14 Effective Tax Saving Options Other than Section 80C

When it comes to tax planning, most individuals are familiar with Section 80C of the Income Tax Act, which offers attractive deductions on investments like life insurance premiums, provident fund contributions, and more. While this section is undoubtedly beneficial, many taxpayers may not be aware of the plethora of other tax-saving options available to them.

In this blog, we will delve into 14 tax-saving alternatives beyond Section 80C that can help you maximize your savings while reducing your tax liability.

Income Tax Exemption Limits for Different Sections

Top 14 Tax-Saving Options other than Section 80C

1. Section 80CCD: Tax Deduction for Contributions to National Pension Schemes (NPS)

• Deduction For: Contributions to National Pension Schemes (NPS)
• Deduction Limit: ₹50,000
  

Under Section 80CCD of the Income Tax Act, individuals can claim tax deductions for contributions made towards National Pension Schemes (NPS). This provision applies to employees, employers, and voluntary self-contributions.

Taxpayers can avail an additional deduction of up to ₹50,000 for self-contributions to NPS or Atal Pension Yojana under Section 80CCD(1b). This is over and above the overall deduction limit of ₹1,50,000 allowed under Section 80C.

By making contributions to NPS, individuals can reduce their taxable income and encourage savings for their retirement.

Know: How to Open an NPS Account?

2. Section 80D: Tax Deductions for Health Insurance Premiums and Medical Expenses

• Deduction For: Health insurance premiums and medical expenses
• Deduction Limit: Varies based on age and type of taxpayer

Section 80D of the Income Tax Act allows individuals to claim tax deductions for health insurance premiums and medical expenses. The deduction limits vary based on the age and type of taxpayer:

Also Read: Why is it Important to Have a Health Insurance Policy?

3. Section 80DD: Tax Deduction for Expenses on Medical Treatment and Rehabilitation of Disabled Dependents

• Deduction For: Expenses on medical treatment and rehabilitation of disabled dependents
• Deduction Limit: Varies based on the severity of disability

Section 80DD of the Income Tax Act allows individuals to claim tax deductions for expenses incurred on the medical treatment and rehabilitation of disabled dependents. The deduction limits vary based on the severity of disability:

4. Section 80DDB: Tax Deduction for Medical Expenses on Specified Diseases

• Deduction For: Medical expenses on specified diseases
• Deduction Limit: Varies based on age and actual expenses incurred
  
  Section 80DDB of the Income Tax Act allows individuals to claim tax deductions for medical expenses incurred on specified diseases for themselves or their dependents. The deduction limits vary based on the age of the taxpayer and the actual expenses incurred:

5. Section 80E: Tax Deduction for Interest on Education Loan

• Deduction For: Interest on education loan
• Deduction Limit: No specific limit
  
  Section 80E of the Income Tax Act allows individuals to claim tax deductions for the interest paid on education loans. The deduction is available for loans taken for higher education purposes for the taxpayer, their spouse, children, or a student for whom the taxpayer is a legal guardian.

The key points to understand about this section are as follows:

• Applicability: The deduction can be claimed by individuals who have taken loans from recognized financial institutions or approved charitable institutions for higher education courses, both in India and abroad.
• Duration: The deduction can be claimed for a maximum of 8 years, starting from the year of loan repayment.
• Usage: The deduction can be claimed by the individual who is repaying the loan and should be mentioned in the ‘Income from Other Sources’ section of the income tax return.
• No Double Deduction: It cannot be claimed along with any other deduction for the same interest payment under any other section of the Income Tax Act.

6. Section 80EE: Deduction for New Home Loan Interest Payments

Deduction Limit  – ₹50,000 | Complementary benefits with Section 24(b)

Section 80EE is a provision under the Income Tax Act of India that offers tax benefits to first-time homebuyers. It allows for an additional deduction of up to Rs. 50,000 on the interest paid on a home loan. This deduction is in addition to the Rs. 2 lakh deduction available under Section 24(b) for home loan interest. To be eligible, the loan must be sanctioned between April 1, 2016, and March 31, 2017, and the property value should not exceed Rs. 50 lakh. The deduction can be carried forward for up to 8 years if not fully claimed. The property must be self-occupied and the taxpayer should not own any other residential property.

Also Read: What are the Documents Required for Home Loan in 2024?

7. Section 80G: Deduction For Donations Made to Charitable Organisations

• Deduction For: Donations Made to Charitable Organisations
• Deduction Limit: No Limit

Section 80G of the Income Tax Act allows taxpayers to claim deductions for donations made to registered charitable organizations. This provision applies to both individuals and companies.

Under Section 80G, there is no limit on the deduction amount for donations made through digital modes such as bank transfers. This means that taxpayers can claim the entire contribution made to a charitable organization as exempt from taxes.

However, for cash donations, there is a limit. Cash contributions up to ₹2,000 per year are eligible for exemption from tax calculations. It is important to note that this exemption is applicable only if the donations are made to registered charitable organizations.

8. Section 80GG: Deduction for Rent Paid

Deduction Limit: The deduction limit under Section 80GG is the least of the following amounts:

• Rent paid minus 10% of the total income.
• ₹5,000 per month.
• 25% of the total income.

Under Section 80GG, individuals can claim a deduction for the rent paid for their residential accommodation. This deduction is applicable if the individual does not receive HRA from their employer and does not own a residential property in the location where they reside or work.

Also Read: Why you need Rent Receipts for Income Tax

9. Section 80GGA: Donations made towards scientific research or rural development

Deduction Limit: The deduction limit under Section 80GGA is the total amount donated or ₹10,000, whichever is lower.

Deduction for Donations: Under Section 80GGA, individuals and businesses can claim a deduction for donations made to entities engaged in scientific research or rural development. The donation must be made to an approved institution or organization.

To claim the deduction, the donation should be made to an entity that is approved by the prescribed authority for scientific research or rural development purposes.

10. Section 80GGB: Donations made by Indian companies to political parties or electoral trusts.

Deduction Limit: No limit

Under Section 80GGB, Indian companies can claim a deduction for donations made to political parties or electoral trusts. This provision aims to encourage contributions towards political activities and electoral processes.

11. Section 80GGC: Contributions made by individuals towards political parties

Deduction Limit: The entire amount contributed to a registered political party or electoral trust is eligible for deduction under Section 80GGC.

Under Section 80GGC, individuals can claim a deduction for contributions made to registered political parties or electoral trusts. This provision aims to encourage individuals to participate in the political process and support political parties.

12. Section 80TTA: Deduction on the interest earned on savings accounts

Deduction Limit: ₹10,000 

Under Section 80TTA, individuals and HUFs can claim a deduction of up to ₹10,000 on the interest earned from savings bank accounts. This deduction is applicable for interest earned from all types of savings accounts, including those held with banks, cooperative societies, and post offices.

13. Section 80U: Deduction for individuals with disabilities

Deduction Amount: The deduction amount under Section 80U depends on the extent of the disability. The deduction limits are as follows:

Section 80U of the Income Tax Act of India provides a deduction for individuals with disabilities. This section allows individuals with specified disabilities to claim a deduction on their total income.

14. Section 24(b): Deduction on the interest paid on a home loan

Section 24(b) of the Income Tax Act allows individuals to claim a deduction on the interest paid on a home loan from their taxable income. This deduction is available for loans taken for the purchase, construction, repair, or reconstruction of a house property.

• The deduction is based on the accrual basis, meaning it can be claimed even if the interest has not been fully paid during the financial year.
• For self-occupied properties, the maximum deduction limit is ₹2 lakh (₹1.5 lakh for the financial year 2020-21).
• If the property is not self-occupied or is rented out, there is no upper limit for the deduction, and the entire interest paid can be claimed.
• The loan must be taken from recognized financial institutions.
• It’s important to note that the deduction is only for the interest component of the home loan, not the principal repayment.

Detailed guide on Income Tax Deductions Under Section 80C to 80U

Exploring tax-saving options beyond Section 80C can help you reduce your tax burden. The 14 options discussed in this article provide valuable alternatives for maximizing deductions and optimizing your overall tax liability. Consult a tax professional or financial advisor to understand eligibility, limits, and documentation requirements before investing or claiming deductions. Taking informed steps will ensure you make the most of these opportunities and save on taxes.