Save Tax Beyond 80C? Find Out in a 15-Min Call
- Farheen Mukadam
- Aug 26
- 12 min read
Tax-saving investments and deductions play a critical role in reducing the overall tax liability for individuals. While Section 80C is well-known for offering various investment options like PPF, EPF, and life insurance premiums, there are several other tax-saving avenues that can significantly lower your taxable income. These deductions not only help you reduce your tax liability but also encourage long-term financial planning and savings. Let us explore some popular tax-saving avenues beyond Section 80C, helping you optimize your tax planning for the Financial Year 2024-25 (Assessment Year 2025-26).
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Schedule a Call to Discover Your Tax Savings
Keeping track of all the tax-saving options beyond Section 80C can be confusing. TaxBuddy’s Schedule a Call service lets you talk directly with tax experts who can help you find the best deductions and investments for your situation. In just 15 minutes, you can learn about deductions you might have missed, get answers to your questions, and get simple advice to save more tax for FY 2024-25. This quick and easy call makes sure you don’t miss any chances to save and helps you plan your taxes better.
Popular Tax-Saving Avenues Beyond 80C
While Section 80C of the Income Tax Act is one of the most well-known and widely used tax-saving sections, offering deductions for investments like Life Insurance Premiums, Provident Fund (PF) contributions, National Savings Certificates (NSC), and tax-saving Fixed Deposits (FDs), its not the only option available to taxpayers. There are several other avenues that can help reduce taxable income and also support long-term financial security. These alternatives often offer higher tax-saving limits or provide additional benefits that align with specific financial goals, such as retirement planning, healthcare, and homeownership.
Here’s a detailed look at some of the most effective tax-saving avenues beyond Section 80C:
1. Section 80D – Deduction for Health Insurance Premiums
Health insurance premiums paid for yourself, your spouse, children, and parents can provide tax deductions under Section 80D. For taxpayers below the age of 60, the maximum deduction available is ₹25,000. If the policyholder or their parents are above the age of 60, this amount increases to ₹50,000. This deduction covers premiums paid for both individual and family health plans.
Additionally, preventive health check-ups also qualify for a deduction of up to ₹5,000 within the overall limit. This makes Section 80D not only a tax-saving tool but also an important financial safeguard against rising medical costs.
2. Section 80E – Deduction for Education Loan Interest
Section 80E allows taxpayers to claim a deduction on the interest paid on loans taken for higher education. Unlike most other tax deductions, the deduction under Section 80E is available for a maximum of 8 years or until the interest is fully repaid, whichever is earlier. This section is specifically designed to make education more affordable and accessible.
The deduction applies to loans taken for pursuing higher education from recognized institutions in India or abroad, and the benefit is available to individuals, including parents who may have taken loans for their children's education.
3. Section 24(b) – Deduction on Home Loan Interest
If you have a home loan, Section 24(b) offers a deduction of up to ₹2 lakh per year on the interest paid for a self-occupied property. This deduction helps homeowners significantly reduce their tax liability while they continue to pay off their mortgages.
This benefit applies to both the principal and interest portions of the home loan. For a rented property, the entire interest paid is eligible for deduction, making it a valuable avenue for reducing taxable income. If the property is let out, the rental income will be taxed, but the interest deduction under Section 24(b) can offset this income, reducing the overall tax liability.
4. Section 80G – Donation to Charitable Institutions
Contributions made to approved charitable institutions can qualify for deductions under Section 80G. The percentage of the deduction varies depending on the type of charity and the kind of donation made. For instance, donations to registered relief funds or government-approved institutions can offer a 100% deduction, while donations to other charitable organizations may qualify for a 50% deduction.
This section not only provides a financial benefit but also encourages philanthropic contributions, making it an excellent option for individuals looking to make a positive social impact while saving on taxes.
5. Section 10(10D) – Tax-Free Benefits from Life Insurance Policies
Life insurance policies, particularly those with a premium paid for more than 5 years, are tax-free under Section 10(10D) if the sum assured is greater than the premiums paid. This section helps individuals reduce their tax liability while ensuring financial protection for their families.
The maturity proceeds, including any bonuses, are also exempt from tax under Section 10(10D), which is a substantial benefit when comparing life insurance with other tax-saving investments that may carry capital gains or interest income taxes.
6. National Pension Scheme (NPS) – Section 80CCD
The National Pension Scheme (NPS) is another excellent avenue for long-term tax savings and retirement planning. Contributions to the NPS are eligible for tax deductions under Section 80CCD. While Section 80C allows a maximum deduction of ₹1.5 lakh, an additional ₹50,000 can be claimed under Section 80CCD(1B) for contributions made to NPS, beyond the ₹1.5 lakh cap.
This makes NPS one of the best retirement savings options, as it provides both tax-saving benefits and helps you build a retirement corpus. The government also provides an incentive through tax-free returns, and the lump sum at maturity can be partially withdrawn tax-free.
7. Section 80U – Deduction for Disabled Individuals
Section 80U provides a tax deduction to individuals with disabilities. This section allows a deduction of ₹75,000 for individuals with a disability and up to ₹1.25 lakh for those with severe disability. The deduction is available regardless of whether the individual is earning or not and can be claimed by the taxpayer or their legal guardian.
This is a crucial tax-saving tool for people with disabilities, allowing them to reduce their taxable income while also providing necessary financial support for their medical and living expenses.
8. Section 80TTA and 80TTB – Deduction on Savings Account Interest
For individuals below the age of 60, Section 80TTA allows a deduction of up to ₹10,000 on the interest earned from savings accounts in banks, post offices, or cooperative societies. For senior citizens (60 years and above), Section 80TTB increases this deduction to ₹50,000 for interest earned on savings accounts, fixed deposits, and recurring deposits.
This is especially beneficial for individuals relying on interest income as a source of savings, helping them reduce their taxable income.
9. Section 10(14) – House Rent Allowance (HRA)
If you're a salaried employee paying rent for your accommodation, you may qualify for tax deductions under House Rent Allowance (HRA). While this deduction is part of the salary structure, many employees miss claiming the full HRA exemption due to the non-submission of the required documents like rent receipts.
HRA is calculated based on a formula considering the rent paid, salary, and other factors. It offers significant savings for those residing in rented accommodation, reducing their taxable income.
10. Capital Gains Exemption under Section 54 – Sale of Residential Property
Section 54 provides tax exemptions on long-term capital gains arising from the sale of a residential property if the proceeds are reinvested into another residential property. This exemption is aimed at encouraging the reinvestment of profits into real estate and thus provides significant tax relief for property owners looking to upgrade or relocate.
The amount exempt from capital gains is restricted to the cost of the new property purchased, and the property must be held for a minimum period to qualify for the exemption.
National Pension System (NPS) – Section 80CCD(1B)
The National Pension System (NPS) is an excellent retirement savings scheme available to all Indian taxpayers. Under Section 80CCD(1B), you can claim an additional deduction of up to ₹50,000 for contributions to NPS, over and above the ₹1.5 lakh limit under Section 80C. This deduction is available regardless of whether you are contributing to a government or private NPS scheme. NPS not only offers tax benefits but also helps you accumulate a significant retirement corpus, which can be used to secure your financial future.
Health Insurance Premiums – Section 80D
Health insurance premiums paid for yourself, your family, and your parents qualify for a deduction under Section 80D. The maximum deduction available for an individual taxpayer is ₹25,000, while for senior citizens (aged 60 or above), this limit increases to ₹50,000. In addition, if you are insuring your parents who are senior citizens, the maximum deduction can go up to ₹100,000. This section encourages taxpayers to invest in health insurance, which not only saves taxes but also ensures financial protection against unforeseen medical expenses.
Interest on Home Loan – Section 24(b)
If you have taken a home loan to buy, construct, or renovate a house, you can claim a deduction of up to ₹2,00,000 under Section 24(b) on the interest paid on the loan. This deduction is available for both self-occupied and rented properties. For first-time homebuyers, this deduction can be combined with the benefits available under Section 80EE or Section 80EEA, providing additional relief on home loan interest.
Educational Loan Interest – Section 80E
Interest paid on an educational loan for higher education is eligible for a tax deduction under Section 80E. There is no upper limit for this deduction, and it can be claimed for a maximum of 8 years or until the loan is paid off, whichever comes first. The deduction is available for loans taken for higher education for yourself, your spouse, children, or a student for whom you are a legal guardian. This section provides a great tax-saving opportunity for those pursuing advanced education and repaying loans.
Donations – Section 80G
Donations made to charitable organizations, NGOs, or other approved institutions can help you save taxes under Section 80G. The deduction for donations varies based on the type of charity, with certain donations qualifying for 100% or 50% deductions, either with or without restrictions. It's important to ensure that the charity is eligible under the Income Tax Act to claim this deduction. Donations can significantly reduce your tax liability while contributing to social causes.
Savings Account Interest – Section 80TTA/80TTB
Section 80TTA provides a deduction of up to ₹10,000 on interest earned from a savings account with a bank, post office, or co-operative society. This deduction is available for individuals below 60 years of age. For senior citizens (aged 60 years and above), Section 80TTB allows a higher deduction of up to ₹50,000 on interest earned from savings accounts, fixed deposits, and recurring deposits. This provision encourages taxpayers to save and earn interest while also offering tax relief on those earnings.
House Rent Allowance (HRA)
House Rent Allowance (HRA) is a common tax-saving provision available to salaried employees who live in rented accommodation. If you receive HRA as part of your salary, you can claim a deduction based on the rent you pay, subject to certain conditions. The HRA deduction is calculated based on the least of the following three values:
Actual HRA received
Rent paid minus 10% of basic salary
50% of salary (if residing in metro cities) or 40% (for non-metro cities)
Understanding how to optimize this deduction can significantly lower your taxable income.
Other Notable Deductions
Apart from the widely used sections, several other provisions also offer tax-saving opportunities:
Section 80GGA: Deductions for donations made to scientific research or rural development.
Section 80E: Tax benefits for interest paid on loans taken for higher education.
Section 80EE: Deductions for first-time homebuyers.
Section 10(14): Allowances received for travel, conveyance, etc., under specified conditions.
These deductions help reduce taxable income and enhance your savings, offering a comprehensive approach to tax planning.
Conclusion
Tax-saving avenues beyond Section 80C offer several opportunities to reduce your tax liability while securing your financial future. From NPS and health insurance premiums to interest on home loans and donations, these provisions can significantly lower the amount you owe to the government. By carefully planning your tax-saving investments and taking full advantage of available deductions, you can not only reduce your taxable income but also strengthen your financial position in the long term. Always consult with a tax professional or use reliable tax filing platforms like theTaxBuddy mobile appto ensure that you maximize your tax-saving potential and comply with tax regulations efficiently.
FAQs
Q1: What is the maximum tax deduction available under Section 80C?
Section 80C allows taxpayers to claim deductions of up to ₹1.5 lakh for various specified investments and expenses. These include contributions to the Public Provident Fund (PPF), Employee Provident Fund (EPF), life insurance premiums, National Savings Certificates (NSC), and tuition fees. The total deduction cannot exceed ₹1.5 lakh in a financial year, so it’s important to maximize eligible investments within this limit to reduce your taxable income.
Q2: Can I claim a deduction for both NPS and EPF contributions?
Yes, you can claim deductions for both National Pension Scheme (NPS) and Employees' Provident Fund (EPF) contributions. NPS contributions can be claimed under Section 80CCD(1B) up to ₹50,000, which is an additional benefit over the ₹1.5 lakh limit under Section 80C. EPF contributions are eligible for deduction under Section 80C, subject to the ₹1.5 lakh limit. Therefore, you can take advantage of both, contributing to your retirement savings while maximizing your tax benefits.
Q3: Can I claim tax benefits for both life insurance premiums and health insurance premiums?
Yes, you can claim tax benefits for both life insurance premiums under Section 80C and health insurance premiums under Section 80D. Life insurance premiums qualify for a deduction of up to ₹1.5 lakh under Section 80C. Health insurance premiums paid for yourself, your family, and your parents can be claimed under Section 80D. The maximum deduction for health insurance is ₹25,000 for individuals below 60 years of age and ₹50,000 for senior citizens above 60 years.
Q4: How can I claim deductions for home loan interest under Section 24(b)?
Under Section 24(b), you can claim a deduction of up to ₹2,00,000 on the interest paid on home loans for self-occupied or rented property. This deduction is available for both principal and interest components of the home loan, but the ₹2,00,000 limit applies only to the interest portion. If the property is rented out, the entire interest paid can be deducted under the "Income from House Property" section, subject to certain conditions.
Q5: Can I claim deductions for educational loan interest under Section 80E?
Yes, you can claim a tax deduction for the interest paid on educational loans under Section 80E. The deduction is available for the full interest amount with no upper limit. You can claim the deduction for a maximum of 8 years, starting from the year in which the loan is taken. The loan must be for higher education, and the deduction is only applicable to the interest portion, not the principal repayment.
Q6: What donations are eligible for tax deductions under Section 80G?
Donations made to registered charitable organizations or institutions can be claimed for tax deductions under Section 80G. The amount eligible for deduction varies depending on the type of charity. Donations to certain organizations qualify for a 100% deduction, while others may qualify for a 50% deduction. Additionally, some donations may be subject to a 10% of your gross income cap. It's important to keep receipts and ensure the charity is registered to claim this benefit.
Q7: Is there a limit on the savings account interest deduction under Section 80TTA?
Yes, Section 80TTA allows a deduction of up to ₹10,000 on the interest earned from savings accounts in a financial year. This is applicable to interest earned from savings accounts with banks, post offices, and cooperative societies. This deduction is only available for individual taxpayers and Hindu Undivided Families (HUFs), and it does not apply to fixed deposits or recurring deposits, which are covered under Section 80TTB for senior citizens.
Q8: Can senior citizens claim higher deductions on savings interest?
Yes, senior citizens can claim a higher deduction under Section 80TTB, which allows them to claim up to ₹50,000 on the interest earned from savings accounts, fixed deposits, and recurring deposits. This deduction applies to taxpayers aged 60 years or above, offering them greater relief in managing their finances. Unlike Section 80TTA, which provides a ₹10,000 limit for regular taxpayers, Section 80TTB offers a much higher limit for senior citizens.
Q9: How is HRA calculated for tax deductions?
House Rent Allowance (HRA) is calculated based on the least of the following three values:
The actual HRA received by the taxpayer.
Rent paid minus 10% of the salary.
50% of salary if living in a metro city (Delhi, Mumbai, Chennai, Kolkata) or 40% for non-metro cities.
You can claim HRA deductions if you live in a rented house and your employer provides you with HRA. The rent receipts and the lease agreement are necessary to claim this deduction.
Q10: Can I claim deductions for travel allowances under Section 10(14)?
Yes, you can claim deductions for travel, conveyance, and other specified allowances under Section 10(14). The deduction is available to salaried employees and is intended to cover the travel expenses incurred while performing work-related duties. The amount eligible for deduction depends on the actual expenses incurred and the employer’s policy. For example, travel allowances for work-related travel are deductible as long as they fall within the specified limits and conditions set by the employer.
Q11: Can I claim multiple deductions under different sections for tax-saving investments?
Yes, you can claim multiple deductions under various sections for different tax-saving investments, provided you meet the eligibility criteria for each section. For instance, you can claim a deduction of up to ₹1.5 lakh under Section 80C for investments in PPF or EPF, while also claiming a deduction under Section 80D for health insurance premiums, Section 80E for education loan interest, and so on. Each deduction has its own set of eligibility criteria, and as long as they are met, you can claim multiple benefits.
Q12: How can I maximize my tax savings through strategic planning?
To maximize your tax savings, strategically utilize a combination of tax-saving investments, insurance, and allowable deductions. Invest in PPF, EPF, tax-saving fixed deposits, or National Savings Certificates (NSC) under Section 80C. Opt for health insurance under Section 80D, and consider making contributions to NPS under Section 80CCD(1B) for an additional ₹50,000 deduction. Additionally, claim deductions for home loan interest, educational loan interest, and donations. Tax planning should be personalized based on your financial goals, so consulting a tax professional is always recommended to ensure that you are taking full advantage of all eligible deductions.
