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Insurance Article

Bills and Receipts that Reduce your Tax Liability

December 10 2015
Reduce your taxes and save more

Bills and receipts, which you thought had little value, can help you save tax

There are several ways to reduce the income tax payable, and out of these, most are unknown to us or often forgotten. Invoices and receipts of various expenses are examples of such commonplace items that can help reduce your tax liability.

Here are 8 invoice-related tax deductions in accordance with The Income Tax (IT) Act 1961, which you can claim to save more this year:

1. Children's Tuition Fee Receipt

Any tuition fee paid by you for the education of your children (maximum 2) is allowed for deduction under Section 80C. This payment can be to any recognized school, college, university or other educational institution situated within India for the purpose of full-time education of your children. It also includes payments for playschool, pre-nursery and nursery.

2. Medical Insurance Premium Receipt

Payment of medical insurance premium for yourself, your spouse and dependent children qualifies for tax deduction under Section 80D. Likewise, payment of medical or health insurance premium for your parents, whether dependent or not, qualifies as a deduction under this section.

3. Bills for Preventive Health Checkups

If you have not yet exhausted your deduction limit under Section 80D and you have a bill for a preventive health checkup, you can claim this bill and get a maximum of Rs. 5,000 as a deduction. This deduction is included within the overall limit of Rs. 25,000 of Section 80D (Rs. 30,000 in case of senior citizens) for the financial year 2014-15.

4. Meal Coupons and Hotel Bills

If your company issues meal coupons (like Sodexho) as a perquisite, you can make your meal expenses tax-free under Section 17. Meal expenses are not taxable up to Rs. 2,600 per month. If you are a business owner, you can save tax by indicating all meal expenses incurred as a part of your business – for example lunch or dinner meetings with various stakeholders of your business – as business expenses.

5. Fuel Bills

Some companies offer daily travel allowance to employees commuting by their own vehicles. To avail this tax benefit under Section 17, you must submit original fuel bills. Limit of non-taxable amount varies with your vehicle type and capacity.

6. Donation Receipts

Donations made to specified funds or charitable institutions mentioned under Section 80G are eligible for tax deduction. You need to retain the stamped receipts of the donations and make sure the charitable organization is registered.

7. Flight and Train Tickets for LTA Claims

Employees can utilize Leave Travel Allowance (LTA) to cover the expense of travel tickets for yourself and your family. Travel expenses of your spouse, two children, parents and dependent siblings will not be taxable, if they are part of your journey.

You can avail this facility twice in the block of four years. If you were unable to avail this allowance, then you can carry over one vacation in next block, provided you avail this in the first year of the block.

8. Telephone/Internet Bills

You company may not reimburse your personal telephone or Internet expenses, but may have a policy to make these expenses tax-free under Section 17. You can either get telephone expenses reimbursed or claim tax benefits.

Physical or scanned documents of bills and receipts are not required while filing your tax return. However, ensure you retain them; there is always a chance of receiving an income tax notice where in Assessing Officer could demand for these receipts.

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