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Reached Section 80C limit? You can still save more income tax!

Most of us try to maximize our investments in section 80C instruments in order to maximize our tax savings. But the limit of investment under section 80C is only Rs. 1 Lakh.

Here are some other ways to save income tax.



Under Section 80C of the Income Tax (IT) act, you can invest in various instruments like:

You can claim deduction of the invested amount from your income, and save income tax.

(Please read “Saving Income Tax – Understanding Section 80C Deductions” to know more about claiming deduction under Sec 80C).

But the limit for section 80C deductions is Rs. 1 Lakh – so the maximum income tax that you can save is Rs. 30,000 if you fall in the highest tax bracket of 30%.

(Please read “Income Tax (IT) Slabs / Brackets” to know the latest income tax brackets and corresponding tax rates).

Are there any more deductions available apart from those under section 80C? Can you save more tax?


Yes there are – and there are lots of them!

The deductions, including section 80C deductions, come under Chapter VIA (Chapter 6A). Let’s have a look at some of the more generally applicable deductions, so that you can claim these deductions, and reduce your income tax liability further.

Let’s also have a look at some of the other (non-deduction) means of saving your income tax.

All the deductions / methods would not be applicable to you – but some definitely would be. If something is applicable to you, please click on the “for more information” link to read an article about that specific deduction – it would contain all the details about the limits, the restrictions, the procedure to be followed (if any) and all other relevant details.

Section 80D: Deduction in respect of medical insurance premia paid

Any amount that you pay as a premium for a medical insurance plan / policy (or Mediclaim, in common terms) is deductible from your income upto a certain limit.

For more details, please read “Insure your health, save your income tax”.

Section 80DD: Deduction in respect of maintenance including medical treatment of a dependent who is a person with disability

If you have a disabled person as your dependent, and you spend for the medical treatment of that person, you can claim certain deduction.

You can also claim deduction if you pay premiums towards buying certain insurance policies for them.

For more details, please read “Have a disabled dependent? Save income tax using section 80DD”.

Section 80DDB: Deduction in respect of medical treatment, etc.

If you have spent on medical treatment of some specified diseases, either for yourself or some of your relatives, you can claim the amount as deductible from your income.

For more details, please read “Deduction of expenses on medical treatment – Section 80DDB”.


Section 80E: Deduction in respect of interest on loan taken for higher education

If you have taken an education loan for yourself or your relatives, and are repaying it, the interest that you pay can be claimed as deductible from your income.

For more details, please read “Income Tax (IT) benefit of an education / study loan – Section 80E”.

Section 80G: Deduction in respect of donations to certain funds, charitable institutions, etc.

Are you philanthropic? Do you donate money to charitable institutions or certain government funds? The donations can be fully or partially deductible from your income.

For more details, please read “Make donations, save income tax – Section 80G”.

Section 80GG: Deductions in respect of rents paid

Do you pay rent, but do not get a house rent allowance (HRA) as a part of your salary? Are you self employed or are a businessman, and pay rent? You can claim the amount as deduction, subject to certain conditions.

For more details, please read “Deduction for rent paid – Section 80GG”.

Section 80U: Deduction in case of a person with disability

Do you have a disability or are handicapped? You can claim deduction under section 80U.

For more details, please read “Are you disabled? Save income tax under section 80U”.


Other avenues of saving income tax

Apart from the Chapter VI-A deductions, there are some other avenues of saving your income tax. Here are a few:

Exemption of House Rent Allowance

If you are salaried, get a house rent allowance as a part of your pay, and actually pay rent, you can claim the HRA as exempt from income tax under certain conditions and upto a certain limit.

For more details, please read “Income Tax (IT) treatment of House Rent Allowance (HRA)”.

Exemption of Leave Travel Allowance (LTA) or Leave Travel Concession (LTC)

If you are salaried, get LTA / LTC, and actually avail of leave in order to travel, you can claim the LTA / LTC as exempt from income tax under certain conditions and upto a certain limit.

For more details, please read “Income tax treatment of leave travel allowance / concession (LTA / LTC)”.

Interest repayment of housing loan

If you have taken a home loan and are repaying the EMIs, you can get income tax benefit from the interest you pay on the borrowed amount. You can also get tax benefit from any pre-EMI paid.

For more details, please read “Income Tax (IT) Benefits of a Home Loan / Housing Loan / Mortgage”.

Conclusion

There are many avenues of saving income tax – Section 80C is just one of them…

Happy income tax saving!

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