Previously we have talked about the various common deductions available under this section. Today, we will discuss some of the lesser-known tax-saving options available under 80C.
1) National Pension System
NPS is a part of 80-C, but you avail of additional deductions up to Rs 50,000 beyond the 1.5 lakh limit of section 80-C. Salaried or self-employed, both can open an NPS account.
2) Disabled dependent
Another deduction is available for people with disabilities, and dependent family members. Under section 80DD, you can avail deduction for expenses incurred in caring for them. You can claim up to Rs 1,25,000 if the disability is more than 80% and Rs 75,000 if the disability is between 40-80%.
3) Education loan
There is also a deduction available for education loans, this can be for yourself, your spouse, or your children. You can get a deduction on the yearly interest of the loan. There is no deduction available for the principal part of the loan, only the interest can avail of the deductions.
4) Electric vehicles
These days electric vehicles are in vogue. Buying an electric vehicle – be it a four-wheeler or a two-wheeler – with a vehicle, loan can make you eligible for income tax benefits under section 80EEB. This deduction can be availed against the interest payment which can be up to Rs 1.5 lakh in a year.
To promote charitable donations, the govt has incentivized them. Section 80G of the Income Tax Act allows you to claim tax deductions for contributions made to certain relief funds and charitable institutions.
And if this donation is towards rural development or scientific research then you can claim tax deductions for it under Section 80 GGA.
6) Tax harvesting
This deduction is only applicable to equity investments such as stocks and mutual funds, this is called tax harvesting. You might know that up to Rs 1 lakh long-term capital gains are tax-free in a financial year.
Tax harvesting is a strategy used to reduce tax liability by selling securities that have declined in value and replacing them with similar investments. This generates a capital loss that can offset capital gains from other investments, lowering the overall tax bill. The idea is to harvest tax losses in order to reduce the tax bill in the current year or carry forward the losses to future years to offset future gains.
Under Section 80C, there are various smart ways to save on your tax liability. From investing in tax-saving instruments like ELSS funds and PPF to claiming deductions for expenses like tuition fees and home loan principal repayment, there are several options to choose from. By making use of these tax-saving opportunities, you can not only reduce your tax burden but also grow your wealth over time.
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