Section 80C of the Income Tax Act helps to minimise the tax burden of Indian citizens. Taxpayers highly prefer this Section as it offers deductions against investments in multiple options such as PPF, ELSS funds, tax-saving fixed deposits, and NSC. However, one cannot avail deductions of more than Rs. 1.5 lakh through this provision in a financial year.
As per Section 80CCD, you can opt for an additional deduction of Rs. 50,000 through NPS investments, marking a maximum limit of Rs. 2 lakh. If you wish to avail additional tax benefits, keep reading this article!
The chart below will guide you through the multiple investment options other than 80C and their exemption limits.
|Premiums of health insurance
|From Rs. 25,000 to Rs. 1,00,000
|Medical expenses incurred for handicapped dependent
|For disability of 40% to below 80%: Rs. 75,000For disability of 80% or above: Rs. 1,25,000
|Health expenses incurred due to treatment of dependent relatives or self for diseases covered under Rule 11DD
|For below 60 years: The actual amount paid or Rs. 40,000, whichever is lower For above 60 years: The actual amount paid or Rs. 1 lakh, whichever is lower)
|Student loan interest
|Interest payable for 8 years
|House loan interest payable for first-time house purchasers
|Contribution to charity
|No maximum limit
|HRA (ifrrb your salary break-up doesn’t mention house rent allowance)
|Lowest of:25% of your incomeRs. 5,000 each month10% of income subtracted from rent paid
|Contributions to rural development and scientific research
|No maximum limit
|Contributions of a firm to a political party
|No maximum limit (not applicable in case of cash payment)
|Contributions of an individual to a political party
|Sum paid (not applicable in case of cash payment)
|Savings account interest income
|Up to Rs. 10,000
|Individuals suffering from a disability
|Self-suffering from mental retardation or physical disability: Rs. 75,000Self-suffering from severe disability: Rs. 1,25,000
|Income in the form of royalty payment
|Least of actual income or Rs. 3 lakh
|Home loan interest repayment
|Rs. 2 lakh
|Sum assured of a life insurance policies
|No maximum limit
|HRA (if your salary break-up includes house rent allowance)
|Lower of:HRA received Rent payable minus 10% of basic salary 50% of basic pay if you stay in metro cities or 40% of basic pay if you stay in non-metro cities
Now that you know about all the sections and the corresponding tax exemption limits, let’s discuss the different investment options available under each section
Here are some of the best tax-saving options as per different sections other than section 80C:
The following table elaborates on the deduction limit prescribed under 80D.
|Medical insurance for self and dependent family members(spouse and children)
|For self and dependent family members + parents
|Rs. 50,000 (Rs. 25,000 + Rs. 25,000)
|For self and dependent family members (below the age of 60) + parents (above the age of 60)
|Rs. 75,000 (Rs. 25,000 + Rs. 50,000)
|For self and dependent family members (above the age of 60) + parents (senior citizens)
|Rs. 1 lakh (Rs. 50,000 + Rs. 50,000)
This provision includes medical check-up costs as well. For this, tax waivers of up to Rs. 5,000 will be applicable. Such deductions are included within a limit of Rs. 25,000 or Rs. 50,000, depending upon the situation.
HUFs (Hindu Undivided Families) and individuals who pay for the wellbeing and treatment of disabled family members can opt for tax waivers. Individuals with 40% to 80% disability can qualify for a deduction of Rs. 75,000 (maximum). In case of individuals with above 80% disability, deduction limit goes up to Rs.1,25,000 that includes all associated costs.
You can receive these tax benefits for treatments of critical diseases such as haematological ailments, chronic renal disease, AIDS, malignant cancers and neurological diseases (that cause disability of 40% or above).
The interest component of student loans (both secured or unsecured) is tax-free only for the first eight years of the repayment period. To be eligible, a person will have to use an education loan for higher studies of self, children, or spouse. He/she must apply for this loan in his/her name.
A first-time house buyer may opt for an additional interest deduction of Rs. 50,000 after claiming Section 24(b) benefits on house loan repayments, provided the value of the property is below Rs. 50 lakh and the loan amount must be within Rs. 35 lakh.
Contributions towards charitable organisations are exempted from taxation. However, you must transfer such payouts through bank accounts only. Cash donations are allowed for exemptions only up to Rs. 2,000. Only registered charitable organisations should be entitled to such donations.
If your employer doesn’t cover the house rent allowance under the salary break-up, tax exemptions will be applicable on the taxable income.
You can claim tax waivers for donating money towards rural development and scientific research. The entire amount paid will be tax-free, provided your bank details include such transactions.
Any Indian company donating money to any registered political party or an electoral trust can claim tax exemptions. Cash payments are not eligible for this exemption.
Contributions made to a political party are tax-exempted, provided the transactions are carried out through bank transfers. However, you can only donate to the political parties that have been registered through Section 29A of the Representation of People Act, 1951.
This section allows tax deduction on interest earned via savings bank accounts. The annual deduction limit is Rs. 10,000. In case of multiple savings accounts with different banks, the cumulative interest will be taxable under the head of earnings from other sources. If your annual interest income is above Rs. 10,000, the additional amount will be taxable as per income tax slabs.
Disabled people can avail compensation by way of tax deductions. A registered health authority must certify such disability with 40% (minimum) impairment. Individuals with above 80% disability can claim up to Rs. 1.25 lakh as tax benefits, while incapacitated people with 40% to 80% disability are entitled to a deduction of Rs. 75,000.
Any Indian citizen receiving income in the form of royalty can enjoy tax exemptions against the same. However, such citizens must hold a registered patent under the Patent Act, 1970.
As per this section, you can save taxes through your home loan interests. If you use such a house for residential purposes, then a deduction of up to Rs. 2 lakh will be applicable during a financial year. However, the house construction must be completed within 5 years of the repayment period. If you rent out the purchased property, then there will be no taxation on the home loan interest.
The total payment after the maturity of a life insurance policy or upon the unfortunate death of a policyholder can be claimed for tax exemption. However, you can avail such benefits only if a policy is bought post April 1, 2012 and the premium amounts are below the sum assured. If you have purchased a policy prior to April 1 2012, then the premium amount must be below 20% of the sum assured.
This section offers tax benefits for your HRA (House Rent Allowance), provided the salary break-up includes this component.
Indian citizens must plan for tax efficiency in order to reduce their financial burden every year. While filing your income tax returns, you must find out and opt for the tax benefits available to you.
This article has already mentioned the multiple tax-saving options other than Section 80C to help you increase your net income in the long run. So, don’t miss them out!
1. How can I reduce my taxable income?
You can reduce your taxable income by way of specific investments and expenses that are eligible for tax deductions under various sections of the Income Tax Act. You can claim tax benefits under Section 80C, 80D, 80E, and multiple other sections.
2. How can I claim such deductions?
After you furnish your income details in the tax returns (ITR-1), you need to provide the tax-saving deductions applicable through Sections 80C to 80U. You can claim such deductions from your total earnings prior to the imposition of income tax.
3. When is the last date to file income tax returns for FY 2021?
For individual taxpayers, the last date to file ITR for the financial year 2020-21 was December 31 2021. For individuals whose accounts required auditing, the last date to file income tax returns was February 15 2022.
4. What are the documents required while filing IT returns for the benefit of HRA?
For claiming HRA benefit, you need to provide documents such as rent agreement and rent receipts to your company (employer) prior to the end of the fiscal year. If the annual rent paid goes beyond Rs. 1 lakh, you’ll have to submit your landlord’s PAN.
Next, you must attach a copy of your Form-16 (TDS certificate that your company has issued) with the income tax returns to avail the tax benefit.
5. Are 80C and 80D the same?
No, Section 80C and Section 80D are not the same. Section 80C offers a tax deduction for investments in various options such as NPS, ULIP, ELSS funds and PPF. Under this Section, the deduction limit is Rs. 1.5 lakh.
On the other hand, Section 80D allows a deduction on the premium paid towards a health insurance policy. Here, the deduction limit starts at Rs. 25,000, but can go up to Rs. 1 lakh under certain conditions.
This article is solely for educational purposes. Navi doesn't take any responsibility for the information or claims made in the blog.
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