TOP 5 Options To Save Tax Other Than Deductions Under Section 80C

While thinking about saving tax, the only thing which comes in the mind of most people is the deductions under section 80C. Section 80C is the most popular tax-saving option among the masses which helps them save tax on payments of health insurance premium, investments in equity linked saving scheme, provident fund, National Saving Certificate, etc. But the maximum deduction which we can claim under section 80C is Rs 1,50,000. To gain more tax benefits, here are a few tips that go beyond section 80C.

1. Chapter VI-A is beyond section 80C

Chapter VI-A is not about only section 80C.

It includes section 80D, 80EE, 80G, 80GG, 80TTA, etc. which helps us in saving tax.

SECTION 80D - Deductions in respect of medical insurance premium

As per section 80D, an individual or HUF can get tax benefit on the health insurance premium and health check-up expenditure for self and family. Deductions allowed are as follows-

Section 80EE - Deduction on home loan interest

This deduction is available only for the first time home buyers. As per this section, you can claim a deduction of up to Rs 50,000. This deduction of Rs 50,000 is in addition to the deductions allowed under section 24 and section 80C, which are Rs 2,00,000 and Rs 1,50,000, respectively.

Conditions for claiming this deduction:

1. The Individual should not own any other house property on the date of grant of loan.
2. House property value should not be more than Rs 50,00,000
3. The home loan taken should be Rs 35,00,000 or less.
4. The Loan should be taken from the banks and financial institutions.

Section 80G - Deductions in respect of donations

Section 80G provides a tax deduction on donations given to eligible funds, charitable institutions, etc. The deduction is generally 50% or 100% of the amount of donation. The deductions are classified as follows:

1. 100% deductions, without qualifying limit
2. 50% deductions, without qualifying limit
3. 100% deductions subject to qualifying limit
4. 50% deductions subject to qualifying limit

If donation exceeding Rs 2,000 is made in cash, then no deduction is allowed.

Section 80GG - Deductions in respect of rent paid 

If you do not receive HRA from your employer, but pay rent, you can claim deductions on the house rent paid under section 80GG.

The least of the following is deducted

1. Rs 5,000 per month
2. 25% of the total income (excluding long term capital gain, short term capital gain, deductions under section 80C to 80U, except deduction under section 80 GG)
3. Rent paid - 10 % of total income

Section 80TTA - Deduction in respect of savings account interest

Section TTA provides a deduction on the savings bank account interest of up to Rs 10,000. Interest income earned up to Rs 10,000 is exempt from tax. If the Interest income earned exceeds Rs 10,000, then the extra amount is taxable. The deduction can be claimed only when the interest income is included in the gross total income.

2. Tax benefit on interest on home loan (section 24)

While taking a home loan, you should consider the tax benefit on the home loan.

Section 80C includes the deduction on repayment of the principal amount. Under section 80C, you can claim a maximum tax deduction of Rs 1,50,000.

Whereas, section 24 covers the deduction on payment of interest on the home loan.

Deduction amount on payment of interest on the home loan is as follows:

i. For a self-occupied house, you can claim a maximum tax deduction of Rs 2,00,000 on payment of interest on the home loan, provided the loan is taken for construction or purchase purpose and the construction is completed within 5 years from the FY in which the loan is taken.

If the construction is not completed within 5 years from the FY in which the loan is taken, then you can claim a deduction of Rs 30,000 only.

If the loan is taken for repair/ renewal purpose, then you can claim a maximum tax deduction of Rs 30,000.

ii. For let out property, there is no limit for claiming interest deductions.

Deduction on interest for the home loan

If there is a loss under the head house property, then such loss can be adjusted against the income from any of the other heads i.e. salary/ business or profession/ capital gains/ other sources.

3. Take maximum advantage of House Rent Allowance (HRA)

If you are a salaried employee, then you can save tax by deducting the HRA exemption amount from the total income. HRA is the allowance given by the employer to the employees to meet the rental expenditure of their accommodation.

For availing the benefits of HRA, you need to -

1. be a salaried employee

2. stay in a rented house

3. have HRA as a part of your salary

HRA is partially or wholly exempted from tax.

The minimum of the following is exempted from tax-

• HRA actually received from the employer
• Rent paid - 10% of the basic salary
• 50% of the basic salary for employees living in metro cities and 40% of the basic salary for employees living  in non-metro cities

This is how you can save tax

If you are staying in a rented accommodation in Mumbai and pay rent Rs 30,000. Your basic salary is Rs 80,000 and you receive HRA of Rs 25,000.

Then the least of the following will be exempted from tax:

1. HRA received i.e. Rs 25,000

2. Rent paid - 10% of the basic salary i.e. Rs 22,000

3. 50 % of the basic salary i.e. Rs 40,000

Least of the above is Rs 22,000 and this amount is removed from HRA and is not taxed at all.

Thus, the balance of Rs 3,000 is taxable (Rs 25,000 – Rs 22,000)

4. Standard Deduction

If you are a salaried employee, make sure that you take the benefit of standard deduction of Rs 40,000. Budget 2018 reintroduced standard deduction of Rs 40,000 for the salaried individuals which is applicable to the FY 2018-19 (it was repealed in the year 2005). It replaced the medical allowance of Rs 15,000 per annum and transport allowance of Rs 19,200 per annum. The amount of standard deduction i.e. Rs 40,000 is straightaway subtracted from your gross salary, irrespective of the actual expense incurred by you.

There's a piece of good news for all the salaried folks!!!

From FY 2019-20, the Government has proposed to increase the standard deduction from Rs 40,000 to Rs 50,000.

This means more tax saving for you all!!!

5. Invest in the National Pension Scheme (NPS)

Most of us are aware of the fact that, under section 80C, we can get a tax deduction on our investment in NPS, up to the limit of Rs 1,50,000. But, you may find it surprising that you can claim a deduction of up to Rs 50,000 on your contribution to NPS under section 80CCD(1b). This deduction of Rs 50,000 is available to an individual over and above the deduction of Rs 1,50,000 under section 80CCD(1b). Thus, the maximum limit of deduction on NPS is Rs 2,00,000.

Do not depend completely on section 80C for saving tax. There are lots of ways and means to save tax apart from section 80C like the ones mentioned above. Hence, if you are planning to save taxes, explore the above-mentioned tips along with section 80C and save your tax.But you might fail to claim the tax benefits in the absence of proper knowledge and procedures. So, you should take help of tax experts for this job. We have a team of in-house tax experts who can accurately file your tax returns online while giving you maximum tax benefits.