The time of the year has come when the accounts department or HR of a company is probably asking for proof of investments of the previous financial year. One might have also already made their tax saving investments under Sec. 80C. However, the final tax bill still looks high. Is there any solution?
Here are three ways you can save a bit more in addition to the deductions allowed under Sec. 80C. Note that not all might apply to you but if they do, you can unlock more tax savings this year.
💡 A deduction of Rs. 25,000 from the income of a person towards him and his family’s medical insurance costs.
Sec. 80D of the income tax act allows you a deduction of up to Rs. 25,000 towards medical insurance expenses. The medical insurance could be yours, for your spouse, or for your children. In addition to this Rs. 25,000 deduction, if you pay for your parents’ health insurance then that additional sum is deductible up to Rs. 30,000. This means, in theory, you can potentially end up getting Rs. 55,000 more in deductions.
💡 50% to 100% of a donation made to “specified” relief funds and charitable institutions
If you have given to charity, then you will be rewarded. Your donations made to certain charitable institutions or relief funds such as Prime Minister’s National Relief Fund are eligible for 50% to 100% deduction, under Sec. 80G of the income tax act. This deduction is limited to 10% of your adjusted gross income.
💡 The interest you pay on your education loan is tax deductible for the first 8 years of repayment
Section 80E of the income tax act allows you to deduct, from your gross income, the interest you paid towards your education loan. This deduction is especially useful for those who recently joined the workforce after finishing their studies and are repaying their education loans. There is no limit on the amount of interest and it is deductible until you paid off the interest or until 8 years since you started repayment. This deduction is also applicable for those who took the loan for the higher education of their spouse or children.
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