Start with the Basics: Salary and Rent
For salaried individuals, the first things to check are the Standard Deduction and House Rent Allowance (HRA). The Standard Deduction is a flat deduction of ₹50,000 available to all salaried taxpayers under the old tax regime. You don't need any documents
to claim this. If you live in a rented house and HRA is part of your salary, you can claim an exemption. This exemption is the minimum of three amounts: the actual HRA received, the rent paid minus 10% of your salary, or 50% of your salary for metro cities (40% for non-metros). Remember, HRA benefits are only available if you have opted for the old tax regime.
The Power of Section 80C
Section 80C is the most popular tax-saving provision, offering deductions up to ₹1.5 lakh. Many people use it for popular investments like the Public Provident Fund (PPF) and Equity Linked Savings Schemes (ELSS). However, it also covers other common expenses you might be forgetting. This includes life insurance premiums for yourself, your spouse, or children, principal repayment on your home loan, and tuition fees for up to two children. Have you accounted for all your eligible investments and payments under this section?
Health and Well-being Deductions
Under Section 80D, you can claim deductions for health insurance premiums. For a policy covering yourself, your spouse, and dependent children, you can claim up to ₹25,000. An additional deduction is available for premiums paid for parents—up to ₹25,000 if they are below 60, and up to ₹50,000 if they are senior citizens. Within these limits, you can also include up to ₹5,000 for preventive health check-ups. If you have uninsured senior citizen parents, you can claim deductions up to ₹50,000 for medical expenses incurred for their treatment.
Donations and Savings Interest
Donations made to specified charitable institutions can fetch you a deduction under Section 80G. The deduction can be either 50% or 100% of the donated amount, depending on the organisation. Another commonly missed deduction is under Section 80TTA. This allows you to claim a deduction of up to ₹10,000 on interest earned from your savings bank accounts. It’s a small but easy claim that many taxpayers overlook in their hurry.
For the Self-Employed and Freelancers
If you are a freelancer or run your own business, a wide range of expenses directly related to your work are deductible. This can include rent for your office or a proportionate amount if you work from home, utility bills, internet and phone expenses, and depreciation on assets like laptops. You can claim a depreciation of 40% on a new laptop used for work. Professionals with gross receipts up to ₹50 lakh can also consider the presumptive taxation scheme under Section 44ADA, where 50% of your income is considered profit, simplifying bookkeeping. Even under this scheme, you can still claim further deductions under Chapter VI-A, such as those in Section 80C and 80D.
Education and Home Loan Interest
If you have taken an education loan for yourself, your spouse, or your children, the interest paid on it is fully deductible under Section 80E for up to eight years. Similarly, for home loans, the interest component is deductible up to ₹2 lakh per year for a self-occupied property under Section 24(b). The principal repayment part of the loan is covered under the ₹1.5 lakh limit of Section 80C. Combining these can lead to substantial tax savings.
