With the financial year coming to a close and the taxman knocking on your door, let us discuss income-tax again. We have, in our earlier issues, discussed about the different avenues of saving income tax, especially under section 80C of Income Tax Act. But tax planning does not end only with Section 80C. So here we are, with a few more sections, where you may find little more respite from paying your income tax this financial year. These sections are up and above the one lakh limit of section 80C.
80D:
The premium, which you pay for medical insurance policy for self and family members to protect them from medical expenses, comes under section 80D. The maximum amount allowed for exemption annually for self, spouse and dependent children are Rs. 15,000. This also includes payment on account of preventive health check-up subject to a cap of Rs.5,000 but within the overall ceiling mentioned above. In case a policy is taken on the life of senior citizen the additional deduction of Rs.5,000 is available.
80DD:
For the medical treatment of a differently abled person, you can avail exemption under the section 80DD. Here, the dependent should be none other than your spouse, children, parents or sibling. If the person is suffering from 40 per cent of any disability, a fixed sum of Rs. 50,000 can be claimed in a year. Similarly, if the disability is 80 per cent, the fixed sum goes up to Rs. 1,00,000 per year.
80DDB:
If you have incurred expenses for the medical treatment of self or your dependents, you can claim a deduction of up to Rs. 40,000 or the actual amount paid, whichever is less, under the section 80DDB. For a senior citizen, the maximum exempted amount is Rs. 60,000, or the amount actual. 80DDB tax deduction on medical treatment is not available for NRI taxpayers.
80E:
The interest paid on loan taken for pursuing higher education of self or any dependent is exempted from tax under section 80E. This deduction is applicable for a period of eight years or till the interest is paid, whichever is earlier. The deduction is only approved for higher studies, which means full-time graduate or postgraduate courses in engineering, management or applied sciences, pure sciences including mathematics or statistics, pursued after completing the senior secondary examination or equivalent. No exemption is applicable for part-time courses.
80G:
Donations to trusts, charitable institutions and approved educational institutions qualifies for deduction under Section 80G. The exemptions can be up to 50 per cent or 100 per cent of the donations made depending where you donate. Funds in which the donations are eligible for tax exemptions include the National Defence Fund, Prime Minister Drought Relief Fund, National Children's Fund, Prime Minister's National Relief Fund etc.
80GG:
If a salaried or self-employed person staying in a rented house does not receive any kind of house rent allowance (HRA), they can claim a deduction under this section. However, you cannot avail any such benefit if you or spouse or your child owns any residential accommodation in the city you are ordinarily residing. You can claim the least of the following under Section 80GG: 25 per cent of the total income, or Rs. 2000 per month, or excess of rent paid, minus 10 percent of total income.
80GGC:
Donations made to political parties can be claimed for tax deduction under section 80GGC. 80GGC is meant for non-corporate taxpayers whereas deduction under section 80GGB is meant for companies. 100% of donation can be claimed for deduction under section 80GGC.
80U:
Differently abled residents in India can claim a flat deduction on income tax by producing disability certificate under section 80U. One with any of the following conditions are considered eligible: Autism, Cerebral palsy, Blindness, Low vision, Leprosy-cured, Hearing impairment, Loco motor disability, Mental retardation, Mental illnesses, Multiple disabilities etc. You would have to furnish certificate in the prescribed form signed by a physician, psychiatrist, etc working in a government hospital to certify disability while filing income tax returns to claim exemption under 80U. Your taxable income would reduce by Rs. 50,000 or Rs. 1 lakh depending on your disability. 80U tax deduction on disability is not available for NRIs.
80CCG:
The Finance Act 2012 introduced a new Section 80CCG to offer 50 per cent tax break to new investors who invest up to Rs. 50,000 and whose income is less than Rs. 12 lakh. It has been introduced to encourage new investors entering the equity markets for the first time.
80D:
The premium, which you pay for medical insurance policy for self and family members to protect them from medical expenses, comes under section 80D. The maximum amount allowed for exemption annually for self, spouse and dependent children are Rs. 15,000. This also includes payment on account of preventive health check-up subject to a cap of Rs.5,000 but within the overall ceiling mentioned above. In case a policy is taken on the life of senior citizen the additional deduction of Rs.5,000 is available.
80DD:
For the medical treatment of a differently abled person, you can avail exemption under the section 80DD. Here, the dependent should be none other than your spouse, children, parents or sibling. If the person is suffering from 40 per cent of any disability, a fixed sum of Rs. 50,000 can be claimed in a year. Similarly, if the disability is 80 per cent, the fixed sum goes up to Rs. 1,00,000 per year.
80DDB:
If you have incurred expenses for the medical treatment of self or your dependents, you can claim a deduction of up to Rs. 40,000 or the actual amount paid, whichever is less, under the section 80DDB. For a senior citizen, the maximum exempted amount is Rs. 60,000, or the amount actual. 80DDB tax deduction on medical treatment is not available for NRI taxpayers.
80E:
The interest paid on loan taken for pursuing higher education of self or any dependent is exempted from tax under section 80E. This deduction is applicable for a period of eight years or till the interest is paid, whichever is earlier. The deduction is only approved for higher studies, which means full-time graduate or postgraduate courses in engineering, management or applied sciences, pure sciences including mathematics or statistics, pursued after completing the senior secondary examination or equivalent. No exemption is applicable for part-time courses.
80G:
Donations to trusts, charitable institutions and approved educational institutions qualifies for deduction under Section 80G. The exemptions can be up to 50 per cent or 100 per cent of the donations made depending where you donate. Funds in which the donations are eligible for tax exemptions include the National Defence Fund, Prime Minister Drought Relief Fund, National Children's Fund, Prime Minister's National Relief Fund etc.
80GG:
If a salaried or self-employed person staying in a rented house does not receive any kind of house rent allowance (HRA), they can claim a deduction under this section. However, you cannot avail any such benefit if you or spouse or your child owns any residential accommodation in the city you are ordinarily residing. You can claim the least of the following under Section 80GG: 25 per cent of the total income, or Rs. 2000 per month, or excess of rent paid, minus 10 percent of total income.
80GGC:
Donations made to political parties can be claimed for tax deduction under section 80GGC. 80GGC is meant for non-corporate taxpayers whereas deduction under section 80GGB is meant for companies. 100% of donation can be claimed for deduction under section 80GGC.
80U:
Differently abled residents in India can claim a flat deduction on income tax by producing disability certificate under section 80U. One with any of the following conditions are considered eligible: Autism, Cerebral palsy, Blindness, Low vision, Leprosy-cured, Hearing impairment, Loco motor disability, Mental retardation, Mental illnesses, Multiple disabilities etc. You would have to furnish certificate in the prescribed form signed by a physician, psychiatrist, etc working in a government hospital to certify disability while filing income tax returns to claim exemption under 80U. Your taxable income would reduce by Rs. 50,000 or Rs. 1 lakh depending on your disability. 80U tax deduction on disability is not available for NRIs.
80CCG:
The Finance Act 2012 introduced a new Section 80CCG to offer 50 per cent tax break to new investors who invest up to Rs. 50,000 and whose income is less than Rs. 12 lakh. It has been introduced to encourage new investors entering the equity markets for the first time.
There are several sections apart from 80C that can help an individual from tax exemption. It is time to start looking beyond 80C to reduce your tax burden.
The writer is the Principal Financial Planner at EconPenny. You can chat-twit-mail him at facebook@dipankar.jakharia | twitter@d_jakharia | dipankar.jakharia@gmail.com
