Tax Saving options beyond Section 80C
Any prudent taxpayer would want to ascertain avenues to optimize taxes and enhance their disposable income. The most popular avenue is the crowded limit of INR 1,50,000 under Section 80C of the Income Tax Act, 1961 (for life insurance premiums, PPF, five-year term deposits, etc.). If you have invested in NPS as well you can claim an additional INR 50,000, bringing the total available deduction to INR 200,000.
However, "Yeh Dil Always Mange More". Can I not get more tax saving options? Yes, there are other benefits to our rescue. Let us evaluate them: -
A Few more Tax Saving Options
The insured can get deduction of INR 25,000 on health insurance for self, spouse and children. Furthermore, you can claim for an additional amount up to INR 25,000 or INR 50,000 for your parents who are less than 60 years or senior citizens respectively. In case both the policy holder and his parents are above 60 years, the maximum allowed deduction is up to INR 1,00,000
This savings is primarily for families of handicapped. It is applicable to individuals and Hindu Undivided Families (HUF’s) on the amount spent on rehabilitation of handicapped dependent relatives. The deduction will be on:
-Medical expenses including nursing, training and rehabilitation of dependent handicapped relative.
- Amount paid to a specified scheme towards caretaking of dependent handicapped relative.
The specific limits are:
- Rs.75,000 for 40%-80% disability
- Rs.1,25,000 for severe disability (80% or more)
A disability certificate from the concerned medical authority will be required for claiming this deduction.
Additional Read: 7 best tax saving options available for you
A resident individual or a HUF can claim a deduction of INR 40,000 for expenses towards treatment of certain specific ailments for his dependents. In case of a senior citizen, a deduction can be claimed up to INR 100,000. Medical expenses claimed from an insurance policy or from an employer are reduced before the application of deductions. Prescription from a medical specialist is necessary.
You can also save tax on interest payment on higher education loans for self, spouse, children. The deduction can be claimed till either:
- 8 years from the year of beginning of loan repayment or
- Until the entire interest is paid off, whichever is earlier
Interest Component on Home Loans
- Section - 24(b)
Interest payments on a home loan can be reduced from your income. If the house is self-occupied, a maximum of INR 200,000 can be claimed as a deduction, provided the construction is completed within five years of the loan tenure. If you choose to let out the purchased property on rent, then the entire interest amount can be deducted from the ‘Income from house property.’
2. Section 80EE
For people buying a home for the first time, up to INR 50,000 is allowed on the home loan interest if the property value and loan is less than the prescribed limit and sanctioned in FY 2016-17.
3. Section - 80EEA
First-time homebuyers can claim additional interest benefits amounting to INR 150,000 above Section 24(b) on home loan EMI’s, provided the property value is less than INR 45 Lakh and the loan should be sanctioned during FY 19-20. This effectively makes way for up to INR 3.5 Lakh tax-saving other than Section 80C, including the benefit of Rs. 2 lakh under section 24(b).
However, no prior property should be registered under an applicant's name while availing benefits under Section 80 EE and 80 EEA.
This deduction is related to the donations paid in support of various social causes. The donations are eligible for tax deduction of up to 50% or 100% of the donated amount depending on the charitable institution. The list includes Prime Minister's National Relief Fund, National Children's Fund etc. No donation above two thousand rupees should be made in cash mode to be eligible.
- Section - 10(13A)
Salaried employees who receive house rent allowance (HRA) as a part of salary and make rent payments can claim exemption to reduce their taxable salary. The total exemption available is the minimum of the following:
- Actual annual HRA disbursed
- 40% of basic salary for non-metro city or 50% of basic salary if the rented property is in Metro city
- Actual rent paid less than 10% of basic salary
2. Section - 80GG
If your company does not include the HRA component in your salary, you can claim the deduction which is lesser of:
- INR 5,000 per month
- 25% of the total annual income
- Annual rent - 10% of the annual income
Section 80 GGC
An individual can claim deduction on contributions made to a political party or electoral trust via any mode other than cash. There is no upper cap on the claim amount, but the overall deduction amount cannot exceed the gross income.
Up to INR 10,000 can be claimed on interest earned from a savings account maintained with a bank, co-operative society, or post office. Interest income from FDs, RDs or corporate bonds is not eligible.
Section 80 TTB
A deduction up to INR 50,000 can be claimed by a senior citizen on interest income from saving accounts or deposits.
Resident individuals who suffer from physical disabilities including blindness or mental health can claim deduction of up to INR 75,000 and those with severe disabilities can claim up to INR 125,000.
Other exemptions from salary income
Besides the all too popular HRA exemption, you can also avail tax exemption on Leave Travel Allowance, meal coupons, conveyance allowance, medical allowance, etc.
Additional Read: Understanding the Basics of Income Tax for Beginners
There are several tax saving options that you can utilize basis relevance to you. Even if you exhaust the popular 80C deduction, you can still look at these other benefits.
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