An important question : How can salaried individuals save on taxes?
It’s common that at the end of a financial year, many taxpayers hurriedly indulge into investments to minimize taxes. However, without all the required knowledge it can land a person into troubled scenarios. Tax related saving options does not only refer to the Section 80C. There are 9 other tax saving options. Therefore, when you calculate your tax liabilities you should consider all these options for tax benefits. In this articles, we present to you the 9 tax saving options other than Section 80C. Let’s begin with the Section 80D.
Section 80D gives tax benefits for mediclaim policies. It includes the premium towards medical insurance policies for a person & his family members. This medical insurance policy covers an individual’s medical expenses. For each individual, rupees 15, 000 is the maximum amount which is tax free. However, for a senior citizen maximum limit is Rs. 20,000. When you pay your parent’s premium amount (dependent on you or not), you are liable to deduct up to Rs. 15,000 extra from your income.
Consider you pay a premium towards a financial institution for the medical expenses of a physically disabled person. The institution must receive due recognition from the Income Tax Department. In such a case, as per Section 80DD of the Income Tax Act, you can receive tax exemption. However, the dependent person should be only your spouse, parents, siblings or children. You can reduce a maximum of Rs.50, 000 from your income every year if the person suffers from 40% impairment. Similarly, the maximum amount is Rs.1 lakh if the person suffers 80% impairment. In order to avail this tax benefit you should provide the medical certificate to the concerned authority along with your total income. The medical certificate should be issued by a recognized medical authority
You can reduce a maximum of Rs.40, 000 from your income if you have paid towards treatment of you & your family members. A senior citizen can reduce up to Rs. 60,000 or the actual medical expense paid. Again to avail this benefit you should submit an approved medical certificate from the doctor who works at a government hospital.
Section 80E covers the tax benefits for the interest paid on education loan for higher education. You can apply for an education loan for your wife, husband, children or minor. A person can also apply for a loan as a legal guardian on someone’s behalf. You can receive tax benefits up to eight years or till the interest is fully paid. This deduction is only applicable for higher studies like full-time postgraduate or graduate course in management, engineering or applied sciences. However, since 2011 the Income Tax department has extended its scope to cover all areas including vocational studies. However, you cannot receive tax exemption for part-time courses.
Section 80G gives tax benefits for those who donate towards various organizations. These donations are done to help the poor and needy. It can refer to a trust, a charitable institution or other approved educational & charitable institutions. You can receive tax exemption from 50% to 100% on your donations. National Defence Fund, National Foundation for Communal Harmony, Prime Minister Drought Relief Fund, Prime Minister’s National Relief Fund & National Children’s Fund are some of the organizations which are eligible to give you tax benefits.
Section 80GG covers the tax benefits for rental allowances. If a self-employed or salaried person is not granted an HRA (house rental allowance), he can claim the same under Section 80GG. However, it’s necessary that you, your children or spouse don’t own any residential place in India or abroad.
Section 80GGC gives tax benefit for those who contribute money towards an electoral trust or political party.
Section 80U gives tax benefit for those who suffer from specific disabilities. A person who suffers from 40% of ailments such as blindness, low vision, mental illness or mental retardation can receive tax exemption. The exempted amount is Rs. 50,000 which is irrespective of the incurred expense. In case of a severe disability the maximum tax free amount is Rs.1 lakh.
The Finance Act paved way for Section 80CCG in 2012. This section offers 50% tax benefit to fresh investors who have invested up to rupees 50,000 & who have a GTI of Rs.10lakhs or less than that. It’s introduced to encourage budding investors who are new into equity markets. However, you can benefit from the same only once in your life.
Hence, now you know the nine tax saving options other than Section 80C to avail optimum tax benefits.
It’s important to begin your tax planning much before the 31st March of every year. Also it’s important to file your tax returns before 31st of July every year. This will prevent you from the troubles of last minute planning of tax. In order to prevent any kind of deductions and misconceptions, it’s advisable that you give your employer the details of your loans & tax saving investments. You should carefully check your Form 16 which you receive from your employer at every year’s end.