Income tax saving 2019: Three lesser-known tax saver options, other than section 80C (2024)

New Delhi: There is a large section of people who invest in various options which provide proportionate tax breaks primarily to reduce the income tax liability. There are certain sections of the Income Tax Act which provide tax break other than investment which implies an individual will simply be eligible for claiming a tax deduction and there will be no other benefit or return. Such income tax provisions are highly useful for all the salaried class individuals and middle-income groups who have already exhausted the permissible limit under section 80C of the Income Tax Act.

Section 80C of the Income Tax Act provides a maximum benefit of Rs 1.5 lakh upon investing in the designated investment options which offer a tax break. Sukanya Samriddhi Account (SSA), Atal Pension Yojana (APY), tax-saving fixed deposits (FD), Public Provident Fund (PPF), Voluntary Provident Fund (VPF), Employee Provident Fund (EPF), Equity-Linked Savings Scheme (ELSS), National Savings Certificates (NSC), National Pension Scheme (NPS) are some of the classic examples of tax saver options under section 80C with which a person is eligible for a tax deduction of up to Rs 1.5 lakh in a respective financial year.

Interestingly, Sukanya Samriddhi, PPF, EPF, VPF are some investment schemes which falls in the EEE tax category. The investment options falling in the EEE income tax category provide triple tax benefits which imply that the investments made into the scheme allows tax deductions, the interest earned on the amount deposited and the total corpus withdrawn at the maturity is tax-exempt.

Three lesser-known tax saver investment options, other than section 80C

1. Interest earned on savings account: Section 80TTA

The interest earned on the savings account with banks or post offices can be claimed as a deduction subject to an upper ceiling of Rs 10,000. With the help of section 80TTA, an individual can show the interest earned as income from other sources while filing the income tax return. The applicability of section 80TTA is only limited to normal citizens who are below the age of 60 years. On the other hand, senior citizens can also claim an income tax deduction on the interest earned on savings account with a bank or post office, term deposit or recurring deposit. This tax deduction can be claimed under section 80TTB up to a maximum permissible limit of Rs 50,000 in a financial year.

2. Donations to specified funds: Section 80G

Donations made to a specified list of funds as prescribed by the central government are applicable for the income tax break under section 80G of the Income Tax Act. The amount to be claimed for income tax deduction under Section 80G can’t surpass 10 per cent of the individuals’ gross total income in a fiscal.

Some persons, having adequate sources of income, are capable of donating money for a cause that they believe in. Donating money is subject to the ‘earnings potential’ and the ‘willingness’ to support a cause. For all those who are interested in donating money towards a cause can claim income tax benefits for the amount donated.

According to Section 80G of the Indian Income Tax Act, 1961, an individual donating any amount to the charitable organisation and relief funds can claim income tax deductions. Persons donating any amount to charitable organisations can claim 100 per cent income tax deduction provided the entity should be notified by the Income Tax Department for the specified purpose.

Before making the donations, individuals should make sure that the entity to which they are donating the money comes under specified organisations as listed by the Income Tax Department. The state-owned entities such as the National Defence Fund and the Prime Minister’s National Relief Fund are some examples of entities to which a person can donate any amount and can claim 100 per cent income tax deduction. The donation amount has been capped at Rs 2,000 if the person is donating the amount in cash. The government has placed a limit on cash donations in order to eliminate the misuse of this tax break.

3.Interest payments (education loan & home loan): Section 80E & section 80EE

With the growing willingness to pursue higher studies be it in the home country or abroad, the need for credit facilities to cater to the shortfall of money is also rising. Nowadays, a large section of students is highly willing to take a loan for higher studies on their own without involving parents or guardians as a co-borrower. The interest paid on servicing the equated monthly instalments (EMIs) of education loan, home loan are eligible for an income tax break under section 80E and section 80EE.

The government has not placed an upper limit on the interest amount paid while servicing education loan EMI up to a maximum tenure of eight years beginning from the year from which the interest payment had started. The tax break for payment of interest of education loan is subject to the loan which is taken to pursue higher education.

Last date to file ITR

Earlier last week, the Central Board of Direct Taxes (CBDT) extended the income tax return (ITR) filing deadline by a month from July 31, 2019, to August 31, 2019. The decision to extend the ITR filing deadline comes just a week before the previous ITR filing due date of July 31, 2019. "The due date for filing of Income Tax Returns for Assessment Year 2019-20 is 31.07.2019 for certain categories of taxpayers. Upon consideration of the matter, the Central Board of Direct Taxes (CBDT) extends the ‘due date’ for filing of Income Tax Returns from July 31, 2019, to August 31, 2019, in respect of the said categories of taxpayers,” the finance ministry said in a statement.