Most common easy-to-miss tax deductions

The tax planning for the financial year is finally over! For those of you who ran pillar-to-post last year to save that extra dough, here's a lesson or two on the tax deductions / exemptions that you should not miss. In fact, while many of you miss saving taxes on various items due to lack of time a lot of you fail to save taxes for lack of awareness which could cost you some of the tax savings.

We take a quick look at the various items that can help you to save taxes.

Process to tax planning

Although there is ample news available in the form of marketing by financial advisory firms on deductions, there is limited information on exemptions and perquisites -- this is typically where individuals lose out on tax savings opportunities.

These are often dubbed as benefits without tax savings. Your medical expenses, house rent, and conveyance can all qualify to reduce your tax liability. It is only about efficient usage of these items and that is possible by gaining ample knowledge.

Not all these exemptions need proof. Rent paid less than or equal to Rs 3,000 per month does not require any rental proofs. Any amount over and above this would require rental receipts as proofs.

Conveyance allowance does not need any documental proofs.

Leave travel allowance can be claimed on trips made via private vehicles, bus, rail or air -- in each of the cases only travel is allowed and food / lodging is not allowed -- the proofs required in this case are petrol bills (private vehicle), ticket (bus & rail), boarding pass (air). As per IT laws there is no maximum limit of allowance that can be claimed, however, the company will limit the maximum amount that one can claim as LTA.

Medical allowance can be claimed for self / spouse / children / dependant parents by producing the relevant medical bills.

Perquisites

Normally, apart from food coupons, there are not many perquisites that one is aware of. Company car lease, company provided accommodation, interest free / subsidised interest rate loans, ESOPs, petrol / phone bill reimbursements of which ESOPs, company accommodation, interest free / subsidised interest rate loans are taxable -- the other perquisites are tax free, if one were to avail food coupons of Rs 3,000 per month, the same can be reduced from the gross income, thereby reducing the tax liability.

ESOPs are taxable on exercise and if sold within 12 months are subject to capital gains tax. However, the benefit of tax paid on exercise is deducted since the purchase price is the market price as on the date of exercise.

Section 80C offers a deduction of Rs 1 lakh irrespective of income brackets. Here are some highlights of the avenues that fall under section 80C:

Apart from the above avenues, the following non-investment items are allowed as deduction u/s 80C:

Home loan principal amount: The interest part can also be claimed as deduction u/s 24

Children education tuition fee

Interest earned on NSC investment

Section 80 CCF: Government of India has allowed the investment in long-term infrastructure bonds. Maximum investment of Rs 20,000 can be claimed u/s 80 CCF for deduction.

Section 80D: Medical premium, maximum of Rs 15,000 can be claimed as deduction u/s 80 D. One can also avail medical insurance for one's aging parents and claim additional Rs 20,000 (for senior citizens) as deduction u/s 80D. The total deduction under this section alone can be up to Rs 35,000.

These are some of the quick tax saving initiatives that one should not miss. It is better to start your tax planning well at the beginning of the year and not wait for the last minute rush.