As the financial year ends, tax planning season begins! Around this time of the year, most employees are seen busy accumulating tax investment proofs. Salaried people hasten to declare investment proofs to their respective departments before deadlines. The aim is to save as much tax as possible. However, in reality, many end up with tax deductions. If you are one of them, struck with just 80C tax benefits while tax planning, this is a must read post from ArthaYanthra. Go beyond 80C tax benefits to turn a smart tax saver!
Why to Go Beyond Section 80C?
Section 80C of the Income Tax Act allows tax benefits up to INR2 lakh (including additional INR50,000 under 80CCD (1b) for NPS). The 80C category popularly contains ELSS (mutual funds), contributions to PPF & post office schemes, etc.
If you want to save beyond this eligible amount under 80C, you have to choose the right products, which fall under lesser known sections of the Income Tax Act. This is an easy way to become a smart tax savers.
Tax Saving Sections in India Other Than 80C:
Many lesser known sections under the Income tax, other than 80C, help individuals claim and save tax. The key lies in identifying the products falling under such sections. However, not all sections are applicable to everyone. Each section has its eligibility criteria and a cap on the amount. Now, let us check each one to get a better understanding of the suitable products.
Section 24(b): Interest Deduction on Housing Loan
This section allows claims against interest on housing loan. You can claim up to INR2 lakhs on self-occupied property, while there is no limit on deduction if it is not self-occupied (till the financial year 2015-2016).
Note: It is valid only after the property is fully constructed.
Section 80D: Payment towards Medical Insurance Premium
Premiums paid towards medical insurance for self or family members are eligible for tax deductions under Section 80D. Premiums paid up to INR25,000 can be claimed. You may claim additional deductions up to INR25,000 under premiums under medical policy for parents. This section allows up to INR30,000 claims, if your parents are senior citizens.
Section 80DD: Expenditure on the Health of Disabled Dependent
This section allows you to claim up to INR75,000, citing expenses towards medical treatments for dependent spouse, children, or parents. Based on the extent of disability, the section allows claims up to INR125,000.
Section 80DDB: Expenditure on a Specified Disease
This sections allows you to claim up to INR40,000 against expenses incurred towards treating specific diseases such as chronic kidney failure, cancer, and so on. The claim can go up to INR60,000 for senior citizens and INR80,000 for those aged 80 or above.
Section 80E: Interest Paid on Education Loan
The section 80E allows you to claim the interest amount being paid on education loan availed for self, children or spouse. There is no limit on the amount, but the deductions are valid until 8 years from the year of the first interest paid.
Section 80EE: Interest Paid on Home Loan
This section allows you to claim up to INR50,000 per annum towards interest paid on home loan, which was availed to purchase a house for the first time. You will be eligible for claims under this section, based on conditions like the year of loan approval, loan amount, house value, and the name on which the property is registered.
Section 80G: Donations towards Certain Funds, Temples
Section 80G allows you to claim against the amount donated for charity and funds. However, the donated amount should be less than 10% of the adjusted gross total income.
Section 80GG: Rent towards Accommodation
The eligibility criteria for claiming HRA deduction under Section 80GG is either INR5,000 per month, or 25% of total income, or rent paid less than 10% of total income, whichever is the least.
Note: This exemption is not applicable in case HRA is part of salary package.
Section 80GGA: Donation to Specified Institutions
The section 80GGA allows you to claim tax saving against donations offered to an institution carrying out scientific research or a government-approved college or a university. Taxpayers gaining income from profession or business are not eligible for deduction under this section.
Note: Deductions over INR10,000 can only be claimed if donated in non-cash form.
Section 80GGC: Donations to Political Party
Section 80GGC allows deductions against political donations, without any limit.
Section 80TTA: Interest on Savings Account
Section 80TTA allows tax saving claims against interests earned up to INR10,000 on savings account.
Sections 80U allows claims up to INR50,000 if you are suffering from a disability. In case of severe disability the claim can go up to INR1,00,000. However, the section covers only the taxpayer but not the dependents.
Section 80CCG: Rajiv Gandhi Equity Savings Scheme
This section allows you to claim a 50% tax break, provided you qualify a few conditions. They are:
- Annual income must be less than 10 lakh rupees
- Must invest in IPOs or certain eligible mutual funds or shares listed on the BSE 100 or CNX 100 or exchange-traded funds
- Should be your first time investment in shares
- Claim can be made only once in life
In conclusion, the products that we choose to save tax should help us reach our overall goal. Right products do not just help saving tax, but also help meet our financial goals like getting the right financial assistance when needed. To get a better idea on how to set your financial goals and choose right products for tax saving, approach ArthaYanthra for expert advice. We help you both save your tax and secure your future!