Tax savings

Dear Sir,

Some of the Common Investments for Tax saving are given below:

• Make investment of Rs 1.5 lakh under Sec 80C to reduce your taxable income
• Buy Medical Insurance & claim a deduction up to Rs. 25,000 (Rs 50,000 for Senior Citizens) for medical insurance premium under Section 80D
• Claim deduction upto Rs 50,000 on Home Loan Interest under Section 80EE

Thanks & Regards

Shiv Kumar Agarwal

Hi

1. Use up your Rs 1.5 lakh limit under Section 80C

The below mentioned investments/deductions are all subject to a cap of Rs 1.5 lakh. In other words, they are either/or investments and making one type of investment will reduce room for another:

1.Tax-Saver FDs : You can get a tax deduction of up to Rs 1.5 lakh under 5 year tax-saver FDs. The carry a fixed rate of interest currently between 7-8%. The interest on these FDs is taxable

2. PPF (Public Provident Fund): Public Provident Fund is a government established savings scheme with a tenure of 15 years available at most banks and post offices in India. Its rate changes every quarter but is currently 8%. The interest on PPF is tax-free.

3. ELSS Funds: These are mutual funds which invest a minimum of 80% of their assets in equity. They have a lock-in of 3 years. The returns on ELSS funds are subject to Long Term Capital Gains Tax (LTCG) at 10%, over and above an exemption limit of Rs 1 lakh.

4. NSC (National Saving Certificate): A National Savings Certificate has a tenure of 5 years and a fixed rate of interest. The rate is currently 8%. The interest on NSC is also automatically counted towards the Rs 1.5 lakh 80C limit and is tax-deductible if no other investments are using up the limit.

5. Life Insurance Premiums: Premiums for different types of insurance policies including ULIPs, term insurance and endowment policies are tax deductible up to Rs 1.5 lakh. However the insurance cover must be at least 10 times the annual premium.

6. National Pension System (NPS): This deduction is available under Section 80CCD up to Rs 1.5 lakh for contributions to NPS. This is over and above the Rs 50,000 deduction available under Section 80CCD(1B) discussed below.

7. Home Loan Repayment: Repayment of the principal amount on a home loan is tax deductible up to Rs 1.5 lakh per annum.

8. Payment of tuition fees: Payment of tuition fees for your children is tax deductible up to Rs 1.5 lakh per annum.

9. EPF: Under the EPF Act. 12% of the pay of employees in the organised sector is deducted towards Employees Provident Fund. This deduction counts towards the Rs 1.5 lakh limit under Section 80C.

10. Senior Citizens Savings Scheme: Contribution to the SCSS is tax deductible up to Rs 1.5 lakh. SCSS has a tenure of 5 years and is available to those above 60. The rate for SCSS is higher than prevailing FD rates and is currently 8.7% (it is taxable).

11.Sukanya Samriddhi Yojana: Parents of a girl child below the age of 10 can get this deduction. This account has a tenure of 21 years or until the girl marries after turning 18. It has an interest above prevailing rates (currently 8.5%) and the interest is tax-free.

2) Contribute to the National Pension System

This deduction under Section 80CCD(1B) up to Rs 50,000 is only available for contributions to the NPS. The NPS allows you to invest in equity and debt pension funds and build a retirement corpus. You can withdraw it at age 60.

3) Pay Health Insurance Premiums

A deduction up to Rs 25,000 is available for health insurance premiums under Section 80D. This is over and above the deductions listed above. For senior citizens, this limit is increased to Rs 50,000. A person contributing health insurance for himself and senior citizen parents can avail of the combined deduction up to Rs 75,000 per annum.

4) Get a deduction on your rent

You can claim tax deduction on your House Rent Allowance (HRA) if you get HRA. There is no upper limit for this but there are a set of rules that cap the maximum HRA deduction. If you do not get HRA but pay rent, you can claim a deduction under Section 80GG up to Rs 60,000 per annum.

5) Get a deduction on the interest on your home loan

If you have a home loan, the interest payable on it is tax deductible under Section 24 of the Income Tax Act up to Rs 2 lakh per annum. If you give out the house on rent, there is no upper limit. However the total loss that can be claimed on the broader head of income from house property is capped at Rs 2 lakh.

6) Keep some money in your savings account

This is probably the easiest deduction under the Income Tax Act that individuals can claim. Interest on savings accounts is tax free up to Rs 10,000 per year under Section 80TTA. This limit is Rs 50,000 for senior citizens for both FD and savings account interest under Section 80TTB.

7) Contribute to charity

You can get a tax deduction on your charitable donations. There is no upper limit but different rules restrict the tax deduction amount available on your charitable contributions. For most donations to NGOs, the limit is 50% of the donated amount and up to 10% of your adjusted total income. NGOs under this section are required to have an 80G certificate for you to be able to claim this deduction.

Dear Sir,

Hope you are doing well !!

Only investments in equity linked saving schemes or ELSSs qualify for tax deduction under section 80C. Investors can claim tax deduction of up to Rs 1.5 lakh under Section 80C of the Income Tax Act. All ELSS funds qualify for the tax deduction under Section 80C.

There are some mutual funds schemes that offer tax savings and are called ELSS or Equity Linked Savings Schemes and these are eligible for deduction under section 80C of the Income Tax Act, 1961.

Broadly/Practically, there are following Income tax sections under which we can claim the tax exemptions - 

80C-Section 80C comprises of various investments and expenses that are eligible for tax deductions. A taxpayer can claim maximum tax deductions of Rs 1.5 lakh for a particular financial year (FY) from his/her taxable income through investments made by him/her under section 80C of the Income Tax Act, 1961.

 1. NPS

 2. PPF

 3. LIC

 4. ELSS

 5.Term deposits

etc.

It is advisable to claim maximum tax deductions of Rs 1.5 lakh by investment specified u/s 80C. 

80CCD-To encourage the investors to invest for retirement in Nation Pension Scheme, the government allowed addition tax deduction of Rs 50,000 under section 80CCDD.

It is over and above Rs. 1.5 lakh limit.

80D-Deduction for the premium paid for Medical Insurance up to Rs. 50000 subject to conditions.

80G-The various donations specified in u/s 80G are eligible for deduction up to either 100% or 50% with or without restriction as provided in section 80G.

We may assist you in tax planing.

It is advisable to take a phone consultation for detailed discussion.

Hello,

Major tax deductions available are

Under Section 80C - Life insurance, ULIP, NSC, Mutual fund(ELSS), Tax Saving Fixed Deposit, Public Provident Fund, Housing Loan Principal Repayment, Sukanya Samriddhi Account, Child Tuition Fee. Overall Limit of Rs. 1,50,000.

Under Section 80CCD(1B) - New pension scheme (NPS)

Under Section 80D - Medical Insurance, and Preventive health check-up. Limit Rs. 25,000 - Self, spouse, and children and Rs. 25,000 - Parents. For senior citizens, the amount will be Rs. 50,000.

Under Section 80GG - Rent Paid Limit Rs. 5,000 per month. The deduction will be available if HRA is not received and rent for accommodation is paid for the residence.

Under Section 80TTA - Interest on Saving Bank Limit  Rs. 10,000.

I hope this answer satisfies your requirements. 

Regards,

CA Hunny Badlani

Under Section 80C, Investment in ELSS - Equity Linked Saving Scheme Mutual Funds are available for deduction.

Tax Saver Funds or ELSS funds are eligible for benefit under 80C. For are also eligible for benefit under 80C.

1) Housing Loan Principal

2) Tution Fees paid for children

3) Life Insurance Premium

4) Contribution to PPF

Additionally you can buy mediclaim policy. The premium is deductible under Sec 80D.

Pension Scheme upto 50K is eligible under 80CCC.

You can purchase LIC policy and mediclaim which is very important in current scenario.

Further you can invest in tax saver mutual fund or ELSS or invest in PPF.

The combined limit of investment in LIC, PPF, ELSS could be Rs. 1.5 lakh which could save you around Rs. 45000 in the highest slab.

Limit for investment in Mediclaim could be 25000 for you if you are not senior citizen and 50000 for your parents if they are senior citizen.

Further additionally after consuming the above 1.5 lakh limit you can even invest 50000 in NPS.

Hope you find the information helpful if you do please rate it 5 and provide your valuable feedback for my improvement.

Thank you.

Are the mutual fund tax saver or ELSS?

Hi Souvik,

There are various ways of saving taxes but all that will vary depending upon nature of your income. Is it business income or salary or any other income?

If your mutual funds investment, falls within the ambit of ELSS, then you can claim deduction u/s 80C, otherwise not. 

few other ways of saving tax are as follows:

- Investment in NPS upto 50k

- Buying medical insurance upto 25k

You can take a phone consultation for detailed discussion.

Yes you can claim u/s 80C but you should have GTI of equal amount or more.

Hi

You can take benefit of  deduction under following section :- 

1. Section 80 C 

2. Section 80 CCD 

3. Section 80 D

4. Section 80G

Some of Mutual fund schemes are covered under deduction. & Only investment in equity linked saving schemes or ELSS qualify for tax deduction under section 80C .

For more information please have a phone consultation.