Deduction and Allowances Available under Income Tax Act 1961 against Expenses Incurred by Assesses
There are many and very common expenses which are allowed to the Assesses to claim as deduction under Income Tax which ultimately reduces the net taxable income and Income Tax, but the assesses are not aware about the expenses which they incurred in their daily life and not take care of the proof expenses. If they maintain the proper file of expense proof they will get ample benefits under Income Tax.
So here are some assesses wise list of expenses for your quick reference who can claim the deduction and allowances under Income Tax of such expenses:
♠ All Assesses having income from House Property:
While assessing or calculating the income from house property under section 22 of the Income Tax Act, any municipal taxes imposed by the local authority (including service taxes) shall be deducted from the income of the house property. There are only two conditions to claim deduction is (i) Taxes are borne by the owner and (ii) the taxes are actually paid by him in previous year.
If money is borrowed for acquisition or construction of the house property, then deduction can be claimed upto Rs. 2, 00,000 subject to conditions that (i) Loan has been taken on or after April, 1999; (ii) acquisition or construction has been completed within 5 years etc.
If above mentioned conditions is not satisfied then Maximum deduction available is Rs. 30, 000.
♠ All Assesses having income from business and profession:
It is to be noted that the above mentioned expenditure shall not be the Capital Expenditure.
It is to be noted that the above mentioned expenditure shall not be the Capital Expenditure.
All assessee can claim the depreciation on capital assets as deduction under this section. The condition to claim the deduction is (i) Asset must be owned by the assessee or if asset is on lease then assessee can claim the depreciation on cost incurred upon the improvement or renovation etc. (ii) Asset must be used for business purpose, if asset is used partly for residential purpose and partly for business purpose, then deduction available of depreciation on asset use for business purpose.
If an Indian company or resident non-corporate assessee have incurred some expenses before the commencement of the business is eligible to take deduction after the commencement of the business by amortised the amount in each year.
If an assessee has taken the business or profession loan, then he is eligible to take the deduction of interest amount paid on such borrowing under this section.
If any expenditure is incurred in respect of advertisement of any political party is not allowed as deduction under income tax. Any other expenses related to advertisement can be claimed as deduction.
Donation can be claimed upto 50%-100% of the amount of donation depends upon the category of fund or institutions where the assessee had donated the amount.
♠ Deduction available to individuals or HUFs:
Please note that in all the above three category(Section 80C, Section 80CCC, Section 80CCD(1), the assessee is allowed to claimed the expenses upto Rs. 1, 50,000 only.
Maximum deduction can be claimed by the assessee in Assessment Year 2018-19 is Rs. 40,000; for Senior Citizen Rs. 60,000; for Super Senior Citizen Rs. 80,000.
Rahul Grover – [email protected]