Income Tax talk: What are the tax saving options beyond Section 80C?

Tarun Kumar

It is that time of the year when taxpayers are looking for options to save their income tax liability as individuals have to make the investment before March 31, 2018 to claim the deduction in the financial year 2017-18. Most taxpayers are aware of deductions under Section 80C of the Income Tax Act, 1961, where the maximum limit of deduction is Rs 1,50,000. In this article, we will discuss the deduction available under various other sections. You can use these tools to further reduce your taxable income.

Section 80CCD: NPS contribution. Tax deduction for contribution to National Pension System is applicable for a salaried employee and a self-employed individual. Employer and employee contribution not exceeding 10% of salary in each case is eligible. In any other case, 20% of gross total income in the previous year. Maximum tax deduction available is Rs 50,000.

Section 80CCG: Investment in equity savings scheme. It is applicable to an individual who is resident in India. The quantum of deduction is 50% of the amount invested or Rs 25,000 whichever is less. However, there was an amendment in the Finance Act 2017 where no deduction u/s 80CCG shall be allowed from AY 2018-19. However, an assessee who has claimed deduction under this section for AY 2017-18 and earlier assessment years shall be allowed deduction till the AY 2019-20 if he is otherwise eligible to claim the deduction as per the provisions of this section. Section 80D: Medical insurance premium. Applicable to an individual or HUF whether resident or non-resident, the quantum of deduction for individual is Rs 25,000 for himself and his family plus Rs 25,000 for parents. In case of HUF, the maximum deduction is Rs 25,000. This limit is Rs 30,000 where the policyholder is the senior citizen.

Section 80E: Higher education loan Applicable to individual whether resident or not, deduction can be claimed on the actual interest amount paid for higher education loan. Section 24B: Interest on housing loan. Interest paid on home loan can earn tax deductions up to Rs 2 lakh a year under Section 24B. However, the home purchase or construction should be finished within three years from the end of the financial year during which the loan was taken.

Section 80EE:Interest on home loan For a first-time home buyer, maximum deduction available is `50,000 for the assessment year beginning April 1, 2017 and subsequent assessment years. To claim the deduction, the maximum value of the property should not exceed Rs 50 lakh and the home loan amount below Rs 35 lakh. Section 80G: Donations to charitable institutions. Quantum of deduction is 100% or 50% of eligible donations. In some cases, the maximum allowable deduction is 10% of adjusted gross total income. Finance Act 2017 amended Section 80G so as to provide that no deduction shall be allowed under Section 80G in respect of donation of any sum exceeding Rs 2,000 unless such sum is paid by any mode other than cash. Earlier this limit was Rs 10, 000. The government has taken this step in order to provide cashless economy and transparency. Section 80GG: Rent paid. Aplicable to an individual only, the maximum amount of deduction is Rs 5,000 per month. Section 80TTA: Interest in savings account. Applicable to individual or HUF, quantum of deduction is up to Rs 10,000.