The tax planning season has begun and individuals would now look to beat the deadline set by their companies to handover tax investment proofs. Other practising professional have time until March 31, 2017 to do their tax planning.
Before planning your taxes one should be aware of the total income and tax liability in order to be smart tax saver.
The government has provided with many plans using which individuals can make better investment decision along with tax saving options.
Individuals often get stuck with 80C tax benefits only during tax planning. While there is little doubt 80C investments are best for tax saving purposes, there are other investment options which can help you save tax if invested smartly.
Here are 7 best tax saving options other than Sec 80C.
New Pension Scheme (Section 80CCD)
The Pension Scheme has had a few changes this year. For instance one can get an additional tax benefit of Rs 50,000 if you park money in the scheme, which is now a part of Sec 80CCD. The other benefit that one gets is that one can now invest in the scheme in equity as well. This is a good scheme if you are looking to build a retirement corpus and is a must for those in all tax brackets. Of course, the ones in the highest tax bracket will save approximately Rs 17,000 each year.
Rajiv Gandhi Equity Savings Scheme (Section 80CG)
Under this scheme individuals can invest up to Rs 50,000 in approved stocks. The tax benefits are available under Sec 80CG. However, only first time investors are allowed to invest in this scheme to claim tax benefits. This scheme has not taken off, since being introduced during the UPA regime. There were reports that there might be an overhaul of the scheme, but, nothing has come through. A scheme that has risks associated with stock market investment.
Interest on education loan (Section 80E)
The deduction is allowed only on the interest repayment part, not on the principal amount of education loan. Means that only interest repayment is available for tax deduction while filing income tax return. This deduction is over and above the 80C limit and there is no maximum limit on claiming deduction under 80E. Not many are aware of the scheme, and one needs to educate people more on this section and its benefits.
House rent allowance (Section 80GG)
If you are staying in a rented apartment or house and paying rent, you can claim tax deduction under Sec 80GG of the Income Tax Act. The amount of deduction is based on the city that you are residing. Again, some cities need to be revamped to factor in an increased rentals in this city, but that has not happened so far.
Home Loans (Section 24)
In the Union Budget last year, Finance Minister Arun Jaitley increased the limit on deduction on home loan interest under Section 24 to Rs 2 lakhs from Rs 1.5 lakhs earlier. The principal amount also was hiked to Rs 1.5 lakh from the earlier limit of Rs 1 lakh. However, the principal amount qualifies for tax exemption under Sec 80C.
Health Insurance (Section 80D)
Individuals should take a health insurance policy, which would enable them save tax up to Rs 25,000 in case of ordinary citizens and Rs 30,000 in case of senior citizens. So, one can go ahead and take a good health insurance policy.
Donations (Section 80G)
Section 80G of income tax law provides tax benefits on amount donated to NGO's. So, it maybe time to be a little more generous than before.