How to Save Tax Other Than 80C?

How to Save Tax Other Than 80C

After the end of each financial year, every person liable to file income tax looks at all the exemptions and deductions that he can claim. For a salaried individual, section 80C is a relief that allows a deduction of up to INR 1.5 lakhs from your total taxable income. Apart from the said section, there are other lesser-known sections available for deduction under the said Act:  

1.Contributions made towards NPS Scheme- Sec 8CCD (1B)

An individual who is eligible for deduction under section 80CCD has made any contribution towards the national pension scheme (NPS). As per 80CCE, the cumulative contribution under 80C and 80CCD cannot exceed INR 1.5 Lakhs. However, an additional deduction of INR 50000 has been allowed towards contributions made under 80CCD (1B)

2.Contributions made towards health insurance- Sec 80D

Under Sec 80D, you can claim the payment of health care premium and medical expenses. An individual can claim a deduction of up to INR 25000 for health insurance premiums paid for himself, spouse and dependent children. However, if any of these are above the age of 60, this limit gets increased to INR 50000. For health premiums paid for parents, an additional deduction of INR 25000 is available. If the parents are of ages 60 or above, the available deduction is INR 50000. A rebate of INR 5000 is also made available for preventive health checkups. 

3.Expenditure on medical treatment of dependents and specific diseases- Sec 80DDB

This section is concerned with any payment for the medical treatment or maintenance of a person with a disability. It includes all expenditure made for a dependent (spouse, children, parents, dependent siblings) suffering from specific diseases, as specified. This amount is subject to a deduction of up to INR 75000.  This deduction is available for the resident individual/ HUF. 

4.Payment towards interest on education loan- Sec 80E

If you have made any payment of interest towards the loan taken for the higher education of self, spouse, dependent children or any student to whom you’re a legal guardian.  Section 80E allows the deduction of such interest paid. The payment must be to an approved institution. There is no upper limit on the amount of deduction. The deduction can be claimed for up to 8 years, beginning with the year you start repaying the interest. 

5.Home loan interest payment for affordable housing- Sec 80EE 

If you’re a first-time house owner, an additional deduction of INR 50000 is available, subject to fulfilment of certain conditions. This deduction is available in addition to the deduction under Sec 24. To avail of this deduction, the value of your property should not be more than INR 50 lakhs & the loan taken should be less than 35 Lakhs.

6.Payment towards rent for those not receiving HRA- Sec 80GG

This deduction is only applicable to those individuals who are self-employed or do not receive any HRA.  Also, neither the individual nor should his spouse nor minor child should have a residential property at the place of his current residence. The amount of deduction is 25% of the total income (excluding long-term capital gains, short-term capital gains under section 111A, Income under Section 115A or 115D and deductions under 80C to 80U). The upper limit of such deduction is INR 5,000 per month.

Conclusion: While calculating tax liability for the financial year, you can consider the above deductions, if eligible. Also, we recommend all our taxpayers start planning for their tax liability at the start of the year. It gives them more flexibility in determining the tax liability for the year.

10 Tips For Tax Saving in 2021

Tips for Tax Saving

In India, the individuals are liable to pay income tax if their income is above 2.5 lakhs. Income tax is payable according to slab rates on an individual varying with their income level. Regular payment of income tax reduces the burden on an individual. People who pay income tax at the end of the financial year face a lot of challenges. If you want to save tax and protect yourself from financial stress, it is necessary to look at the following tips for tax-saving.

1. Provident fund:

The amount of interest on provident funds is tax-free. It takes time of five years before you withdraw the money from provident funds. Before five years, you cannot withdraw any amount from your provident fund. Provident funds help or save us from paying any amount of tax.

2. Equity Linked Saving Schemes (ELSS)

ELSS is an equity-oriented investment option mainly focused on equity funds and other equity-related instruments. It has a lock-in period of 3 years. Any investment made in ELSS funds is eligible for deduction in 80C.

3. Insurance policy:

Money received from a life insurance policy at the time of maturity or receiving the claim amount. The amount of premium is deductible from the taxable income. For insurance policies issued before 1st April 2012, premium up to 20% of the amount insured is deductible & for insurance policies issued after 1st April 2012, premium up to 10% of sum-insured is deductible.

4. Education scholarship:

The amount of education scholarship is tax-free under section 10(16). The amount received either under private or public scholarships is tax-free. Scholarships help students a lot come from a middle-class family. Now they can get scholarships free from tax.

5. Agricultural income:

Any income earned from agricultural activities is exempt from tax. For example- revenue from land, amount through a farm field, the amount received from agriculture products, income from the sale of seeds, etc.

6. Inheritance amount:

The amount received in the form of a will or the inherited money is always tax-free in India. No tax will apply on such an amount. This type of amount can be useful for a person. He/She need not pay any amount of tax on such an amount.

7. Gifts received at the wedding:

In India, weddings are an auspicious occasion for an entire family. It’s even where couples receive a lot of gifts. Such gifts are not taxable. Gifts, cash, cheque, stuff received at a wedding is tax-free. Mostly gift from friends or relatives and are purely a gesture of good wishes and love. They are non-taxable under section 56(2).

8. Expenditure on the treatment of specific diseases:

Tax benefits apply to expenses for treating specific diseases like cancer, Aids, etc. For these kinds of the disease, tax deductions up to Rs 40000 are applicable. For a senior citizen, the amount increases up to Rs 1 lakhs, any incurred expenses in this behalf are exempt from tax in India.

9. Education loan:

Education is the most important key factor in the development of every country. Every person or every family gives more emphasis on good higher education. Pursuing higher education is very expensive & not everyone can readily afford it. Often, individuals need to take an education loan to pay the fees. Education loans help them to pay the amount of the price of that particular institute. Under section 80E of the income tax Act, the interest paid for an education loan is non-taxable.

10. Donation to charity:

Tax can save by donating the money to charities. Money spent on donations or charity is tax-free under section 80G. If you have a valid certification from a charity organization, you will avail the benefits. Donations to charity can also help a person from paying any amount of tax.

To know how you can save your tax, you have to understand your pattern of income. If you want to save money from paying the income tax, invest your money in financial markets or instruments. Following up on the tips mentioned above will help you to a great extent. You should have a clear-cut objective and link the tax instruments to the desired goals. Apart from the mentioned points, there are other ways more that can help you to save on tax, but these were the best ways to save tax, adopt these ways and be free from the income tax.

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