Wealth Guide: Top 5 tax-efficient investment options other than 80C
The Indian tax system offers many opportunities for taxpayers to reduce their taxable income, but most taxpayers only focus on using the Rs 1.5 lakh deduction available under Section 80C.
Less awareness could be the reason, but by knowing about all these tax saving opportunities, every taxpayer can further reduce the taxes they pay.
CA Amit Gupta, MD, SAG Infotech highlights 5 non-Section 80C ways taxpayers can save on income tax:
1. Invest in NPS under Section 80CCD (1B):
If you are a taxpayer and looking for opportunities to save additional taxes, you can invest up to Rs 50,000 in the NPS (National Pension System). This is in addition to the benefits they are entitled to under Section 80C.
They also have the option to use the NPS for the Rs 1.5 lakh limit under Section 80C. This mixture of opportunities will convert the total deduction that the taxpayer can claim with the NPS up to Rs 2 lakh.
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2. Invest in health insurance premiums under Section 80D
Health insurance is important, and the government also encourages self-funded health insurance by offering tax incentives.
Section 80D allows tax deduction from total taxable income for the payment of health insurance premiums as well as expenses incurred for health care.
However, the limits for claiming the u/s 80D tax deduction depend on who is all covered by health insurance coverage and their age.
Therefore, depending on the family situation of the taxpayer, the limit can be Rs 25,000, Rs 50,000, Rs 75,000 or Rs 1 lakh.
3. Section 80E Student Loan Repayment
Taking a student loan for higher education is common these days. Students who have taken out student loans for their education receive a tax benefit on the repayment of the interest portion of the loan under Section 80E.
This benefit can be used by the parent or the child (student), it just depends on who is repaying the student loan.
This can only be used to take out student loans from institutions and not from friends, family or relatives.
4. With interest forming part of the home loan under Section 24
Taxpayers with home loans can claim a tax deduction of 24 units of income tax on the interest portion of their home loan.
The maximum deduction a landlord can claim on the interest payment of a home loan taken out for self-catering is Rs 2 lakh.
If the said property which is purchased with a home loan is not self-occupied and rented or intended to be rented, then there is no defined maximum limit for a tax deduction. Thus, a taxpayer can benefit from the tax deduction on the entire amount of interest in accordance with Article 24
5. Interest Repayment Tax Savings for New Section 80EE Borrowers
If you are a taxpayer and a first owner, this means that you have no other property on the date of the loan sanction with a financial institution, then you can benefit from a tax deduction of up to to Rs 50,000 under Section 80EE.
This amount exceeds the limit of Rs 2 lakh for repayment of interest on home loans under Section 24 of the Income Tax Act.
Eligibility to claim this deduction includes home value less than Rs 50 lakh, and loan amount must be Rs 35 lakh or less.
A taxpayer should know about all the possibilities offered by the government. However, it is important to choose the way to save more taxes. These 5 ways are as effective as they are authentic. So go through them and pick the one that best suits your condition.
(Disclaimer: Opinions/suggestions/advice expressed here in this article are investment experts only. Zee Business suggests its readers consult their investment advisors before making any financial decisions.)