How Can You Save Taxes Outside Section 80C

If you have some experience with investing, you will know that taxation is a deterring factor to your growing wealth. Thus, maximising tax deductions is an important aspect that you need to master to achieve optimal growth. The Income Tax Act (ITA) has provisions like section 80C that guide you on claiming deductions and exemptions on your investments. However, there are other sections of the Act that help you save on taxes even if you do not claim deductions or exemptions u/s 80C.

• Apart from section 80C, you can also claim tax deductions under sections 80CCC, 80CCD, and 80D.
• While claiming tax deductions under section 80CCC, check if your payments to the relevant entities comply with section 10 (23AAB), which deals with pension schemes.
• Under section 80CCD, you can claim tax deductions on your contribution (and your employer’s) to the NPS.
• Under section 80D, claim tax deduction on premiums paid to health insurance policies and contributions to schemes like the Central Government Health Scheme (CGHS).

Tax deduction under section 80C can be claimed if you are an individual and not a company, LLP, or a partnership firm. A maximum tax deduction of Rs. 1,50,000 can be claimed in a financial year on your gross total income if you fulfil the said criterion.

These are the sections that offer you provisions for tax deductions apart from section 80C.

Section 80CCC

You are eligible for tax deduction under section 80CCC if:

• You have invested a sum from your taxable income in a pension plan offered by an insurer, such as the renewal of a pension policy.
• You must ensure that these payments comply with the provisions of Section 10(23AAB), which relates to pension schemes maintained by insurers.
• Taxes are levied on the pension income you receive from the policy. While contributions to the pension fund are deductible, any pension or annuity payments you receive are taxable.
• If you discontinue the policy, the surrender value or the amount withdrawn will be subject to tax as per the prevailing tax laws.

Section 80CCD

Under this section, you will be eligible for tax benefits if:

• You have invested in the National Pension System (NPS), and your contributions are eligible for tax deductions..

• Under Section 80CCD(1), you can claim a deduction of up to 10% of your basic salary plus dearness allowance (DA) (or 20% of gross income for self-employed individuals). However, the total deduction under Section 80C, 80CCC, and 80CCD(1) should not exceed Rs. 1.5 lakhs.
• Section 80CCD(1B) offers an additional deduction of up to Rs. 50,000 on contributions to NPS, which is over and above the Rs. 1.5 lakh limit.
• Section 80CCD(2) allows employees to claim a deduction on their employer’s contributions to NPS,, up to 10% of basic salary plus DA (or 14% for Central Government employees).
• You can combine deductions under Section 80C and Section 80CCD(1B) to avail a maximum tax deduction of Rs. 2 lakhs.

Section 80D

If you are a member of a Hindu Undivided Family (HUF), you are eligible for tax deductions under this section in the following ways.

Health insurance premiums:

• If you have paid health insurance premiums for yourself, your spouse, or children, you are eligible for a tax deduction of up to Rs. 25,000.
• If the health insurance is for your parents who are above 60 years old, you can claim an additional deduction of up to Rs. 50,000. Parents can also claim this benefit independently for their own insurance premiums if they are paying themselves.

Central Government Health Scheme (CGHS):

• You can claim a tax deduction of up to Rs. 25,000 for contributions made to the Central Government Health Scheme (CGHS) or any other notified equivalent scheme. This deduction is applicable only for self and family (spouse, dependent children).

Preventive health check-ups:

• You can claim up to Rs. 5,000 within the overall limit of Rs. 25,000 or Rs. 50,000 (depending on the case) for preventive health check-ups. This amount can be paid in cash.

Other medical expenses:

•  While Section 80D covers preventive health check-ups, it does not mention eligibility for deductions on medical purchases like hearing aids or contact lenses. These are not covered under Section 80D unless related to a specific health insurance plan.

Section 80G – Donations to Charitable Institutions

This section allows tax deductions for donations made to specified charitable institutions. However, cash donations exceeding Rs. 2,000 are not eligible for deduction; such contributions must be made via non-cash modes to qualify.

Section 80GG – Rent Paid Without HRA

Taxpayers not receiving House Rent Allowance (HRA) can claim deductions under Section 80GG for rent paid. The deductible amount is the lowest of the following: Rs. 5,000 per month, 25% of total income, or actual rent paid minus 10% of total income.

Section 80GGA – Donations for Scientific or Rural Development

Under Section 80GGA, individuals can claim tax deductions for donations made to notified institutions engaged in scientific research or rural development, subject to the specified conditions.

Section 80GGC – Donations to Political Parties

Contributions made to registered political parties or electoral trusts are eligible for tax deductions under Section 80GGC. However, donations made in cash are not allowed as deductions.

Section 80TTA – Interest on Savings Accounts

Individuals and HUFs (excluding those eligible under 80TTB) can claim up to Rs. 10,000 as a deduction on interest earned from savings accounts held with banks, post offices, or cooperative societies.

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Conclusion

While Section 80C offers significant tax savings, there are additional avenues like Sections 80CCC, 80CCD, and 80D that can further reduce your taxable income. Contributions to pension plans, NPS (including an extra Rs. 50,000 deduction under 80CCD(1B)), and health insurance premiums provide valuable exemptions. By intelligently combining these sections, you can boost long-term savings, secure your future, and optimize your tax outflow efficiently.