Tax Saving – Look Beyond Section 80C
Most of us are well aware of the few tax exemptions available like home loan premium, insurance premium, health insurance premium, provident fund contributions, tuition fees of two school-going children and many others, but there are other options for Tax Saving that one can use to minimize the tax burden.
Let’s Take a Look at These Tax Saving Options
Section 80CCG – Investment in Rajiv Gandhi Equity Saving Scheme, 2013(RGESS)
Maximum Deduction and exemptions available: Either 50% of the amount invested in shares or select equity oriented mutual funds, or Rs. 25,000, whichever is lower. The deduction is available for three consecutive financial years beginning with the investment fiscal.
- Gross total income does not exceed Rs. 12 Lakh
- Investment is locked in for 3 years.
- Individual is a “retail investor:, i.e. did not have a demat account or had one but was never used for trading in the past.
- If after claiming the deduction, you fail to satisfy any condition, the deduction shall be considered to be income in the year in which default is confirmed.
- A grace period of 7 trading days from the end of the financial year is given so that securities bought on the last trading day get credited in the demat account.
Proof to be submitted
- A certificate from the depository, certifying the new retail investor status.
- Annual statement of securities and photocopy of statements of equity fund.
- Copy of Form A and Form B as notified by the central government furnished by the individual to the depository.
Section 80TTA: Interest on Saving Bank Account
Maximum deduction/ exemption available: Actual interest received or Rs. 10,000, whichever is lower
Conditions: Account has to be in a bank, or a cooperative society in banking or post office.
Caution Points: No deduction for interest on fixed deposits or sweep in accounts.
Proofs to be submitted: Declaration by individual.
Section 80DD: Maintenance or Medical Treatment of Handicapped Dependents
Maximum deduction/ exemption available: Rs. 1 Lakh for severe disability; Rs. 50,000 for other disability.
Conditions: Expenditure on medical treatment, training and rehabilitation of a dependant and/or under any scheme by Life Insurance Corporation of India or any other insurer for maintenance of the dependent
Caution Points: Where disability requires reassessment, a fresh certificate is needed to continue claiming this deduction.
Proof to be submitted:
- Photocopy of certificate along with a self declaration.
- Proof of payment.
Section 80U: Disability for Self
Maximum Deduction/exemption available: Rs 1 Lakh for severe disability and Rs. 50,000 for other disability
Condition: Individual is suffering from a permanent physical disability or mental retardation.
Caution Points: Where disability requires reassessment, a fresh certificate is needed to continue claiming the deduction.
Proof to be submitted: Photocopy of Form 10-IA
Section 80GG: Rent Paid
Maximum Deduction/ exemption available
- 25 % of total income
- Rs. 2,000 per month
- Excess rent paid over 10% of total income, whichever is lower.
Conditions for Tax Saving:
- Individual does not receive house rent allowance from employer.
- Deduction is not available if:
- a) The individual/spouse/minor child owns any residential accommodation at a place where she ordinarily resides or performs duties of his office.
- b) The individual owns an accommodation at any other place for which income is assessed on “income from house property” as self-occupied property.
Proofs to be submitted: Declaration in Form No.10BA
Section 24(b): Loss from self occupied house
Maximum Deduction/ exemption available: Interest paid on loan taken for self-occupied house property shall be allowed subject to the maximum of:
- Rs. 15 Lakh (if the loan is taken on or after 1 April 1999 for the purchase or construction, completed within 3 years from the end of the fiscal in which loan is taken). Or,
- Rs. 30,000( in other cases)
- Only interest paid in the current year is eligible.
- Deduction is applicable only after occupancy, pre-occupation interest is deductible in five equal installments starting from the year when the construction is completed, or property is acquired.
- For a joint loan, deduction can be claimed only on the amount paid by the individual.
- Where the person has occupied more than one house, only one house is treated as self-occupied. All others will be deemed to be let out.
- In case of self-occupied property, the person cannot claim both HRA exemption as well as from house property where the property is in the same city or region.
- Possession of the house is mandatory to get tax benefits.
Proof to be submitted
- Provisional interest certificate from the housing finance company or bank.
- Possession certificate from the builder or a utility bill or municipal tax receipt
- Self-declaration, if the person is availing both HRA and housing interest benefit without property being let out.
- In case of joint loan, declaration needs the co-borrower or co-owner’s signature.