If you thought tax planning is possible only by investing, then you better give it a second thought as there are some expenses too that can save your income from tax.
School fees paid for your children and stamp duty and registration charges paid for your house entitle you to a tax deduction.
Under section 80 C, school fees for children’s education is eligible for tax deduction of up to Rs 1 lakh a year. However, it is available only for two children.
Under the same section, one can claim deduction of up to
R1 lakh a year on the amount paid as stamp duty and as registration charges for a house.
The school fee for the purpose of tax relief is limited to tuition fee. It means that out of the total fee paid only the component of tuition fees is allowed for tax deduction. “Fees paid under transport charges, donation, hostel charges, mess charges, library fees are not eligible for tax deduction,” said Vishal Dhawan, founder of Plan Ahead Wealth Advisors.
Also the assessee cannot claim tax benefit for expenditure done on himself, which means if the assessee has paid tuition fees for his studies, he cannot claim relief. Deduction is not available for tuition fees paid for studies of spouse either. Tuition fees paid for coaching classes for admission in professional courses or any other type of courses are also not covered.
Premium paid for medical insurance policies are also eligible for tax deduction. Under section 80 D of the Income Tax Act, one can claim deduction of R15,000 for spouse and children while for a senior citizen this limit is R20,000. An additional R15,000 deduction can be claimed if the assessee takes out a mediclaim policy for his senior citizen parents. “This deduction is in addition to the deduction of R1 lakh allowed under section 80C,” said Amar
Pandit, a Mumbai-based financial planner.
One can also claim deduction of R1 lakh for the investment made in pension plans of mutual fund and life insurance companies under section 80 C.