Exhausted Section 80 C? Here’s How You Can Expand Your Tax Saving Horizon

The current fiscal year is about to end and taxpayers are busy discovering tax saving options to reduce their taxable income. For most taxpayers Sec 80C is the only option to avail tax benefits. So, if you have also exhausted the tax -saving limit of Rs 1.5-lakh rupees under Section 80 C you can opt for the following options:

#1 Section 80D – Health Insurance

Looking at the increasing cost of healthcare in India, buying a health insurance policy is a must in your financial portfolio. It also offers tax saving benefits under Section 80 D. It is applicable to individual health insurance plans and also policies purchased for children, spouse and parents.

The tax benefits that you can avail on health insurance for self, children, and spouse is up to Rs. 25,000. And if you have purchased health insurance coverage for dependent parents above 60 years then you can claim for an additional 25,000 rupees.  For senior citizen health insurance plans the maximum tax deduction limit is 50,000 rupees.  You can compare different type of health insurance at Policybazaar and buy one for your aging parents.  However, please note that tax-saving benefits are valid for policies where the premium is paid in a mode other than cash.

#2 Section 80(DD) – Medical Expense Incurred For Dependents with Disability

Expenses incurred on medical treatment of a dependent family member with a disability you can claim tax saving benefit up to 75,000 rupees. And in case of severe disabilities, the tax-saving limit is kept at 1, 25,000 rupees. These expenses include nursing, medical treatment, rehabilitation of a dependent, training, etc. Dependent s can be your parents, spouse, siblings, and children.  You can avail the benefits by submitting a medical certificate for the specified medical condition.

#3 Section 80 E- Interest Payments on Education Loan

Under Section 80 E the interest that one pays for education loan taken for self, spouse, and children is eligible for tax deduction under Sec.80 E.  The claim needs to be filed in the relevant fiscal year.  Moreover, you can claim tax benefits for continuous 8 years from the time you start settling the payment.

#4 Section 80 G – Donations

Under Section 80 G the donations that you make to charitable institutions, certain funds, or government notified funds can offer you tax benefits. But this is valid only if the amount donated doesn’t exceed 10 percent of the adjusted gross total income. Cash donations lesser than Rs. 2000 are eligible for tax benefits u/s 80 G.

#5 Section 80 GG – Payment of Rent

Generally, HRA deductions can be claimed through the HRA form that you receive from the employer. And if your employer doesn’t provide HRA, you can claim tax deduction u/s 80 GG for the hour rent that you pay.  You just need to submit the declaration in Form 10BA to avail the tax deduction benefits.

#6 Section 80 TTA – Interest on Deposits in Savings Account

Under this section Interest received on savings account deposit is permissible for a tax deduction. Add this interest earned on the savings account under the head ‘Income from other sources’ to claim tax benefits up to Rs. 10,000 u/s 80 (TTA).

#7 Sec 80 (TTB) – Interest on Deposits in Savings Account by Senior Citizens  

Senior citizens can also earn interest on deposits in post offices, bank savings account, recurring account deposits, and term deposits and the upper limit here is kept at Rs. 50,000.

Let’s Delve Deeper into the Tax Deductions under Section 80 D

Check out the table below for the tax deduction limits under Section 80D of the Income Tax Act for the FY 2018-2019 and AY 2019-2020:

Individuals Covered Tax Exemption Limit ( Rs.)
Self & Family25,000
Self, Spouse and Family50,000
Self & Family + Parents above 60 years25,000+ 30,000 (55,000)
Self ( senior citizen) & Family + Parents ( Senior Citizens)60,000

Tax Exemption on Preventive Medical Check-Ups

The limit of tax-exemption is up to 25,000 rupees every year for preventive health check-ups. You can also claim expenses incurred on preventive health check-ups up to 5,000 rupees.

Tax Exemption on Health Insurance Premium Paid for Parents

The health insurance premium that you pay for your parents can earn you tax benefit up to 25,000 rupees. And if your parents are senior citizens then the tax exemption limit is 30,000 rupees.

Tax Exemptions under Section 80DDB

Medical expenses incurred on specified illnesses can earn you tax benefits up to 1, 40,000 rupees. The treatment can include cancer, renal failure, Parkinson infection etc.

Deduction on Senior Citizen Medical Insurance Premium

Every fiscal year, taxpayers above 60 years of age can claim a deduction of up to 30,000 rupees towards medical treatment and check-ups.

Tax Exemptions U/S 80U of the Income Tax Act

Under this section, a deduction up to 75,000 rupees is permissible for people with disabilities. The limit is extendible to Rs. 1.25 lakhs.

Check out the Limitations U/S 80D of the Income Tax Act

To avail the tax benefits, firstly it is important to pay the health insurance premium on time. As mentioned before, tax benefits cannot be availed for any premium that is paid in cash. Though, you can avail tax benefits for cash payments made in regard for preventive health check-ups. Furthermore, listed below are the two most common exclusions-

  • Group Health Insurance– Tax benefits are not applicable to a group health insurance policy. But, if the taxpayer wants to enhance the group health coverage by paying an extra amount of premium then it is possible to claim deductions on it.
  • Service Tax Charges- Insurers charge service tax on the medical insurance premiums. Please note that you cannot claim tax benefits on service tax that is charged on the health insurance premium.

Overall, every policyholder or taxpayer is eligible to claim tax exemption benefits on the health insurance premium paid (under the purview of the Section 80D of the Income Tax Act). Anyway, if you want to buy an affordable comprehensive health insurance plan for elderly parents and self then you can compare health insurance plans online that do not involve any paperwork. This way you can earn a discount on the premium and also avail tax benefits.  A win-win situation!