Are you worried that most of your savings will be ruined when it comes time to pay your income tax? Don’t worry. Under Section 80C of the Income Tax Act of 1961, certain deductions are provided to taxpayers to lower their taxes. And, if this is not enough to meet your financial goals, here are some other tax saving options beyond Section 80C.
1. Interest Payment on Home Loan
If you have applied for a home loan under ₹35 lakhs, you can claim the tax deduction on interest paid towards home loan of up to ₹50,000. Under Section 80 EE, you are eligible to claim the deduction in income tax if you have taken a home loan for buying a residential property.
This exemption is applicable on the fulfilment of certain conditions, such as:
• The value of the residential property is below ₹50 lakhs
• This is the first house you have purchased
• The loan has been sanctioned by a Financial Institution or a Housing Finance Company
• The loan has been sanctioned between April 1, 2016 and March 31, 2017
• As on the date of the loan sanction, no other house is owned by you
Life insurance is considered a good option for tax saving, as premiums paid can be deducted from your total taxable income. Under section 80C, up to ₹1,50,000 in premiums paid can be reduced from your total taxable income. Apart from this, you can claim deduction for premiums paid or amount deposited for annuity plans of any insurer, under section 80CCC. Only those plans are eligible that are meant for receiving a pension from a fund. Under section 80CCD, the amount you contribute towards your pension account can be deducted from your taxable income. If you are an employee, a maximum deduction of 10% of salary is permitted. In case you are self-employed, the deductible amount is 20% of gross total income or ₹1,50,000, whichever is less.
3.Interest Payment on Education Loan
In case you have taken an education loan for yourself, children or spouse, you can claim the tax deduction on the interest paid on the entire loan amount. There is no limit on the deduction on interest paid in a single financial year. You are eligible to claim the deduction for eight years, starting from the year you start paying the interest. Remember, the loan must be for higher studies.
4.Donations paid to NGOs, Temples, etc.
Tax exemptions are also available for donations to funds, NGOs or for renovations of religious places temples, mosques and churches, which are approved by the Central Government of India. However, the tax deduction is applicable on the donated amount cannot exceed 10% of your gross total income.
If you are a salaried employee and you don’t receive House Rent Allowance or HRA as a component of your salary, and you live in a rented house, you can claim the tax deduction on the rent. To avail this tax saving option, you will have to fill a declaration via Form 10BA.
By filling accurate details of your income sources and paying income tax returns on time, you are not only helping yourself, but you are also contributing to the growth of the nation.
6.Paying Premium on Health Insurance
Medical bills can wipe out your saving during times of emergency. Fortunately, health insurance is one way to protect yourself from the skyrocketing medical costs. In addition, the premium you pay for such health insurance is eligible for tax deduction. If you are an ordinary citizen lesser than 60 years of age, you can save up to ₹25,000, while senior citizens can save up to ₹50,000 on premiums. If you have an undivided Hindu family (HUF) and are paying for a health insurance policy for any family member that also can offer you tax exemptions.