Tax Planning
premiums. Such employees can
file for tax relief on their group
policies instead. If you have bought
a group health insurance policy
for your spouse, children or your
parents through your employer and
the premium for such a policy is
borne by you, then you can claim
deduction for the same under
Section 80D, if it has not been
accounted for in your Form 16,
informs Sankla.
9
Section 24: Cut losses
on let-out properties
For years, those who owned more
than one house, funded through
home loans, enjoyed a distinct
advantage. They could claim as
deduction the entire interest paid
on home loans linked to their
houses where they did not reside.
This was in addition to the tax
break of Rs 2 lakh on home loan
interest for their self-occupied
house. The interest on let-out
properties would be treated as a
loss. It could then be set off against
income from other heads like
salary or business income. The
2017 Union Budget, however, put
an end to this practice by capping
such losses, or interest paid, at
`2 lakh - the same as deduction
on interest paid on self-occupied
property. “Any further loss will
need to be carried forward for
the next eight years to be set off
against future income from a
Archit Gupta
founder and CEO, Cleartax
If your Section 80D limit
is under-utilised, you can
consider a preventive
health check-up
house property,” says Chadha,
explaining the implications of the
changes under Section 24 read with
Section 71. If you’re holding back
prepayment only to maximise tax
breaks on interest paid, you can
reconsider your options. “Look
at pre-payment to avoid higher
interest cost if you have surplus
cash and if you are unable to set off
the carried forward house property
losses against property income in
future,” adds Chadha.
10
Section 80G: Make
the most of charity
Any donation made to non-
governmental organisations (NGO)
or government relief fund is eligible
for a tax break under Section
80G. The donation amount can be
claimed as a deduction, which will
either be 50 or 100 per cent of the
actual money transferred. This will
depend on the entity to which a
donation is made.
Most non-governmental
charitable institutions fall in the 50
per cent category. “It is important
to choose the recipient of your
donation carefully. Further, in order
to claim the deduction, the assessee
must ensure that he preserves the
proper receipt issued by the trust
as a confirmation of the donation
made by him,” says Maheshwari.
Most organisations do not factor in
80G deductions in the investment
declaration forms. As a result, tax-
payers have to claim this deduction
at the time of filing tax returns.
While you must retain the
receipts, do not attach them to
your ITR-V, or the verification
form, if you plan to send it across
to the I-T department’s centre in
Bengaluru by post.
For efficient tax planning, start
the exercise in April every year. If
you’ve put it off until the deadline
hour, ensure that you don’t take
decisions in haste. First, exhaust
the available concessions before
parking your money in tax-saving
instruments. Lastly, try to identify
products that suit your risk
appetite and come with minimal
lock-in period.
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Outlook Money February 2018 www.outlookmoney.com