Income Tax hack: How to save money beyond Rs 1.5 lakh limit of Section 80C
Income Tax planning can be a pain. There is no denying the fact that millions of Indians fail to plan their taxes in advance and end up paying a large part of their hard earned money to the taxman.
Income Tax planning can be a pain. There is no denying the fact that millions of Indians fail to plan their taxes in advance and end up paying a large part of their hard earned money to the taxman. This happens because most taxpayers procrastinate till the last quarter of the year, and end up taking hurried decisions. Instead, they should look to plan their tax-saving investments at the beginning of the financial year. The job becomes slightly easier after Finance Minister Piyush Goyal's recent announcement at Budget 2019 to increase tax rebate to Rs 5 lakh but, the benefits will be directly passed on to small taxpayers only.
Not much changes for the medium and large taxpayers who will still have to plan ahead. While most people are aware of Section 80C benefits which allow exemption of up to Rs 1.5 lakh, there are other investment options through which you can save money as well. Here are 5 investment options that can help save money beyond Section 80C:
1. Deduction on home loan interest
An interest of up to Rs 2 lakh paid on house loan is allowed as deduction from taxable income. The benefit is extended under Section 24B of the Income Tax Act. The borrowers can also claim deduction of up to Rs 2 lakh per year on rented properties, after adjusting for the rental income.
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A taxpayer can claim deduction of up to Rs 25,000 towards medical insurance premium paid for self, spouse and children, if he or she is younger than 60 years. The amount goes up to Rs 30,000 if the age is above 60 years. The taxpayer can also claim an additional of Rs 25,000 on medical insurance bought for parents. This deduction can go up to Rs 30,000 if parents are above the age of 60.
National Pension Scheme (NPS) allows a benefit of additional Rs 50,000 under Section 80CCD. This takes the overall deduction under Section 80C and 80CCD to Rs 2 lakh.
4. Section 80GG
The taxpayers that don't get HRA from the employer and make payments towards rent, can claim deduction under section 80GG towards that amount. The deduction can be Rs 5,000 per month or 25% of total income or rent paid less than 10% of income.
5. Interest on education loan
Taxpayers can also claim deduction for interest paid on education loan for him, spouse or children. There is no upper limit on the amount of deduction.