Consider these 9 things before investing in mutual funds!
What is the right way to invest in mutual funds? How do mutual funds work? What kind of risk is involved? Which fund is right for whom? What things should be kept in mind before investing? Watch this video to know-
Tax-saving investments make sense for taxpayers, including salaried persons and professionals. The majority of people know that under Section 80C of the Income Tax Act, 1961, they can claim a tax deduction of Rs 1.5 lakh. The tax benefits available under this section, include life insurance premiums, public provident fund, employee provident fund, and tax-advantaged fixed deposits. However, tax preparation is much more than utilising Section 80C to minimise your tax bill further.
Let’s take a look at some more tax-saving strategies than Section 80C that can help you become a more savvy tax saver:
Tax benefits beyond 80C
1. Section 80CCD (1B) entitles the contributor to an extra tax deduction of up to Rs 50,000 on contributions to a national pension scheme (NPS) Tier I Account. This deduction is in addition to the deduction granted under Section 80C for contributions of up to Rs 1.5 lakh to an NPS Tier I account. With this advantage, the combination of deductions you can claim under NPS is Rs 2 lakh.
2. Section 80D entitles individuals, spouses, and dependent children to a tax deduction of up to Rs 25,000 on health insurance premiums paid for themselves, spouses, and dependent children.
Additional deductions of up to Rs 25,000 are available on health insurance premiums paid for your parents under the age of 60. For parents over the age of 60, a larger tax deduction of up to Rs 50,000 can be claimed for health insurance premiums.
That said, under section 80C, depending on who is included under the health insurance cover and their age, the limit can be Rs 25,000, Rs 50,000, Rs 75,000, or Rs 1 lakh.
3. Section 10(13A) allows renters to deduct the HRA component of their salary. Individuals who live with their parents in their parent’s rental property may also claim this deduction provided they pay rent to their parents.
One should keep in mind that you must pay rent to the parent who owns the property. The parent who receives the rent should disclose the rental income on their income tax return.
Maintain accurate records and proof of your rent payments to your parent in the form of rent receipts, rent agreements, and rent payments made via bank transfers. This will ensure that you are prepared for any subsequent inspection by tax officials.
4. Section 80GG enables self-employed and salaried individuals who do not receive HRA as part of their compensation to deduct the rent they pay for their housing. However, the deduction allowable under this section limit is at Rs 5,000 per month or 25% of one’s total income for the year, whichever is less.
5. Section 80DDB entitles taxpayers to a deduction for medical expenses incurred in treating particular conditions or disorders for themselves or a dependent family member. These conditions are included in IT Act Rule 11DD and include AIDS, chronic renal failure, haemophilia, cancer, thalassaemia, and other neurological disorders. The deductions are available only upon receipt of proper prescriptions from the specialists listed in Section 80DDB.