Posted on: January 13, 2017

2-Minute Guide to Tax Savings Options Beyond 80C

Guide to Tax Savings

When it comes to tax saving investment options, Section 80C of the Income Tax Act 1961 definitely tops our mind. Rightly so too, as this section includes a wide range of tax saving investment option ranging from ELSS tax saver mutual funds and PPF to life insurance and home loan principal repayment. However, the cumulative tax savings benefit across all options under 80C is only Rs. 1.5 lakhs per fiscal. So it is only natural that those with high income seek out additional tax saving options that can help them save beyond this limit. In the following sections, we will discuss some of the other lesser known sections and investments that can help you save tax on your hard-earned money.

Section 80D

This section allows for deductions related to medical insurance and various medical expenses. For starters, the premium paid for medical insurance is tax deductible under this section. For individuals, the limit is currently Rs 25,000, while uninsured super-senior citizens (individuals aged above 80 years) can claim tax deduction of up to Rs. 30,000 against medical expenses incurred during the financial year. Additional subsections of 80D feature tax rebates for differently-abled individuals and dependant relatives. Moreover, section 80D also features a provision for tax rebate of up to Rs. 5,000 per year on the expenditure incurred for performing diagnostic tests.

Section 80E

The primary tax saving option in this section is the interest paid in lieu of repayment of an education loan taken for pursuing higher education. This education loan tax deduction does not have a pre-defined limit and is applicable to education loans taken by the tax payer, spouse, dependent children or a student under the guardianship of the tax payer. A separate sub-section 80EE is also available which provides additional tax savings to those who have taken a home loan not exceeding Rs. 35 lakhs for their first home valued up to Rs. 50 lakhs.

Section 80G

This section of the IT Act provides tax exemptions for various donations that you may have made during the financial year. Section 80G also specifies a list of charities and trusts that you can make donations to in order to avail 100% or 50% tax deduction on the total amount donated. The 80GG subsection includes tax exemption provisions for the payment of rent if you are living in rented accommodations.

Section 80I

This section provides tax deduction benefits to self-employed individuals who earn profits from ownership and operation of businesses operating in sectors such as infrastructure, telecommunications or power generation and distribution. This tax rebate is also available to businesses and business owners who are engaged in developing Special Economic Zones (SEZ) and industrial parks within India. This rebate is currently available for a period of 10 years during the initial 15 years from the inception of the business.

Section 80Q

This section enables assessees to receive tax deductions with respect to profits/gains obtained from publishing of books. These profits may be derived from publication and printing of books within India and maximum deduction allowed is up to 20% of the total profits obtained by the publisher. This section was incorporated through an amendment in 1991 of the 1961 IT Act.

Section 80R

This section allows up to 75% tax exemption on any and all remuneration received by Indian residents from foreign sources provided they were working in the capacity of teacher or professor overseas at the time of receiving the said remuneration. It is mandatory that such remuneration be received from a foreign university or educational institution in order for this exemption to be applicable.

Section 80U

In some ways, 80U may be considered an extension of section 80DD as it provides some additional tax exemption benefits to differently-abled individuals. The maximum deduction available to such individuals is Rs. 1.25 lakhs annually, which is in addition to any  and all deductions available under section 80C, D, etc. What’s more there is no need for any insurance premium receipts or medical bills to be submitted in order to claim deductions under Section 80U.

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  • ELSS (Equity Linked Saving Scheme) is one of the best investment options fo saving tax as well as growing wealth. However, it does have a lock in for 3 years. So after 3 years the amount redeemed will be tax free. The only difference between the ELSS funds and other equity funds is that, ELSS are the only type of funds that are allowed deduction under section 80C up to the maximum limit of Rs 150000.

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