Nine tax saving options other than the famous Section 80C (NDTV Profit May 29, 2013)

Before you calculate your tax liabilities, remember to analyze the various sections of tax deductions under the Income Tax Act as tax planning does not end with Section 80C.

80D:
Tax deduction under section 80D qualifies for mediclaim policies. The premium, which is paid for medical insurance policy for self and family members to protect them from sudden medical expenses, comes under this section. The maximum amount allowed for exemption annually for self, spouse and dependent parents/children is Rs. 15,000. In case of a senior citizen, the maximum amount extends up to Rs. 20,000. If you are paying the premium for your parents (whether dependent or not), you can claim an additional maximum deduction of Rs. 15,000.

80DD:
According to the Income Tax Act, if you are paying a premium to LIC or any other insurance company (approved by the Income Tax board) for the medical treatment of a dependent physically disabled person, you can avail exemption under the section 80DD. Here, the dependent should be none other than your spouse, children, parents or sibling. If the person is suffering from 40 per cent of any disability, a fixed sum of Rs. 50,000 can be claimed in a year. Similarly, if the disability is 80 per cent, the fixed sum goes up to Rs. 1,00,000 per year. For initiating the process of deduction you need to submit the medical certificate issued by a medical authority along with the return of income.

80DDB:
If you have incurred expenses for the medical treatment of self or your dependents, you can claim a deduction of up to Rs. 40,000 or the actual amount paid, whichever is less, under the section 80DDB. For a senior citizen, the maximum exempted amount is Rs. 60,000, or the amount actually paid for medical expenses. To claim a deduction under this section, you need to submit a medical certificate from a doctor working in a government hospital.

80E:
The interest paid on loan taken for pursuing higher education of self or any dependent is exempted from tax under section 80E. An education loan can be taken for wife, children and minors for whom you are the legal guardian. This deduction is applicable for a period of eight years or till the interest is paid, whichever is earlier. The deduction is only approved for higher studies, which means full-time graduate or postgraduate courses in engineering, management or applied sciences, pure sciences including mathematics or statistics. However, from 2011 onwards, the scope of this exemption has been extended to cover all fields of studies including vocational studies pursued after completing the senior secondary examination or equivalent. No exemption is applicable for part-time courses.

80G:
One often donates on philanthropic grounds to help the destitute. Such an amount can be donated to trusts, charitable institutions and approved educational institutions, and qualifies for deduction under Section 80G. The exemptions can be up to 50 per cent or 100 per cent of the donations made. Funds in which the donations are eligible for tax exemptions include the National Defence Fund, Prime Minister Drought Relief Fund, National Foundation for Communal Harmony, National Children's Fund, Prime Minister's National Relief Fund, etc.

80GG:
If a salaried or self-employed person staying in a rented house does not receive any kind of HRA, they can claim a deduction under this section. However, you cannot avail any such benefit if you, your spouse and/or your child owns any residential accommodation in India or abroad. You can claim the least of the following under Section 80GG: 25 per cent of the total income, or Rs. 2000 per month, or excess of rent paid over 10 per cent of total income. (this section is interesting as Self employed person usually overlook this provision.)

80GGC:
Any monetary contribution to any political party or electoral trust is eligible for tax exemption. Thus, your contribution, as a matter of appreciation for their work, will serve both the purposes.

80U:
A resident of India suffering from any kind of specified disability is eligible to claim tax deduction under this section. In order to enjoy this opportunity, one should be suffering from not less than 40 per cent of the following diseases: blindness, low vision, mental illness, mental retardation, hearing impairment. The deduction provided is flat Rs. 50,000, irrespective of the expense incurred. If the disability is severe, the deduction can be up to Rs. 1 lakh. One needs to provide a copy of all the certificates issued by a medical authority in order to avail this benefit.

80CCG:
The Finance Act 2012 introduced a new Section 80CCG to offer 50 per cent tax break to new investors who invest up to Rs. 50,000 and whose GTI is less than or equal to Rs. 10 lakh. It has been introduced for budding investors entering the equity markets for the first time and is a once-in-a-lifetime benefit.

Hence, there are several sections apart from 80C that can help an individual benefit from tax exemptions. It is time to start looking beyond 80C for tax savings.

Group Health Plan’s Fine, but Go Solo for Better Cover (ET 10th May 2013)

New health insurance norms are likely to bring in some benefits, but delay in purchasing a policy may be risky, says Preeti Kulkarni

Did you notice that the premium for your company health insurance plan has gone up? Take a look at your revised salary structure, and you will notice that your company is paying a higher premium for your insurance cover this year. But bad news does not end here. Restrictions such as sub-limits and co-payments, too, have gone up. “Premiums for group health insurance are increasing due to high claims,” says Mahavir Chopra, head, e-business and personal lines,Medimanage.com, a health insurance consultancy firm. Experts believe that companies may pass on higher premiums to employees to cut costs. “One worrying trend is that some companies are shifting the cost of parents’ coverage to their employees. This could result in a significant reduction in enrollment of parents,” says Segar Sampathkumar, general manager with public sector major New India Assurance. “Employees shouldn’t opt out of parents’ coverage when the cost of coverage shifts to them, as they might not get insurance for their parents at a later date when they need it the most.” 

TO BUY OR NOT TO BUY At the moment, however, nobody is keeping their parents out. In fact, many of them are scouting for an independent cover for their parents. Many are even looking for independent cover for themselves, probably because of the increasing awareness about the importance of health insurance cover, say experts. “There is a huge flux of salaried employees queuing up to buy independent health policies,” says Mahavir Chopra. If you are in the process of buying a cover for your parents, or even for yourself, be prepared to slog a bit as the process of decision-making is a bit complex.

On the one hand, friendlier products without claim-based loading (where renewal premiums rise if you make claims) and arbitrary premium hikes are expected to hit the market after October 1, when the new guidelines of Insurance Regulatory and Development Authority (IRDA) become effective. On the other hand, premiums across age groups could go up as insurers factor in new regulations in their products. Hence, the question: is it better to wait until October to purchase a health policy or take the plunge right away? “I don’t see any reason why policyholders should put their decision on hold. After all, the changes that are going to be effective from October are procedural in nature. There will be very little or no impact on pricing,” says Neeraj Basur, CFO, Max Bupa. Also, remember, most health insurance policies are annual contracts and you can benefit from the new regulations the next year when your policy is renewed. “My advice would be, if you are uninsured, get yourself insured right now. No day is too soon when it comes to health insurance. Of course, the benefits of the regulations could accrue next year on renewal. But that is no reason to defer insurance protection,” says Sampathkumar. Also, you could look for products that meet the new requirements even in their current form. “There are some products that already meet 90-95% of the regulatory (no loading, no maximum renewable age) requirements, you could buy these products. In case premiums shoot up, you would get a three-month notice (as per new regulations) which would be enough for you to switch to an affordable plan,” advises Chopra. For instance, existing products offered by Apollo Munich, Max Bupa and Tata-AIG have already done away with the claim-based loading clause. 

STUDY THE FEATURES CLOSELY Irrespective of whether you go ahead with your plan to purchase health insurance now or wait till October, you need to take into account a list of parameters. “First and foremost, study the reputation of the insurer, when it comes to claim settlement, even before looking at product features. While looking at product features one must also scrutinise the waiting period for pre-existing diseases (PED) cover, whether any copay has to be borne by the insured, whether there is any ailment-specific or room rent capping, as this will reduce the reimbursement amount,” says Divya Gandhi, head, general insurance and principal advisor, Emkay Insurance Broking. 
If you are buying your policy before October, make sure it does not carry a claim-based loading clause or specify a maximum renewable age. “A good health insurance product is one with no or reasonable limits/cappings and stable premiums across life-cycle/age groups. Premiums for products that have a maximum renewable age or claim-based loadings currently are bound to increase by 20-25%, especially in the higher age groups. Such products should be avoided at least till October,” says Chopra. 
Moreover, you need to be doubly sure of the policy wordings and features when buying a cover for your parents, especially if they happen to be senior citizens. It is, no doubt, a tedious task as such products contain complicated terms and conditions, but this will help avoid nasty surprises at the time of making claims. “One should look at the maximum age at entry, the price, the terms, whether there is any co-pay and what the fine print says. The track record of the insurer should be paramount, as the relationship would continue for decades,” says Sampathkumar. Also, ensure that you tone down your expectations of the ideal product. “Getting a perfect product for parents at this age is highly unlikely. This being a highrisk category for insurance companies, there are bound to be limits. Look for products which save the most for you, have lower co-pay limits, sub-limits and claimbased loading. Avoid products that have combination of many complex cappings - co-pay, surgery limits, room-rent limits, etc. Such products are very complex and end up paying only 40-45% of the actual costs incurred,” adds Chopra. 
preeti.kulkarni@timesgroup.com