4 simple tax saving ideas

# Setting off capital loss against capital profit

Did you know you can setoff long term capital profit against short term loss? Long term capital gains like profit gained on sale of property can be set against any short term capital loss such as loss incurred from investing in stock market.

For example if you have paid off the home loan and sold the property for a profit of Rs. 30 lakh. At 25% the amount of tax payable is 7.5lakhs. In the same financial year if you have invested in the stock market at incurred short term loss of Rs 3 lakhs, then the net taxable capital gain profit is Rs. 27 lakhs (Rs. 30 lakhs – RS. 3 lakhs). Tax payable at the rate of 25% on taxable amount is Rs .6.75 lakhs. By this tota tax saved is Rs. 0.75 lakhs.

Proof required -Statement of  trading account which includes details of transaction in which you incurred loss.

# Donations to political party and charitable trust

Whenever you contributed to charitable trust, NGO and recognized political party, you are eligible for tax deduction. Under Section 80GGC donations to registered political parties or electoral trusts can be entitled for a deduction. A fascinating point to note is that there is no upper limit on the amount that can be claimed as a deduction.
Under Section 80G, 100% or 50% of your donation to a charitable organization and up to 10% of your income is entitled for deduction.
Proof Required – For claims on contributions to political parties, you need a stamped receipt from the party or trust. For claims on donations made to charitable organizations, a tax exemption certificate or receipt is required.

# Educational Expenses
Increasing cost of education is a major concern for parents. In the case of education, the taxman is relatively favorable. Under Section 80C and 80E, interest on educational loans for children as well as spouses (excluding relatives and  siblings) is deductible from taxable income for the first eight years.
Proof Required – For claims on interest paid on education loans, you need to present your loan account statement as proof.

# Medical expenses on illness of dependents
The taxman understands that in circumstances where a dependent is chronically ill, medical expenses can weigh down taxpayers. Therefore, under Section 80DDB, an annual deduction of Rs 40,000 or Rs 60,000 for senior citizen dependents can be claimed.
Deductions can be claimed on only certain diseases  some of which include, advanced stage of AIDS, hematological disorders such as hemophilia, neurological diseases such as Parkinson’s, dementia, chorea, and chronic kidney failure. To be eligible for a claim, dependents (parents, children, spouses and siblings) should not have claimed for deduction separately.
Proof Required – For claims on medical expenses on illness of dependants, you need a medical certificate and details of the illness from a certified medical professional in a government hospital.