Do not forget to claim these lesser-known tax deductions

by VidyalaxmiVidyalaxmi,ET Bureau




For most individuals tax deductions are all about investing in Public Provident Fund or life insurance policy. However, there are a host of other deductions which many taxpayers are eligible to claim but don't do so because they are not aware of them.

"Many tax payers buy health insurance, but many are not aware that they can seek tax exemption up to 15,000 under Section 80 D on health insurance premium payments. They can also seek an additional exemption of 15,000 for their dependent parents and 20,000 if one of their parents is a senior citizen," says Saakar S Yadav, managing director, myitreturn.com, a tax portal.

Take a look at some lesser-known deductions which may help you save some more.

Medical expenses for specified diseases like AIDS, Cancer

"The actual expenditure incurred on treatment of specified disease such as AIDS, cancer, neurological diseases, etc., is deductable to the extent of 40,000 or the actual expense whichever is lower. The limit is increased to 60,000 in case of expense incurred for a senior citizen," says Vineet Agarwal, director, KPMG.

The expenditure may be incurred by the taxpayer or an eligible dependent. The tax payer has to obtain a certificate from the doctor to claim the tax deduction.

Deduction for medical expenses incurred on disability

If you have incurred expenditure for medical treatment of a disabled dependant or have deposited any amount under a prescribed scheme for the maintenance of the dependent, you can seek a tax deduction.

"In such cases, tax payers are allowed a deduction of 50,000. The deduction increases to 1,00,000 in case of severe disability. The above deductions are also available if the taxpayer himself is a person with some disability," says Vineet Agarwal.

Deduction for rent paid if you are not availing HRA

You can claim a deduction for rent paid to the extent of 2,000 per month even if you don't receive HRA from your employer or you are self-employed. This deduction, available under Section 80GG, is subject to some conditions.

"Neither the taxpayer nor the spouse should own a house at the place of employment. They cannot be self employed, which includes businessmen or professionals. Lastly, the tax payer should not self-occupy his/her house at any other place," says Vaibhav Sankla, director H&R Block India.

Amount paid under National Pension System

"The contributions made by an employee to the NPS qualify for a deduction under 80CCD and the upper limit of 1,00,000 under Section 80C of the Act. However, effective April 2011, employer contributions to NPS up to 10% of the employee's salary would qualify for an additional deduction which is a good saving," says Vineet Agarwal.

Foreign taxes

Many individuals take up overseas assignments and as a result earn income both in India and abroad. In the event they face taxation in both countries, they may avail credit of taxes paid overseas while filing their tax returns in India.

The Indian tax laws as well as tax treaties signed by India with other countries prescribe provisions for claiming credit of foreign taxes.

"In case, the individual is going abroad on a company transfer/secondment, he should check if his company has a tax equalisation/protection policy. A tax equalisation policy ensures that the employee does not pay more taxes in the host country than what he would have paid in his home country. He should also check if his company tax equalises income from other sources as well," says Amitabh Singh, tax partner, Ernst & Young.

Repairs and maintenance of house property

You will never forget to claim deduction of interest on repayment of your home loan, but not many people know that any interest paid on home loan for reconstruction or repair of the "house property" qualifies for deduction of up to 30,000, subject to the overall limit of 1,50,000.

Exemption from capital gains

If you have made any capital gains on the sale of residential house property, such capital gains shall be exempt from tax, provided you purchase a new residential house one year before or within two years after the date of transfer; or you incur expenditure on construction of house property within three years from the date of transfer.

Alternatively, to avail exemption, a tax payer may also invest the gains in REC / NHAI bonds, subject to specified conditions.

Filing for these deductions

If you have incurred any of these expenses or made investments and have not declared it in the investment return, you can still claim for the deductions for financial year 2011-12 at the time of filing income tax returns.

"You cannot attach any receipts of investments, donations or even expenses along with the returns. However, you can still mention any fresh expense, investment etc. on the ITR. The Income Tax Department can ask for a copy of the receipts if required," says Saakar S Yadav.