Section 80C of the Income Tax Act allows you to claim a deduction of up to Rs 1.5 lakh from your total taxable income. This is an excellent way to minimize your tax liability. However, there’s a lot more to tax planning than Section 80C. Deductions under numerous other Acts also allow you to enjoy tax benefits.
In this article, we will discuss how you can look beyond Section 80C and become a smart tax saver.
Section 80D: Payment towards medical insurance premium
Section 80D of the Income Tax Act deals with tax deductions on Medical Insurance premiums. Any premium you pay towards Medical Insurance for yourself and family members is eligible for tax deduction. You can avail of a maximum deduction of Rs 25,000 per year on the premium you pay for self, spouse, and children. Moreover, if you have spent on behalf of your parents, you can claim an additional deduction of Rs 25,000. The maximum tax deduction limit for senior citizens is Rs 50,000.
Section 80E: Interest paid on education loan
In case you have taken an Education Loan from a financial institution, you are eligible for a tax deduction on the interest you pay. This applies to Education Loans availed for self, spouse, children, or student of whose you are a legal guardian. Interestingly, there is no limit on the amount eligible for a deduction. However, to claim the deduction, the loan must be taken for higher education only.
Section 80G: Charitable donations
The Indian government allows tax deductions on charitable contributions. As an individual taxpayer, you are eligible for this deduction under the Section 80G of the Income Tax Act. Irrespective of your income source (i.e. legal earnings), you can claim this deduction. However, a stamped receipt must be furnished as proof of donation.
Section 80GG: Rent towards accommodation
If you are staying in a rented accommodation, you can claim a tax deduction under Section 80GG of the Income Tax Act. However, only taxpayers who are not salaried and those employees who do not get House Rent Allowance (HRA) from their employers as part of their salaries are eligible for this deduction.
The eligible deduction is the rent paid for his own residence in excess of 10% of his total income to the extent to which such excess does not exceed an amount which is lower of
Rs 5,000 per month
25% of total income
Here, you may want to know you will not be able to claim this deduction if you or your spouse own the house where you are currently living.
The Income Tax Act offers you several options to reduce your taxable income legally. Make the most of it by taking advantage of the different deductions available when filing your income tax return. As a conscientious tax saver, you may want to consider exploring the wide variety of tax saving products offered by HDFC Bank. These products include Fixed Deposits, pension plans, and tax saving Mutual Funds.
