Explore unique tax-saving tips beyond Section 80C, from claiming deductions for rent paid to parents to leveraging health insurance benefits for significant savings. When saving on income tax, many individuals focus on the popular Section 80C deductions, like investments in PPF, EPF, tax-saving fixed deposits, and tuition fees. While these are effective, there are lesser-known but equally impactful methods to reduce your tax burden. Here are five innovative ways to save income tax beyond Section 80C. Find out about tax-saving tips you might be missing, including health insurance deductions for parents, home loan benefits, and HRA claims for living with parents.
Tax Deductions on Child’s Early Education Fees
Did you know you can claim tax deductions on the fees you pay for your child’s playgroup, pre-nursery, or nursery school? While most taxpayers know tax benefits related to school education under Section 80C, fees for early childhood education have also been included. Introduced in 2015, this provision is often overlooked, but it can provide a valuable opportunity to save on taxes. You can avail of this benefit for up to two children. This deduction is a great way to save on taxes if you invest in your child’s early education.
Claim Deductions on Loans Borrowed from Family Members
If you need financial assistance and your parents are in a lower tax bracket or do not pay taxes, borrowing money from them for household expenses can be a smart strategy. The key benefit here is that you can pay them back with interest and claim deductions under Section 24B for the interest paid. This provision allows for deductions up to Rs 2 lakh on home loan interest, significantly reducing your taxable income while benefiting your family. This strategy is often underutilized but effectively minimizes tax liabilities without relying on traditional financial institutions.
Claim HRA While Living with Your Parents
Most individuals know that renting an apartment entitles them to claim House Rent Allowance (HRA) under Section 10(13A). However, did you know that you can still claim HRA even if you’re living with your parents? Under the same section, if you are paying rent to your parents, you can legally declare them as your landlords and claim HRA, thereby reducing your taxable income. This is a great way to maximize HRA benefits, especially if you live in a family-owned property. Ensure you maintain proper documentation, such as rental agreements and receipts, to support your claim. Note that this does not apply if you already own a house.
Tax Deductions for Health Insurance Premiums (Section 80D)
Health-related expenses can also offer tax-saving opportunities. Under Section 80D, you can claim deductions on health insurance premiums paid for yourself, your spouse, children, and parents. The deductible is Rs 25,000 for premiums paid for individuals under 65. However, the deduction increases to Rs 50,000 if the premiums are for senior citizens (those above 65). In addition, if your parents are senior citizens, you can also claim deductions for medical expenses, which may add up to Rs 50,000. This makes health insurance a safeguard for your family and a potent tool for reducing tax liability.
Tax Savings for Medical Expenses
Apart from health insurance premiums, you can also claim deductions for medical expenses for senior citizens under Section 80D. If your parents are over 65, you can claim a deduction of up to Rs 50,000 for their medical treatment. This is especially helpful if your parents do not have a health insurance policy but still incur significant medical expenses. Additionally, any medical treatments for chronic illnesses, such as cancer, can be claimed under Section 80DDB, offering further opportunities to lower your taxable income.
Conclusion
While Section 80C is often the first choice for tax-saving investments, exploring these lesser-known methods can help you save significantly on your taxes. By making the most of tax benefits for early childhood education, borrowing money from family members, claiming HRA while living with your parents, and utilizing deductions for health insurance premiums and medical expenses, you can reduce your taxable income substantially. Ensure all necessary documentation is in place to ensure the smooth processing of these claims and take full advantage of these opportunities. These strategies are simple, effective, and often overlooked, yet they can significantly reduce your overall tax burden. Find out about tax-saving tips you might be missing, including health insurance deductions for parents, home loan benefits, and HRA claims for living with parents
