People looking to save taxes can invest under the 80C Income Tax Act. This is one of the most preferred investing methods among salaried employees and others. Under the Income Tax Act, it is allowed to deduct up to Rs 1.5 lakhs from the taxpayer's gross income.
Some options for claiming tax benefits in this section include life insurance premium, PPF, EPF, and tax-saving fixed deposits. However, there is much more to tax planning than Section 80C that helps you further reduce your tax liability.
Let's take a look at the investment options that can save tax other than Section 80C to make you a smart tax saver.
: National Pension Scheme: In addition to a contribution of Rs 1.5 lakh under Section 80C, you can invest an additional Rs 50,000 in NPS which can be claimed as a tax deduction under Section 80CCD. This gives you the option to claim a tax deduction of Rs 2 lakh each year by investing in NPS.Section 80D
: Payment of Health Insurance Premium: Under Section 80D of the Income Tax Act, you can claim a tax deduction for premiums paid for your family members and your health insurance. This section allows you to claim a maximum of Rs 25,000 per year in installments paid for yourself, your spouse, and your children. You qualify for an additional deduction of Rs 25,000 if you are investing in your parents' health insurance
premiums, so the total deduction is Rs 50,000.
Also, if the person is under the age of 60 and his parents are over the age of 60, the maximum exemption under this section is Rs 75,000. And if both the individual and her parents are over 60 years old, a total amount of Rs 100,000 can be claimed under this section.
The amount spent on preventive health check-ups is also eligible for deduction under Section 80D - INR 5,000 Maximum for oneself or family, including parents.
Section 80E: Education Loan Repayment: The amount paid as interest on an education loan for you, a spouse, children, or any student of whom you are a legal guardian may be claimed as a tax deduction under this section. There is no limit to claiming a deduction for interest paid in a tax year. You can claim the deduction from the year you start paying off the education loan till the next seven years or until you pay off the full interest, whichever comes first. Also, this tax deduction can only be claimed if you are investing in it and the loan is taken from an approved financial institution and not from a family member or friend. It can only be used for a student loan for higher studies.
Section 24: Paying Interest on a Home Loan: Taxpayers can claim the amount paid as an interest component on a home loan as a tax deduction under Section 24 of the Income Tax Act. The maximum limit in this section is Rs 2 lakh that can be used as an interest payment for a home loan for a self-occupied property. However, if you do not occupy the property and it is rented, there is no cap, and you can take the full amount of interest as a tax deduction.
Section 80EE: Paying Interest on Home Loans to First Time Buyers - If you do not own any other homeownership (first-time homebuyer), you can claim a deduction of up to Rs 50,000 under Section 80EE. This amount is higher than the tax benefit of Rs 2 lakh to repay the home loan interest under Section 24.
The conditions to benefit from this discount include that the value of the house that you are investing in is less than Rs 50 lakh and the loan amount must be Rs 35 lakh or less. In addition, the home loan must be sanctioned between April 1, 2016, and March 31, 2017.
Section 80EEA: Paying Interest on Home Loans to First Time Buyers - If you do not own any other property (first time home buyer) you can claim a deduction of up to Rs 1,50,000 under Section 80EEA. This amount is higher than the tax benefits of Rs 2 lakh to pay the home loan interest under Section 24.
The conditions to take advantage of this discount include that the stamp duty value for the home that you are investing in is less than Rs 45 lakh. In addition, the mortgage loan should be sanctioned between April 1, 2019, and March 31, 2020.
Section 80GG: Rent Paid for accommodation - This deduction can only be claimed if you do not receive a house rent allowance (HRA) as part of your salary, or if you are self-employed. To take advantage of this discount, you must send Submit a 10BA form. You can claim a discount of up to Rs 60,000 in this section.
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