For the middle class, tax planning often revolves around Section 80C. While it provides popular deductions like investments in PPF, ELSS, and life insurance, the limit of ₹1.5 lakh can feel restrictive. Fortunately, there are several other tax-saving strategies beyond Section 80C that can significantly reduce your tax burden. Here's a guide to maximizing these benefits.
Tax-Saving Options Beyond Section 80C
1. Health Insurance Premiums (Section 80D)
- Deduction for premiums paid for self, spouse, children, and parents.
- Up to ₹25,000 for individuals under 60.
- An additional ₹50,000 for senior citizen parents.
- Covers preventive health check-ups within the overall limit.
2. Home Loan Interest (Section 24 & Section 80EEA)
- Interest on home loans allows for:
- Deduction up to ₹2 lakh under Section 24 for self-occupied property.
- First-time buyers get an additional ₹1.5 lakh deduction under Section 80EEA, provided conditions are met.
3. Education Loan Interest (Section 80E)
- Deduction for interest paid on loans for higher education without any upper limit.
- Applies to loans for self, spouse, children, or a student for whom the taxpayer is a legal guardian.
4. Donations to Charitable Institutions (Section 80G)
- Deduction for donations made to government-approved charitable organizations.
- Offers either 50% or 100% deduction based on the organization and contribution type.
5. Savings Account Interest (Section 80TTA/80TTB)
- Up to ₹10,000 deduction for interest earned on savings accounts under Section 80TTA.
- Senior citizens get up to ₹50,000 deduction for all types of interest income under Section 80TTB.
6. National Pension System (NPS) Contributions (Section 80CCD)
- Additional ₹50,000 deduction under Section 80CCD(1B) for investments in NPS.
- Employer contributions up to 10% of basic salary are also tax-deductible.
Key Considerations
-
New vs. Old Tax Regime
- Taxpayers should evaluate their income and eligible deductions to choose the best regime.
- The new regime offers lower rates but removes most deductions.
-
Avoid Misguided Investments
- Don't make investments solely for tax benefits; align them with financial goals.
-
Plan Early
- Start planning at the beginning of the financial year to spread investments and maximize returns.
Conclusion
Tax-saving opportunities beyond Section 80C provide diverse ways for middle-class taxpayers to optimize their savings while meeting financial goals. From health insurance to home loans and donations, leveraging these deductions can make a significant difference in your taxable income.
For personalized advice on maximizing your tax savings, connect with
Verotus Finlegal Solutions LLP at 7066336680 or visit Verotus LLP.
