Tax season can be stressful for most of us, especially if you are unaware of all the deductions and exemptions available. In India, the income tax return (ITR) filing process can be quite complex, and with ever-changing tax laws, it can be challenging to keep up. However, understanding the various tax deductions and exemptions can help you save considerable money in taxes.

This blog will discuss six lesser-known deductions and exemptions you can claim on your income tax return in India. These deductions and exemptions are often overlooked but can significantly impact your tax liability. By the end of this blog, you will better understand the tax-saving opportunities available to you and be better equipped to maximise your tax savings. So, let's dive in!

1. Deductions on House Rent

If you are a salaried individual with rented accommodation, you are eligible for House Rent Allowance. However, if you are receiving HRA, but do not stay in a rented space, then the income will be taxed. And if you are living in a rented space, provide rent receipts to get tax exemption facilities.

You can claim the lease on the following HRA exemptions:

• 40% of your salary for non-metro residents and 50% of your salary for metro residents
• Total HRA received from your employer
• Rent paid less than 10% of your basic salary + Dearness Allowance

2. Interest Paid on Education loan

As per the rules of Section 80E of the Income Tax Act, if you are paying interest on your education loan, you are eligible to get a tax deduction on the same. 

For instance, if the total EMI of your education loan sums up to Rs. 16,000, out of which the principal amount is Rs. 10,000 & interest is Rs. 6000, then you are eligible to claim tax deductions on Rs. 6,000 only. While there is no upper limit to claiming taxes, tax deductions only apply to the interest and not the principal amount. 

You, your children, your spouse, or a child of whom you are a legal guardian could have taken the loan to pursue higher education degrees.

3. Relocation Allowance

If you are required to allocate to a new city for business or job purposes, the expenses covered under this category can be exempted from taxes. When moving from one place to another, you might require all the amenities to shift, including -transportation cost of the car, car registration, moving furniture, airfare, and other such expenses. Either your employer directly pays the amount to you, or you reimburse it later; these expenses are exempted from taxes. Also, your accommodation cost for the first 15 days, including packaging costs and travel fare for the employee and their family, are included in the list.

4. Section 80G

If you have contributed to charitable institutions or relief funds, you can claim deductions under Section 80G. But, the donations made should fall under the prescribed funds' category; only then will you be eligible to claim tax deductions.

Also, if the donation is made in cash and exceeds Rs. 2000, then that is not eligible for tax deductions.

5. Section 80EEA

If you are a first-time house buyer, you are eligible to claim tax deductions up to Rs. 1,50,000 for the interest paid on a home loan sanctioned by a financier. Please note that this deduction is separately calculated from the Rs. 2 lakhs deduction for the payment of interest made available under the Income Tax Act. Hence, as a first-time home buyer, according to section 80EEA, you are eligible to claim deductions of up to Rs. 3.5 lakhs.

6. Section 80D

Under Section 80D, you are allowed to claim deductions up to Rs. 25,000 for yourself, your dependent child, or your spouse. As an individual or HUF, if your parents are under the age of 60, you are eligible to deduct an additional Rs. 25,000 for the premium paid on their insurance. 

If your parents are above age 60, the deduction amount is increased up to Rs. 50,000; and if the taxpayers and their parents are both of age 60 or above, the maximum deductions claimed can be up to Rs. 1,00,000. 

Final Thoughts

Taking advantage of all the tax deductions and exemptions available on your income tax return can significantly affect your tax liability. Knowing about these lesser-known tax breaks saves you money by reducing your tax obligations.

To stay ahead on your tax-filing game and remain informed about tax-saving strategies, visit TaxNodes. Our website offers many resources, including articles, videos, and tools, to help you navigate the complex world of taxation in India. So, check out TaxNodes today and take your tax-filing game to the next level!