Income Tax Saving Investments Under Section 80EE, 80C, 80D

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Income Tax Saving Under Section 80EE, 80C, 80D

Every year taxpayers make use of different legal platforms or tax saving investment schemes to help save some tax. These schemes can be opted for keeping in mind the tax deductions to enable tax saving in the best possible ways, and to increase income.

There are various rules under the income tax act that allow deduction on investment plans and savings plans that a taxpayer can acquire during a financial year to save tax.

Here are some such tax saving schemes that you can make use of to help you in saving some taxable amount.

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Also Read: Investment Plans for a Girl Child in India

Ways to save tax under section 80EE, 80C, and 80D 

Under section 80EE

Under this section you can make a claim for tax deduction on home loans for an amount of up to Rupees 50,000.

Under Section 80C

Under this section you can invest an amount of 1.5 lakh rupees if you want to avail tax exemptions on your taxable income. Further, you can claim an added deduction of 50,000 rupees by making an investment in NPS or National Pension Scheme under section 80CCD (1b).

Investment Plan Available Returns Lock-in Period
5-Year Bank Fixed Deposit 6% to 7% 5 years
Public Provident Fund (PPF) 7% to 8% 15 years
National Savings Certificate 7% to 8% 5 years
National Pension System (NPS) 12% to 14% Till Retirement
ELSS Funds 15% to 18% 3 years
Unit Linked Insurance Plan (ULIP) Varies with Plan Chosen 5 years
Sukanya Samriddhi Yojana (SSY) 7.60% N/A
Senior Citizen Saving Scheme (SCSS) 7.40% 5 years

Under Section 80D

Under this scheme you can have a maximum deduction of 1 lakh rupees by purchasing a medical insurance. This sum is further divided and can be used to insure health of your own self and your family/parents/senior citizens.

Further Options of Investments Under Section 80C 

Among all the different options of knowing how to save tax, the most accepted ones are available under Section 80C.  These saving options are available in the form of expenses and investments for HUFs or Hindu Undivided Family as well as for other individuals in India, and one can easily claim deductions on the same of up to 1.5 lakh rupees during a fiscal year.

The below table shows the various plans that you can invest on to save on your income tax during a financial year.

Other Options of Tax Saving

If you want to know how to save tax other than 80c section, you can also avail other deductions available under income tax Section 80.

  • The key among them includes tax benefits earned on premiums of health insurance as well as on home loan.
  • Section 80 of the income tax act allow you to claim up to rupees 50,000 on the premium paid for medical insurance. Out of the 50,000 rupees, 25000 rupees can be used for the taxpayer and his/her spouse and kids, while the remaining 25000 rupees can be used for senior citizens or parents who are dependents.
  • Also, the taxpayer can claim deduction on the premium of medical insurance of up to 1 lakh rupees per year for senior citizens. However, if you cannot claim deduction on senior citizen health cover, you can incur claim for medical expenses of up to 50,000 rupees under 80D.
  • Similarly, in case of home loans you can claim deductions of up to 2 lakh rupees on interest paid under section 24.
  • Here, you can also avail a deduction under section 80EE of over 50,000 rupees on interest paid on home loan along with the claim that can be made under section 24.
  • Besides, you can also claim an additional deduction of 1.5 lakh rupees on interest paid for purchasing a new house. This deduction is  available as per the housing scheme under 80EEA section, available till March 31, 2022.
  • In addition, you can also avail the home loan option to lessen the income tax you pay by claiming deduction of 1.5 lakh rupees on the home loan principal you pay under Section 80C.
  • Further, you can also claim deduction for donating money for charity under section 80G.
  • Moreover, education loan interest that you pay also allow you deduction as per section 80E.

Thing to consider to plan investment to save tax 

The starting of a financial year is the best time to plan for your investments for income tax-saving options. Though most tax-paying citizens delay the process till the last quarter of a financial year, it is advised to get them done early on during the financial year to attain long-term goals.

Here are some pointers to help you plan your tax-saving for a financial year.

  • First consider the tax-saving investment plans that you already have invested in, such as, term insurance, EPF payment, children education loans, home loan etc.
  • Now, you can calculate this amount and deduct it from 1.5 lakh rupees to check how much more money you need to invest.
  • If your investment plans that you already have, has covered the entire amount limit required to invest, then you need not invest any further.
  • While choosing tax-saving investment plans, try to opt for the ones as per your risk profile and goals including NPS, PPF, ELSS, fixed deposits and so on.

Also Read: Sukanya Samriddhi Yojana (SSY) Scheme

The above tips can be used to understand how to utilize the limit of 80C. The best option is to start investing early on during the first quarter of a budget year to attain maximum benefits throughout the year. Moreover, it will help you to stay relieved towards the end of the financial year.

Now that you know the various options on how to save tax in India, you can utilize these options in the best possible ways to save tax.

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Gayatri Prabhu, Head-Digital Business at Mahindra Insurance Brokers Limited (MIBL) is one those few digital leaders who has the width and depth that is required to execute an ROI driven holistic digital strategy. She cuts through the noise, identifies the critical levers and leads her team to successful execution of the defined strategy. Her core mantra to win new and retain existing customers is: understand the consumer behavior and craft experiences around it.

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