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Little known tax deductions in India
Little-known tax deductions in India
Studying the Income Tax Act of India thoroughly is a daunting task even for the most diligent law students, let alone ordinary taxpayers. Most individuals are therefore aware only about the most common tax deductions available to them, and do not take advantage of the several benefits hidden in the complex clauses of the Act. Listed below are some little-known tax benefits that can help you save a considerable amount in taxes every year.
Capital losses = capital gains?
While most of us know that we need to pay taxes on short term or long term capital gains, not many are aware of the fact that capital losses, if any, can be balanced off against gains. So, for instance, if you have made a long-term capital gain of Rs 15 lakh by selling off your property and long-term capital loss of Rs 3 lakh by selling stocks, the total taxable amount would Rs 12 lakh.
It is important to note that short term losses can be balanced off against both short term as well as long term capital gains. However, long term capital losses can only be balanced off against long term capital gains.
Have an ill dependant to look after? Pay lower taxes
The income tax department understands that chronic illness of a dependant can empty your life savings, and paying full taxes in such cases is burdensome for any taxpayer. Hence, it allows a deduction of Rs 40,000 (Rs 60,000 if the dependant is a senior citizen) per year, under Section 80DDB. Dependants include siblings, children, parents and spouses.
This deduction is available for specific diseases, which include many neurological diseases like dystonia musculorum deformans, aphasia and Parkinson’s disease, hemiballismus, ataxia, motor neuron disease, chorea, haematological disorders, chronic kidney failure, and a few more.
In order to claim this deduction, it is important that the patient should be dependant on the taxpayer, and should not have filed for such a deduction separately.
Contributions to a political party
If you have contributed any amount to a recognised political party, you are eligible to claim a tax deduction ranging from 50 percent to 100 percent of the amount under Section 80GGC for individuals and Section GGB for corporate organisations. One can contribute up to 10 percent of one’s gross total income to a political party.
These deductions, along with the common ones like medical benefits, HRA, home loan EMIs, etc. can help you save a considerable amount of tax every year.
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