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Under Section 80GG of the Income-Tax Act, 1961, an individual is allowed for
deduction in respect of rent paid by him for his own residence. The amount of
deduction that can be claimed is the least of rent paid less 10% of his total
income; 25% of his total income and Rs 5,000 per month. However, "to claim
this deduction, the individual should not have income for which exemption
can be claimed under section 10(13A) and neither the individual, spouse of the
individual or minor child of such individual should own accommodation in the
place of the individual's employment. Further, the individual should not have
any self-occupied residential accommodation," says Akhil Chandna, Director,
Grant Thornton India LLP.
Usually deduction under Section 80G of the Act is not available at the time of
submitting investment proofs to one's employer. Hence, "the individual tends
to miss this deduction which is available on donations made by an individual
to certain funds, charitable institutions and so on. The rate of deduction is
either 50 or 100 per cent of the amount contributed, depending where the
funds are donated. Further, such deductions are restricted to 10% of the gross
total income of the donor," says Chandna.
Under Section 80U of the Act, a resident individual who is certified by the
prescribed medical authority to be a person with disability can claim
deduction of Rs 75,000 and in case the individual suffers from severe disability,
the amount of deduction that can be claimed is Rs 125,000. It is pertinent to
note that this deduction can be claimed irrespective of the actual amount of
expenditure incurred by the resident individual.
Almost all taxpayers maintain one or more savings accounts in banks. These
accounts generate income in the form of interest from deposits. It is not
widely known but interest earned up to Rs 10,000 as interest can be claimed
as deduction. The provisions related to this tax benefit are covered under
Section 80TTA of the I-T Act.
People are aware about the various tax benefits (Section 24, Section 80EE, and
Section 80C) available on purchase or construction of a new house. However,
they often miss out the tax benefit available on loans taken for face-lifting
your house. Under Section 24b, you can get tax deduction up to Rs 30,000 on
interest paid for a loan taken to revamp or reconstruct your house.