Saving tax would be the single point agenda for all of us till March, 31st. Popular tax saving investments include ELSS, PPF, Tax saving FD’s, etc. However, there are also few tax saving options which we always tend to ignore. Here is an attempt to remind you of such options:
This is the most ignored section of all tax saving options available. This deduction is exclusively for those individuals who are deprived of benefit on the rent being paid by them. Usually, companies provide HRA benefit to their employees for those who stay on rent. However, if HRA is not part of your salary component, you can avail benefit under section 80GG for the rent paid to the landlord. Self-employed people can also utilize this section. However, you should not own any residential accommodation for claiming deduction under this section. The deduction allowed is up to least of the following:
1) Rs. 2000 per month
2) Rent paid minus 10% of total income
3) 25% of total income
(Also see: How to save tax if you have more than one house?)
Interest income from savings bank account is tax free up to Rs. 10,000 p.a. A lot of banks offer interest rate of 4% p.a on savings bank account. Some of them even offer 6% or 7%. The interest is calculated based on daily balance method. Quite often, we ignore the interest amount from savings account. Previously, all the income from savings bank account was taxable. Now, you can avail deduction up to the limit as specified above.
There will not be any TDS applicable for savings account interest received. You would have to declare it while filing your taxes under the head ‘Income from other sources’. The section also applies for post office saving account. This deduction is over and above the Section 80C limit of Rs. 1 lakh.
Preventive health checkup
You can claim a deduction of up to Rs. 5,000 p.a. for preventive health check-ups done for self, spouse, children or parents. This is part of the overall limit of Rs. 15,000 as per section 80D. Most of the hospitals provide such check-ups. You need to submit the necessary bills to your employer to claim the deduction. This move is to encourage good health among employees as well as self employed.
Interest paid for rented accommodation
You must be well aware that interest paid on housing loan taken in deductible under section 24 of income tax act. Maximum deduction that can be claimed per year is Rs. 1,50,000 p.a. However, this limit applies only for self occupied house. A lot of people have more than one house. Some of them might have a loan on a house which has been rented now. Interest payment on such rented properties does not have any upper limit. You can claim the entire interest paid towards such a loan in a year. This is an excellent option for those who are paying interest of more than Rs. 1,50,000 p.a on housing loans.
Health Insurance for parents
Section 80D allows you to claim deduction up to Rs. 15,000 on premium paid on your health insurance policies. This deduction is applicable for policies taken in the name of self, spouse or dependent children. Suppose you also pay for your parent’s policy. You can claim deduction up to Rs.20,000 for premiums paid on such health insurance policies if your parents are senior citizens. Hence, you can claim up to Rs. 35,000 in this case. If you are also a senior citizen, the total limit becomes Rs. 40,000.