Tax Saving Investments - 5 Income Tax Saving Schemes Other Than Sec 80C

The taxpayers are always in search of ways through which they can save their taxes. The most popular section for saving taxes among the taxpayers is section 80C. You can claim deduction up to Rs. 1,50,000 under section 80C of the Income Tax Act, 1961 by investing in specified avenues listed by the government. However, there are many other sections under which you can save your taxes but due to lack of awareness, many people miss out on them. In this article, we will list down five income tax saving schemes other than section 80C.

• Tax Saving Schemes Other Than 80C
• National Pension System (NPS)

National Pension System (NPS) is one of the popular tax saving investment schemes. Here you can invest in the NPS and get an additional tax deduction up to Rs. 50,000. This scheme was launched by the government of India in 2009. This tax saving scheme makes you eligible for an additional tax deduction for investment up to Rs 50,000 under subsection 80CCD (1B) of the Income Tax Act, 1961. The main advantage of investing in NPS is that the tax benefits under this scheme are not clubbed with the tax benefits under section 80C which allows tax benefits on investments of up to Rs. 1,50,000 lakhs only. Investment in NPS can be done by employees of the public, private and unorganized sectors. Apart from saving tax, NPS is also a good investment scheme for the long term.

Health Insurance Premium

The health insurance premium is another good tax saving investment option. Paying health insurance premiums can help in saving your taxes. You can claim deduction under section 80D of the Income Tax Act, 1961. The maximum exemption limit under this section is up to Rs. 1,00,000. The exemption limit is up to Rs. 25,000 for health insurance premium paid for self, spouse or dependent children. However, when the premium is paid for the health insurance of senior citizen parents, the maximum deduction limit is Rs. 50,000. Therefore, when the health insurance premium is paid for policies for self, spouse and senior citizen parents, the total deduction that can be availed is Rs. 25,000 plus Rs 50,000 i.e. Rs 75,000.

A mediclaim policy is essential these days because if any of your family members fall sick or meets an accident, the cost of treatment can wipe out a large part of your savings. The deduction under this section can be claimed only when the premium is paid by any mode other than cash. Also, the central government or the Insurance Regulatory and Development Authority of India (IRDAI) must have approved the insurer.

Payment Of Interest On Education Loan

Education loans are one of the popular tax saving investments. The tax deduction is available to you on the interest paid on the education loan taken for self, spouse, children, or a student (whose legal guardian is you). The tax deduction on payment of interest on education loan is available under section 80E of the Income Tax Act, 1961. What makes it a good tax saving scheme is the fact that interest paid on education loan is eligible for deduction without any limit. However, to claim deduction under section 80E, you must make sure that the loan is taken for higher education i.e. for any course after the completion of the 12th standard. The deduction on interest is available for a period of eight years from the year in which the payment of interest started.

Savings Account Interest

Interest in the savings account is eligible for tax exemption. The tax exemption limit on the interest of the bank’s savings account is Rs. 10,000. Therefore, if the interest income from the bank’s savings account is more than Rs. 10,000 then you have to pay tax on it. However, you must remember that the interest on fixed deposits in the bank is not eligible for tax exemption.

Donations

Donations made to institutions or organisations that are notified by the Central Government of India are eligible for tax exemption. Such deduction is available under section 80G of the Income Tax Act, 1961. However, while availing this income tax saving scheme, the amount donated must not exceed 10 per cent of the adjusted gross total income. Under this tax saving scheme, the donation of more than Rs. 2,000 in cash in not eligible for a tax deduction. Some of the funds that are notified by the government include Swachh Bharat Kosh, Clean Ganga Fund, Prime Minister's Drought Relief Fund, Prime Minister's National Relief Fund, National Children Fund, National Defence Fund, Jawaharlal Nehru Memorial Fund, etc. In addition to the notified institutions, deduction under section 80G is also available on donations given to churches, temples and mosques for renovation purposes. Such churches, temples and mosques must be approved by the Central Government.

The above mentioned are some of the popular tax saving funds other than section 80C. It is always advisable to invest in multiple funds to avail the tax deductions. This is because there is a cap of Rs. 1,50,000 lakhs for tax deduction under section 80C. By investing in the other income tax savings schemes, you can avail the deduction of more than Rs. 1,50,000. By exploring other tax saving investment options, you can further reduce your tax liability. If you want to learn more about tax saving funds or need any financial advice, you can contact IndiaNivesh. We are one of the leading broking and financial advisory firm in India with highly qualified professionals who can help you in reducing your tax liability.Disclaimer: "Investment in securities market and Mutual Funds are subject to market risks, read all the related documents carefully before investing."