Tax-saving Investment Instruments Beyond Section 80C

When you do not have any of the investments or the expenses under Section 80C, can you still save tax? The answer is yes. There are many tax-saving options other than 80C included in the Act.

Here is an overview:

As you can see from the table above, there are many different tax-saving sections apart from 80C that offer tax benefits. Here is a closer look at the details of these tax-saving provisions.

• Section 80EE: Tax Benefits on the Interest Paid by First-time Home Buyers for Home Loans

If you are a first-time house buyer i.e., never owned a house before, then you can claim for tax deduction up to Rs.50,000 u/s 80EE. This deduction comes above the ₹2 Lakhs tax benefit for housing loan interest repayment under Section 24.

• Section 80CCD: National Pension Scheme (NPS)

Apart from the Section 80C contribution of ₹1.5 Lakhs, you can additionally invest ₹50,000 in the National Pension Scheme that can be claimed as deduction of tax u/s 80CCD. This gives you the opportunity to claim up to ₹2 Lakhs in tax deduction each year by investing in the NPS.

• Section 80D: Premium for Health Insurance Payment

You can claim a deduction for the premium you pay for yours and your family member’s health insurance. 80D allows you to claim a deduction of up to ₹25,000 on the premium paid for your spouse, your children and yourself.

 

An additional deduction of up to ₹25,000 can be claimed if you are paying for the premium of your parents, making the total deduction to ₹50,000. Additionally, in case the individual is below the age of 60 years with parents who are above the age of 60 years, the maximum deduction is capped at ₹75,000 under this section. In case, both, the individual and the parents, are above the age of 60, then the deduction goes up to ₹1 Lakh.

• Section 80E: Education Loan Repayment

The amount that is paid for educational loan interest for spouse, self or children, can be claimed for deduction under 80E. There is no cap to the amount that can be claimed in a financial year. The deduction can be claimed for the first 8 years of loan repayment or up till the entire interest is paid.

• Section 24: Home Loan Payment Interest

As a taxpayer, you can claim the amount that is paid as interest for home loan u/s 24 of the IT Act. The maximum cap under Section 24 is ₹2 Lakhs. This deduction can be claimed on home loan interest payment for a self-occupied house.

 

However, if you are not occupying the house and it is rented out, there is no maximum cap. In this case, you can get the entire amount of interest as a tax deduction.

• Section 80EEB: Loan Interest for Electric Vehicle Purchase

In case you take a loan for an electric vehicle purchase, then you are eligible to claim a tax deduction of ₹1.5 Lakhs under this section of the Income Tax Act. The only condition is that the loan for the vehicle purchase should be approved between 1 April 2019 and 31 March 2023.

• Section 80G: Charity Donations

Donations that are made to government-approved institutions for charity can be claimed for tax deduction under Section 80G. For cash donations, you can claim an exemption of ₹2,000 every year.

• Section 80GG: Accommodation Rent

Deductions can be claimed under this section only if you do not get house rent allowance (HRA) as a component in your salary or in case you are a self-employed individual.

• Section 80TTA: Saving Bank Account Interest

Deductions under this section can be claimed up to ₹10,000 for the interest income that you get from a savings bank account with a post office, co-operative society or a banking institution.

• Section 80TTB: Senior Citizens Deposit Interest

Deductions under this section can be claimed by an elderly citizen of up to ₹50,000 for the interest income that they get from deposits with a post office, co-operative society or a bank.

• Section 54: Capital Gain from Residential House Sale 

This deduction is available to HUFs (Hindu Undivided Family) as well as individuals who get profit on a residential house sale (which has been owned by the assessee for more than 2 years). This is also applicable when an individual purchases a new house from the profit within a year before the sale date or 24 months after the sale date of the original house. 

 

If you build a new residential house within 36 months from the sale date of the original house, you are eligible for this deduction.

• Section 54EC: Capital Gain from Building Sale, Land Sale or Both

This deduction is available in case you get a profit from a long-term capital asset sale i.e., building or land or both. The maximum deduction allowed under Section 54EC is ₹50 Lakhs.

• Section 54F: Capital Gain from Capital Asset Sale Other Than That of a Residential House

This deduction is available to HUFs as well as individuals who earn profit from a capital asset sale other than that of a residential house.

 

As a taxpayer, you should be aware of tax-saving options other than 80C deductions. The objective of saving tax must be done without impacting your financial health.