Premiums paid for health insurance for self, spouse, children, and parents qualify for deduction under Section 80D
New Delhi: As March 31, the last day of the financial year approaches, taxpayers are left with nearly 45 days to make their tax-saving investments for the current financial year FY19. Other than the popular options available under Section 80C, taxpayers also have other options to save tax. Income Tax Act in India has many provisions that allow taxpayers to save tax. One needs to know these rules/provisions in order to get the maximum possible. Check these options here:
1. Tax saving on house rent allowance
House rent allowance, commonly known as HRA, is a major chunk of a salaried individual’s total pay. Under Section 10 (13A) of the Income Tax Act, you can save tax on the rent you pay to your landlord. However, you get partial tax benefit on the rent you pay. The amount that is allowed for exemption under HRA is calculated as the minimum of:
i) Rent paid annually minus 10 per cent of basic salary plus dearness allowance
ii) Actual HRA received
iii) 40 per cent of basic and dearness allowance (50 per cent in case of metro cities).
Your HRA allowance will be taxable if you are not paying any rent or you stay in your own house. But those who stay with their parents can also claim HRA benefits by paying rent to their parents.
2. Deductions under Section 80CCD(1B)
This section was introduced in Budget 2015-16. Under this section, one can get tax benefits on investments up to Rs 50,000 in NPS tier 1 account. This is over and above the Rs 1.5 lakh limit allowed under Section 80C. An individual in the highest tax bracket can save over Rs. 15,000 by investing Rs. 50,000 in NPS under Section 80CCD(1B).
3. Deduction under Section 80E
If you have taken an education loan for yourself, spouse or children, then the interest paid on the loan qualify for tax benefit under Section 80E. The best thing here is that there is no upper limit on the amount of deduction. But the criteria is that the loan must have been taken from a financial institution or approved charitable institution and for full-time higher education.
4. Deduction under Section 80D
Premiums paid for health insurance for self, spouse, children, and parents qualify for deduction under Section 80D. One can claim a deduction of Rs. 25,000, if he is below 60 years of age, and Rs. 30,000 if he is above 60 years of age, towards medical insurance premium paid for self, spouse and children. Under this section, an additional deduction of Rs. 25,000 is available if one buys medical insurance for his parents. This deduction can go up to Rs. 30,000 per year if parents are above the age of 60 years. So the total deduction you get under Section 80D is up to Rs 60,000.