Possible ways of Saving Tax beyond Section 80C

Updated: Apr 8, 2021


Living an active life requires a stress free working environment and one of the big stress aspect is how to save Income tax. Every year, a person filing ITR i.e. Income Tax Return, Feb-Mar is generally that time of the year when one is required to submit all proofs of investments carried out towards Tax Saving. Incase you have missed out on any of the instruments that can give you the benefit of saving tax as per the permissible limit, do it before submitting your details.


While many focus on Section 80C which is the most used tax-saving section amongst the tax-payers, people should also focus on the other possibilities of saving tax. Section 80C generally provides for investment options whenever one wants to reduce his/her tax liability which is largely through Life insurance premiums, PPF contributions, ELSS schemes, Five-year term deposits, and many other for which one should look into all possibilities for exemption not more than ₹1.5 lakhs in aggregate through Section 80C investments.


But you can add NPS investments (Section 80CCD) to claim an additional ₹50,000, bringing the total available deduction to ₹2 lakhs.


Do you think ₹2 lakhs exemption is sufficient? Are there any further possibilities..


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.


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, and Rent paid – 10% of annual salary.


SECTION 80D

Under this section, the claim for deduction of INR 25,000 on Health Insurance for self, spouse and children as well as certain healthcare expenses can be availed.

One can ask for an additional claim of up to INR 25,000 or INR 50,000 for his parents who are less than sixty years of age or greater than sixty years of age respectively. However incase the policy holder and his parents are above sixty years of age, the maximum tax deduction is up to INR 1,00,000.


SECTION 80DD

This section related to tax deduction available in the case of expenses incurred on medical treatment of handicapped depends. A disability certificate from prescribed medical authority shall be required in such cases.


SECTION 80DDB

In this section, a resident individual or a HUF (Hindu Undivided Family) can claim a deduction of INR 40,000 for expenses incurred towards treatment of certain specific ailments for himself or his dependents.


SECTION 80E

Students who have availed an education loan to pursue their education are provided a tax benefit on the repayment of the interest component of the loan under Section 80E. This tax benefit can be claimed by either the parent or the child (student), depending on who repays the education loan to start claiming this deduction.


SECTION 80EE

This section related to the deduction on home loan interest for the first-time home buyers.

For the FY 2017-18 and 2017-16: To claim the deduction, their property value should not be more than fifty lakhs rupees, while the loan is of less than thirty-five lakhs rupees.

For the FY 2013-14 and 2014-15: In this case, the property value must not exceed forty lakhs rupees while the loan amount is twenty-five lakhs rupees or less.


SECTION 80G

This deduction is related to the donations paid for various social causes. The donations are eligible for tax deduction of up to its fifty or hundred percent. The new rule from FY 2017-18 says that no donation above two thousand rupees should be made in cash mode to be eligible for deduction.


SECTION 80GG

This section relates to deduction for house rent paid when HRA is not received by the taxpayer. The taxpayer becomes eligible for this deduction provided he or his spouse does not own a residential accommodation at the place of his employment and must be living on rent.


SECTION 80TTA

This section accounts for deduction of maximum ten thousand rupees against a gross total interest earned from savings accounts with bank, co-operative societies and/or post office. The interest income from FDs, RDs or corporate bonds is not considered here.


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.


We hope this article brings out related possibilities of saving tax which could help you in your active life. One should consult Tax consultants for proper guidance on saving tax and/or read through the details properly before considering any such exemption. Tax payers should know the provisions under which they can save tax.


By – 360activeliving