Best Tax saving instruments other than 80C (For FY 19-20 and for 20-21 the rates have been further tweaked)
Here are a few additional options which help in saving more. These options are only on expenses which are listed for tax deduction purposes
Section 80D: Payment of medical insurance premium
Section 80D includes the premium payments made to cover health insurance – individual, family floater, critical illness, personal accident cover. An 80D limit is over and above the benefit of the 1.5 lakh limit available in 80c. Additional to 80C investments, tax-payer can avail extra benefit by claiming both.
The benefit comes with a certain caps
• Tax-payer can claim upto 55,000 Rs. (additional Rs. 25,000 health insurance premium for dependent parents + Rs. 5,000 for a medical check-up) this is over and above 80C Limit
• For self and family, the insurance premium cap is at 25,000, within which one can claim upto Rs. 5,000 for preventive healthcare check-up
• In case of very senior citizen parents limit can be upto 60,000 (Premium of upto Rs. 30,000 + Rs. 5,000 for a medical check-up)
• If the taxpayer is a senior citizen with very senior citizen parents, the limit is Rs. 65,000 (Rs. 30,000 + Rs. 30,000)
Section 80DD: Health-related expenditure of disabled person/ dependant – Exclusive of 80C exemptions
Section 80DD allows tax-payer to claim upto Rs. 75,000 towards the expenses incurred towards medical treatment, nursing, rehabilitation etc. For extreme disabilities one claim upto Rs. 1,50,000. The member should be directly related to the tax-payer – parents, siblings, spouse or children.
Section 80DDB: Expenditure related to a specific disease
This section allows assessee to claim for some specific illness and has a limit of Rs. 40,000, (in case of a senior citizen, the limit is upto Rs. 1,00,000) or an amount paid whichever is lower. In the case of medical insurance, the claim will be reduced to the extent of the claim received. One can claim tax benefit on such expenses for self, spouse, children, parents, and siblings.
Section 80E: Payment of interest on education loan for higher education
While the education loan principal payment is covered in 80c, 80E is a special section for tax-break on the interest payment. The benefit can be availed towards education loan on self, spouse, children (including adopted). There is no higher limit to this option. This benefit is other than 80C Limit
• Section 80G: Donations
Above 80C Limit, There are notified charitable and development institutions, trusts
- 100% tax benefit on total donation Without Qualifying Limit
- 50% tax benefit without qualifying limit
- 100% tax benefit, if the amount is less than 10% gross income
- 50% tax benefit, if the amount is less than 10% gross income
• Section 80GGA: Donation to specified institutions – This section is dedicated to donating in institutions which undertake research for social developments such as eradicating poverty, scientific research etc. One need to check the eligibility of the institution for claiming the benefit
Section 80GGC: Donations to the political party – The entire donation amount is tax-free, however, it should not exceed the total taxable income.
• Section 80GG: Rent paid for accommodation – One can claim up to Rent paid – 10% of basic salary in this category
• Section 80EE: Payment of interest on a home loan.
The deduction is allowed up to a maximum of Rs 50,000 per financial year per assessee. To take the maximum benefit, one can consider a joint home loan – when interest exceeds Rs. 50,000 per year, it can be claimed until the loan is repaid.
Section 80RRB: Royalty income from patents
Section 80QQB: Royalty income to the author
Section 80TTA: Interest on a savings account – Up to Rs. 10,000 for a financial year
Section 80TTB: Interest on deposits with banks, post office – up to Rs. 10,000 for a financial year
Return on Equity shares and Mutual Funds – up to 1 lakh per financial year
80U – Handicapped tax-payers, with disabilities such as – Blindness, low vision, leprosy-cured, hearing impairment, locomotor disability, mental retardation, mental illness can claim the benefit of Rs. 75,000. An individual with a severe disability can avail a tax-break up to and Rs. 1,25,000
Other tax benefits can be availed through LTA, Mobile and travel allowance, entertainment allowance daily allowances