When we think about making tax saving investments, the first thing that comes to mind is section 80C of Income tax Act. But readers, slow down.
There are lot of things that you need to keep in mind apart from section 80C and once we’ve gone through the basic exemption provided in section 80C, we’ll discuss what else you can do. Let’s finish off with 80C first and then we’ll move on to other deductions you can opt.
We will only tell you what’s available, and what’s good for you, from a tax saving point of view.
A) First Know your 80C
The most common investments people think of, when they think of 80C are PPF and LIC. But hang on, we have others ways also.
- EPF: You’ve been contributing to your own Employee Provident Fund (EPF) all year.
Find out what this figure is from your friendly neighbourhood HR department, and make a note of it. - PPF: a well-loved option. Earning interest of 8.6% per year, with tax deduction on the investment, and no tax on maturity, these are all great qualities.
- Home Loan: Call your bank / housing finance company and ask them for a copy of your amortization table to see how much principal you have repaid this year.
- FD: Invested into any 5 year FDs in the last Financial Year? These funds count as well.
- ELSS: You can invest into a good equity linked savings scheme, it has a lock in period of 3 years and is currently tax free on maturity as it is equity.
- Others– Pension funds, National Savings Certificate, Senior Citizen Savings Scheme investments, Investments into the National Pension Scheme, any life insurance premium you might be paying…
Don’t’ be too happy guys…all that you get as deduction u/s 80C would be limit up to Rs 1,50,000/- only. So now we will see what else the IT Act has to offer.
B) Living on rent
Show your rent receipts to claim deduction using your HRA (House Rent Allowance) benefit available to you in your salary structure. You can avail the least of the following:
- Actual HRA received
- Rent paid in excess of 10% of your salary (Basic + DA)
- 50% of salary (Basic + DA) if you live in a metro, 40% of salary (Basic + DA) if you live in any other city.
(C) Medical reimbursements
Like everybody else, you probably spend some money on medicines each year. Keep the bills (just like everybody else does), and claim a reimbursement up to Rs. 15,000 per financial year. This has to be on actual bills paid, and you have to produce the original bills. Speak to your HR department, they will ask you to fill up a simple form, produce the bills, and will adjust it with the allowance you are entitled to.
D) Buy Health Insurance (Section 80 D)
A straightforward mediclaim policy can save you tax on the premium paid.If you are paying
If you are paying premium for yourself, spouse and kids, you can avail up to Rs. 15,000 deduction per annum (Rs. 20,000 if you’re a senior citizen) and you can also avail deduction for premiums you are paying for your parents (Rs. 20,000 if they are senior citizens, Rs. 15,000 if they are not).
E) To be more Educated (Section 80 E)
If you have taken an education loan for yourself, your spouse, your kids, or even of a child of whom you are a legal guardian, then every year you can avail a full deduction of the interest you are paying on the loan (capped at 8 years).
F) Keep Invested in Equity (Section 10(38))
The income arising from a transfer of long term capital asset, being equity share of a company or a unit of an equity oriented fund, is exempt from tax if STT has been paid
G) Reduce Tax Buren on Rental Income
As you looking for saving tax on a rental income generated from house property owned. We will shares some insight about rental income, its components and various ways to reduce the tax with the deductions available on such rent received.
- Interest on a Self-occupied house – In case you have a loan on a self-occupied house, you can claim up to Rs. 2 lakhs interest paid per annum as loss from self-occupied house under ‘Income from house property’.
2. Interest on Let-out property – There is no limit on claiming the paid interest on a let out/deemed let out property.
3. Principal amount on housing loan– As we already discussed. You can bundle up the total principal amount paid for the housing properties during the financial year and include them as a deduction.
H) Donation (Section 80G)
Contributions made to certain relief funds and charitable institutions can be claimed as a deduction.
But all donations are not eligible for deduction under section 80G. Only donations made to prescribed funds qualify as a deduction.
I) Donation towards Scientific research (Section 80GGA)
Section 80GGA allows deductions for donations made towards scientific research or rural development. This deduction is allowed to all assessees except those who have income (or loss) from business and profession.
J) What for differently abled people (Section 80DD and 80U)
Differently abled people or those who have taken insurance for a differently abled dependent can claim tax benefit under Section 80DD and Section 80U.
Any person certified as partially or severely disabled can seek tax deduction under Section 80U. Persons with disability are allowed deductions of Rs. 75,000 under Section 80U, Persons with severe disability will be allowed deductions up to Rs. 1.25 lakhs
Under Section 80DD, one can avail deduction for money spent on welfare of a differently abled dependent.
After you’ve done all these things, and saved tax because of them, remember, you will definitely save yourself from getting taxed more.
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