When someone mentions tax savings or deductions under the Income Tax Act, the first thing that pops in our head is Sec 80C and its limit which does not exceed INR 1,50,000. However, CCHTAXonline which serves as an online ready reckoner for clarifications on both direct & indirect tax law lists down some other options under direct taxation to help you plan or manage your taxes better. Let’s explore –
- Any contributions made to certain relief funds, charitable institutions, NGOs or temples provide tax benefits on the amount donated u/s 80G. Only donations made to prescribed funds via cash, cheque or draft qualify for 100% or 50 % deductions. There’s an entire list of institutions and establishments where you can donate. Also, quoting of PAN number to the institution where you donated is a must while filing the tax return. Cash contributions exceeding INR 2,000 are not eligible for deduction.
- Donations made to a political party – Under sec 80GGC, even donations made to political parties are eligible for deduction provided the donation is made via cheque, online transfer or demand draft i.e. no cash transactions. One can claim deduction equivalent to the donation amount with no ceilings.
- 80TTA deduction – Interest earned on a savings account or/and post office savings account of up to INR 10,000 is exempted from tax. In fact, the limit for tax deducted at source has also been increased in the interim budget this year.
- Interest on education loan u/s 80E – Interest paid in regards with any loan taken for purpose of education from any financial institution for self, spouse, children, or as legal guardian of a student is eligible for deduction under direct tax in India. This deduction is not yet capped; the only condition is that loan should be taken for higher education. This deduction is available for eight years, starting from the year in which the interest payment began. The deduction is allowed only on the interest repayment part, not on the principal amount of education loan.
- Medical insurance u/s 80D – Any premium paid towards health cover or insurance policy for self, spouse, dependent children, and parents can be claimed as a deduction under section 80D by an individual. Upper limit for the same is INR 25,000 for self, spouse, and children and an additional INR 25,000 for parents. This limit can be exceeded to INR 30,000 for senior citizens while senior citizens above the age of 80 can seek a deduction on grounds of their medical expenditure. Further, the Income Tax Act offers tax benefits to an individual u/s 80DDB on the basis of expenses incurred by him for treatment of certain specific diseases.
- Sec 80CCD (1B) – Income Tax Act introduced a new section 80CCD (1B) over and above Sec 80C in regards with National Pension Scheme (NPS) for deduction of up to INR 50,000 for the amount deposited by a taxpayer to the NPS account.
Other options to save your taxes over and above Section 80C.