Tax Saving Investment Options Other Than Section 80C

Section 80C is one of the most widely used tax-saving strategies. Investment possibilities are available under Section 80C for those looking to lower their tax obligations. The list of exempt investments included in this section is rather extensive; just a few examples include life insurance payments, PPF contributions, five-year term deposits, and ELSS programs.

The money market offers various investment options like interest income and healthcare costs, each with unique characteristics. Explore more about how to save income tax other than 80C; here is in-depth information on apart from 80C how to save tax. Read more to understand better how to save tax apart from 80C and different tax-saving strategies that apply to the individual in planning for the future and saving for the future.

Investment Choices Other than Section 80C

When it comes to tax saving strategies, Section 80C of the Income Tax Act is a familiar go-to for many individuals. However, savvy investors understand the importance of diversification, not only in their investment portfolios but also in their tax saving options. Beyond Section 80C, there are several avenues that offer attractive opportunities to optimize tax benefits while ensuring a well-rounded financial plan. Some of these tax saving investment options other than 80C are:

1. Interest Income Generated From Savings Account Deposits

Section - 80TTA

Limit – ₹10,000

Under Section 80TTA, the total interest earned from savings account deposits is deductible. However, this deduction from taxable income is only allowed up to ₹10,000 yearly.

If you have multiple savings accounts with various banks, the cumulative interest total is considered and taxed as “income from other sources.”

Only the excess amount over the cap, if such interest income exceeds ₹10,000 in a year, is taxed at rates based on total yearly income.

2. Interest Component Paid Towards Education Loan

Section - 80E

Limit – No limit

Under this clause, income used to pay the interest portion of student loans is not taxable. Depending on the amount of money needed, a loan like this for schooling may be secured or unsecured.

It should be emphasized, nevertheless, that these exemptions are only given for the first 8 years of debt repayment. Any additional money used to pay the interest burden is taxed.

Education loans that qualify for these deductions must be acquired in the name of the specific person and may be used to pay for the higher education costs of the person, their spouse, or their children. Besides the 80C option, it is one of the most well-liked tax saving options.

3. Sum Assured on Maturity of Life Insurance Plans

Section - 10(10D)

Limit – Entire maturity amount

Under Section 10, a tax credit can be claimed for the total sum assured that is paid out at the maturity of a life insurance policy or the untimely death of an insured individual (10D).

If, however, the death benefit is received after April 1, 2012, and the entire value premium costs are less than the full sum assured, the death benefit is not subject to tax calculations.

If the insurance was purchased before April 1, 2012, the premium costs must be lower than 20% of the total sum insured to qualify for section 10 exemptions (10D).

4. Expenses Incurred Towards Treatment of a Disabled Person

Section - 80DD

Limit: ₹75,000 for 40%-80% disability/ ₹1,25,000 for higher than 80% disability

Individuals and Hindu Undivided Families (HUF) paying for the treatment and wellbeing of a disabled family member can claim exemptions on total income spent to cover such expenses under Section 80DD.

The coverage limit is determined based on the percentage of disability, wherein people having 40-80% disability are eligible for deduction up to ₹75,000.

Families hosting a person having a disability higher than 80% can claim up to ₹1.25 Lakh inclusive of all related expenses. Such claims are granted only to the family of such dependent individuals.

5. Tax Savings on Interest Component of Home Loan under Section 24

Section- 24

Deduction Limit- Up to ₹2 lakhs

The Income Tax Act has specified in Section 24 that the interest portion of house loans can be claimed as a tax deduction by the homeowners. In self-occupied properties, even if the expenditure exceeds the amount earned, the maximum allowable deduction in this regard as per the section 24 is ₹2 lakhs.

However, if the property is let out or deemed to be let out it may not claim the amount of interest less than the amount derived from the letting of the property, hence any amount will be allowed as a deduction on this count.

6. Home Loan Interest for First-time Buyers

Section- 80EE

Deduction Limit - ₹50,000 | plus benefits from Section 24(b)

For those purchasing a home for the first time with a property value below ₹45 lakh, there’s an opportunity to avail additional interest benefits of up to ₹50,000 beyond Section 24(b) on home loan EMIs. This results in potential tax savings of up to ₹2.5 lakh, supplementing the deductions allowed under Section 80C.

To qualify for a tax rebate on EMI payments under Section 80EE, applicants must not have owned any other property before applying for the home loan.

7. Section 80TTTB

Section- 80TTTB

Deduction Limit: Up to ₹50,000

This Section 80TTTB was launched on 1st April 2018 to offer tax exemptions for the elderly who only rely on their interest earnings sourced from savings bank accounts and deposits. Under this section, the senior citizen is able to exclude up to ₹50,000 from its total income for the purposes of tax. In this deduction, they are given the responsibility of lightening the tax obligations towards seniors and, at the same time, protecting their investment during their retirement period.

8. Donations Made to Charitable Organizations

Section 80G

Deduction Limit - No Limit

The donation to a charitable organization qualifies for tax exemption under Section 80G. When transfers are conducted through banks, there is no cap on the tax exemptions applicable to these contributions.

Cash donations, to be exempt from tax calculations, are limited to ₹2,000 per year. It is important to note that such contributions should be directed to registered charitable organizations.

9. Deduction For - House Rent Allowance (HRA), if NOT Included in the Salary Breakdown

Section 80TTA

Deduction Limit - ₹10,000

A deduction of up to ₹10,000 is applicable to the net total interest earned from savings accounts held with banks and/or the post office. This calculation does not consider interest income from FDs, RDs, and corporate bonds.

In the case of multiple savings accounts across different banks, their combined interest is treated as a single account, and the cumulative interest is taxed under the category of ‘income from other sources.’

If the interest income surpasses ₹10,000 in a given year, only the amount exceeding the limit is subject to taxation, with the tax rate determined by the overall annual income.

10. Deduction For - Interest Earned on Savings Account Deposits

Section 80TTA

Deduction Limit - ₹10,000

A deduction of up to ₹10,000 is applicable to the net total interest earned from savings accounts held with banks and/or the post office. This calculation does not consider interest income from FDs, RDs, and corporate bonds.

In the case of multiple savings accounts across different banks, their combined interest is treated as a single account, and the cumulative interest is taxed under the category of ‘income from other sources.’

If the interest income surpasses ₹10,000 in a given year, only the amount exceeding the limit is subject to taxation, with the tax rate determined by the overall annual income.

11. Tax saving with NPS under Section 80CCD(1B) + 80CCD(1)

Section 80CCD(1B) + 80CCD(1)

Deduction Limit- Up to ₹1.5 lakh | Under Section 80C for contributing to the NPS

As per the Income Tax Act of 1961 provisions, tax exemptions on contributions made to NPS are provided under Section 80CCD(1B). In the first place, uncertainty claiming deduction up to ₹1 lakh a clear framework and arguments, which are the basic facets in this case while analyzing an argument. The contribution to NPS is eligible for a tax exemption under the Tax section 80C, which determines that the maximum investment allowed under it is ₹5 lakhs.

Additionally, it may be found that a further deduction of ₹50,000 is allowable under section 80CCD(1B) for investing in NPS, which are other tax exemptions. From a financial perspective, individuals under the ₹30,000 tax slab can avail of up to ₹15,600 tax rebates followed by a 4 percent educational cess. NPS also helps get a return on investment, which is extremely useful for retirement planning. NPS also has the advantage of Tax savings, making it one of the best options in the field of Tax saving.

12. Tax savings on Health Insurance Premiums under Section 80D

Section- 80 D

Deduction Limit-

Section 80D of the Income Tax Act facilitates tax deductions for health insurance premiums and medical expenses. The limits depend on the age and type of taxpayer. For individuals, the deduction is up to ₹25,000 for self, spouse, and dependent children; parents can also be claimed as a deduction. That being said, senior citizen taxpayers who are 60 years of age and above benefit from an increased deduction limit of fifty thousand rupees.

Furthermore, any taxpayer who is under 60 can claim a deduction of up to ₹5,000 for preventive health check-ups. This provision assists in getting people involved in acquiring health insurance and putting more effort into preventive health care since it will lead to overall health enhancement accompanied by tax advantage.

13. Tax savings on the Treatment of Specified Diseases under Section 80DDB

Section -80DDB

Deduction Limit- Up to ₹40,000 or the actual amount paid (whichever is lower)

According to the rule specified in section 80DDB of the Income Tax Act, any person who is going for the treatment of certain diseases like cancer, neurological diseases like dementia, motor neuron diseases, Parkinson’s diseases, AIDS, etc. can get deductions for tax exemption. This deduction is available for employees and Hindu Undivided Families if the individual or any partner or member of the Hindu Undivided Family has been treated for any of these diseases. Thus, the deduction can go up to ₹40000 or the actual amount paid, whichever may be lower.

However, the above limit for senior citizen taxpayers or their dependents is raised to ₹1 lakh. This provision seeks to remove the worry about the cost of seeking treatment in cases of serious illnesses and thus allows people to seek medical attention without worrying about taxing their pockets much.

Save Income Tax in New Vs Old Tax Regime

Understanding the differences between the old and new tax systems makes achieving maximum tax exemptions and benefits possible. The current tax system allows for a larger number of deductions and exemptions, but with it, tax scales are higher. However, under the new tax reforms, the tax rates are lower than before, but there are fewer exemptions and deductions allowable.

Comparison of Old vs New Tax Regime

The old regime is beneficial if you have significant deductions and exemptions, while the new regime may be more advantageous for those who prefer lower tax rates without the need to claim multiple deductions.

Key Takeaways

• Leverage Section 80TTA for up to ₹10,000 deductions on interest from savings accounts.
• Benefit from unlimited deductions on interest payments for education loans under Section 80E.
• Claim tax credits under Section 10(10D) for the entire maturity amount of life insurance plans.
• Utilize Section 80DD for deductions on expenses incurred for treating disabled family members.

Final Thoughts

You can save money in a number of ways besides Section 80C, which will eventually improve your overall wealth. Most of these instruments can also be used to make investments, which lowers costs and increases profits. Now that you know about the different saving investments, it is time to make the right decision and choose the best investment for your family.

FAQs on how to save tax other than 80c