Think beyond 80C for tax savings – Be a smart tax saver

To be a smart tax saver, one should be aware of the income and tax liabilities so as to choose the best investment plan with tax saving option. The most popular tax saving investments that comes to our mind is section 80C.

Be it PPF, Life insurance or ELSS schemes, the list of tax saving schemes under section 80C is long. But the catch is that, you cannot claim more than 1.5 lacs of exemption in aggregate through this section. After adding NPS investments under section 80CCD, you can claim up to 2 lacs exemption. The question is, when there are more options other than term insurance, PPF, EPF, NPS etc., for saving tax, why not make use of them?

Let’s have a look at the investment options if you have exhausted the section 80C limit:

1. Section 80D: Payment towards medical insurance premium

This section deals with tax deductions on Medical Insurance premiums. Any premium that you pay towards medical insurance for you and your family is eligible for tax deduction. You can avail a tax deduction of up to Rs 25,000 per year on the premium amount you pay for self, spouse and children. Additionally, if you have spent on behalf of your parents, you can claim additional deduction of Rs 25,000. For senior citizens, the maximum deduction limit is Rs 50,000.

2. Section 80GG: Payment of Rent towards accommodation

You are eligible for claiming this tax deduction if you are staying in a rented accommodation. However, the clause is that, you are eligible for section 80GG only if you are not salaried and do not get House Rent Allowance (HRA) as part of your salary.

3. Section 80E: Interest paid on education Loan

If you have taken an education loan from a financial institution, you are eligible for this tax deduction on the interest that you are paying. This section is applicable for education loan availed for self, spouse, children or student for whom you are a legal guardian. The interesting fact is that, you don’t have a limit on the amount that you are eligible for a deduction. However, so as to claim the deduction, the loan must be taken for higher education only.

4. Section 80EE: Interest paid on Home Loan

This section allows you to claim deduction up to Rs 50,000 per annum towards the interest paid on home loan, that was availed to purchase a house for the first time. You will be eligible for claims based on conditions such as year of loan approval, house value, loan amount, and the name with which the property is registered.

5. Section 80G: Charitable donations

As an individual tax payer, if you are contributing towards charitable causes, Indian government allows tax deductions irrespective of your income source. You have to furnish a stamped receipt as a proof of donation to avail this benefit.

To sum it up, the option that we choose for investment should help us reach our overall goals. The right investment does not just help in saving tax but also help meet financial goals. Get the right awareness and Do not depend entirely on Section 80C to reduce your tax liability.