The tax-saving investment season is about to end. And usually, we think of well-known avenues such as insurance (endowment or moneyback policies), equity-linked savings schemes (ELSS), or small-saving instruments such as National Savings Certificate (NSC). But there are many other options that you may be unaware of, which get you tax deduction benefits.
Section 80C: For both investments and spends
Archit Gupta, Founder and CEO, ClearTax says that data was collected from users who make tax-saving investments via the website. It shows that around 30 percent of the tax filers with total income in excess of Rs 8 lakh did not exhaust the section 80C.
While Section 80C allows Rs 1.5 lakh deduction, many investments qualify. Even some of your crucial expenses are allowed for income-tax deductions. Children’s tuitions fees, stamp duty paid on registration of a house, principal repayment of home loan are some of your crucial spends that also qualify for deduction under the same section.
“Check your income-tax computation provided by the employer. In case you have not utilised the Section 80C limit fully, you must make some investments before March 31. Or, include the eligible spends in your computation,” added Gupta.
Deduction against preventive health checkup expenses
Section 80D gives you income-tax deduction for buying health insurance policies. But did you know that it also covers preventive health check-up? These, too, qualify for deduction under section 80D. Every taxpayer is allowed to claim a maximum of Rs 5,000. “This is within the overall limit of Section 80D. If you spend on a health check-up, claim it, or schedule a health check-up before March 31,” says Gupta.
However, “the payment should be made in any mode other than cash,” reminds Sandeep Sehgal, Director -Tax and Regulatory, AKM Global, a consulting firm.
Additional investment in New Pension system
Investment in National Pension Scheme (NPS) gets you Section 80C income-tax deduction benefits. There is a standalone section 80CCD (1B) in the income-Tax act that allows deduction for investment, just in the NPS. An additional deduction of Rs 50,000 is allowed in this section. “This is over and above the collective limit of Rs 1.5 lakh available under section 80C of the Income Tax Act,” adds Malhotra.
NPS investors can claim benefits under Sec 80 CCD (1) of up to 10 percent of their salary (basic + DA; this goes up to 20 percent of gross total income for self-employed individuals) within the overall ceiling of Rs 1.5 lakh under Sec 80 C.
“Individual assessees can claim deduction in respect of amount paid or deposited under a pension scheme notified by the Central Government,” Neha Malhotra, director, Nangia and Anderson.,” says Neha Malhotra, director, Nangia and Anderson.
LTA cash voucher scheme
Given that there was lockdown and restriction on movements, many people those availing the Leave Travel Concession (LTC) Scheme, would have not been able to do so. The government announced other options to claim the allowance.
“Taxpayers who have bought goods and services with a GST rate of 12 percent or more are eligible for claiming the benefit. If you bought gadgets or household goods, use the bills to claim the LTA scheme,” says Gupta.
Deductions in respect of rents paid
“Self-employed or salaried individuals not receiving any house rent allowance can claim deduction of rent paid. Individuals residing with their parents in a property owned by their parents are also eligible to claim Section 80GG benefits. Maximum deduction under this section is Rs 60,000 per year. In order to claim benefit of this section, the assessee is required to file Form 10BA. The form is to be filed online,” says Sehgal.
Submit the proof to your employer
If you are a salaried employee, besides making investments and incurring expenses to save taxes, it is prudent to submit the proof of the same to your employer. “Ordinarily, at the beginning of the financial year, all salaried individuals furnish Form 12BB declaring the investments they intend to make during the year. Employers deduct tax at source after accounting for such investment-linked tax deductions. If you haven’t yet submitted proofs, then your employer will compute the total income without accounting for the deductions and shall deduct tax at source from the salary for the month of March,” says Malhotra.But you can still account for your investments and expenses at the time of filing your income-tax return, by July 31.