Why claim deductions

You can also deduct running costs for any electricals. You can also claim your phone bill if it is used in part for work related expenses. If you use your own phone for work purposes, you can claim a deduction if you paid for these costs and have records to support your claims. If you use your phone for both work and private use, you will need to work out the percentage that reasonably relates to your work use.

You can't double-dip and claim for phone expenses that have been reimbursed by your employer. To work out your deduction, you need to choose a typical four-week period from some point in the tax year. If you have a phone plan where you receive an itemised bill, you need to determine your percentage of work use over that 4-week period.

You can then apply that to the full year. You need to calculate the percentage using a reasonable basis. For more information, read our mobile phone deduction tax tips. As a part of your profession, you may be a member of an association — the good news is, you can claim your subscriptions.

If you're part of a trade union, your fees are also deductible. Magazines can make a dent in your return, as can subscriptions to mags associated with your line of work. If you're an investor, financial publications and research services are claimable.

Think ahead and prepay next year's fees before June 30 and claim your deduction now. Gifts or donations can only be claimed if the organisation you donated to has the status of deductible gift recipients DGRs. There are four key criteria to claim a tax deduction for a gift:. The amount that can be claimed depends on the type of gift. For property the rules vary depending on the type and value.

For gifts of property, there are different rules, depending on the type of property and its value. You can claim the deduction in the tax return for the income year in which the gift is made. Your receipt — which you will need to substantiate the deduction — should tell you whether or not you can claim a deduction. If you donated through third parties, such as banks and retail outlets, the receipt they gave you is also sufficient. If you contributed through 'workplace-giving' your payment summary shows the amount you donated.

Read more about claiming gifts and donations. Deductions can be claimed for expenses incurred earning interest, dividends or other types of investment income. For interest income expenses, you can claim account keeping fees for investment purposes. Something to be mindful of though is if you have a joint account, you can only claim your share of the fees.

Check your last payslip for the previous year to confirm that the amount of insurance contributions stated in your tax return is correct. You are entitled to deductions for what you pay for the management and safekeeping of securities, book-entry shares and comparable assets.

For example, you can deduct the rent of a safe deposit box and the annual fee for maintaining a book-entry account. All expenses for the management and safekeeping of securities are tax-deductible. You can claim tax deductions for loan interest only if the loan in question is home loan or loan for the production of income.

You cannot deduct student loan interest. Loan for the production of income is loan related to the production of taxable income, such as rental income, dividend income or interest income.

If you have bought a residential property as a first-time homebuyer, check your tax return and tax card details to confirm that the purpose of your loan is correctly stated. Interest expenses are primarily deducted from your capital income, such as rental income or capital gains. Loan repayments are not tax-deductible, except for student loan repayments. If there is not enough capital income for the deduction to be made, the deduction is made from the tax on your earned income in the form of a special tax credit for a deficit.

If there is still not enough tax for the credit to be granted, part of the tax credit will remain unused. You cannot claim allowable losses based on pension insurance or long-term savings contract contributions.

Only the insured person can deduct the contributions in their own taxation. For example, if your spouse has paid your insurance contributions, they cannot deduct the contributions in their tax assessment.

However, the deduction amount cannot be higher than the amount of wages you have received. Read more about how to deduct expenses for the production of income. The deduction for the production of income is made from your wage income in both state taxation and municipal taxation. The deduction for earned income is made from your net taxable earned income in municipal taxation. When the deduction is reduced, all your earned income — including pension, unemployment benefit and sickness allowance — is counted as income.

When the credit amount is reduced, all your earned income — including pension, unemployment benefit and sickness allowance — is included as income.

Profits and gains derived by an undertaking or an enterprise in special category States Himachal Pradesh, Uttaranchal, Arunachal Pradesh, Assam, Manipur, Meghalaya, Mizoram, Nagaland and Tripura subject to certain limits, time limits and conditions ,.

Provisions of section 32 shall apply whether or not the assessee has claimed depreciation. If sum is borrowed for acquiring a capital asset, interest thereon pertaining to the period before asset is first put to use shall not be allowed as deduction. Such deduction shall be allowed if amount of debt or part thereof has been taken into account in computing income on the basis of Income Computation and Disclosure Standards notified under section 2 without recording the same in the accounts.

With effect from assessment year business of developing or maintaining and operating or developing, maintaining and operating a new infrastructure facility, has been included. With a view to ensure that the capital asset on which investment linked deduction has been claimed is used for the purposes of the specified business, sub-section 7A has been inserted in section 35AD to provide that any asset in respect of which a deduction is claimed and allowed under section 10AA , shall be used only for the specified business for a period of 8 years beginning with the previous year in which such asset is acquired or constructed.

Moreover, if such asset is used for any purpose other than the specified business, the total amount of deduction so claimed and allowed in any previous year in respect of such asset as reduced by the amount of depreciation allowable in accordance with the provisions of section 32 as if no deduction had been allowed under section 10AA , shall be deemed to be income of the assessee chargeable under the head "Profits and gains of business or profession" of the previous year in which the asset is so used.

However, this provision will not apply to a company which has become a sick industrial company under section 17 1 of the Sick Industrial Companies Special Provisions Act within the time period of 8 years as stated above. With effect from assessment year a new Explanation 2 has been inserted in section 37 1 to clarify that expenditure incurred by the assessee on Corporate Social Responsibility activities in accordance with section of the Companies Act, will not be considered as expenditure incurred by the assessee for the purposes of the business or profession.

Following chart explains amendments made in section 40 a i with effect from the assessment year :. Following amendments have been made in section 40 a ia with effect from the assessment year :.

After amendment, disallowance under section 40 a ia , will cover any amount payable to a resident which is subject to TDS. One residential house in India with effect from assessment year With effect from Assessment Year , a taxpayer has an option to make investment in two residential house properties in India.

This option can be exercised by the taxpayer only once in his lifetime provided the amount of long-term capital gain does not exceed Rs. With effect from assessment year limit of Rs. See Bank Term Deposits Scheme, Where deduction is claimed under this section, deduction in relation to same amount cannot be claimed under section 80C.

With effect from assessment year , amended sub-section 1 has clarified that a non-government employee can claim deduction under section 80CCD even if his date of joining is prior to January 1, With effect from the assessment year section 80CCE is amended so as to provide that contribution made by the Central Government or any other employer to a pension scheme under sub-section 2 of section 80CCD shall not be included in the limit of deduction of Rs.

With effect from assessment year , sub-section 1A of section 80CCD which laid down maximum deduction limit of Rs. Further, a new sub-section 1B is inserted to provide for additional deduction to the extent of Rs. The additional deduction is not subject to ceiling limit of Rs. However, it is to be noted that addition deduction of Rs.

Any payment from NPS to an employee because of closure or his opting out of the pension scheme is chargeable to tax. However, with effect from the assessment year , the whole amount received by the nominee from NPS on death of the assessee shall be exempt from tax. With effect from assessment year a investment in listed units of an equity oriented fund is also permitted; b deduction shall be allowed for three consecutive assessment years, beginning with the assessment year relevant to previous year in which the listed equity shares or listed units of equity oriented fund were first acquired and c gross total income of the assessee for relevant assessment year shall not exceed twelve lakh rupees.

Section 80D is amended by the Finance Act, From assessment year onwards the deduction under Section 80D will be available as per the limit specified below:. Maximum deduction is Rs. With effect from assessment year , the taxpayer shall be required to obtain a prescription from a specialist doctor not necessarily from a doctor working in a Government hospital for availing this deduction. Scope of 'higher education' is enlarged with effect from assessment year to cover any course of study pursued after passing the Senior Secondary Examination or its equivalent from any school, Board or university recognised by the Central Government or State Government or local authority or by any other authority authorized by the Central Government or State Government or local authority to do so.

With effect from the scope of expression 'relative' has also been enlarged to cover the student for whom the taxpayer is the legal guardian. Donation of any sums paid by the assessee, being a company, in the previous year as donations to the Indian Olympic Association or to any other association or institution established in India, as the Central Government may, having regard to the prescribed guidelines, by notification in the Official Gazette, specify in this behalf for—.

Donation made to an authority constituted in India by or under any law enacted either for the purpose of dealing with and satisfying the need for housing accommodation or for the purpose of planning, development or improvement of cities, towns and villages, or for both is also eligible for the purpose of deduction under section 80G from the assessment year [this is in consequence of omission of section 10 20A ].

With effect from no deduction shall be allowed in respect of donation of any sum exceeding two thousand rupees unless such sum is paid by any mode other than cash. With effect from no deduction shall be allowed under this section in respect of any sum exceeding ten thousand rupees unless such sum is paid by any mode other than cash.

With effect from deduction will not be allowed if sum is contributed in cash. Time limits stated under section IA 4 iv have been extended from to With effect from Assessment Year Readers are requested to please check the relevant document from below link:.

Following chart explains amendments made in section 40 a i with effect from the assessment year : TDS default pertaining to any sum other than salary payable outside India or payable to a non-resident which is taxable in the hands of recipient in India Law applicable up to the assessment year Law applicable from the assessment year 1.

Tax is deductible but it is not deducted Expenditure is not deductible. If, however, TDS is deposited in a subsequent year, it will be deducted in that year No amendment.

The law which is applicable for the assessment year will apply for assessment year onwards 2. If, however, TDS is deposited in a subsequent year, it will be deducted in that year Disallowance provisions will not be applicable if TDS is deposited up to the due date of submission of return of income under section 1.

Tax is deductible and it is so deducted during the month of March but it is not deposited up to April 30 falling immediately after the end of the financial year Expenditure is not deductible. Following chart explains amendments made in section 40 a i with effect from the assessment year : TDS default pertaining to any sum other than salary payable outside India or payable to a non-resident which is taxable in the hands of recipient in India Law applicable up to the assessment year Law applicable from the assessment year Tax is deductible but not deducted, but Payee has furnished his return of income after taking into account said income and paid tax thereon Expenditure is not deductible.

If, however, TDS is deposited in a subsequent year, it will be deducted in that year Were deductor has failed to deduct the tax and payee has furnished his return of income after considering such income and paid tax thereon, deductor shall not deemed to be an assessee in default, then it shall be deemed that the assessee has deducted and paid the tax on the date on which the payee has furnished his return of Income.

Accordingly expenditure shall be allowable as deduction. From assessment year onwards the deduction under Section 80D will be available as per the limit specified below: Individual HUF For self, spouse and dependent children : Rs.

For parents of the assessee : Additional Rs. Donation of any sums paid by the assessee, being a company, in the previous year as donations to the Indian Olympic Association or to any other association or institution established in India, as the Central Government may, having regard to the prescribed guidelines, by notification in the Official Gazette, specify in this behalf for— i the development of infrastructure for sports and games; or ii the sponsorship of sports and games, in India; is eligible for the purpose of deduction under section 80G [this is in consequence of omission of section 10 23 ].

With effect from Assessment Year i. Taxes levied by local authority and borne by owner if paid in relevant previous year. Interest on borrowed capital Rs. Standard deduction of 30 per cent of arrears of rent or unrealised rent received. Internal Revenue Service. Congress Joint Committee on Taxation. Accessed Jan.

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We and our partners process data to: Actively scan device characteristics for identification. I Accept Show Purposes. Your Money. Personal Finance. Your Practice. Popular Courses. What Is a Deduction? Key Takeaways A deduction is an expense that can be subtracted from taxable income in order to reduce the amount owed. Most taxpayers who take the standard deduction only need to file Form