Income Tax Return: 4 lesser-known tax-saving options beyond Section 80C

Saving money while filing for income tax is the main goal of a taxpayer. Section 80C is most talked about when it comes to tax-saving, but did you know there are several other sections too that can help taxpayers save their hard-earned money? In this article, ZeeBiz will unveil four lesser-known tax-saving options beyond Section 80C. 

1. Section 80CCD 

Section 80CCD provides tax benefits to individuals contributing towards the National Pension Scheme (NPS) or the Atal Pension Yojana (APY). 

There are two sub-sections under it: 

a. 80CCD(1): 

This sub-section allows an individual taxpayer to claim a deduction for the amount they contribute towards their NPS account. The deduction limit under this clause is part of the overall limit of Rs 1.5 lakh under Section 80C. Additionally, for employees, contributions made by their employer to the NPS account are also eligible for deduction under this section, up to 10 per cent of their salary (basic salary plus dearness allowance) or 20 per cent of gross income for self-employed individuals.

b. 80CCD(1B):

This subsection allows an extra deduction of up to Rs 50,000 over and above the amount set by Section 80CCD(1). This deduction is only available for contributions made by individual taxpayers to their NPS accounts.

Thus, the maximum deduction available under Section 80CCD is Rs 2 lakh (Rs 1,50,000 + Rs 50,000). 

2. Section 80D

Section 80D allows individual taxpayers to claim deductions on health insurance premiums for themselves, their spouses, children, and parents. The idea of this section is to encourage people to obtain health insurance for themselves and their families.

Here is a breakdown of the deductions available under Section 80D:

It's important to note that the maximum total deduction of Rs 25,000 (or Rs 50,000 for senior citizens) can be claimed under Section 80D for premiums paid towards health insurance, including preventive health check-up expenses.

3.80E

Section 80E allows individual taxpayers to claim a deduction on the interest paid on loans taken for higher education for themselves, their spouse, or their children. 

Things to know before applying for 80E:

-There is no exemption limit under this section.

-Deductions are applicable only on the total interest paid and not on the principal repayment.

-A waiver under Section 80E is allowed only in the first eight years of the loan repayment and taxable thereafter.

4. Section 80GG

Section 80GG is particularly beneficial for individuals who are self-employed or salaried employees not receiving House Rent Allowance (HRA) from their employers. It allows them to claim a deduction for the rent paid for their accommodation, subject to certain conditions.

Under this investment option, other than 80C, the deduction under Section 80GG is the least of the following three amounts:

>>25 per cent of the total income of the taxpayer for the financial year.

>>Rent paid minus 10 per cent of the total income.

>>Rs 5,000 per month.

For instance, if an individual's annual income is Rs 7 lakh and they pay Rs 10,000 in monthly rent. The calculations proceed as follows:

>>25 per cent of the total income of the taxpayer for the financial year (25% of Rs 7 lakh = Rs 1,75,000)

>>Rent paid minus 10 per cent of the total income. 

Rent paid is Rs 10,000x12 months=Rs 1,20,000 

>>10% of Rs 7 lakh= Rs 70,000

1,20,000-70,000= Rs 50,000.

>>Rs 5,000 per month.

Rs 5000x12=60,000.

The least among the three conditions is Rs 50,000. Hence, the exemption under Section 80GG amounts to Rs 50,000.

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