The most popular tax-saving options among individuals and HUFs are under Section 80C of the Income Tax Act. Section 80C includes various investments such as Tax-saver FD, PPF, NSC, NPS and ELSS.
New Delhi: In order to promote the culture of savings among people, the government allows certain deductions provided the amount saved is invested in the instruments specified under Section 80C, Section 80CCC and Section 80CCD of the Income Tax Act. The I-T Act allows for certain deductions to be claimed to save tax at the time of filing of returns.
These deductions which help in saving tax are only available if the taxpayer has done proper tax planning during the financial year. Such deductions are subtracted from the gross total income and income tax is levied on the balance income as per the income tax slabs in force.
Here are 5 lesser know options which can help you tax
1. Charity: You can save tax on the amount donated to charities. Under Section 80G of the I-T Act, any donation to charitable organisations is eligible for up to 100% tax exemption. Donations to PM’s Relief Fund, CM’s Relief Fund, Earthquake Relief Fund and Flood Relief Fund, are eligible for 100% tax deduction. For any donation to an NGO, employees can claim a 50% deduction on the donated amount.
2. Pre-school fee: A lot of people are not aware that they can claim an income tax deduction on their child’s tuition fees of pre-school, i.e. pre-nursery and nursery. Tuition fees of pre-nursery and nursery are eligible for deduction under Section 80C of the Income Tax Act. However, the benefits are restricted to only two children. So each parent can claim tax deduction on the fees for two children.
3. Medical expenses for parents: If your parents are senior citizens and you are paying a premium for their health insurance policy, you can claim a deduction of up to Rs 50,000 under Section 80(D) of Income Tax Act. If a senior citizen is paying the insurance premium for their very senior parents, they can claim for an additional deduction of Rs 50,000.
Apart from the insurance premium, if you are also paying of expenses incurred on your senior citizen parents’ medicine, you can claim tax deduction of up to Rs 50,000. Note that these tax deductions can be availed only if the medicine expense is not covered under the health insurance policy.
4. Reinvesting in old tax-saving instruments: You can liquidate your old tax-saving instruments after they have completed the lock-in period and reinvest in the to claim further tax benefits. This way you can save more tax without having to invest more money.
5. Rent to parents: If you live are living in a house owned by your parents, you can pay rent to them and claim HRA deduction in order to lower your tax liability. In order to claim this deduction, you need to have a proper rent agreement and rent slips from your parents. Also, if you are buying a house on loan and you borrow some money from the parents to finance it, you can claim tax deduction benefits under Section 24B of the Income Tax Act.
The most popular tax-saving options among individuals and HUFs are under Section 80C of the Income Tax Act. Section 80C includes various investments such as Tax-saver FD, PPF, NSC, NPS and ELSS. It also includes certain expenses on which you can claim deductions up to the limit of Rs 1.5 lakh in a financial year.
Apart from the 80C deductions, there are various deductions under Section 80 which can be used to claim income tax benefits. On can buy medical insurance and claim a deduction up to Rs 25,000 (Rs 50,000 for senior citizens) for medical insurance premium. One can claim deduction up to Rs 50,000 on home loan interest under Section 80EE.