policies taken on the lives of Parents and if they are senior citizens, it is Rs.20000.

·            Not only that… in terms of Section 17(2), you can seek exemption for a maximum amount of Rs.15000, reimbursed by your employer, under medical expenses.

Interest on Educational Loan - 80E

Interest paid on loan taken for higher education for self, spouse and children is exempt under Section 80E. There is no maximum limit. However, the loan should be utilised only for prosecuting graduation or post-graduation courses in Engineering, Medicine or Management. It equally applies to post-graduation courses in Science stream.

·          Interest on the loan taken for education in foreign countries also is eligible for exemption.

For Handicapped.- 80U

Physically handicapped can seek exemption up to Rs.50,000 under Section 80U. Rupees one lakh, if it is permanent disability. This point should be taken note of by them in their tax planning. To get this exemption, invariably, they have to get certified the specified form (10 IA) and attach the same to the IT Return.

For dependents - 80DD

Applicability: Medical and maintenance expenses actually and necessarily incurred for physically handicapped dependents.

* Deposits made for them in some specified schemes

Tax Exemption:

Up to a maximum of rupees 50 thousand if the handicap is not less than 40%

 If it is severe handicap (80% and more), up to one lakh rupees.

Documents to be submitted:

Confirmation letter from an authorised Medical Officer in the form of a certificate in Form 10 IA, along with the Income Tax Return.

Expenses for treatment Section - 80DDB

Illnesses covered:

Expenses incurred for treatment of prolonged illnesses enumerated in Rule 11DD – Cancer, AIDS, Neurological Diseases, Chronic Renal failure and similar diseases.

Documents to be submitted:

Form 10 I in the form of Certificate along with the Return.

Tax Exemption: Maximum Rs.40,000; for senior citizens Rs.60,000.

Donations - Section 80 G

Exemption can be claimed for donations made to permitted Trusts, Service Organisations, Educational Institutions and other similar groups up to a maximum of 50% on the donation made. For some special types of organisations, can claim up to 100%.

*   Such claims to be mode only when the Return is filed.

House Rent Allowance -m80 GG

Those, who are not in receipt of any HRA are eligible to claim exemption.

Who are eligible: Employees, Self-employed, Employees who do not get HRA.

How much: Rent paid in excess of 10% of your income (or) rent actually paid (or) 25% of total income (or) Rs.2,000 per month; whichever is less.

Investment in Stock Market - 80 CCG

This is a new section introduced during the current year.  New entrants (those who do not have DMAT account) are eligible under this section. Maximum investment is Rs.50,000. Exemption is available on 50% of the investment. Suppose, you invested Rs.50,000. Then you can show your income deducting therefrom Rs.25,000. Investments can be made for three years.

* For investing under this section, the annual income should not exceed Rs.10 lakhs.

* Invested amount should not be withdrawn within three years.

Before planning to save / invest for getting tax exemption, first arrive at the amount of tax payable. Then only you will have a clear idea as to the mode of saving / investment. In view of the closure of the financial year, be alert to prepare your financial and tax planning.