How to reduce your taxes
In this article, we will focus on tax saving instruments and sections other than 80C
Tax saving season is here and most of us are either collating investment related documents or exploring various options to save taxes levied on our hard earned money. Section 80C allows you to reduce your taxable income by Rs 1.5 lakh and an additional investment of Rs 50,000 in National Pension Scheme under Section 80CCD(1). In this article we will focus on tax saving instruments other than 80C which you may not be aware of or you might have missed.
Section 80E: Interest on Education loan (No limit)
Education loan taken for self, spouse, children or acting as a legal guardian for a student can claim tax deduction under Section 80E for the interest paid on the loan amount. There is no limit under this section. So if you paid interest amount of Rs 3 lakh in the financial year 2018-19, you can claim tax deduction of entire Rs 3 lakh under this section. Education loan should be taken for higher education for pursuing any course after Std XII. This benefit is applicable for eight years from the time you start repaying interest on education loan.
Section 80EE: Interest on home loan (Rs 50,000)
Home buyers can avail tax deduction of Rs 2 lakh on interest paid on home loan under Section 24. In addition to Section 24, one can avail tax benefit of Rs 50,000 on home loan interest under Section 80EE subject to certain conditions. Home loan must be taken between April 1, 2016 and March 31, 2017. The value of your home should be below Rs 50 lakh and property should be only in individual’s name. The loan amount should not exceed more than Rs 35 lakh.
Section 80D: Medical insurance premium
Under Section 80D, you can avail tax benefit of Rs 25,000 on premium paid towards your medical insurance policy. The policy can be taken either in self, spouse, dependent parents or children’s name. For Hindu Undivided Family (HUF), the policy can be taken in any family member name.
You can claim a tax deduction of Rs 50,000 for premium paid towards senior citizen’s medical insurance policy. In case your parents are not senior citizens, then you can claim tax benefit of Rs 25,000 towards your parents medical insurance premium. So you can avail total benefit of Rs 50,000-75,000 under Section 80D.
In addition to above, you can also claim Rs 5000 for expenses incurred towards health check-ups. One should note that it includes health check-up expenses of all members in the family and maximum claim can be made of Rs 5000 only. So keep your health check up bills handy while claiming it.
From FY2018-19, if a senior citizen does not have a medical insurance policy, then he or she can claim tax deduction of Rs 50,000 for medical expenses incurred for senior citizen.
Section 80DD: Expense towards disabled person (Rs 75,000-1,25,000)
Under Section 80DD, you can avail tax deduction of Rs 75,000 for expenses incurred towards health of a disabled person who is dependent on you. The limit is hiked to Rs 1,25,000 in case the person is suffering from a severe disability.
Section 80DDB: Expenses towards a specified disease (Rs 40,000)
You can avail a tax benefit upto Rs 40,000 for expenses incurred towards treatment of a specified disease. The limit is hiked to Rs 1 lakh for senior citizens in FY2018-19. One can check the list of specified diseases covered under this Section as per Rule 11-DD of the Income Tax.
Section 80G: Donations to temples
Under Section 80G, donations made to a fund or renovation of temples, churches and mosques which are approved by central government can avail tax benefit not exceeding 10 per cent of your adjusted gross income. For donations made in cash, you can avail tax deduction of Rs 2000 only.
Section 80GGC: Donations to political party
Donations made to political party can be claimed for tax deduction under Section 80GGC. Donations can be done via any mode of payment except cash and there is no limit on it.
Section 80TTA: Interest on savings account
One can avail tax deduction up to Rs 10,000 on interest earned on savings bank account or post office savings account. You will have to file interest income as Income from other Sources in your ITR. Interest earned on fixed deposits is fully taxable and no tax exemption is available for the same.
Section 80TTB: Interest on deposits with banks, post office for Senior Citizens
Senior citizens can claim tax benefit of Rs 50,000 for interest earned on deposits with banks and post offices. It covers savings account, term deposits, recurring deposits and post office schemes.