Section 80D limit exhausted? 5 other ways to reduce taxable income

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HIGHLIGHTS

  • Section 80D allows a tax deduction from total taxable income for the payment of health insurance premiums as well as expenses incurred for health care.
  • Taxpayers with home loans can claim a tax deduction of 24 units of income tax on the interest portion of their home loan.
  • A taxpayer can save up to Rs 50,000 under the NPS to save tax. This is in addition to the benefits under Section 80C.

When it comes to saving to reduce the tax burden, most people think of Section 80C while overlooking other powerful exemptions such as NPS under Section 80CCD(1B), and health insurance premiums under Section 80CCD(1B), home loans under Section 24 etc The maximum that a taxpayer may reduce his aggregate taxable income under Section 80D is Rs 1.5 lakh per year. The benefit of this deduction is only available to individuals and HUFs.

Here are some non-80D means exemptions that can be used to further reduce taxable income.

NPS under Section 80CCD (1B)

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Another deduction of up to Rs 1.5 lakh per annum can be utilized by investing in the National Pension Scheme (NPS) – a central government social security scheme open to all private sector and government employees, except except for the armed forces, i.e. the army, navy and air force. . A taxpayer can save up to Rs 50,000 under the NPS to save tax. This is in addition to the benefits under Section 80C. Employees also have the option of using the NPS for the limit of Rs 1.5 lakh under Section 80C. This mixture of opportunities will convert the total deduction that the taxpayer can claim with NPS up to Rs 2 lakh, says CA Amit Gupta, MD, SAG Infotech.

Section 80D health insurance premiums

At a time when quality health care is virtually out of reach for the middle class, good health insurance is becoming extremely important in ensuring that your loved ones get the health insurance they deserve. Even the government encourages citizens to purchase health insurance by offering tax incentives. Section 80D allows a 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 a tax deduction under Section 80D 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 Rs1 lakh.

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 studies 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 done by taking out student loans from institutions and not from friends, family members or relatives.

Repayment of a home loan under section 24

Taxpayers with home loans can claim a tax deduction u/s 24 of Income tax on the interest portion of their home loan. The maximum deduction a landlord can avail 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.

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. The eligibility to claim this deduction includes the value of the house is less than Rs 50 lakh, and the loan amount must be Rs 5 lakh or less. A taxpayer should know about all the possibilities offered by the government. However, it is important to choose a 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, says Gupta.

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