Individuals usually invest in tax savings schemes at the end of the year which is not an effective way of tax planning. The whole objective is to integrate your tax planning into your overall financial plan. When you delay, you scramble to invest in any instrument which may not align with your goal requirements. So, here’s what you need to know to make the most of your income in the FY 2020-21, if you don’t opt for the new regime:

We are all aware of the most common deductions that are available under Section 80C. The same can be availed by contributing towards various investments like PPF, Sukanya Samriddhi scheme, NSC, Five year FDs, premium payment towards life insurance policies, ELSS, Principal Repayment of home loan, Payment of Tuition fees, Investing in NPS etc.

But there are other expenses and investments for which we can claim deductions as well. The same has been discussed below –

1. If you are contributing over and above the Section 80C limit of Rs. 1.5 lakhs towards NPS

Additional contribution of Rs. 50,000 can be claimed under section 80CCD(1B) in NPS. This will take the maximum that can be claimed as deduction to Rs. 2 lakhs.

2. Your expenses towards health check-ups and premiums towards health insurance policies

You must be worried that expenses towards health check-ups are increasing your overall household expenses, however, do you know that you could claim tax deduction towards these expenses? Section 80D allows you to claim tax deduction towards health insurance premium up to Rs. 25,000 for self, spouse and dependent children. Additional deduction of Rs. 25,000 or Rs. 50,000 can be claimed for the premium paid for parents depending on their age. In this section, you can also claim deduction towards expenses for preventive health check-ups up to a maximum of Rs. 5,000.

3. Expenses towards your dependants who are disabled

If you are supporting any of your dependent family member who is suffering from disability or severe disability, then you can claim those expenditures under section 80DD once you furnish a medical certificate from medical authorities. If the dependent individual has a disability of at least 40 percent, then you can claim up to Rs. 75,000 as deduction. On the other hand, if the dependent has severe disability of at least 80 percent, then the maximum deduction available is Rs. 1.25 lakh.

4. Expenses towards specified diseases

These days expenditure on specified diseases is very high. To make the most of this, you can claim tax deduction u/s 80DDB which covers expenditure for the treatment of specified diseases like cancer, heart, diabetes etc. either on self or a dependent. The maximum deduction allowed under this section depends on the age of the person on whom money is being spent for the treatment. If the person is below 60, then maximum deduction of Rs. 40,000 can be claimed and if person is above 60 then maximum of Rs. 1 Lakh can be claimed.

5. Interest towards Education Loan

If you have paid interest on an education loan taken for the higher education of self, spouse or children, then you can claim deduction u/s 80E. There is no limit on the maximum amount claimed as deduction. However, this deduction is available for up to 8 years starting from the year in which interest payment began or until interest is paid in full.

6. Your contributions towards donations

If you are contributing some amount to donations, that can also be claimed under section 80G. However, it will depend on the type of institution to which you have given your donation can be claimed as either 100% or 50% of the amount donated, subject to ‘With’ or ‘Without’ the upper limit.

7. If you are paying rent but not receiving any HRA

You’re paying rent but not receiving any HRA from your employer, then also you can claim rent paid under section 80GG; provided your self occupied house must be in a different city.

8. Your interest on savings account

Wondering what happens to the interest being received in your savings account, will it get added to the income and fully taxable? Interest earned on your savings account is taxable. However, you can claim deduction up to Rs. 10,000 on the interest earned under section 80TTA.Similarly, senior citizens can avail exemption under section 80TTB on the interest received from deposits (savings and FDs both) upto Rs. 50,000 per year.

 These are some tax hacks which would help you to plan better through DIY methods. For knowing the above in detail or to know some more tax benefits, you can seek the advice of a Financial Planner or Chartered Accountant who will help you to reduce the burden of improving your financial plan’s tax efficiency.