Making India Tax Wise

Tax Saving

Save Tax Beyond the Section 80C Limit

Section 80C is the most used tax-saving section amongst the tax-payers. Section 80C provides for investment options whenever one wants to reduce his/her tax liability. Be it life insurance premiums, PPF contributions, five-year term deposits or ELSS schemes, the list of tax-free instruments under this section is quite long. But there is a catch. You cannot claim more than ₹1.5 lakhs exemption in aggregate through Section 80C investments. If you add NPS investments (Section 80CCD), you can claim an additional ₹50,000, bringing the total available deduction to ₹2 lakhs. Is the ₹2 lakhs exemption sufficient? What if you can get more?

Yes, there are other sections which give you additional tax-saving exemptions besides Section 80C. While many are available under Section 80 itself, some belong to other sections.

Let us see what they are –

Section 80

Here is a complete list of tax-free deductions available under Section 80 apart from Section 80C:

Sections What they deal in Exemption limit
80D Health insurance premiums Up to ₹60,000
( Premium paid for health insurance for self-spouse-child- ₹25,000
Senior citizen parents or self –₹30,000)
80DD Expenses on a handicapped dependent Disability up to 80% - ₹75,000 (fixed)
Severe disabilities – ₹1.25 lakhs (fixed)
80DDB Treatment of specified illnesses Age up to 60 years – up to ₹40,000
Age 60-80 years – up to ₹60,000
Age above 80 years – up to ₹80,000
80E Education loan interest payment Nil. Actual interest paid
80EE Home loan interest payment for first time home-owners Up to ₹50,000
80G Donations to approved charitable institutes 50% or 100% of the amount donated
80GG Rent paid by employees not having HRA Lower of the following –
· 25% of total income
· ₹5000/month
· Rent paid exceeding 10% of total income
80GGB and 80GGC Contributions made to a political party by companies and individuals respectively Nil. 100% actual contribution made only by other than cash.
80TTA Saving account interest ₹10,000
80U Handicapped tax-payers can claim this deduction ₹75,000 (fixed). For severe disabilities ₹1.25 lakhs (fixed)
80RRB Royalty or patent income Up to ₹3 lakhs

Section 24

If you have a home loan, you can earn tax exemption on its interest payment too. Interest of up to ₹2 lakhs is allowed as tax-free expense under the provisions of Section 24(b).

House Rent Allowance (HRA)

If you are a salaried employee then you can enjoy the tax-saving benefits of House Rent Allowance, which might be a component of your salary. If you are living in a rented home you can claim HRA exemption from your salary income. The maximum exemption which is available is lower of the following -

  • Actual amount of HRA received
  • 50% of your salary if you live in a metro city or 40% if you are in a non-metro city
  • Rent paid – 10% of annual salary

Other exemptions from salary income

Besides the all-too-popular HRA exemption, you can also avail tax exemption on Leave Travel Allowance, meal coupons, conveyance allowance, medical allowance, etc.

Gifts, wills and taxation

Money received by way of gift is also tax-free. If you receive gifts from your direct relatives, there is no upper limit on exemption. From non-relatives, however, gifts up to ₹50,000 are tax-free. If you receive cash gifts on the event of marriage, they are completely tax-free without any limit and irrespective of the person giving the gift. Money received through will is also tax-free in your hands.

Do not depend entirely on Section 80C to reduce your tax liability. Though Section 80C does offer a major tax-saving deduction, there are other sections that one can explore. So, use the above-mentioned sections of the Income Tax Act and save your tax outgo.

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