5 Smart tax deductions to take advantage of in 2017

 

Tuition fee

Under Section 80C of the Income Tax Act, you can save taxes upto  ₹ 1.5 lacs. Any amount paid as tuition fees to the extent of ₹1.5 lacs can be claimed as deduction. Deduction is allowed only for fees paid to recognized universities, colleges, schools or institutions. The course has to be a full-time course and can be claimed only for 2 children.

House Rent Allowance

If you stay in a rented place, you can claim this allowance. You can still claim this allowance if you stay with your parents and the house is in your parent’s’ name. You can pay  rent to your parents and the same has to be declared by them in their income. The amount applicable as deduction is the minimum of the following:

• HRA received from your employer.
• Actual rent paid minus 10% of salary.
• 50% of basic salary for those living in metro cities or 40% of basic salary for those living in non-metro cities.

For individuals who do not get HRA benefits, an amount upto Rs 5,000 per monthly can be claimed as deduction.

Home loan

The interest and principal amount paid on a home loan can be claimed as deduction, as per the tax laws. You can claim a maximum of ₹ 1.5 lacs as principal repayment under Section 80C and Rs. 2 lacs as interest repayment under Section 24(b). As per the declarations in budget 2016, first-time homebuyers are now entitled to an additional interest deduction of Rs 50,000 per annum for loans up to ₹ 35 lakh sanctioned during the financial year (1st April, 2016 onwards), provided the value of the house does not exceed ₹ 50 lakh.

Education loan

The interest amount paid on an education loan can be claimed as deduction under section 80E. There is no rebate allowed for principal payment of the loan. Since, there is no limit on the amount that can be claimed as deduction, as a result the entire amount paid as interest can be claimed and  reduced from your taxable income. However, this deduction is applicable only for the first eight years of the loan.

Health insurance Premiums

Even if you are covered by an employer for health insurance,it makes sense to purchase an individual health cover.  as this cover ceases to exists if you switch jobs. You can save taxes through  Section 80D of the Income Tax Act 1961. This section allows for a tax deduction for medical premiums, paid for self, spouse and children by using means of payment, other than cash to LIC or other insurance providers. The maximum limit that can be claimed as deductions is  ₹25,000 for Non-senior citizens and ₹30,000 for senior citizens