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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.
There is a catch, though.
You are limited to ₹1,50,000 in total exemption through Section 80C options. You can deduct an additional ₹50,000 by including NPS investments (Section 80CCD), bringing your overall deduction to ₹2 lakhs. The two lakh exemption—is it sufficient?
The most well-known section of the Income Tax Act of 1961 is Section 80C, which allows for a maximum rebate of ₹ 1.5 lakh on various loan products and other investment instruments.
You should be aware that there are a variety of alternative tools available to help you lower your taxable income. You can raise your annual savings through such tax-saving strategies outside of 80C options by filing significant income tax returns.
Since the Income Tax Act continues to maintain several provisions for tax returns, a person might not be simultaneously aware of the rules. Due to unnecessary tax payments, they may lose money as a result, which would lower their annual savings.
These are all the alternative investing choices to section 80C.
Section - 80TTA
Limit – ₹10,000
Under Section 80TTA, the total amount of 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 total of interest 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.
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 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).
Section - 80DD
₹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.
Some of your investments provide benefits beyond the anticipated profits. Taxes can be avoided as well. Investments under the Section 80C option are a prime example of this type of investment. A Hindu Undivided Family and an individual are both eligible for this deduction (HUF). Deductions are accessible in some of the significant investments, including
The Indian Income Tax rules provide tax deduction options for all tax-paying individuals. Nonetheless, most of the citizens know and avail of the deductions worth ₹1.5 lakh that are accessible under section 80C tax saving. However, there is no need to worry if you exhaust your limit of ₹1.5 lakhs. There are other options other than the tax benefits under 80C that you can go for as a tax-paying individual.
Tax-paying citizens can save an extra amount of up to ₹50,000 if they invest in the National Pension Scheme that can go over and above the ₹1.5 lakh tax benefits mentioned under Section 80C in Income Tax. This guarantees an exemption of ₹2 lakhs.
Section 80D of the Income Tax Act, apart from the 80C exemption, provide deductions from an individual’s income towards the instalment payments of a health protection scheme.
If your income falls under the tax bracket and the exemption under 80C is exhausted, this is another option for you. Getting education loans is normal these days, and people who seek this after their schooling are given a tax deduction on the reimbursement under Section 80E. This deduction, apart from the 80C tax-saving, is additionally accessible by taking education loans from financial institutions and not from relatives or companions and family members.
Property holders with a home loan can guarantee a deduction under Section 24 of the annual expense on the part of their home loan. On the off chance that the property for which the home credit has been taken is leased or considered to be leased, no higher cut-off for a deduction is mentioned. As a citizen, you can take an overall allowance interest sum under Section 24.
If you are a first-time mortgage holder and do not know what 80C in Income Tax is, you can try and have a look at this option. You are not ought to possess some other house property on the date of the assent of loan from a monetary establishment. This provides deductions under Section 80EE of up to ₹50,000.
Exemption under 80C is a common deduction availed by taxpayers. Still, fortunately, you have many other ways of getting additional exemptions under the above-mentioned sections if you overshoot the limit of ₹1.5 lakhs!
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 all about the different saving investments, it’s time to make the right decision and choose the best saving investment for your family.