From saving for your retirement to keeping your family protected from medical bills, these tax-saving avenues are a perfect mix of savings, protection and for creating assets.
Tax Saving other than 80C: If you are looking for tax-saving options other than Section 80C, there are quite a few different avenues available for you. From saving for your retirement to keeping your family protected, from medical bills to owning a home, these tax-saving avenues are a perfect mix of saving, protection and creating assets. Even the funds lying in your savings account or income earned on deposits can provide you with the tax benefit.
Here we look at five such non-section 80C tax saving options:
National Pension Scheme tax benefit
As per section 80CCD(1B), the taxpayer either employed or self-employed is allowed a deduction on the amount contributed towards NPS up to Rs 50,000. The deduction under Section 80CCD(1B) is over and above the deduction availed under Section 80CCD(1), however, the same amount cannot be claimed both under both the sections.
Health insurance premium tax benefit
Currently, for those who are below age 60, the limit stands at Rs 25,000. This includes self, spouse and children and the health cover could be a Mediclaim, Family Floater, Critical Illness etc. the premium paid towards any of these schemes gets deducted from the gross income under section 80D. For those who are above age 60, the limit is Rs 50,000. If both the individual taxpayer and the parent are more than 60 years, the deduction can be availed up to Rs 1 lakh. Any payment made towards preventive health check-ups up to Rs 5,000 also qualifies for tax benefit but it has to be within the overall limit.
Education loan repayment
The tax benefit on interest paid in an educational loan qualifies for an income tax deduction when the loan is for higher education. As per the Income Tax Act, “higher education means any course of study pursued after passing the Senior Secondary Examination or its equivalent from any school, board or university recognised by the Central Government or State Government or local authority or by any other authority authorised by the Central Government or State Government or local authority to do so.”
The interest on loans taken for higher education is eligible for deduction from the total income under Section 80E with no monetary ceiling on the interest that can be claimed as a deduction. The loan needs to be taken from a financial institution or an approved educational institution for educating oneself, children or even spouse. The deduction shall be allowed for the initial assessment year and seven assessment years immediately succeeding the initial assessment year or till the entire interest is claimed, whichever is earlier.
Interest payment of a home loan
In a home loan EMI, the principal portion repaid during the year qualifies for deduction under section 80C within the cap of Rs 1.5 lakh, while the interest paid is deductible up to Rs 2 lakh under section 24. The tax benefit is available only if the possession of the house is within 5 years from the date of the loan.
Income from deposits
Under, Section 80TTB of the income tax act, interest income earned from deposits qualifies for a deduction from one’s gross total income. The maximum limit under section 80TTB is Rs 50,000 in a year. This section is available to senior citizens since April 1, 2018. Importantly, the benefit of section 80TTA, which allows a deduction of the interest income (up to Rs 10,000) from the savings account, is not available to the senior citizens.