Taxpayers mostly use instruments under section 80C to save tax. But, apart from this, there are many other options to save tax.
Section 80C of the Income Tax Act is most commonly used for tax-savings. About a dozen instruments come under this. These include life insurance policies, mutual funds’ ELSS, PPF, NPS, Sukanya Samriddhi Yojana, etc. The facility of claiming deduction on tuition fees of two children is also available under Section 80C. Overall, a deduction of up to Rs 1.5 lakh can be claimed in a financial year under 80C. If you use this entire limit, then Moneycontrol is telling you about 5 such methods, which are different from Section 80C.
1. Tax savings from contribution in NPS
The National Pension System (NPS) is one of the instruments under Section 80C of the Income Tax. Under this, a contribution of Rs 1.5 lakh annually can be claimed as tax deduction in NPS. Apart from this, tax can be saved by contributing an additional Rs 50,000 to NPS under section 80CCD (1B). Taxpayers falling in higher tax slabs can use this for tax savings. Taxpayers falling in the 30 percent tax bracket can make tax savings of Rs 15,600 by using this section. This amount includes 4 percent education cess.
2. Deduction on health policy premium
Under Section 80D of the Income Tax Act, deduction is allowed on the premium of health policy. This means that a person can buy a health policy for himself, his wife and children and claim deduction on its premium. Apart from this, he can also buy a health policy for his parents and claim deduction on its premium. Deduction is allowed on a premium of Rs 25,000 per year on health policy for himself and his family. If the age of the parents is less than 60 years, then by buying a policy for them, a deduction of an additional Rs 25,000 can be claimed. If the parents are senior citizens, then deduction can be claimed on a maximum premium of Rs 50,000.
3. Tax savings on education loan
Nowadays, taking a loan for higher education has become common. Deduction is allowed under Section 80E on the interest of education loan. Deduction on interest on education loan can be claimed by either the student or his/her parents. It depends on who pays the home loan EMI. There is no limit to claim deduction in a financial year under this section.
4. Deduction on home loan interest
Deduction can be claimed on interest payment of home loan. This is allowed under section 24(B) of the Income Tax Act. A person taking a home loan can claim a maximum deduction of Rs 2 lakh on interest on home loan in a financial year. The condition is that this loan has been taken to buy a house for self-residence. If the house is not being used for self-residence and is given on rent or is considered to be given on rent, then there is no limit to claim deduction on the interest on its loan.
5. Deduction on medical expenses of a disabled family member
If a family member is disabled, then deduction can be claimed on his/her medical expenses. This is allowed under section 80DD. The condition is that the disabled person should be financially dependent on you only then you can claim deduction on his/her medical expenses. In the income tax rules, dependents include spouse, children, parents and siblings.
