5 Tax-Saving Options: Among the most popular tax savings options, Section 80C is a standout. For people wishing to reduce their tax responsibilities, Section 80C offers several investment options that are exempted from tax. Certain examples are life insurance premiums, PPF contributions, five-year term deposits, and ELSS schemes.
Your total exemption under Section 80C choices is restricted to 1,50,000 rupees. By adding NPS investments to your deduction (Section 80CCD), you can deduct an extra 50,000, bringing your total deduction to 2 lakhs. But, is this exemption of two lakhs enough for our tax savings?
Hence, know about the 5 Tax-Saving Options Other than Section 80C to reduce your taxable income.
What Other Investments Save Taxes Besides the 80C?
Section 80C of the Income Tax Act of 1961 is its most well-known provision. On a number of loan packages and other investment vehicles, it permits a maximum reimbursement of Rs. 1.5 lakh.
You should know that there are various alternative methods to reduce your taxable income, such as the 80GG of the Income Tax Act. By filing significant income tax returns, using tax-saving methods will enable you to increase your annual savings outside 80C.
Since the Income Tax Act maintains several tax return provisions, A person might not be conscious of the rules at the same time.They might incur losses as a result of unneeded tax payments, which would lower their annual savings.
List of Tax-saving Options Other than Section 80C
Apart from 80C, other tax-saving measures and options fall under the following acts:
1. Interest Earned on Deposits in Savings Accounts
Limitation under Section 80TTA: ₹10,000
Under Section 80TTA, interest accrued on contributions made to savings accounts is fully deductible. However, only up to £10,000 a year may be deducted from taxable income.
If you have many savings accounts with different banks, the total interest earned is taken into consideration and taxed as “income from other sources.”Taxes only apply to amounts that exceed the ceiling at rates based on annual total income. This only applies when annual interest income surpasses 10,000.
2. Amount of Interest Paid on A Student Loan
Section 80E Limit: There is no cap
This provision exempts from taxation any monetary gain used to pay down the interest portion of student loans.This type of student loan could be secured or unsecured depending on the amount required.
The fact that these exemptions only apply to the first eight years of debt repayment should be stressed. Taxes are levied on any additional funds used to offset the interest burden.
Education loans eligible for these deductions must be taken out in the individual’s name. They may be used to cover the expense of the individual, their spouse, or their children’s higher education. That is one of the most popular tax-saving methods, along with the 80C option.
3. Life Insurance Plan Sum Assured Upon Plan Maturity
Section-10 (10D)
Maximum – Total maturity amount
When a life insurance policy matures, or an insured person passes away unexpectedly, under Section 10, The total amount paid out may be claimed as a tax credit(10D).
But if the death benefit is paid after April 1, 2012, and the total value premium expenses are less than the amount promised, tax calculations are not applied to the death benefit.The premium costs must be less than 20% of the entire sum insured if the insurance was obtained before April 1, 2012, to be eligible for section 10 exemptions (10D).
4. Amount of Interest Paid on Mortgages
Limitation under Section 24(b): 2 lakhs
Mortgage interest payments may be exempt from income tax computations under this provision. Providing the construction is finished within five years of the loan tenure, a maximum of 2 Lakh can be claimed as a tax rebate on the interest rate if the house is bought for residential use.
If you choose to rent out the house you recently bought, there is no tax owed on the mortgage interest part.
5. Compensation for Interest forNew Home-Buyers
First-time house purchasers may be eligible for additional interest advantages on home loan EMIs in the amount of 50,000 beyond Section 24(b), providing the property value is less than 45 lakhs. As a result, tax savings other than those allowed by Section 80C of up to 2.5 lacks are now possible.
To qualify for a tax credit on the total amount of income used to pay EMIs under Section 80EEA, however, no prior property should be registered in the applicant’s name at the time of loan application.
6. Life Insurance Plan Maturity Sum Assured
Article 10 (10D)
Limit – Total maturity sum
When a life insurance policy matures or an insured person dies unexpectedly, the total sum assured that is paid out is eligible for a tax credit under Section 10. (10D).
If, however, the death benefit is received after April 1, 2012, and the entire value premium costs are less than the total sum assured, the death benefit is not subject to tax calculations.
To be eligible for section 10 exemptions, the premium expenses for insurance obtained before to April 1, 2012, must be less than 20% of the total sum insured (10D).
Also Read: What is the CSM certification process like?
7. House Rent Allowance Provided Under Section 10 of the Salary Break-Up (13A)
Limit – Identified circumstances
If your pay breakdown includes an HRA component, this section of the Income Tax Act applies to tax benefits under the HRA. Under this programme, a total exemption is worth no less than the sum of the following:
- Actual HRA payments made each year
- 50% of the annual earnings of people who live in big cities
- 40% of one’s yearly earnings for people residing outside of major cities
- Paid annual rent less 10% of base income plus DA
Endnote
As a result, other tax-saving strategies besides Section 80C can significantly boost your overall wealth over time. Tax-Saving Options such as the 80GG of the Income Tax Act also serve as comprehensive investment tools, increasing returns or lowering required expenses.
