Common Deductible Items When Computing for Taxable Income

Posted by Reading Time: 2 minutes

Feb. 11 – When computing for taxable income we often forget to include certain items that can be claimed as tax deductible.

Below is a list of common items eligible for a tax deduction:

Medical treatment of specified ailments under section 80DDB
A deduction can be filed for medical expenses for ailments like AIDS, cancer and neurological diseases under Section 80DDB with the maximum amount of deduction allowed from gross total income capped at about US$861. The amount can reach to US$1,292 if the treated person is 65 years or older. This is only applicable for medical expenses wherein no medical reimbursement was received from an insurance company or employer.

Deduction for Medical treatment of dependent:
Under Section 80DD of the Act, where an individual has incurred expenditure for the medical treatment, training and rehabilitation of a dependent, being a person with disability or has paid or deposited any amount under prescribed scheme for the maintenance of dependent, such individual will be allowed a deduction worth as much as US$1,076 although the figure can be as high as US$1,615 if the dependent is suffering from severe disability.

Charitable deductions under section 80G
Under Section 80G of the I-T Act, deductions can apply to donations made by an individual to certain funds and registered charitable institutions with no restriction on the charitable amount. The rate of deduction, however, can be either 50 or 100 percent, depending on the choice of trust.

Deductions in respect of rent paid
Deductions to the extent of US$43 monthly or 25 percent of total income (whichever is less) is available under Section 80GG of the I-T Act in respect of rent paid by an individual on his accommodation, provided the individual does not get any house rent allowance.

Foreign taxes paid
Foreign tax credits may be claimed by an individual for doubly-taxed income which is taxed in India as well as in a foreign country as long as the conditions as prescribed under the Double Taxation Avoidance Agreement between India and the foreign country are satisfied.

In cases where there is no Double Taxation Avoidance Agreement between India and the foreign country, credits may also be claimed under the Act, following certain conditions.

Deduction under section 80U for Person with disability
Under Section 80U of the Act, an individual who is certified by the prescribed medical authority to be a person with disability shall be allowed a deduction of US$1,076 and an individual, who is certified as a person with severe disability, shall be allowed a deduction of US$1,615.

For professional assistance in complying with Indian tax requirements email