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Tax Saving Options other than Section 80C

Additional tax-saving options beyond Section 80C, such as investing in the National Pension System (NPS) and contributions to the Employees' Provident Fund (EPF), can optimize your financial planning and reduce taxable income.

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Amit Raje
Written By :
Amit Raje

Amit Raje is an experienced marketer who has worked in various Fintechs and leading Financial companies in India. With focused experience in Digital, Amit has pioneered multiple digital commerce in India. Now, close to two decades later, he is the vice president and head of the D2C business department. He masters the skill of strategic management, also being certified in it from IIMA. He has challenged his challenges and contributed his efforts in this journey of digital transformation.

Amit Raje
Reviewed By :
Prasad Pimple

Prasad Pimple has a decade-long experience in the Life insurance sector and as EVP, Kotak Life heads Digital Business. He is responsible for developing user friendly product journeys, creating consumer awareness and helping consumers in identifying need for life insurance solutions. He has 20+ years of experience in creating and building business verticals across Insurance, Telecom and Banking sectors

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.

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 avenues 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 plans.

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. 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 prior to applying for the home loan.

6. 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.

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

Section 80GG

Deduction Limit - Specified Conditions

Section 80GG enables you to seek deductions from your overall taxable income when your employer excludes the HRA component from your salary structure. Regarding tax saving investments outside of Section 80C, tax exemptions are provided based on the lesser of the following:

  • Monthly ₹5,000
  • 25% of the total annual income
  • 10% of the basic annual income

8. 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.

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.

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.

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