Exploring Tax Saving Options Beyond Section 80C

Tax planning is an essential aspect of financial management, helping individuals reduce their taxable income and save money. While Section 80C of the Income Tax Act, 1961 is widely known for its tax-saving benefits, there are several other avenues that can help you save on taxes. This blog aims to explore five tax-saving options beyond Section 80C, providing valuable insights for investors, especially those in Tier II and Tier III cities in India (Tier II and Tier III cities in India are the smaller urban centres experiencing growth and development, having population of Tier II cities range between 50000 to 99999 and Tier III cities range between 20000 to 49999 ).

Health Insurance Premiums (Section 80D)

Health insurance is not just a financial safety net but also a significant tax-saving tool. Under Section 80D of the Income Tax Act, you can claim deductions on the premiums paid for health insurance policies. The deduction limits are as follows:

• Up to ₹25,000 for individuals and their families.
• An additional ₹25,000 for parents under 60 years.
• For senior citizens (above 60 years), the limit is ₹50,000.

Interest on Education Loan (Section 80E)

Investing in education is one of the best long-term investments you can make. Section 80E provides tax benefits on the interest paid on education loans. This deduction is available for a maximum of eight years or until the interest is fully repaid, whichever is earlier. The loan must be taken for higher education, and the deduction is available to the individual who has taken the loan.

For instance, if you have taken an education loan for your child's higher education, the interest paid on this loan can be deducted from your taxable income, making education more affordable.

Donations to Charitable Institutions (Section 80G)

Contributing to charitable institutions not only helps in making a positive social impact but also offers tax benefits. Under Section 80G, donations made to specified funds and charitable institutions are eligible for deductions. The deduction can be 50% or 100% of the donation amount, depending on the type of institution.

For example, donations to the Prime Minister's National Relief Fund are eligible for a 100% deduction, while donations to other specified institutions may qualify for a 50% deduction. This encourages philanthropy while providing tax relief.

Interest on Home Loan (Section 24(b))

Owning a home is a significant milestone, and the interest paid on home loans can help you save on taxes. Under Section 24(b), you can claim a deduction of up to ₹2 lakh on the interest paid for a self-occupied property, interest incurred on capital borrowed for the purpose of acquisition or construction of house property. The deduction shall be allowed if capital is borrowed on or after 01-04-1999 and acquisition or construction of house property is completed within 5 years .For let-out properties, there is no upper limit on the deduction.

Additionally, first-time homebuyers can claim an extra deduction on interest payable of ₹50,000 under Section 80EE, provided the loan amount does not exceed ₹35 lakh and the property value is within ₹50 lakh. This makes homeownership more affordable and provides substantial tax benefits.

National Pension System (NPS) (Section 80CCD(1B))

Planning for retirement is crucial, and the National Pension System (NPS) offers an excellent way to save for the future while enjoying tax benefits. Under Section 80CCD(1B), you can claim an additional deduction of up to ₹50,000 on contributions made to the NPS. This is over and above the ₹1.5 lakh limit under Section 80C.

NPS contributions are invested in a mix of equity, corporate bonds, and government securities, providing a balanced approach to retirement savings. The tax benefits on contributions and the tax-free withdrawals at maturity make NPS an attractive option for long-term financial planning.

For further information, kindly seek advice from your financial advisor. Please note that the avenues stated above are based on the tax laws as on date. However, the same maybe subject to changes if any, as and when amended from time to time.

Making Informed Tax-Saving Decisions

In summary, there are several tax-saving options beyond Section 80C that can help you reduce your taxable income and achieve your financial goals. Health insurance premiums, interest on education loans, donations to charitable institutions, interest on home loans, and contributions to the National Pension System are all viable options to consider.

Diversifying your tax-saving investments ensures that you are not overly reliant on a single section of the Income Tax Act and can maximize your tax benefits. It is always advisable to consult with a financial advisor to tailor your tax-saving strategy to your specific needs and circumstances.

Take the Next Step in Your Tax-Saving Journey

As you explore these tax-saving options, consider integrating mutual fund investments into your financial plan. Mutual funds offer a range of investment opportunities that can complement your tax-saving plan and may help you achieve your long-term financial goals. For more information and personalized assistance, consult with a financial advisor who can guide you through the process.

Additional Links:

Senior Citizens and Super Senior Citizens for AY 2025-2026

Incometaxindia.gov.in - Income under the House Properties