Check these deductions in Income Tax Act before filing your tax returns

The Indian Income Tax Act, 1961, offers numerous deductions to reduce taxable income, yet many taxpayers, while filing returns, miss the lesser-known provisions that can significantly reduce the tax liability if only one remembers to claim them. While popular sections like 80C (investments) and 80D (health insurance) are widely used, unfortunately, many of these are overlooked either due to a lack of awareness or complexity in understanding.

Here is a set of lesser-known Income Tax sections that are often overlooked by taxpayers. Exploring them before filing the return could help in significant savings:

Section 80GG: Rent Paid Without HRA

Most salaried individuals receive House Rent Allowance (HRA), but if you are a professional or other taxpayer individual not receiving HRA but paying rent, Section 80GGallows a deduction. The deduction is allowed up to ₹5,000 per month or 25% of total income, whichever is less. The only condition is that you must not own a house in the same city or location as your workplace.

Section 80DDB: Medical Treatment for Specified Diseases

For those who have incurred expenses on the treatment of critical illnesses like cancer, Parkinson’s, or chronic kidney failure for themselves or their dependents, this section allows a deduction up to ₹40,000 for individuals, and ₹1,00,000 for senior citizens. To claim this deduction, a prescription for such medical treatment from a specialist is required.

Section 80DD – Maintenance of a Disabled Dependent

This section allows a deduction of Rs. 75,000 (normal disability) or ₹1.25 lakh (severe disability) for expenses incurred on the care of a dependant with a disability. The expenses can be for medical treatment, training, and even life insurance premiums for the dependent.

Section 80U: Disability Deduction

If a taxpayer is having a disability, he/she is entitled to a flat deduction of ₹.75,000 (40%-80% disability) or ₹1.25 lakh (severe disability, 80% or more) regardless of the actual expenses. To claim this deduction, only a disability certificate from a medical authority is required.

The difference between the two provisions–80DD and 80U—is that Section 80DD provides tax deductions to the family members and kin of the taxpayer with a disability, whereas Section 80U provides deductions to the individual taxpayer with a disability himself.

Section 80E: Interest on Education Loan

Parents or students who have taken loans for higher education can claim a 100% deduction on the interest paid for 8 years (or until full repayment). It is pertinent to mention that there is no limit on the deduction and the higher education can be in India or abroad.

Section 80EE: First-Time Homebuyer Interest Deduction

This section is applicable for first-time homebuyers. If someone had purchased your first home between April 1, 2016, and March 31, 2017, with the property value should be less than or equal to ₹50 lakh; loan sanctioned amount should be less than or equal to ₹35 lakh, one can claim an additional deduction of Rs. 50,000 annually on the interest paid on the home loan. It is important to mention that the said deduction is over and above the deduction u/s 24(b).

Section 80EEA – Affordable Housing Loan Interest

This section was introduced in Budget 2019, which provides an additional deduction of up to ₹1.5 lakh for interest on loans taken for affordable housing. The condition is that stamp duty value of the property should be less than or equal to ₹45 lakh, and the loan should have been sanctioned between April 1, 2019, and March 31, 2022. One cannot claim this if already claiming deduction u/s 80EE.

Section 80TTB – Interest Income for Senior Citizens

Senior citizens, who are 60 years or above can claim a deduction of up to ₹50,000 on interest income earned from bank deposits. The interest income can be from savings accounts, fixed deposits, and recurring deposits. Generally, at the time of filing the return, one focuses only on the return on FDs but forgets savings account interest.

Section 10(14): Special Allowances

Certain allowances are tax-exempt underRule 2BB. For example, transport allowance for disabled employees, children’s education allowance ( ₹100/month per child), hostel allowance ( ₹300/month per child). Many in the workforce do not claim these small but useful exemptions.

Section 24(b) – Home Loan Interest (Self-Occupied Property)

Often clubbed with Section 80C, this allows up to ₹2 lakh in deductions for interest paid on home loans for self-occupied properties. This section allows deduction even if you are not claiming principal repayment u/s 80C. The only condition is that loan must be taken for purchase or construction and completed within five years.

Bharat Dhawan, managing partner, Forvis Mazars in India.