How you can use these spending-linked deductions to save taxes

Mint

4 days ago

If you are looking to file your income tax returns, here is a look at how spending on certain items can help you save taxes. These deductions are available under the old tax regime.
Under section 80C, the taxpayer can claim a deduction on education expenses—tuition fees. These could be related to any educational institution—university, college, or school—situated within India. This doesn't include any other payments such as development fees, donations, etc. The tuition fees could be paid on behalf of spouse or children.
"This is available for any full-time education programme only. It is available for maximum two children. This deduction can help tax-payers, especially who don't have any other eligible items under section 80C. This can especially help parents with younger children," said Balwant Jain, Mumbai-based tax and investment expert.
Under Section 80D, individuals can claim a deduction of up to ₹ 5,000 for payments made towards preventive health check-ups. This deduction can be availed by the taxpayer for themselves, their spouse, dependant children or parents. The payment for preventive health check-ups can be made in cash. However, you must keep receipts of such check-ups handy.
If you have a dependant with disability, which requires medical treatment, such expenses can also be claimed towards deduction.
The expenditure can be related to medical treatment (including nursing), training and rehabilitation of the dependant with disability. A deduction of up to ₹ 75,000 is allowed. If the dependant has severe disability, a deduction of ₹ 1.25 lakh is allowed.
There are certain spending that lead to TCS (tax collected at source). Ensure it gets adjusted at the time of filing your ITR. You can use the TCS paid to reduce your tax liability to the extent of TCS paid by you. Noted, TCS can be claimed in both old and new tax regime.
These are the expenses that attract TCS.
If you have travelled overseas through a foreign tour package worth more than ₹ 7 lakh, a TCS (tax collected at source) of 20% is levied on such packages. You can claim this TCS at the time of filing your ITR and reduce your tax liability to that extent. If the cost is less than ₹ 7 lakh, TCS of 5% is levied.
If you buy a vehicle worth more than ₹ 10 lakh, a 1% TCS applies.
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If you are using the LRS (liberalised remittance scheme) route to send money abroad for any expenditure, a TCS of 20% is applicable if the amount exceeds ₹ 7 lakh. If the amount is for the purpose of education or medical treatment, a TCS of 5% is applicable if the amount exceeds ₹ 7 lakh.
Remember, these rates are applicable for the financial year 2024-2025. For the new financial year, the threshold has been raised to ₹ 10 lakh.