How to Save Tax Other Than Section 80C?

Tax Saving Options Other Than 80C

Introduction

The income that you earn will undoubtedly increase as the years go by. As you move from one promotion to the next, your inflow of earnings will rise. Correspondingly, so will the tax rate applicable to you as per the Income Tax Act, 1961. This effectively means a higher tax liability.

Fortunately, the Income Tax Act also has several provisions to reduce the tax burden. Some of the major tax saving provisions are contained within section 80C. There are also tax saving options other than section 80C.

 

Let us look at what this important section includes and explore the alternative tax saving options available.

What is section 80C of the Income Tax Act?

Section 80C of the Income Tax Act allows a maximum deduction of Rs. 1.5 lakhs per annum. The deductions are available to eligible taxpayers for various investment options and expenses incurred. The subsections of section 80C include sections 80CCC, 80CCD (1), 80CCD (1b) and 80CCD (2).

 

Here is a preview of the eligible investments and expenses that come within the Rs. 1.5 lakh limit under section 80C.

 

  • Investment in Equity Linked Savings Scheme (ELSS) funds

  • Investment in Unit Linked Insurance Plans (ULIPs)

  • Investment in Public Provident Fund (PPF)

  • Investment in the National Pension System (NPS)

  • Investment in tax-saving fixed deposit

  • Investment in Sukanya Samriddhi Yojana

  • Life insurance premiums

  • Tuition fees paid for your children’s education (up to a maximum of 2 children)

  • Repayment of home loan principal

How to Save Tax Other Than Section 80C?

If 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 exemptions other than section 80C included in the Act.

 

Here is an overview of how to save tax other than section 80C.

Section

Particulars

Section 80D

Premiums paid for health insurance

Section 80E

Interest payments on education loans

Section 24(b)

Interest payments on home loans

Section 80 EEA

Interest payments on home loans for first-time home buyers

Section 10(10D)

Payouts from life insurance plans

Section 80G

Specified donations

Section 80U

Tax waivers for disabled persons

Section 80TTA

Deductions for interest from savings account

A Closer Look at the Tax Exemptions Other than Section 80C

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

 

1. Section 80D: Premiums paid for health insurance

The premiums that you pay for your health insurance plan can be claimed as a deduction under section 80D. This benefit is available for health insurance plans taken for yourself, your spouse, children or parents. The limits on the deduction are given below.

Policy taken for

Age of the person

Maximum limit on deduction

Yourself, your spouse or kids

Below 60 years

Rs. 25,000

Your parents

Below 60 years

Rs. 25,000

Yourself, your spouse or kids

Above 60 years

Rs. 50,000

Your parents

Above 60 years

Rs. 50,000

2. Section 80E: Interest payments on education loans

If you have availed an education loan to fund your higher studies or that of your spouse or children, you can avail this benefit. The interest component of the education loan can be deducted from your total taxable income.

 

There is no limit on the amount of deduction under section 80E. However, this benefit is available only for a period of 8 years from the date you start to repay the loan.

3. Section 24(b): Interest payments on home loans

If you have availed a home loan for building or buying your own home, that is also eligible for deduction other than in section 80C. The interest component of your home loan repayment each year is deductible under section 24(b).

 

If you have purchased or built the house for self occupancy, you can claim interest up to Rs. 2 lakhs as a deduction. If the house is let out, there is no limit on the deduction.

4. Section 80EEA: Interest payments on home loans for first-time home buyers

Section 80 EEA also offers extra tax benefits on home loans to first-time home buyers. The interest portion of the loan can be deducted up to Rs. 1.5 lakhs. This is in addition to the deduction available under section 24.

 

To be eligible for this benefit, your property’s stamp duty value of the property should be less than Rs. 45 lakhs.

5. Section 10(10D): Payouts from life insurance plans

If you want more ideas about how to save tax other than with section 80C, your life insurance plan may hold the answer. As per section 10(10D), all the proceeds received from a life insurance plan upon maturity, surrender or death of the policyholder are tax-free.

 

This includes the sum assured, any bonus paid out, and the premiums returned, if any.

6. Section 80G: Specified donations

If you regularly donate to charities or trusts, you may be eligible for tax benefits under section 80G. This is another example of how to save tax other than with section 80C. If you donate to specified relief funds and charitable institutions, you can claim this benefit.

 

Some donations are eligible for 100% deduction, while donations to certain other funds are eligible for 50% deduction. Any cash donation exceeding Rs. 2,000 will not be eligible for the benefit.

7. Section 80U: Tax waivers for disabled persons

Any resident individual who suffers from a disability as specified in the Income Tax Act is eligible for this tax benefit. Disabilities specified include blindness, low vision, hearing impairment, mental illness or mental retardation, locomotor disability and leprosy (cured).

 

  • For people with 40% disability, a deduction of Rs. 75,000 is allowed each year.

  • For people with severe disability i.e. 80% disability, a deduction of Rs. 1,25,000 is allowed annually.

8. Section 80TTA: Deductions for interest from savings account

As per this section, the interest you earn from your savings bank accounts can be deducted from your total taxable income. This includes the interest from all your savings accounts together.

 

The limit on deduction is Rs. 10,000 per year.

Conclusion

That sums up the key details about tax saving options other than section 80C. If you already have some of these investments or expenses, make sure you avail the benefits they offer. Alternatively, if you have exhausted your 80C limit, you can invest in some of these other options to avail extra tax benefits.

 

For instance, you could purchase a health insurance plan or avail a home loan on Bajaj Markets. The attached tax benefits can greatly ease your tax burden while simultaneously helping you check off some life goals too.

FAQs

  • ✔️What is the maximum limit of deduction allowed under section 80C?

     As per section 80C of the Income Tax Act, 1961, you can claim a maximum of deduction of Rs. 1.5 lakhs. This limit is applicable to each financial year, and to the total of the investments and expenses under section 80C.

  • ✔️Are there tax saving options other than 80C instruments?

     Yes, there are several tax saving options other than section 80C alone. You can make use of them to reduce your tax burden.  

  • ✔️Can I claim a deduction under section 80C and section 80D?

     Yes. Section 80C and section 80D are mutually exclusive. So, you can claim deductions under both these sections if you are eligible for the same.

  • ✔️Do home loans offer tax deductions other than under section 80C?

     Yes. The interest portion of home loan EMIs can be availed as a deduction as per section 24 of the Income Tax Act, 1961.  

  • ✔️What are the top tax saving options other than section 80C options?

     There are many tax saving options apart from section 80C. Top examples include health insurance, home loan EMIs, interest from savings accounts and more.