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Tax Hacks: Lesser-Known Income Tax Deduction

Tax Hacks: Lesser-Known Tax Deductions

A junkyard owner once tried to write off the cost of cat food. He claimed the feral cats it attracted helped him keep snakes and rats off the property. Did you know the government once let a bodybuilder successfully write off a huge sum in tanning oil? There’s a whole world of obscure, industry-specific income tax deduction you could be missing out on as a small business owner without even knowing it. So how do you find these lesser-known deductions?

Make sure you’ve deducted the less obscure ones first.

Did you know you can claim a tax deduction on stamp duty? Or if you use a specific part of your home exclusively for business, you may be able to claim the home office deduction?

Before you start claiming cat food on your business tax return, make sure you’ve deducted the other lesser-known expenses first. Take a look at a list of some of the lesser-known investments and expenditures that are eligible for tax breaks.

Let’s dig out some of the lesser-known ones!

Income Tax Deduction: Saving the environment with benefits to Electric Vehicle buyers u/s 80EEB

🏎️ Interest on loan for the purchase of an Electric Vehicle is exempt. This deduction is available from A.Y. 2020-21 i.e. the loan should be sanctioned between 1.4.2019 to 31.3.2020. This deduction is included under Section 80EEB.

The maximum permissible deduction is INR 1,50,000

Look out for…

Fulfilling the dream for first time home buyers u/s 80EE and 80EEA

🏡 Claim deduction U/S 80EE and 80EEA on interest paid on a home loan taken by a first-time homeowner.

Interest on loan should be sanctioned between 1.4.2016 to 31.3.2017 for the purchase of the first house. It is applicable to ‘all’ taxpayers. Section 24 can be claimed to provide exemptions up to INR 2.5 lakh.

Deduction Amount – INR 50,000

Look out for:

Know more.

Interest on loan should be sanctioned between 1.4.2019 to 31.3.2020 for the purchase of the first house. Applicable to ‘individual’ taxpayers. Section 24 can be claimed for exemptions up to INR 3.5 lakh.

Deduction Amount – INR 1.5 Lakh

Look out for:

Know more.

Income Tax Deduction Benefits to contributing members of society u/s 80G

💰 Donations made to certain relief funds & charitable institutions U/S 80G are tax-deductible. Additional documents like Stamp Receipts and Form 58 are also required as proof of donations.

There are 3 types of deduction eligibility:

i. 100% or 50% without any qualifying limit

ii. 100% subject to the qualifying limit of 10% of adjusted gross total income

Look out for:

Read on:

80C Deduction – Benefits for nurturing the children

📚 Playschool, nursery, and pre-nursery fees for children are eligible for deduction U/S 80C. The benefit is restricted to 2 children per individual. So a couple can claim a deduction for the fees of 4 kids.

Maximum permissible deduction: INR 1.5 Lakh

Look out for:

Income Tax Deduction Rent to parents cuts tax u/s 10(13A)

👪 Rent paid to parents for residing in their property is tax-deductible U/S 10(13A). This can help save hard-earned money for the entire family. Also, parents are still eligible for the standard deduction.

Deduction Amount (the lowest out of the following)

Look out for:

Read on.

Income Tax Deduction – Benefits for the better health of your parents u/s 80D

🩺 Recurring medical expenses of elderly parents can be claimed  U/S 80D. The medical expenditure incurred by parents only if they are above 60 years of age.

Maximum permissible deduction- INR 50k

Look out for- Not allowed if parents already covered by a health insurance policy.

Read on.

Income Tax Deduction – Benefits for higher education u/s 80E

🎓 Interest paid on repayment of education loan is eligible for deduction U/S 80E. The exemption is allowed only to ‘individual’ taxpayers. The loan must be for self, spouse, or children, and the repayment must be done by the taxpayer. Producing a certificate of repayment to your employer is mandatory.

Maximum deduction amount: INR 1.5 Lakh

Look out for: 

Income Tax Deduction – Exemption for the Innovators u/s 80-IAC

💡 Section 80-IAC provides a deduction for 100% of the income i.e. profits and gains of an eligible startup

The following conditions are mandatory to be eligible for the above deduction:

Deduction Amount- 100% of income for 3 out of 7 years from the year of incorporation

There’s a whole world of TAX DEDUCTIONS you could be missing out on. But these deductions will help you save up your hard-earned income. Make sure to claim them this Tax Season 2020!

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