🎯 Introduction
While Chapter VI-A deductions (Sections 80C–80U) cover many reliefs, India’s tax laws also offer important exemptions and additional deductions outside this chapter. Mastering these can further cut your tax bill. In this article, we explore:
- 🏠 Section 24(b): Home loan interest deduction
- 🏢 House Rent Allowance (HRA) exemption (Section 10(14))
- ✈️ Leave Travel Allowance (LTA) exemption (Rule 2B)
- 🏥 Medical reimbursement exemption (Section 17(2))
- 📜 Life insurance maturity exemption (Section 10(10D))
- 📋 Exemptions vs. Deductions: Key differences
1. 🏠 Section 24(b): Home Loan Interest Deduction
✅ Eligibility & Scope
- Applies to self-occupied or let-out residential property.
- Deduction for interest component of home loan EMI.
💸 Deduction Limits
| Property Type | Max Deduction |
|---|---|
| Self-occupied | ₹2,00,000 per year |
| Let-out (rental) | Unlimited (actual interest) |
Example: Mr. Jain pays ₹3,50,000 interest on his self-occupied home loan. He claims ₹2,00,000 under Section 24(b).
2. 🏢 House Rent Allowance (HRA) Exemption
✅ Eligibility
- Salaried individuals receiving HRA as part of salary (Section 10(14)).
- Must pay rent for residential accommodation.
💸 Exemption Calculation (least of three):
- Actual HRA received
- Rent paid minus 10% of salary (Basic + DA)
- 40% of salary (non-metro) or 50% (metro cities)
Example: Priya’s salary = ₹6 L; HRA = ₹1 L; Rent = ₹1.2 L; Metro city.
- HRA received: ₹100,000
- Rent − 10% salary: 120,000 − 60,000 = ₹60,000
- 50% salary: ₹300,000
- Exemption = ₹60,000
3. ✈️ Leave Travel Allowance (LTA)
✅ Eligibility
- LTA paid by employer for travel within India for self and family.
💸 Exemption Rules
- Exempt only for actual travel fare (train, flight) for two journeys in a block of 4 calendar years.
- Block: e.g., 2022–25.
Example: Raj travels to Delhi (₹10,000) and Goa (₹15,000) in 2024. He claims ₹25,000 LTA exemption.
4. 🏥 Medical Reimbursement (Section 17(2))
✅ Eligibility
- Policy of employer to reimburse employee medical expenses.
💸 Exemption Limit
- Up to ₹15,000 per annum.
- Applies to self, spouse, dependent children, and parents.
Note: From FY 2018, medical reimbursement is replaced by standard deduction of ₹50,000, so this applies only if your salary structure still includes it.
5. 📜 Life Insurance Maturity (Section 10(10D))
✅ Scope
- Maturity proceeds or sum assured received from life insurance policies.
💸 Exemption Conditions
- Premiums paid ≤ 10% of sum assured.
- Policy issued on or after 1 April 2012.
Example: Rahul’s LIC policy matures for ₹5 lakhs. Premiums paid over tenure = ₹4 lakhs. Entire ₹5 lakhs is tax-exempt under 10(10D).
📑 Exemptions vs. Deductions
| Aspect | Exemption | Deduction |
|---|---|---|
| Definition | Income not included in total income | Subtracted from total income |
| Section | Mostly under Section 10 | Sections 80 onwards |
| Impact | Directly reduces taxable income part | Reduces gross total income |
| Examples | HRA, LTA, 10(10D) | PPF (80C), health insurance (80D) |
📋 Quick-Reference Checklist
- Home loan interest: Section 24(b) proof from bank
- HRA: Rent receipts, rent agreement, Form 12BB
- LTA: Travel tickets, proof of stay
- Medical: Reimbursement claims (if applicable)
- Insurance: Policy document, maturity certificate
Call to Action: Download our Bonus Deductions & Exemptions Guide (PDF) for a one-page cheat sheet!
This concludes our comprehensive tax-saving series on the Income Tax Act. For personalized advice, consult a tax professional.