“There are a number of not-so-commonly used I-T sections under which you
could reduce your tax burden. These, however, come into force subject
to specific situations and conditions.” A list of such not-so-familiar
sections under the I-T Act:
Section 80E for education loan
Limit: Rebate on entire interest payment
This section allows deductions on the entire interest amount on a loan
taken to fund higher education courses within the country for oneself,
spouse and children. Individuals can also claim a rebate if they are
legal guardians for students who aren’t related to them. The deductions
would continue for seven succeeding years or until the interest amount
has been repaid. For basic tuition, Section 80C comes into play.
Sections 80DD, 80DDB and 80U for health
Limit: Rs 15,000 to Rs 1 lakh
Under Section 80DD, one can claim expenses up to Rs 50,000 incurred on
medical treatment and maintenance, that is, hiring a nurse and
rehabilitating a disabled dependant. For a severely disabled person, the
amount is Rs 1 lakh. However, there are guidelines. The dependant has
to fit the I-T Act’s definition of a disabled or a severely disabled
person. Certain medical conditions like autism, cerebral palsy, multiple
disability and others have also been specified.
One can claim a similar rebate under Section 80U too, but the relief in this case is limited to medical expenses for oneself.
Expenses can also be claimed under Section 80DDB for conditions like
cancer, AIDS and so on. The amount is capped at the actual amount spent
or Rs 40,000, whichever is less. In case of a senior citizen, the amount
increases to Rs 60,000.
If the amount has already been claimed from a medical insurer (under
Section 80D) or has been reimbursed by the employer, no benefits will
accrue.
Section 80G, 80GGA, 80GGC for charity
Limit: 50 per cent to 100 per cent
Most government-backed trusts allow 100 per cent deductions on
donations. For charities that advertise a 50 per cent tax rebate, the
number could be lower because the deduction is linked to the income of
the taxpayer. This means the 50 per cent deduction is applicable only on
the ‘qualifying’ amount. For instance, if a person with an income of Rs
5 lakh donates Rs 50,000 to a charity, the entire donated amount is not
considered while computing his total taxable income.
His tax-saving investments (section 80C, 80D and so on) are deducted
first from the total income. Suppose, all these sections add up to Rs 1
lakh, then his taxable income will be Rs 4 lakh.
According to the I-T Act, the qualifying amount has to be either less
than 10 per cent of his taxable income or the amount given to charity.
In this case, it means that only Rs 40,000 will qualify for tax rebate
and not the Rs 50,000 he has donated. And the 50 per cent exemption
translates to Rs 20,000.
Hundred per cent exemptions are given to institutions or trusts that
promote scientific thinking or rural development under Section 80GGA.
Donations towards political parties come under Section 80GGC.
Section 80GG for rental paid
Limit: Rs 24,000
This is for salaried individuals paying a rent but not claiming house
rent allowance (HRA). If one’s rent exceeds 10 per cent of the total
income, then he can claim a rebate on the excess amount spent on payment
towards rent. The maximum that can be claimed under this section is Rs
24,000 a year.
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