It’s that time of the year when your accounts department or company HR is probably asking you for your proof of investments for the previous financial year.
You might have also already made your tax saving investments under Sec. 80C. But the final tax bill still looks high. Can you do something about that?
Here are three ways you can save a bit more in addition to the deductions allowed under Sec. 80C. Note that not all might apply to you but if they do, you can unlock more tax savings this year.
#1. Rs. 25,000 deduction from your income towards your and your family’s medical insurance costs.
Sec. 80D of the income tax act allows you a deduction of up to Rs. 25,000 towards medical insurance expenses. The medical insurance could be yours, for your spouse, or for your children.
In addition to this Rs. 25,000 deduction, if you pay for your parents’ health insurance then that additional sum is deductible up to Rs. 30,000. This means, in theory, you can potentially end up getting Rs. 55,000 more in deductions.
#2. 50% to 100% of a donation made to “specified” relief funds and charitable institutions
If you have given to charity, then be prepared to be rewarded. Your donations made to certain charitable institutions or relief funds such as Prime Minister’s National Relief Fund are eligible for 50% to 100% deduction, under Sec. 80G of the income tax act. This deduction is limited to 10% of your adjusted gross income.
#3. The interest you pay on your education loan is tax deductible for the first 8 years of repayment
Section 80E of the income tax act allows you to deduct, from your gross income, the interest you paid towards your education loan. This deduction is especially useful for those who recently joined the workforce after finishing their studies and are repaying their education loans.
There is no limit on the amount of interest and it is deductible till you paid off the interest or until 8 years since you started repayment. This deduction is also applicable for those who took the loan for the higher education of their spouse or children.