Take advantage of your tax deductions

Taxes are inevitable and it is our social responsibility to pay them. So how about adding a new year resolution to do your homework on various tax deductions available and take full advantage of them.

That way you can save your hard-earned money and avoid paying additional taxes.

I understand taxes are burdensome for all taxpayers. But tax deductions act as a tool to cool all the itching and burning.

Fortunately, there are legally permissible ways to reduce taxes and retain more of your hard-earned money in your piggy bank.

Everyone wants to claim tax deductions and there’s no doubt that saving money in taxes is high on everybody’s list of financial priorities.

But considering the complicated income-tax law, how many people really know about them or take full advantage of them.

Surely, you could be missing a few of them. That’s why it is worthwhile to be aware of the tax deductions which can save your moolah.Let’s look at some commonly overlooked tax deductions.

Home sweet Home

Your home is not only your living shelter but also your tax shelter. If you live in a rental apartment and are a salaried person then you can claim house rent allowance. If not, you can claim deduction of the rent paid in excess of 10% of the total income subject to certain specified limits/ conditions.

If you own your home you can claim the benefit of deduction in respect of the interest paid on loan from a financial institution. Many people often restrict this amount to Rs 1,50,000.

However, it is pertinent to note that this restriction applies only for property considered as self occupied in nature and does not apply in cases where the property is let out or deemed to be let out.

Further, expenses like stamp duty, registration fees and other expenses incurred during transfer of the house property for purchasing a house can be considered for the purpose of determining the benefit of tax deduction in respect of repayment of the loan installment.

Have a philanthropic heart

At times on an impulse we give donations which qualify for tax deduction. If we have paid them by cheque, we remember them more often than not whilst preparing our tax returns. But if we have paid by cash we generally tend to forget them.

It is essential we do a little charity for ourselves at the same time as well— after all charity begins at home.

All we need to do is get a written receipt in respect of our tax eligible donation. And off course, we shouldn’t forget to clean out our closets where we would have stored such receipts. Trust me, the resultant tax savings are worth the effort.

Education

Today the cost of education is scorching high which adds to the financial burden.

In this respect, in case you avail of a loan for higher education of your child or your spouse, then you can claim a deduction of the interest paid on such loan.

Health is Wealth

The deduction on medical insurance though of a small quantum of Rs 15,000 is often left out to be claimed. A bonanza is available in the form of an additional deduction of Rs 15,000 towards medical insurance premium paid for your parents.

Further, in case you have paid any amount for the medical treatment of any disabled person dependent on you then again you are entitled to a deduction in the range of Rs.40,000 to Rs.75,000.

Other finer points

Various deductions viz. life insurance premia, deferred annuity, contributions to provident fund, subscription to certain equity shares, tuition fees, house loan repayment, etc are all covered under a single basket of availing deduction upto Rs 1,00,000.

However, one tends to generally forget that all these are restricted under this cap.

At the end of it, just remember what’s one of the most important questions you need to ask every time you pay cash or write a cheque for payment or investment — Can I claim this as a tax deduction?