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Tax-Saving Options Beyond Section 80C

Jagrity Sharma Jagrity Sharma 19 July 2019

Investments in Section 80C is important to save tax, but it is not the be all and end all. There are multiple ways and means beyond Section 80C to save your Income Tax. Want to know them?

Section 80C

Section 80C of the income tax is known by all the income tax payers as this section of the income tax act helps all the tax payers to save their hard-earned money. This section offers various investment options which can be used by tax-payers in order to reduce their tax liability. This enlists various instruments like life insurance premium, tax-saving fixed deposits and investment in PPF that are utilized by all the tax payers to save on their tax liability. However, the maximum amount is capped to Rs 1.5 Lakhs. Tax-payer can claim tax benefit up to Rs 1.5 lakhs through investments under this Section. Is this tax exemption sufficient? What if we give you more tax-saving options beyond Section 80C? This article is a complete guide that provides information about additional tax-saving options other than those available under section 80C.

  • Section 80D: The Section 80D of the Income tax act deals with provisions related to tax deductions available for payment of medical insurance premium. This section of the income tax act states that any payment made towards payment of premium of medical insurance policy of yourself and your family members is eligible for tax benefit. Under this section, a maximum tax benefit of Rs. 25,000 per annum can be availed for premium payment towards health insurance policy of oneself, spouse and children. Moreover, an additional tax benefit of Rs. 25,000 can be claimed if you have paid premium for parents’ medical insurance policy as well. Thus, a maximum of Rs. 50,000 tax deduction can be claimed under this section.

  • Section 80E: This Section of the Income tax act allows you to claim tax benefit on the interest paid on education loan. The tax benefit can be claimed for education loan availed for self, spouse, children or of whom you are a legal guardian. This section does not limit the amount that is eligible for tax deduction i.e. the entire interest component paid towards education loan can be claimed. However, this benefit can be availed for education loan availed for higher studies only.

  • Section 80G: This section is related to contributions made towards charitable trusts and funds. The government of India allows individuals to claim income tax benefit on the contributions made by them towards charitable trusts like donations for the renovation of temples, mosques, church etc. Any individual tax-payer can also claim benefit by contributing to government notified funds like the National Defence Fund, PM Drought Relief Fund, Jawaharlal Nehru Memorial Fund, Swachh Bharat Kosh, Namami Ganga fund etc. This benefit can be availed by providing a stamped proof of contribution. Kindly note, if the contribution is done in cash, then the tax payer can only avail tax deduction up to Rs. 2000 (starting from the financial year 2017-2018) as per the budget 2017 amendment.

  • Section 80GG: Under this section, tax payers can avail tax deductions for payment of rent. All the salaried employees can avail tax benefit of house rent allowance, which usually is a component of your salary. The maximum amount of tax deduction allowed under Section 80GG is the lower of the following-

    • Actual House Rent Allowance received
    • 50% of tax payers salary if living in a metro city and 40% for non-metro cities
    • Amount of rent paid – 10% of the tax payers annual salary
  • Section 80EE: Under Section 80EE, an individual tax payer can claim tax deduction for payment of interest on housing loan. The maximum tax deduction allowed under this section is Rs. 50,000 per year, subject to fulfilment of the following conditions:

    • The housing loan amount must be less than Rs. 35 Lakhs
    • The value of the purchased property must be less than Rs. 50 Lakhs
    • The said purchased property must be the only property purchased in the name of the tax payer
    • This housing loan must be availed between 1st April 2016 and 31st March 2017
  • Section 80GGA: Under this section, an individual tax payer can avail tax deduction for the contribution made towards scientific research institutions, university or college which are approved by the government. All the deduction amounting to more than Rs. 10,000 can be availed provided the contribution is not made in cash. Also, this tax benefit is not applicable to tax payers who earn income via business or profession.

  • Section 80GGC: This section allows you to claim a tax deduction for the donations or contributions paid to political parties. There is no limit on the amount of tax deduction to be claimed under this section as it offers deductions equivalent to the actual donation amount. Kindly note, tax benefit under this section is not allowed for donations made by cash.

  • Section 80QQB and Section 80RRB: These two sections allow tax deduction on Royalty Income and Patent Income i.e. authors and patentee can avail tax benefits under this section of the Income tax act. The maximum tax deduction allowed under this Section is Rs. 3 lakhs. In the case of the author, if the royalty is not received in lumpsum, then the amount of tax deduction is restricted to 15% of the books’ revenue generated in that particular year.

  • Section 80TTA: This is one of the known sections where the tax payer can avail tax deduction on the interest received from a bank account or post-office account. The maximum tax deduction that can be claimed under this Section is Rs. 10000. This limit has been raised to Rs. 40000 as per the announcements made in Budget 2019. But for availing this deduction, it is important to first show these earnings as a part of ‘income from another source’ in the income tax returns and then proceed to avail claim deduction under this section.

  • Other tax exemptions from salary: Salaried tax payers can avail tax benefit on other components of salary like meal coupons, conveyance allowance, leave travel allowance, medical allowance etc.

  • Gifts and Will: If the tax payer receives money as a gift from direct relatives, then such gifts is tax-free with no limit on tax deduction. However, if the money is received from non-relatives, then in such cases, the maximum tax benefit allowed is Rs. 50,000. Similarly, if the money is received as marriage gift, then the entire amount is tax-free. Also, money received by means of Will is tax-free in the recipients’ hand.

Thus, we suggest all the tax payers not to depend entirely on Section 80C for reducing their tax liability. The Income Tax Act offers several ways to reduce tax liability. So, it is recommended to make the most by availing different deductions by exploring other sections of the Income tax act.

Jagrity Sharma
Written by Jagrity Sharma
A bibliophile who hates alliterations, but loves cream, comics and content immensely! On another note, a content marketer who leverages the power of words to explain...almost anything!