Tax Saving Options Other than 80C

Useful Links:

Returns and Forms Applicable for Salaried Individuals
Returns and Forms Applicable for HUFs
Returns and Forms Applicable for Senior Citizens and Super Senior Citizens
Returns and Forms Applicable for Non-Resident Individuals

Let us take a closer look at the tax-saving options for the salaried in 2022 - 23 other than 80C.

Interest Amounts from Bank Savings Account Deposits (80TTA and 80TTB)

Not many people know the interest accumulated on their savings account from banks, cooperative societies and post offices is taxable as "Income from other sources". However, you can get a deduction on interest amounts received up to ₹10,000 under Section 80TTA.

Individuals, HUFs and NRIs (on NRO savings accounts) can claim this annual deduction. Senior citizens can claim this annual deduction only under Section 80TTB for up to ₹50,000 on their gross total income.

Education Loan Payments (80E)

This is a popular way to save tax other than 80C among parents and younger individuals. Only individuals can claim this deduction. It is not available for HUFs or other types of taxpayers. Here are some key aspects you should note:

The loan should be taken for the higher education of yourself, your spouse, your child or your legal ward. The education loan is only eligible for deductions if taken from banks, financial institutions or approved charitable institutions.

It is available only on the interest payments of the education loan and not the principal amount. It can be claimed for up to 8 years starting from the year of interest repayment.

There is no upper limit on the deduction amount you can claim, but you need to get a certificate from your bank detailing the separation between the interest repayments and principal amounts.

For example, if your interest repayment amount was ₹2 lakhs that year and your gross taxable income was ₹5 lakhs. Your total taxable income would be ₹3 lakhs, as the entire interest amount can be claimed as a tax deduction.

Health Insurance Plan Premium Payments (80D)

Medical insurance premiums are another popular deduction other than 80C. These deductions also include the additional premiums you pay for any add-ons or 'riders' like maternity insurance bought with your base health insurance plan.

Here, the preventative health check-up deduction limit will be included in the overall tax deduction limit.

For example, say you are 25 years old and bought a medical insurance policy for ₹2 lakhs with a premium of ₹20,000 and got a health check done sometime within the year for ₹5,000.

Your overall tax deduction under 80D will be ₹25,000, including the ₹5,000 you paid for your health check-up.

Also Read: Tax Benefits Of Health Insurance Plans

Treatments for Certain Ailments or Disabilities: (80DDB)

This deduction can be claimed by taxpayers for themselves or dependants suffering from specific disabilities or critical illnesses for the conditions' medical treatments/procedures. Dependants here refer to a spouse, children, siblings and parents.

You can get a maximum annual deduction of ₹40,000 or the amount paid for the treatment (whichever is less). If the dependant is a senior citizen (over 60), the upper limit is ₹1 lakh.

You will also need a 'Prescription Form' from the specialist treating you or your dependant to claim your deduction. It should contain:

Details of the Patient: Name, age and illness

Details of the Specialist: Name, address, qualifications and registration number. If you or your dependant are getting treated at a government hospital, it should also include the name and address of the Government hospital.

Useful Links: Specified Diseases and Ailments Covered Under 80DDB

Treatments for Disabled Individuals and Dependants: 80U and 80DD

Individuals or dependants with certified disabilities by a medical authority can claim these deductions. You must note that:

Section 80U: Only for disabled individuals (Self/Taxpayer).

Section 80DD: Only for disabled dependants of the taxpayer or HUF.

Disability here refers to ailments that impair 40% of bodily functions. Severe disabilities require a minimum impairment of 80%. Deductions under 80DD cannot be claimed if the dependent has already claimed a deduction under Section 80U for themselves.

The maximum deduction under both Sections for disabilities (40%) is ₹75,000 and for severe disabilities (80%), it is ₹1.25 lakhs. You must get a certificate from the concerned medical authority and submit Form 10-IA for your claim.

Useful Links:

Form 10-IA

List of Certified Disabilities (Under Preliminaries)

Interest Payments Towards Home Loans: (24(b))

Homeowners can claim a maximum deduction of ₹2 lakhs on the interest payment of the loan. This is only applicable if the home loan has been taken:

On or after 1999

For the construction and purchase of a property.

The purchase/construction must be done within 5 years – starting from the end of the financial year in which the home loan was taken.

If not, the deduction amount falls to ₹30,000. If you have rented out the property, the entire interest amount can be deducted. Moreover, other deductions you can claim as a homeowner include:

Municipal Tax: Only if the homeowner pays the annual amount to the municipal corporation.

Standard Deduction: 30% of the Net Annual Value of the property for rented property and Nil for a self-occupied house.

Home Loan Deductions for First-Time Buyers (80EEA)

This deduction is available only to individuals on the home loan's interest payments.

The deduction amount caps at ₹1.5 lakhs and can be claimed for 5 years from the year the loan was taken. The home loan amount should be less than ₹35 lakhs and the property value must be more than ₹45 lakhs.

You can also claim 24(b) and 80EEA if you satisfy the eligibility conditions for both. First, claim the deduction amount for 24(b) – ₹2 lakhs. Once exhausted, claim the amount under 80EEA – ₹1.5 lakhs.

Death Benefit Amount from Life Insurance Plans (10(D))

This is a popular tax-free investment other than 80C. The sum assured amount you get as a death benefit is fully tax-exempt.

For maturity amounts, all life policies bought on or after April 1, 2023, will have their maturity amounts taxed if the annual premiums paid under the policy exceed ₹5 lakhs. This applies to all life policies except ULIPs and life policies bought before April 1, 2023.

The maturity amounts will be taxed as per the income tax slab rate of the taxpayer according to their income.

House Rent Allowance: 10(13A) and 80GG

Included Under Salary Break-Up (10(13A)): A beneficial way to save tax other than 80C for salaried individuals. The total deduction amount that can be claimed is the minimum amount from the following:

The actual HRA amount you received.

50% of [annual basic salary + Dearness Allowance] if you live in metro cities (Delhi, Mumbai, Kolkata, or Chennai).

40% of [annual basic salary + Dearness Allowance] if you live in non-metro areas.

Actual yearly rent paid (-) 10% of annual basic salary + Dearness Allowance.

Not Included Under Salary Break-Up (80GG): For self-employed individuals, salaried individuals and those that live in rented property or do not own property in the city they reside in. The lowest of these amounts will be considered for deductions:

₹60,000 annually (₹5,000 monthly).

Actual yearly rent paid (-) 10% of total income.

25% of annual salary.

Salaried employees must not receive HRA from their employer during the year they claim this deduction to be eligible.

Deductions on Donations: 80G, 80GGA and 80GGC

Charitable Organisations (80G): This deduction is available to all taxpayers who opt for the old tax regime. Donations can be made through cheques, demand drafts and cash. Cash donations will only be tax-exempt if they a below ₹2,000.

If you wish to donate more, choose cheques or demand drafts instead. You can claim a 50% or 100% deduction on your donation amount.

Some donation deductions, however, will be subject to a cap of 10% of your gross total income. Simply put, if the total amount donated exceeds 10% of your gross total income, the excess donation amount beyond that 10% can not deducted.

Scientific Research and Rural Development (80GGA): Similar to 80G, donations can be made through cheques, demand drafts and cash (maximum ₹10,000).

Where 100% of the amount donated can be deducted, the donation amount must not be any income from a business/profession.

Towards Political Parties (80GGC): You can claim a 100% deduction on your donation amount. However, this amount can not exceed your total income.

The donations can not be in cash and must be made through legitimate banking portals. These include net banking, debit or credit cards, cheques, demand drafts, etc.

These are some of the best income tax saving options other than 80C. Options like 80TTA, 80E and 10(13A) apply to most salaried individuals and can significantly reduce your tax liability.

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