Thursday, 12 December 2019

10 Tax saving options other than Section 80C

10 Tax saving options other than Section 80C

10 Tax saving options other than Section 80C

We all want to save tax in India. A majority of us are aware of tax saving options available under Section 80C but most of us are not aware of the other tax saving options available to us. 

There is no doubt Section 80C is the best option for tax saving. But there are many other tax saving options available to you outside Section 80C. You should also explore those tax saving options before planning your taxes. 

In this post, I will tell you about 10 tax saving options other than Section 80C.

1. National Pension System (NPS) {Section 80CCD(1B)}

An additional amount of Rs 50,000 can be contributed in NPS for additional tax deduction under Section 80CCD(1B). This tax deduction is available over and above the tax benefits of Rs. 1.5 lakh under Section 80C. 

NPS is a defined contribution retirement scheme launched by Government of India. NPS contributions are invested in a mix of assets. Therefore returns in NPS would depend on the assets that you choose.

You can contribute a minimum amount of Rs.500 per month or Rs.6000 a year in NPS. You can also choose from different NPS plans as per your risk appetite.

Also read: What is NPS (national Pension System)?

2. Medical Insurance (Section 80D)

Premium paid for medical/health insurance is eligible for tax deduction under Section 80D. You can take a health policy for self, spouse, dependent children, or dependent parents. You can avail a maximum deduction of Rs. 25000 for the premium paid for self, spouse or dependent children if your age is below 60 years and Rs. 30000 if your age is above 60 years. 

An additional deduction of Rs 25000 can also be claimed for buying a health insurance for parents. This deduction will be Rs. 30000 if either of the parents is a senior citizen. This deduction is available if the premium is paid in any mode other than cash. 

You can also claim a deduction of Rs 5000 for preventive health checkup for self, spouse, children, and parents and the same can be paid in cash too provided it should be within the limit of Rs. 25000/30000.

3. Payment of interest on education loan (Section 80E)

The amount paid as interest repayment on the loan taken from any financial institution for pursuing higher education is eligible for deduction under Section 80E. The loan may have been taken for self, spouse, children, or a student whose legal guardian you are. 

This deduction can be claimed only on the interest repayment part and not on the principal amount of the loan. There is no maximum limit on the interest amount that can be claimed.

4. Interest earned on Savings Account (Section 80TTA)

Interest earned on savings bank account up to Rs. 10,000 can be claimed as a deduction under Section 80TTA. However, first, you should show the interest from savings bank account in other income and then claim deduction under Section 80TTA. 

This can be claimed for interest earned on deposits in a savings account in a bank, post office or co-operative society. This deduction is allowed to an individual as well as to a HUF (Hindu Undivided Family).

5. Expenditure on specified diseases (Section 80DDB)

This deduction is available for the expenses paid on the treatment of specified diseases under Section 80DDB.  You can claim this deduction on the treatment of specified for self, spouse, parents, children, brother, and sister. For a Hindu undivided family (HUF) this deduction can be claimed by any member. 

You can claim an extra deduction equal to the amount actually expended or Rs 40,000, whichever is less. Rs. 60,000 if the person for whom the expenditure is made is a senior citizen and Rs 80,000 if age is 80 or more. The diseases covered under this section are available in rule 11-DD of income tax rules.

6. Rent paid for accommodation (Section 80GG)

This section applies to those who do not receive house rent allowance (HRA) as part of their salary or they are not salaried employees. The deduction under section 80GG is available when the taxpayer in living in the rented accommodation. 

The taxpayer himself/herself, spouse or minor child should not own any accommodation at the place of business or employment. Tax Payer has to submit a declaration in Form 10BA to claim this deduction. 

The deduction amount will be the least of the following:
1. Rs 5,000 per month, or
2. 25% of the total income, or
3. Rent paid minus 10% of the total income.

7. Home loan interest payment (Section 80EE)

Home loan interest paid up to Rs 2 lakhs for a self-occupied or rented home is exempted under section 24. A first time home buyer can also claim an additional tax deduction of Rs. 50,000 on home loan interest under Section 80EE. 

However, there are some conditions to avail this tax benefit:
1. The loan must be taken in the financial year 2016-2017.
2. The loan amount should be less than Rs. 35 lakhs.
3. The value of the house should be less than Rs. 50 lakhs.
4.  The said residential property should be the only one in his/her name.

8. Expenditure on the health of disabled relatives (Section 80DD)

You can claim the tax deduction if you incurred the expenditure for caring for disabled relatives who are dependent on you. Here relatives mean spouse, children, parents, brother, and sister. In case of HUF, relative can be any member of the HUF. 

You can claim a maximum deduction of Rs. 75,000 per annum under Section 80DD. You can claim a higher deduction of Rs. 1,35,000 per annum if the dependent is suffering from a severe disability.

9. Donations (Section 80G)

Donations made to certain funds, trusts, temples/mosque/church (for renovation), charitable institutions etc can be claimed as a tax deduction under section 80G. However, the deduction can only be claimed if you are donating by cheque or draft or in cash. 

Remember, from the financial year 2017-18, the limit of deduction under section 80G for donations made in cash is reduced to Rs 2,000 only.

10. Donations to political party (Section 80GGC)

The donations made to any Political party can be claimed as a deduction under section 80GGC. There is no limit on the donation amount that can be claimed under section 80GGC. However, payment of such donations should be made using any mode of payment other than cash.

Also read: How to save tax?

Also read: All about ELSS | Tax saving mutual funds

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10 Tax saving options other than Section 80C