To most of the employed people, 80C is one of the best tax saving options in India. Though there are varieties of routes available other than 80C, most of the people are unaware of this. Our previous post covered a general discussion on Income tax slab rate and tax saving option in India. Today’s content slightly differs from the first one, here the discussion point will be on How to Save Income Tax in India Other Than 80C.
Around this time of the financial years, tax planning session begins. If you are still stuck with 80C, its time to go beyond it to be a smart tax saver. First, you have to understand why one should go beyond section 80C. The answer is quite simple, as per the specific section, one can have tax benefits up to INR2 lakh (including additional INR50,000 under 80CCD 1b for NPS. This category contains mutual funds (ELSS), PPF, Post office schemes etc. If one wants to save tax beyond this eligible amount (under 80C), he or she has to choose the right products. Under the income tax act, there are lesser known sections which can be easy ways to save income tax in India. Here, we will try to provide proper guidance on the topic How to Save Income Tax in India Other Than 80C.
How to Save Income Tax in India Other Than 80C?
First of all, keep one thing in mind that not all sections are applicable to everyone. Many lesser-known sections other than 80C have different eligibility criteria. In order to cover almost all the important sections, I’ve attached a list over here. Among the list, some of the important sections will be covered. So, let’s search for the answer of How to Save Income Tax in India Other Than 80C.
- Section 80E: Interest on Education Loan
- Section 80GG: House Rent Allowance
- Section 80D: Health Insurance Premium
- Section 80CCG: Rajiv Gandhi Equity Savings Scheme
- Section 80DDB: Expenditure on Specified Disease
- Section 80G: Donations (Towards Social Causes)
- Section 80DD: Expenditure on the Health (Disabled Person)
- Section 80EE: Interest on Home Loan
- Section 80TTA: Interest on Bank Savings Account
- Section 54EC: Investment in Bonds
- Section 35D: Pre-Commencement Expense
The description list of How to Save Income Tax in India Other Than 80C is as follows:
Interest on Education Loan (Section 80E)
For pursuing higher education, a tax deduction is allowed only on the interest payment part (not on the principal amount of education loan). In a financial year, the amount paid as interest is eligible for deduction without any certain limit. One can claim the benefit of the tax savings option on higher education (the benefit availability is 8 years).
House Rent Allowance (Section 80GG)
The eligibility criteria for claiming the deduction are as follows:
- One must not receive HRA (House Rent Allowance) as part of the salary.
- The taxpayer should not have any residential accommodation or property in any other place.
- He or she should be living on rent and paying rent.
- The deduction is contributed to a certain limit.
Deduction Availability Rules:
- Only if donated in non-cash form, deduction over Rs10,000 can be claimed.
- Only Rs.5000/month or 25% of total income or rent paid less than 10% of total income whichever is less.
Health Insurance Premium (Section 80D)
Under Section 80D, the premium paid towards health insurance for self or family members is eligible for the tax deduction procedure. One can claim the tax deduction up to Rs.25000 (in case of ordinary citizen) and Rs.50000 (for the senior citizen as per the 2018 budget).
Rajiv Gandhi Equity Savings Scheme or RGESS (Section 80CCG)
In order to avail the facility, the following conditions should be met:
- Investors’ total income must be less than Rs.12 lakhs.
- He or she must be a new retail investor.
- The minimum lock-in period is three years from the date of acquisition.
- 80CCG allows claiming a 50% tax break.
- In life, the claim can be made only once.
Expenditure on Specified Disease (Section 80DDB)
Section 80DDB allows you to claim up Rs.40,000 (on the expenses) towards treating specific diseases like chronic kidney failure, cancer and so on. As per the previous rules, for senior citizens, the claim can go up Rs.60000 and for 80+ aged person Rs. 80000. According to the latest modified rules, the common deduction level is available up to Rs. 1 lakh for all senior citizen.
Donations (Section 80G)
On Charitable contribution, 80G provides income tax benefits. One can eligible for a deduction of up to 50% or 100%. One can claim the deduction when filing the tax return. From the FY 2017-18, any donation in cash exceeding Rs 2,000 will not be allowed as a deduction.
Expenditure on the Health for Disabled Person (Section 80DD)
The tax deduction facility is available on the expenditure of caring for the disabled person. The expenditure pattern includes training, nursing, and rehabilitation. The eligibility criteria to claim the benefit are as follows:
- Disability (more than 40% but less than 80%) has a fixed deduction of Rs 75,000.
- Disability (more than 80% up to 100%) has a fixed deduction of Rs 1,25,000.
Interest on Home Loan (Section 80EE)
As per the FY 2017-18, only the first-time homeowner can get the tax benefit in home loan. In order to avail the loan, one must fulfill a certain condition:
- The loan has to be taken in the FY16-17
- The loan amount must be on or below 35 lakhs.
- The house value should be below Rs. 50 lakhs.
Interest on Bank Savings Account (Section 80TTA)
Interest earned from the bank savings account falls under the category of tax deduction law 80TTA. Under the section, the maximum amount of Rs.10000 can be claimed. The law is applicable on deposits in the savings account with the post office, bank, co-operative society. It does not allow interest income from the recurring deposit, fixed deposits, or interest income from corporate bonds.
Investment in Bonds (Section 54EC)
Investment in Bonds is one of the best ways to save long-term capital gain tax. One can get tax exemption on these gains. The max limit for investing in 54C is Rs,50,00,000. Example of eligible bonds under Section 54EC are REC (Rural Electrification Corporation Ltd), NHAI (National Highways Authority of India), IRFC (Indian Railways Finance Corporation Limited).
Pre-Commencement Expense (Section 35D)
The eligibility criteria of the Section are as follows:
- Expenditure incurred before a business commencement
- Expenditure incurred after a business commencement in connection with the extension of an existing undertaking or in connecting with setting up a new unit.
Under Section 35D, the maximum deductible cannot be over 5% of the cost of the project.
In this content How to Save Income Tax in India Other Than 80C, these are some of the important but lesser-known tax deduction ways in India other than 80C.