While investments in the National Pension System (NPS) of up to ₹1.5 lakh per financial year qualify for tax deduction under Section 80C, an additional tax deduction of ₹50,000 is available for investments in NPS Tier I Account
Most of us make the most of tax deduction options available under Section 80C of the Income Tax Act. As a result, we often end up exhausting this limit. However, we can further reduce our tax outgo with other tax saving options. Let’s look at some of these options for those who have already exhausted the limit of ₹1.5 lakh
Section 80D provides tax deduction on health insurance premiums of up to ₹25,000 paid for yourself, spouse and dependent children. An additional deduction of up to ₹25,000 can be claimed for insurance premiums paid for your parents. Moreover, the health insurance premium paid for parents who are senior citizens is eligible for a higher tax deduction of up to ₹50,000.
Section 80CCD (1B): Additional deduction for NPS investments
While investments in the National Pension System (NPS) of up to ₹1.5 lakh per financial year qualify for tax deduction under Section 80C, an additional tax deduction of ₹50,000 is available for investments in NPS Tier I Account. This deduction is over and above the ₹1.5 lakh available on NPS Tier I Accounts under Section 80C.
Section 80GG: Deduction on rent for those not receiving HRA
Naveen Kukreja – CEO& Co-founder, Paisabazaar.com said section 10(13A) allows employees receiving House Rent Allowance (HRA) to claim a tax deduction on the rent paid by them. However, those living in rental accommodation but not receiving HRA as a part of their salary, or non-salaried people living in rented accommodation can claim a deduction for their rental expenses under Section 80GG of the Income Tax Act. “The deduction amount would be the least of the following --- ₹5000 per month, 25% of your income and actual rent paid in excess of 10% of the total income," he said.
Section 10(13A): Availing exemption on HRA by paying rent to parents
Taxpayers who are staying in accommodation owned by their parents can reduce their tax outgo by claiming tax deduction under Section 10(13A) by paying rent to their parents. However, keep in mind that the rent needs to be paid to the parent in whose name the property is registered. Moreover, the rental income has to be disclosed by the parent while filing his tax returns. Such taxpayers should ensure to maintain proper records of paying rents to their parents. They should enter into rental agreements with their parents, preserve the rent receipts and preferably pay their rents through bank transfers. This will help you to stay prepared for any scrutiny by tax officials.
Section 80DDB: Deduction for medical treatment of certain diseases
“Section 80DDB allows taxpayers to claim a deduction for treatment of eligible diseases as specified in Rule 11DD of Income Tax Act for self or any of his dependents. The deduction can only be claimed on submitting relevant prescription from the list of specialists specified under section 80DDB. If the person requiring treatment is a senior citizen, then the maximum deduction available is ₹1 lakh p.a. For others, the deduction has been capped at ₹40000," said Kukreja.