80C YOUR TAX-SAVING KNIGHT...

80C YOUR TAX-SAVING KNIGHT...

02.02.2021

Those with taxable income at 30% can save 45,000 by claiming 1.5 lakh as deduction under Section 80C and not opting for the new ‘simplified’ personal income tax regime

1  Your Provident Fund (PF) contribution

2 Principal component of your housing loan from prescribed institutions

3 You can invest 500 to 1.5 lakh every year in a Public Provident Fund (PPF) account

4 Tuition fees of two children

5 Life insurance premiums for self, spouse and kids

6 Contribution to Unit-linked Insurance Plan for self, spouse and children

7 Invest in National Savings Certificates (NSC) schemes (through post offices)

8 A 5-year term deposit with a bank under a notified scheme or a post office

9 Investment of up to 1.5 lakh a year in Sukanya Samriddhi Account in the name of your daughter (limited to two children)

...AND SAVINGS BEYOND 80C

If you have not opted for the new ‘simplified’ personal income tax regime and your basic salary is over 1 lakh a month, your 80C limit will be used up by provident fund contributions alone. Want to save more? You can save up to 82,500 a year in taxes over and above the 1.5 lakh limit allowed under 80C if you invest 50,000 in NPS, pay 25,000 for medical insurance and also repay interest of 2 lakh on housing loan for a self-occupied property.

A few more deductions are available:

1 Interest earned on savings bank account with a bank or post office. If you are less than 60, up to 10,000 (even for NRO savings a/c). If you are 60 or more, up to 50,000. Interest from FD also exempt for senior citizen

2 Interest on education loan. No limit, but deduction available for maximum 8 years

3 Disability-related tax benefits 75,000 ( 1,25,000 in case of severe disability) for expenditure towards rehab, treatment or training of self, dependent spouse, child, parent or even sibling. This can either be claimed by the dependent or by the individual on whom he/she is dependent

4 Treatment for certain diseases such as AIDS or malignant cancers for self and dependents up to 40,000 (up to 1,00,000 for patients who are 60 years or more)

5 Donation: 100% or 50% of the amount donated (subject to conditions), depending on the institute/fund to which contribution is made. No deduction is allowed if donation is made in cash over 2,000

6 Deduction of 1.5 lakh on the interest paid on loans taken to purchase electric vehicles from any financial institution