When it comes to claiming deductions for expenses, the general rule is that deductions are allowed only for expenses related to the generation of income. However, there are certain situations where you may be eligible to claim deductions for expenses incurred before you started earning income.
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Section 80C Deductions
Under Section 80C of the Income Tax Act, you can claim deductions for certain investments and expenses, regardless of your income. These include tuition fees paid for yourself or your children, repayment of the principal amount on a home loan, contributions to specified savings schemes, and payments towards life insurance premiums. These deductions have a specified maximum limit of ₹1.5 lakh per year.
Deductions for Home Loan Interest
If you have taken a home loan and the construction or acquisition of the property is completed before you start earning income, you can claim deductions on the interest paid during the pre-income period. However, this deduction can only be claimed from the year you start earning income, and the maximum limit is ₹2 lakh per year.
Business Start-up Expenses
If you have incurred expenses related to starting your own business, you may be eligible to claim deductions under Section 35AD of the Income Tax Act. This provision allows deductions for specified capital expenses incurred before the commencement of business operations. However, it's important to note that this provision is applicable only to certain industries and activities.
Professional Courses
If you have pursued professional courses or skill development programs before you started earning income, you can claim deductions under Section 35D of the Income Tax Act. This provision allows deductions for the expenses incurred in acquiring the necessary qualifications for employment or setting up a business. However, these deductions are subject to certain conditions and limitations.
Remember to maintain proper documentation and consult a tax professional to ensure eligibility and maximize your tax benefits.
Look up more articles here for a smooth first time tax-filing process. All the best!
