Tax Rebate

A tax rebate is a refund on the tax you pay when your tax liability is lesser.  You can get a refund on your Income tax if you have spent more than what you owe. The Tax refund is returned at the end of a financial year. You can get a refund on the excess tax with interest. You must file an income tax return to claim your return within a specific period. 

How to Get a Tax Rebate?

To avail tax rebates, approach your HR, and they will do the exemption and deduct it at the source. 

Types of Tax Rebates

The following kinds of tax rebates are available in India: 

1. Section 80C 

   Most taxpayers prefer Section 80C as it lowers their taxable income by Rs.1.5 lakh.

   Individuals and members of Hindu Undivided Family are allowed for the following investments and expense which are exempt under Section 80C:

   1. ELSS

   2. NSC, PPF, SCSS

   3. 5 year Bank FD that are tax saving/5 year Post Office Term deposits

   4. PF, voluntary and mandatory

   5. Life insurance premiums

   6. Pension funds or annuity

   7. Principal on home loans

   8. Registration and stamp duties on home purchases

   9. Children’s full-time education tuition fees

   10. Maximum amount that can be deducted is Rs.1 lakh in a year. 

2. Section 80D

   You get exemptions under section 80D if you are paying a health insurance premium.

   You can get a tax deduction by submitting proof to the HR so that they can adjust that amount in your salary. 

3. Section 80EE 

   You can avail a tax rebate on the interest payment of loan through Section 80EE. You are eligible for the refund if you fulfill the following conditions.

   1. Your loan is approved by a financial institution or company between 1st April 2013 and 31st March 2014.

   2. Your loan amount is less or equal to 25 lakh rupees or less, and the cost of your house is less than or equal to 40 lakh rupees.

   3. The house bought with the home loan must be the only house you own.

   4. Maximum deduction allowed is 1 lakh rupees paid on the interest. 

4.  Section 80TTA 

   You can avail a tax rebate on the interest on savings up to Rs.10,000 from 1st April 2013, under Section 80TTA if the interest is less than the amount.

   Individuals and members of Hindu Undivided Family earning interests on their savings account can claim tax exemption. The savings accounts can be held with banks, post offices, and co-operative societies. 

5. Section 80G 

   You can also get exemptions on amounts donated to charitable institutions and organizations established by the government.

   There are 4 types of deductions depending on charitable organizations:

   1. 100% deduction on donation to: 

      -Prime Minister's National Relief Fund

      -National Children's Fund

      -The Africa (Public Contribution - India) Fund

      -Prime Minister's Armenia Earthquake Relief Fund 176

      -National Defence Fund

      -The National Foundation for Communal Harmony

      -Donations made to Zila Saksharta Samitis

      -The Chief Minister's Earthquake Relief Fund, Maharashtra

      -Any approved university or educational institution of national eminence

      -The National Blood Transfusion Council or a State Blood Transfusion Council

      -The Army Central Welfare Fund/the Indian Naval Benevolent Fund/The Air Force Central Welfare Fund 

   2. 50% deduction on donation to:

      -Jawaharlal Nehru Memorial Fund

      -Prime Minister's Drought Relief Fund

      -Indira Gandhi Memorial Trust

      -The Rajiv Gandhi Foundation

   3. 100% deduction subject to qualifying limit on donation to: Government or local authority promoting family planning.

   4. 50% deduction subject to qualifying limit: 

      -Government or local authority supporting charitable purposes other than family planning.

      -Authorities in India engaging in housing development, development of cities, towns, and villages.

      -Corporations promoting interests of Muslim, Christian, Buddhist, Sikh and Parsi Community.

      -Repair work of a notified mosque, church, gurudwara, temple, etc.

6. Section 54 

   • The profit from the sale of your residential property is taxable. If you own the property for more than 3 years, it becomes a long term capital gain, and you can avail exemption.

   • To be eligible for an exemption, you should buy another residential property within 2 years or before 1 year of sale of the old property, or you must construct a residential property within 3 years from the sale of the former property.

   • There is no cap to the extent of the tax exemption. If the entire capital gain is utilized, it can be exempted from tax. 

7. Section 54EC 

   If you invest the long term capital gain amount in specified bonds, you can claim tax exemption.

   You can invest up to Rs.50 lakhs in NHAI and REC bonds to avail exemptions. 

8. Section 24b 

   • Section 24b, known as an interest tax shield, allows deductions on the interest amount on home loans.

   • Interests up to Rs.30,000 can be exempted if the loan is for house property bought, constructed, renewed, repaired, or reconstructed before 1st April 1999.

   • Up to Rs.1.5 lakhs is exempted if the loan is for property bought or constructed within 3 years from borrowing.

   • Up to Rs.30,000 is exempted if the home loan is taken for renewing, repairing or reconstructing the house provided the money is borrowed after 1st April 1999.

   • Up to Rs.30,000 is exempted if the house is constructed or bought after 3 years after borrowing the money provided the money is borrowed after 1st April 1999. 

9. Section 80CCG 

   • Section 80CCG is called Rajiv Gandhi Equity Savings Scheme. If your income is less than Rs.12 lakhs, use a DEMAT account to buy notified shares to claim a 50% deduction on the invested amount. You must be a new retail investor, and the investment must be made in shares belonging to BSE 100, NSE 100, maharatnas, navratnas and miniratnas. NRIs can not avail this tax benefit.

   • The maximum investment limit is capped at 50,000 rupees.

   • You can fill out the details in your ITR under section 80CCG, or you can submit the details of the investment to the company HR to have the tax deducted at your source on your salary. 

10. Section 10(13A) 

    • This applies to you if you pay house rent allowance.

    • You must submit the rental receipt to the HR for every financial year.

    • If the rent is less than 10% of your salary, then there won’t be any exemption.

    • If your HRA is lower than the house rent, talk to your HR to make the HRA equal to the house rent and to increase your basic pay.

    • You will have to provide your rental receipt to HR so that the HR can apply less TDS on your salary.

11. Section 80GGA 

    • If you are a salaried employee, you can claim tax benefits by making donations to institutions involved in scientific activities, rural development, conserving nature, etc.

    • Maximum deduction limit is 100% of the amount donated. However the deduction is not allowed on salary TDs, so you will have to include it while you are filing your returns. 

12. Section 24a 

    • Income from your house will be treated as a separate income, and it is deducted from your tax.

    • You can get a flat 30% rebate on income from house.

    • Deduction for repairs and maintenance is not entertained. The rebate is not applicable for houses that are let out. 

13. Section 10(5) 

    • You can avail tax breaks on your travel allowance under Section 10(5).

    • Tax rebate can be claimed on the amount actually spent on travel costs.

    • The actual amount spent on traveling or the leave travel allowance can be claimed for deductions.

14. Section 80DD 

    • The amount spent on the well-being of the disabled dependents is exempt from tax.

    • You can claim a flat deduction of Rs.50,000 in a year. If the disability is 80% or more, the maximum limit is Rs.1 lakh.

    • You have to submit the prescribed certificate to the HR, and he will get a deduction in TDS on salary.

15. Section 80GGC 

    • Donations made to the political parties can be claimed for tax exemption. This section is meant for non-corporate taxpayers.

    • The donations made must be a political party registered under the section 29A of the Representation of the People Act. Contributions made in cash are not eligible for tax deduction.

    • 100% of the donated amount can be claimed for deduction.

    • This deduction is not allowed in salary TDs. This has to be claimed while filing your tax return. 

16. Section 80E 

    The entire amount that you pay as interest on your education loan can be claimed for exemption.

    You must submit the interest payment bank statement to your HR, and they will apply less TDS on your salary. This can also be claimed in your ITR form while claiming for your returns. 

17. Section 80DDB 

    • If you are undergoing any medical treatment for cancer, kidney failure, thalassemia, etc. the amount spent on those treatments can be deducted.

    • A tax rebate is available for individuals and Hindu Undivided Families residing in India. You can claim the expenses or 40,000 rupees for tax deductions.

    • Submit the required documents to your HR, and they will apply less TDS on your salary. 

18. Section 80GG: 

    Those who don’t get tax exemption on the HRA of their salary can now get a tax rebate for the rent that the person pays under the section 80GG.

    The least of the following can be claimed: 

    -Rs.2,000 per month

    -25% of the total income

    -Rent barring 10% of the total income

    -You can claim for the rebate while filing your income tax return forms.

19. Section 80U: Disabled persons residing in India can claim flat deductions by producing disability certificates. The flat deduction that can be claimed in a year is 50,000 rupees and one lakh rupees if the disability is severe. The deductions can be claimed while filing your income tax returns. 

20. Section 54F: Capital gain earned from the sale of property, shares, bonds, gold, etc. is taxable and can be claimed for deductions of the amount that is used to invest. There is no limit. The entire capital gain can be exempted. You have to claim for deduction while filing your income tax return. 

21. Section 10(10D) 

    Income received from insurance policies is exempted from income tax. The benefits must be drawn from endowment plans, whole-life plans, unit linked plans and returns and bonuses that are tax-free. There is no cap, any amount received is exempted from income tax as long as the conditions are met. You have to claim for deduction while filing your income tax return. 

22. Section 80CCF 

    An investment made up to Rs.20,000 in certain infrastructure bonds is qualified for additional deductions. Three long term infrastructure bonds that are eligible are:

    • LIC

    • Infrastructure Development

    • Finance Corporation and IFCI.

    This additional discount has not been extended for the year 2012-2013. Individuals and HUFs can make investments in these bonds but cannot claim income tax exemption.