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With the fiscal year moving closer to its end, its time you squeezed in some tax-saving investments while there is time. The more obvious one is the tidy sum of Rs 1 lakh deduction available under Section 80 C.
While most of us are familiar with the deduction under Sec 80 C, let’s quickly recap. This section covers investment in eligible securities, expenditures, payments such as life insurance premium, contribution made under employee's provident fund scheme, contribution to public provident fund (PPF), Post office saving bank, any notified savings certificate (NSCs), Unit Linked Insurance Plan (ULIPs), notified Mutual funds, tuition fees. This, along with Sec 80 CCC (Premium Paid for Annuity Plan of LIC or Other Insurer.), 80 CCD (Contribution to Pension Account up to 10 per cent of salary), provides deduction up to Rs 1 lakh.
What’s in and out
Last year, you had an additional Rs 20,000 deduction under Sec 80 CCF for investment in long term infrastructure bonds. This is not available for the assessment year (AY) 2013-14 (Current year). However, this year, under a new Sec 80 CCG, if your annual income is less than Rs 10 lakh, you can invest in Rajiv Gandhi Equity Saving Scheme (RGESS) scheme up to Rs 50,000 and claim a deduction of 50 per cent of the investment. Additionally, under Sec 80TTA introduced in the Budget 2012, if your income includes interest income on deposits in savings account (not time deposits) with a bank, co-operative society or post office, then this is also allowed as deduction, up to a maximum of Rs 10,000.
Mediclaim benefits
Among other existing deductions, you should start looking at some medical insurance policies, if you don’t have one already. While they cover your medical bills, the premium you pay is tax deductible from your income as well. Under Sec 80 D deduction of medical insurance is available up to Rs 20,000 for senior citizens and up to Rs 15,000 in other cases for insurance of self, spouse and dependent children. Additionally, a deduction for insurance of parents is available to the extent of Rs 20,000 if parents are senior citizens and Rs 15,000 in other cases. From AY 2013-14, within the existing limit, a deduction of up to Rs 5,000 for preventive health check-up is available.
If you have taken an educational loan for pursuing higher studies, you can claim the entire interest you pay on such loans as deduction under Sec 80 E. Remember that the provision is also available for higher education of a relative. Any donation you make to certain funds or charitable institutions as specified under Sec 80G is also available for deduction. The amount eligible for deduction is up to 100 per cent or 50 per cent as provided in Sec 80G.
Housing
You can also claim deduction for the rent you pay for accommodation. The expenditure you incur, in excess of 10 per cent of total income for payment of rent to the extent of Rs 2,000 a month or 25 per cent of total income, whichever is less, is allowed under Section 80GG.
Finally, under Sec 24 the amount of interest you pay on loan taken for acquiring, constructing, repairing or renewing of a housing property can also be claimed as deduction subject to the limits stated. This is outside the deduction available for principal repayment on the loan available under Sec 80C.
Remember, the exemptions mentioned above are not exhaustive but only indicative of other avenues you must look at. You can also look at other provisions that apply to you, before you compute your tax this year.
> Radhika.merwin@thehindu.co.in
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