Most individuals are aware of the popular tax deductions in Section 80C, but there are other useful tax sections that can help you as a taxpayer, to pay less tax. This will give you a higher investible surplus towards your financial life goals.
Let’s see what these are.
1. Section 80D
This is probably the most well known section after 80C. In Sec 80D you can claim a deduction for health insurance premiums paid, to the extent of Rs. 15,000 for yourself (either as an individual policy or a family floater) provided you are under 60 years of age. You can also avail a deduction of Rs. 20,000 (over and above your own Rs. 15,000) if you are not a senior citizen but your parents are and you are paying for them. If you are a senior citizen i.e. above 60 years of age, your deduction goes up to Rs. 20,000.
When buying a health insurance policy, be sure to buy the right Mediclaim policy, don’t just buy whatever the agent sells because you want the tax deduction.
2. Section 80DD and Section 80DDB
These are 2 sections that are not very well known.
Section 80DD states that if you are incurring an expense on medical treatment of a handicapped dependent, you are eligible for a deduction of Rs. 50,000, or actual expense incurred, whichever is less. For severe handicap, the limit is Rs. 100,000. Deductions are permissible in either of the following cases:
Key Things to Note for Section 80DD are:
- expense is incurred for medical treatment or rehabilitation of a disabled dependent
- expense is by way of premium paid for a medical policy that will benefit the dependent in case of your untimely demise
Section 80DDB states the following: If you have incurred expense on certain specified medical treatments either for yourself or for a dependent relative, that is not covered by a Mediclaim policy, a deduction up to Rs. 40,000 (or Rs. 60,000 for senior citizens) is allowed under Section 80DDB.
- You need to produce a disability certificate issued by the state or central government medical board in order to claim this deduction
- The insurance policy should be in your name with your dependent relative as a beneficiary in case of your demise
- If you outlive your dependent, the maturity value of the insurance payout is fully taxable in your hands.
If this expense is already being covered by a health insurance policy, then the deduction is not available.
Diseases covered include Parkinson’s disease, malignant cancers, neurological diseases, AIDS, chronic renal failure, hemophilia and thalassemia.
3. Section 80G
If you donate to certain charitable institutions you can avail a tax deduction. For some institutions you can avail a 100% deduction, for others you can avail a 50% deduction.
*Amount deductible is capped at not more than 10% of your gross total income, after deductions made under Sec 80C to 80U (not including Sec 80G). 4. Section 80E
|CHARITABLE INSTITUTIONS ||AMOUNT DEDUCTIBLE |
|National Defence Fund ||100% |
|Prime Minister’s National Relief Fund ||100% |
|Prime Minister’s Armenia Earthquake Relief Fund ||100% |
|Africa (Public Contributions - India) Fund ||100% |
|National Foundation for Communal Harmony ||100% |
|Any approved university or educational institution ||100% |
|Maharashtra Chief Minister’s Relief Fund and Chief Minister’s Earthquake Relief Fund ||100% |
|Any fund set up by Gujarat State Government for providing relief to earthquake victims ||100% |
|Jawaharlal Nehru Memorial Fund ||50% |
|Prime Minister’s Drought Relief Fund ||50% |
|National Children’s Fund ||50% |
|Indira Gandhi Memorial Trust ||50% |
|Rajiv Gandhi Foundation ||50% |
An education loan can help fund your child’s higher education
If you have taken an education loan for either yourself or your child, you can claim a deduction under Section 80E for payment of the loan’s interest. The entire interest paid on the loan can be claimed as a deduction. Remember, there is no tax benefit on repayment of the principal of the loan. The deduction is available for a period of 8 years including the year in which the loan repayment begins, and the next 7 years. It applies to courses in India and overseas, pursued after the Senior Secondary Examination from a recognized education board.
Remember, a rupee saved is a rupee earned. Make the most of the tax deductions available to save your investible surplus and achieve your life goals faster.