6. Other sections of the IT ACT

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We have seen how we can save taxes using Section 80C, but is that it? Is there no other way to save taxes apart from section 80C? 

Most people are aware of claiming tax deduction of Rs 1.5 lakh under Section 80C of the Income Tax Act, 1961. The right tax-saving investments help most taxpayers, including salaries individuals and professionals, to save tax. Some of the options to claim the tax benefit under this section include life insurance premium, PPF, EPF, and tax-saving fixed deposits. However, there is a lot more to tax planning than Section 80C which helps you further reduce your tax liability.

In this chapter, let’s take a look at the tax-saving options other than Section 80C to turn you into a smart tax saver.

1. Section 80CCD: National Pension Scheme

Beyond the contribution of Rs 1.5 lakh under Section 80C, you can invest an additional Rs 50,000 in NPS which can be claimed as tax deduction under Section 80CCD. This gives you the option of claiming tax deduction of up to Rs 2 lakh every year by investing in NPS.

2. Section 80D: Payment of health insurance premium

Under Section 80D of the Income Tax Act, you can claim a tax deduction for premiums paid for your family members and your health insurance. This section allows you to claim a maximum deduction of Rs 25,000 per year on premiums paid for yourself, spouse, and your children. You are eligible for an additional deduction of Rs 25,000 if you are paying medical insurance premiums for your parents, taking your total deduction to Rs 50,000.

Moreover, if the person is below 60 years with parents of above 60 years of age, the maximum exemption limit under this section is Rs 75,000. And, if both the individual and his/her parents are above 60 years, then a total of Rs 1,00,000 can be claimed under this section.

The amount spent on preventive health check-up is also eligible for deduction under section 80D – maximum limit of Rs 5,000 for self or family, including parents.

3. Section 80E: Repayment of an education loan

The amount paid as interest for an education loan for self, spouse, children, or any student to whom you are a legal guardian, can be claimed as a tax deduction under this section. There is no limit to claim as a deduction for interest paid in a financial year. You can claim the deduction from the year you start repaying the education loan till the next seven years or until the total interest is paid, whichever is earlier. 

Moreover, this tax deduction can only be claimed if the loan is taken from an approved financial institution and not from any family member or friends. It can only be availed for an education loan taken for higher studies.

4. Section 24: Interest payment of a home loan

Taxpayers can claim the amount paid as the interest component of a home loan as a tax deduction under Section 24 of the Income Tax Act. The maximum limit under this section is Rs 2 lakh which can be availed as interest payment of a home loan for a self-occupied property. However, if you are not occupying the property and it is rented then there is no maximum limit, and you can avail the whole interest amount as a tax deduction.

5. Section 80EE: Interest payment of the home loan for first-time buyers

If you have not owned any other house property (first-time homebuyer), then you can claim a deduction of up to Rs 50,000 under Section 80EE. This amount is above the tax benefit of Rs 2 lakh for repayment of home loan interest under Section 24.

The conditions to avail this deduction include that the value of the house should be below Rs 50 lakh, and also the loan amount should be Rs 35 lakh or less. Furthermore, the home loan should be sanctioned between April 1, 2016, and March 31, 2017.

6. Section 80EEA: Interest payment of the home loan for first-time buyers

If you have not owned any other house property (first-time homebuyer), then you can claim a deduction of up to Rs 1,50,000 under Section 80EEA. This amount is above the tax benefit of Rs 2 lakh for repayment of home loan interest under Section 24.

The conditions to avail this deduction include that the stamp duty value of the house should be below Rs 45 lakh. Furthermore, the home loan should be sanctioned between April 1, 2019, and March 31, 2020.

7. Section 80EEB: Interest paid on loan taken for the purchase of an electric vehicle

If you have taken loan for the purchase of electric vehicle, then you can claim a deduction of up to Rs 1,50,000 under Section 80EEB.

The conditions to avail this deduction is that the loan should be sanctioned between April 1, 2019, and March 31, 2023.

8. Section 80G: Donations to charitable institutions

Donations made to government-approved charitable institutions can be claimed as a deduction under this section. The donation can be for the renovation of a place of worship like temples, mosques, and churches, given that they are approved by the central government. To avail the tax deduction under this section, you should donate by cheque, as starting from FY17-18 cash donation above Rs 2,000 do not qualify as deductions. Some of the funds approved by the government include the National Defence Fund, Prime Minister’s National Relief Fund, Clean Ganga Fund, National Children Fund, etc.

9. Section 80GG: Rent paid for accommodation

This deduction can only be claimed if you do not get house rent allowance (HRA) as part of your salary, or if you are a self-employed person. To avail this deduction, you need to submit Form 10BA. You can claim deduction up to Rs 60,000 under this section.

10. Section 80TTA: Interest from Saving Bank Account

This deduction can be claimed up to Rs 10,000 in respect of interest income received from savings bank account with a banking company, a post office or a co-operative society engaged in the business of banking.

11. Section 80TTB: Interest from deposits in case of senior citizens

This deduction can be claimed by a senior citizen up to Rs 50,000 in respect of interest income received from deposits with a bank or a post office or a co-operative bank.

12. Section 54: Long-term capital gain on the sale of the residential house

This exemption is available to an Individual or HUF having profit on the sale of a residential house (which is held by assessee more than 24 months) and purchase a new residential house from that profit within one year before the date of sale or two years after the date of sale of the original house or construct a new house within 3 years from the date of sale of the original house.

13. Section 54EC: long-term capital gain on the sale of land, building or both

This exemption is available on profit from the sale of a long-term capital asset i.e. land or building or both and invest that profit in bonds of NHAI or REC or other specified bonds by the Central government. within 6 months from the date of sale of the original asset. Maximum exemption allowed under this section is Rs 50 lakh.

14. Section 54F: long-term capital gain on the sale of a capital asset other than a residential house

This exemption is available to an individual or HUF having profit on the sale of a capital asset other than a residential house (which is held by assessee more than 24 months) and purchase a new residential house from that profit within one year before the date of sale or two years after the date of sale of the original house or construct a new house within 3 years from the date of sale of the original house.

Tax planning is an essential part of a stable financial life. Hence, the understanding of available tax deductions can help you reduce your income tax liability in every financial year and make better financial decisions. These tax-saving options, if used after exhausting the limit under Section 80C, will help you to invest and reduce tax liability through deductions, exemptions, and benefits.

Wrapping up
Now that you know about Other sections of the IT ACT, it’s only logical that we move on to the next big topic - Markets and taxation: for investors. To discover the answer, head to the next chapter. 

A Quick Recap

  1. The right tax-saving investments help most taxpayers, including salaries individuals and professionals, to save tax.
  2. Tax planning is an essential part of a stable financial life.
  3. For the purchase of electric vehicle, you can claim a deduction of up to Rs 1,50,000 under Section 80EEB.
  4. First-time homebuyers can claim a deduction of up to Rs 1,50,000 under Section 80EEA.
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