Tax Planning
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Section 24 is popularly known
as the provision that allows tax
breaks of up to `2 lakh on home
loan interest paid. This limit is
not confined to interest paid
on loan from banks or housing
finance companies. “You can claim
deduction on loan processing fees,
foreclosure charges and other fees
related to your home loan. Interest
includes service fees, brokerage,
commission and prepayment
charges,” points out Sankla.
Similarly, you can avail of benefits
if your house purchase entails loan
from parents, family members or
friends. “However, in this case, you
should collect a certificate from the
lender,” adds Sankla. The deduction
is allowed irrespective of whether
it is a housing loan or personal loan
from an individual or institution.
The only condition is that the loan
amount should be used for the
acquisition of a house.
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Section 80C: Get your
PPF investments right
Tax-saving benefits of public
provident fund (PPF) contribution
are well-known. However, a
proactive approach can help
you gain from the scheme under
Section 80C. “In order to get a
higher return, it is advised to
invest just when the financial
year commences, since the PPF
account follows the April-to-March
year cycle,” says Akhil Chandna,
director, Grant Thornton India.
The earlier you invest, the
higher will be the interest your
PPF account accumulates during
the year. Do not wait until March.
If you have been a long-term PPF
depositor, you could restructure
your PPF contribution such
that you can take advantage of
PPF withdrawal rules—starting
from the seventh year of your
investment in PPF account, you
26
7
Section 24: Beyond
home loan interest
deduction
Amarpal Chadha
tax partner and India mobility
leader, EY
You can claim a deduction
for rent paid under Section
80GG, even if you are self-
employed. The maximum
amount of rent qualifying
for deduction is `5,000
per month
can make partial withdrawals
every year, subject to ceilings
“You can withdraw and reinvest
the permissible amount in the
PPF account to claim deductions
without the burden of making
any fresh investment,” according
to Sankla.
Akhil Chandna
director, Grant Thornton India
Invest in PPF just when the
financial year commences
as it follows the April-to-
March year cycle
Outlook Money February 2018 www.outlookmoney.com
Section 80D: Utilise
non-insurance health
deductions
Although introduced in Union
Budget 2012, awareness of the
`5,000 tax relief on preventive
health check-ups is still low.
Available under Section 80D, it
has received scant attention in
comparison to the more prominent
deductions it offers on health
insurance premium paid for self,
spouse, children and parents.
“If your Section 80D limit is
under-utilised, you can consider
a preventive health check-up. Do
remember to preserve your bills
safely,” says Gupta of Cleartax.
This apart, you are entitled to
tax breaks in case you take care
of uninsured elderly parents’
medical expenses. “You can claim
a deduction of up to `30,000 for
the expenses incurred on medical
treatment of parents who are
over 80 years of age,” says Sankla.
However, both these benefits have
to adhere to the section 80D limit.
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Section 80D: Optimise
group health benefits
Since the total deduction on health
insurance premium can go up to
`60,000—`25,000 for self, spouse
and children and `30,000 if
parents happen to be senior
citizens—distributors often exhort
tax payers to buy higher value
covers. Instead, you can look at a
less-taxing alternative: premium
paid on group health cover.
Employees consider group
health insurance to be a critical
component of the remuneration
structure. Since several such
plans also cover elderly parents,
depending on the company’s
policy, it acts as a cushion
against hospitalisation expenses.
Moreover, pre-existing illnesses
too are covered and the claim
settlement is hassle-free,
prompting many individuals to opt
for it even if they have to fund the