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Section 80C offers multiple tax saving investment options, but there are other ways to save tax as well. Read on to know the four best among them
Section 80C of the Income Tax Act, 1961 is popular among taxpayers because it can reduce their total gross income by ₹1.5 lakh in a financial year. It can reduce their taxable income and the amount of income tax they need to pay. Taxpayers also have a variety of investment options, with Public Provident Fund (PPF), fixed deposits (FDs), and the National Pension System (NPS) being a few of them.
However, taxpayers cannot receive more than ₹1.5 lakh exemption under Section 80C investments. An extra ₹50,000 can be claimed through NPS investments (Section 80CCD), but that is the absolute limit. If they want more exemptions, they must seek other tax-saving options. A few of them have been mentioned below.
Best Tax Saving Investments other than 80C
Section 80C offers many tax saving options, but you can also claim deductions through other sources. Some of them include:
1. Interest on home loan
If you have a home loan, you may be able to claim a tax deduction for the interest you pay on it. Section 24B allows you to deduct up to ₹2 lakh in home loan interest in a financial year. However, there are two requirements:
- You must have taken the loan on or after April 1999.
- You must have taken ownership of the property or completed construction within five years of taking the loan.
The deduction is capped at ₹ 30,000 each financial year in the following circumstances:
- If you took the home loan before April 1999.
- If you took the loan on or after April 1999 to reconstruct, remodel, or renovate your home.
- If you took the loan after April 1999 but could not take possession within five years of the loan's start date.
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2. Health insurance premiums
Section 80D allows you to claim deductions on health insurance premiums for yourself, your spouse, your kids, and your parents. If you are under 60 years of age, you are entitled to a deduction of up to ₹25,000. You can use it to purchase insurance for yourself, your spouse, and your children.
If you buy insurance for your parents, you can get an additional exemption of ₹25,000. You can claim a tax deduction of up to ₹50,000 if your parents are over the age of 60. If you and your parents are over 60, you can deduct up to ₹1,00,000 from your premium payments in a financial year.
3. Interest accrued on education loans
Continuing your education abroad can save tax under section 80E. If you have taken an education loan for yourself, your spouse, or your child, you can claim a tax deduction for the interest you pay. The deductible has no upper limit.
The amount you pay as interest is exempt for up to eight years or until the loan's interest is settled, whichever comes first. However, keep in mind that the deduction does not apply to the loan's principle.
Health insurance purchased through IDFC FIRST Bank can also be used for tax deductions under Section 80D. Download IDFC FIRST Bank's mobile banking app, register your details and buy the insurance you need.
4. Donations
Donating to any organisation might also help you get tax benefits. Non-Resident Indians (NRIs) can deduct 50-100% of their charitable contributions under Section 80G. However, payments must be sent to designated funds, trusts, and organisations, such as the Prime Minister's Relief Fund and the National Defense Fund. Donations to scientific research or rural development are eligible for a 100% deduction under section 80 GGA.
Taxpayers must use these schemes, along with the available options under 80C, to save money. They can save a significant amount of money every financial year, which may aid in wealth creation in the long run.
Disclaimer
The contents of this article/infographic/picture/video are meant solely for information purposes. The contents are generic in nature and for informational purposes only. It is not a substitute for specific advice in your own circumstances. The information is subject to updation, completion, revision, verification and amendment and the same may change materially. The information is not intended for distribution or use by any person in any jurisdiction where such distribution or use would be contrary to law or regulation or would subject IDFC FIRST Bank or its affiliates to any licensing or registration requirements. IDFC FIRST Bank shall not be responsible for any direct/indirect loss or liability incurred by the reader for taking any financial decisions based on the contents and information mentioned. Please consult your financial advisor before making any financial decision.
The features, benefits and offers mentioned in the article are applicable as on the day of publication of this blog and is subject to change without notice. The contents herein are also subject to other product specific terms and conditions and any third party terms and conditions, as applicable. Please refer our website www.idfcfirst.bank.in for latest updates.
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