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Tax Saving Options beyond Section 80C

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When it comes to making tax saving investments, most of us are well versed with the ins and outs of Section 80C of the Income Tax Act, 1961. However, there is a limit of Rs. 1.5 lakhs on the tax savings that can be availed through the popular 80C investments. In this post, we will see various tax saving options beyond Section 80C.

Here is a list of deductions that you can claim other than Section 80C. Use these deductions and reduce your taxable income as much as possible.

There are various deductions available to us, but we miss out on them due to lack of awareness.

Medical Insurance (Section 80 D)

One can claim upto 75,000 for medical insurance under Section 80D.

All surveys of the Indian insurance industry conducted till date has reached an inescapable conclusion – the average Indian is underinsured when it comes to life insurance and most often uninsured when it comes to health insurance. Though some salaried employees are often part of group health insurance benefits provided by their employer, such insurance plans are not tax saving schemes as they do not carry any tax benefits and cease to be in effect once the employee leaves the organization. With the skyrocketing medical costs of the present day, it makes sense to purchase a separate health insurance policy. Health insurance premium payments provide tax benefits under Section 80D over and above the 80C limit. The maximum deduction you could claim for payment of health insurance premium that covers you, your spouse and dependent children is capped at Rs. 25000. However, you can claim an additional tax exemption of up to Rs. 50,000 in lieu of health insurance premium payments for senior citizen parents.

Medical Expenses (80 DD & 80 DDB)

One can claim upto 125,000 for the medical expenditure of disabled person under Section 80DD.

The 80 DD subsection provides tax exemption on medical treatment costs incurred for self, spouse, dependent children and/or parents. The maximum exemption currently allowed under this section is 75,000 and Rs. 1.25 lakhs in case of severe disability.

One can claim upto 40,000 for the medical expenditure for specified diseases under Section 80DDB.

The 80 DDB subsection provides you with tax exemption in case of medical expenses incurred towards the treatment of specific diseases including but not limited to chronic renal failure, various cardiovascular illnesses, and cancer. The annual exemption cap in this subsection is Rs. 40,000, however, a higher deduction amount of up to Rs. 100,000 can be claimed for senior citizens i.e. those over 60 years of age.

Home Loan Interest Payments (Section 80 EE)

One can claim upto 50,000 for the payment of interest on home loan under Section 80EE.

Home loans have long been considered as a preferred tax saving option in India partly because it provides tax benefits while allowing borrowers to create an asset. A portion of this tax benefit – the principal repayment portion benefit – is included in Section 80 C but the tax benefits of interest payout are featured in a different section namely Section 24 (b). In case of a self-occupied house or a house to be let out, this benefit is capped at Rs. 2 lakhs annually, no matter what their applicable income tax slab or loan value.

The tax saving benefit under Section 80 EE is limited to individuals making interest payments on a home loan for their first house. The maximum deduction that an individual can claim under this section is Rs. 50,000. This benefit can however only be availed if all the following conditions are met:

  • Loan disbursed between 1st April 2016 and 31st March 2017
  • Total loan sanctioned is less than Rs. 35 lakhs
  • Value of the house being purchased is less than Rs. 50 lakhs
  • The property in question must be the only one in the individual’s name.

Point to remember: First you need to exhaust your deductible limit under section 24, which is Rs. 2 lakh. Then you can claim this additional benefits under section 80EE.

Education Loan Interest Payment (Section 80 E)

One can claim tax exemption on the whole amount paid as education loan interest for higher studies under Section 80E

As the cost of higher education in India as well as abroad has increased, it has become near impossible for many parents to fund it through their savings only. In this regard, an education loan is the most viable alternative out there and what’s more, there are tax benefits attached to it. Under Section 80 E, you could claim tax exemption on the whole amount paid as education loan interest for yourself, spouse or your dependent children. However, there is, at present, no tax benefit on the payment of the principal amount of the education loan.

Donations to Specific Institutions and Funds (Section 80 G & Section 80 GGA)

Donations made by you to specific religious entities and certain funds such as Prime Minister’s Relief Fund is subject to tax exemptions of 100%, 80% or 50% under Section 80 G. The list of these qualifying institutions and funds can be obtained from the IT Department website however the maximum deduction allowed under this section is up to 10% of the gross adjusted total income of the taxpayer.

Section 80 GGA provides you with tax exemptions on donations made to specific government-approved institutions such as colleges, universities and research institutes. Qualifying donations can only be made by salaried employees as self-employed businessmen and professionals cannot claim this tax exemption benefit. Another stipulation for availing this deduction is that donations of Rs. 10,000 or more can qualify for exemption only if such donation has not been made in cash.

Donations to Political Parties (Section 80 GGC)

In case you have made a donation to a political party, your contribution could provide you with tax exemption under Section 80 GGC. At present there is no limit on the amount that you can claim an exemption however, such donations will not qualify for an exemption is made in cash.

Savings Account Interest Earned Exemption (Section 80 TTA)

This is probably the least well known among various exemptions that are applicable to almost all taxpayers. Under Section 80 TTA, interest earned by you from savings accounts and fixed deposits are completely exempt from income tax up to a maximum limit of Rs. 10000 annually. Any amount above this threshold amount is automatically deducted as TDS refund and may be claimed as a refund at the time of tax filing (subject to certain conditions).

Apart from these, one can avail deductions under below Sections

Section 80QQB: Book Authors can claim Royalty income under this section.

Section 80RRB: Patent owners can claim their Patent royalty income under this section.

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