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Best Tax Saving Options Beyond Section 80C

Neelansh Gupta

| Updated: Jan 23, 2019 | Category: Income Tax, Taxation

Tax Saving

Section 80C is a primary choice for Tax Saving for most taxpayers as it allows deductions up to Rs 1.5 lakhs per annum. For instance, if your taxable income is Rs 1 lakh and you invest the same amount in a scheme covered under Section 80C, you will be paying zero additional taxes that year excluding any kind of education cess or capital gains.

Despite its massive popularity, Section 80C has its share of limitations. We would be discussing the other tax saving options beyond Section 80C in this article. So let’s go ahead and begin our journey

Drawbacks of Section 80C

All Equity Linked Saving Scheme (ELSS) schemes for instance, that most taxpayers without any second thought promise to take does not perform equally. Some provide great returns while some clearly do not.

Moreover, they come with a mandatory lock-in period of 3 years, which might not be favorable for everyone.

On top of it, it’s never a great idea to put all your eggs in one basket, is it?

So then what are the other options beyond Section 80C?

Before you plan your taxes, you should be aware of the total income and tax liability in order to be a smart tax saver.  Moreover, the government has these days provided with many plans in which individuals can make better investment decision along with tax saving options. But Individuals with less or no knowledge often get stuck with 80C tax benefits only during tax planning. While there is little doubt 80C investments are best for tax saving purposes, however, there are other deductions as well that you can claim.

If you are one of the millions of taxpayers in the country who is about to take a hasty investment decision, stop right there!

Don’t you miss out on the following deductions as you consider them while filing your income tax return?

Also, Read: Salaried? You need to file Income Tax Return!.

List of Deductions that you can Claim and Tax Saving Tools under different sections of Income Tax Act:

1.Section 80DDeductions on Medical Insurance
2.Section 80DDExpenditure on the health of disabled person
3.Section 80DDBExpenditure on a specified disease
4.Section 80EInterest paid on education loan
5.Section 80EEDeduction on home loan Interest
6.Section 80GDonations made to certain funds, temples
7.Section 80GGRent paid for accommodation
8.Section 80GGADonation to specified institutions
9.Section 80GGCDonations to political party
10.Section 80QQBRoyalty income to author
11.Section 80RRBRoyalty income from patents
12.Section 80TTAInterest on savings account

 Now since you get little aware of the tax saving options, it is better to have a full view on the above 12 tax-saving deductions as per Income Tax Act, 1961[1] for better understanding:

Section 80D – Deductions on Medical Insurance

  • Every working professional must get health insurance and it must be on their priority list. If you have not yet got it done, you must do it right away.
  • Moreover, a Health Insurance policy not only takes care of your financial burden in the event of a medical emergency, but it’s also quite effective as a tax-saving instrument.
  • You can claim a deduction for yourself, your spouse, children, and parents
  • However, in order to claim the deduction, you cannot pay your medical premium by any mode but not with cash
  • A maximum deduction of Rs 25,000 on the premium paid for oneself, spouse, or dependent children can be availed. You can get an additional deduction of Rs 25,000 on the premium paid for your parents. For senior citizens, however, the maximum limit is Rs 30,000.

Also, Read: Best Tax Saving Options Beyond Section 80C.

Section 80DD: Expenditure on the health of a disabled person

  • Under this, the deduction is available to a taxpayer for the expenditure incurred by him on the expenditure of caring for disabled persons – parents, spouse, children, brother, and sister-who are dependent on him.
  • Moreover, the maximum deduction amount that can be claimed under this section is Rs 75,000 per annum which will be increased to Rs 1,25,000 in case the dependent is suffering from a severe disability.
  • To claim this deduction, you need to attach a copy of the certificate issued by the medical practitioner which can be a neurologist or a civil surgeon along with form 10-IA when you file your return.
  • A disability may include autism, cerebral palsy, and mental retardation. A person with a severe disability would be the one, who has 80 percent or more of any of the above-mentioned disabilities, i.e., a medical authority has certified that the level of disability is more than 80 percent.

Section 80DDB: Expenditure on a specified disease 

  • This deduction is available on the expenditure which is incurred by the taxpayer on the treatment of specified diseases for himself or his spouse, dependent parents, children, brother, and sister.
  • The deduction will be equal to the amount you actually expended or Rs 40,000, whichever is lower. If the person for whom the expenditure is made is 60 years or above, then the limit of Rs 40,000 will be taken as Rs 60,000, and it will be taken as Rs 80,000 in case the age is 80 or more.
  • If you have received any sum from an insurer as reimbursement for an expenditure which is incurred by you, then the amount received as reimbursement would be reduced from the amount of deduction.
  • The list of specified diseases covered in the section is available in Rule 11-DD of Income-tax Rules which include neurological diseases, AIDS, malignant cancers, and hematological disorders, etc.

Section 80E: Payment of interest on education loan 

  • Under this section, you get to claim full deductions on the amount you paid as interest.
  • Likewise, any individual who has availed an Education Loan from a recognized institution can claim a deduction under this section.
  • This deduction is available for eight years, starting from the year in which you made the first interest payment.
  • Since higher education is an expensive affair, Section 80E does not have an upper limit on the deduction that you can claim.

Section 80EE: Payment of interest on home loan

Section 80EE provides first-time homebuyers deductions on the interest paid on their Home Loan.  However, the maximum deduction that you can claim under this section is Rs 50,000 per annum. But in order to claim deductions under this, you need to comply with the following conditions:

  1.  This is the first house that you have purchased – deductions under Section 80EE can only be availed by first-time buyers.
  2. The value of the house is Rs 50 lakhs or less.
  3. The total value of the loan is Rs 35 lakhs or less.
  4. A reputed financial body has sanctioned the loan.

Section 80G: Donations made to certain funds, temples 

  • In case you have donated to a fund which is notified by the central government under this section, then you would be eligible for a deduction of the amount which you have donated, but it should not exceed 10 percent of the adjusted gross total income.
  • This deduction is also generally available for any donations given for renovation of temples, churches, mosques which are approved by the central government.
  • Some of the funds notified by the government include National Defence Fund, Jawaharlal Nehru Memorial Fund, Prime Minister National Relief Fund, Swachh Bharat Kosh, Clean Ganga Fund, etc.

Section 80GG: Rent paid for accommodation

If you do not receive HRA (House Rent Allowance) as part of your salary or if you are not a salaried employee, you can claim deductions for the rent paid for accommodation u/s 80GG.

The deduction amount will be the lower of one of the following:

  • Rs 5,000 per month.
  • Rent paid over and above 10 percent of the total income.
  • Twenty-five percent of the gross total income.

Section 80GGA: Donation to specified institutions for research and development

  • If you have donated to any specific institution which is carrying on scientific research or to any university or college which is approved by the government under sections 35(1)(ii), 35(1)(iii), 35CCA, 35CCB for the time being, then such amount so contributed would be eligible for deduction under this section.
  • Any Deductions over and above Rs 10,000 can be claimed only if the contribution has been made by any mode, other than cash.
  • In case any sum under this section is paid using any mode other than cash, then it can be claimed for deduction without any limit.
  • Moreover, this deduction is not available to those taxpayers who have income from business or profession.

Section 80GGC: Donations to political party 

  • If you have given any donation to a political party, then you can claim deduction under this section equivalent to the amount which you actually donated.
  • Moreover, there is no maximum limit on the deduction amount which can be claimed under this section.
  • The mere condition which must be complied is that the payment should be made by any mode, but not by cash.

Section 80QQB: Royalty income to author

  • If you are the author of a book but other than textbooks for schools and colleges and have received any kind of payment in royalty, either in a lump sum or otherwise, then you can claim that amount as a deduction from your royalty income.
  • The maximum deduction that you can claim when royalty is received in a lump sum is Rs 3 lakh.
  • When the amount of royalty is not received a lump sum, then the amount of deduction will be restricted to 15 percent of the book’s total revenue that year.

Section 80RRB: Royalty income from patents

  • If you are a patentee and have registered any of your patents after April 1, 2003, and receive royalty income for that, then you can claim a deduction for the amount received as royalty.
  • The maximum deduction that you can claim is Rs 3 lakh.

Section 80TTA: Interest on savings account

  • When you earn any interest on your savings bank account, then such amount is allowed as deduction.
  • You can claim a maximum amount up to Rs. Rs 10,000.

Note: The above interest amount up to Rs. 10,000 is not any exempted income. In fact, you should show this amount as “Income from other sources” in your Income Tax Return and must then claim deduction under this section.

Moreover, any amount of interest earned on the FDs (Fixed Deposits) is completely taxable and you cannot claim any deduction on that as there is no deduction.

We would advise you to consider the above Tax Saving Tools beyond the standard Section 80C.

Conclusion

There is no doubt that Section 80C is one of the most popular Tax Saving options. However, there are several sections apart from 80C that can help an individual benefit from tax exemptions. Besides, It is time you start looking beyond 80C for tax savings.

Also, Read: Calculate Your Tax – Income Tax Calculator.

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Neelansh Gupta

Mr. Neelansh Gupta is a Legal Counsel having extensive in-depth knowledge of various laws. He has completed his graduation in law and has experience in IPR, Taxation and Corporate laws.

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