In the world of tax savings, Section 80C is the most commonly known and most utilized. It is a gold mine for tax savings. Certain famous investment instruments like ELSS, PPF, life insurance premiums, and the principal component of home loans are eligible for a deduction under 80C.
There are multiple other instruments in addition to these. The overall limit of Section 80C is Rs 1.5 Lakhs. But most people are already aware of Section 80C.
What if you have already claimed 80C entirely? Is that the maximum you can save in taxes? Not exactly. The Income Tax Act of India provides more avenues from which one can save taxes.
Here are 5 tax saving options other than 80C.
Section 80D
Section 80D offers a deduction on premiums paid for Health Insurance. This covers both plans taken individually or a family floater taken to protect your family.
You will also get a higher limit if you’ve paid premiums for your parent’s health insurance policies.
The limit for premiums paid towards an individual cover or a family floater for spouse and kids is Rs 25,000.
But, in case you have also paid for your parents, you can claim another Rs 25,000 increasing the total deduction to Rs 50,000.
Please note: In this example, all ages of people are assumed below 60.
Also Read: Section 80D: Save taxes while safeguarding your health!
Section 24B
Section 24B allows you to claim a deduction on the interest component of your home loan. An EMI has two components, one portion is the principal amount of the loan, and the other is the interest component.
You can claim the principal component under Section 80C for a home loan. Section 24B will allow a deduction on interest paid.
You can avail a maximum of Rs 2 Lakhs as a deduction in a particular financial year.
Section 80E
If you’re a student, have you taken a loan to fund your higher education? Or do you plan on taking one in the future?
In that case, Section 80E can be a game changer for you. Under this section, you can avail a deduction on the interest component of your education loan. Do note that no deduction is available for the principal component.
The Best Part
There is no limit on the amount of deduction. Whatever amount you’ve paid as interest for that particular financial year can be claimed as a deduction. You can avail of this deduction if you’ve taken an education loan for yourself, your spouse, or your children.
NPS Section 80CCD(1B) + 80CCD(2)
The National Pension Scheme is a government scheme that helps individuals save towards retirement. It is market-linked and offers a higher return compared to debt products.
The Income Tax Act allows a deduction for any contribution towards NPS. You may already know that you can claim up to Rs 1.5 Lakhs under Section 80C. But not just 80C, you can claim an additional Rs 50,000 under Section 80CCD(1B) for self-contribution to NPS.
This is over and above the Rs 1.5 Lakh limit under Section 80C.
You can also claim a deduction of up to 10% of your Salary if your employer contributes to NPS. This is under Section 80CCD(2) and is again over and above the Section 80C limit.
Also Read: Tax saving for AY 2024-25: Get more out of National Pension System (NPS)
HRA (As part of Salary)
HRA is an allowance issued by employers to their employees for rent accommodation. The HRA you receive is eligible for an exemption under your Income from Salary head itself.
The amount of HRA Exemption allowed is the least of the following:
- Actual amount of HRA Received
- Rent paid minus 10% of Salary (Basic + DA)
- 50% of Salary (Basic + DA) if you live in Delhi, Kolkata, Mumbai or Chennai.
- 40% of Salary (Basic + DA) for those living in non-metros.
Don’t worry, you can instead just use The 1% Club’s HRA Calculator for this.
What are you waiting for? Get right to it and use these 5 tax-saving options other than 80C to maximize your savings this year!
Disclaimer: It’s imperative to acknowledge that all the tax deductions delineated in this article are exclusively applicable under the old tax regime, with two exceptions. Firstly, the deduction for interest on a home loan under Section 24B will be permitted solely for let-out property under the new tax regime. Secondly, the Employer’s contribution to NPS under Section 80CCD(2) will be sanctioned under the new tax regime.
