Are you looking to save some tax? Your first port of call should be Section 80C of the Income Tax Act. Section 80C provides for deduction from Gross Total Income for certain eligible investments and payments. Following is the list of instruments which can be used for Tax savings
ELSS is a type of diversified equity mutual fund which is qualified for tax exemption under section 80C of the Income Tax Act, and offers the twin-advantage of capital appreciation and tax benefits. It comes with a lock-in period of three years.
A Person can start investing in this component with min amount of Rs.500/-
|Instrument||Lock In Period|
|Bank Fixed Deposit||5 Years|
|PO Time Deposit||5 Years|
|PPF||15 Years (Partial Withdrawal)|
Health insurance is a type of insurance coverage that covers the cost of an insured individual's medical and surgical expenses. For the premium paid income tax benefit is available to the main proposer under section u/s 80D of I.T. act
A life insurance policy is a contract with an insurance company. In exchange for premiums (payments), the insurance company provides a lump-sum payment, known as a death benefit, to beneficiaries in the event of the insured's death. Or upon the completion of Full term provides lump sump amount of Insured value + Bonus to the insured.
Life Insurance products varies from :-
In this category ,for the premium paid income tax benefit is available to the main proposer under section u/s 80D of I.T. act
The principal amount in the repayment of a home loan can be added to the 80C limit of Rs1 lakh for tax savings. The interest component of home loans is allowed as deduction under Section 24 B for up to Rs1.5 lakh in case of a self-occupied house. In case the house is in the joint name of your spouse and you (joint loan), each one can avail of Rs1.5 lakh interest component deduction
For joint loan and self-occupied home, it is important to show the loan repayment by both husband and wife as they can avail of Rs1.5 lakh each on loan interest deduction. If the EMI (equated monthly instalment) is being paid from one account by ECS (electronic clearing service), pay your contribution of loan repayment to your spouse by cheque. It will help in case of IT assessment. In case your spouse does not have any income, only you can take Rs1.5 lakh loan interest deduction.
|Type of Account||Minimum Invstment||Maximum Investment|
|Public Provident Fund (Individual account)||Rs.500/- in a Financial Year||Rs.1 Lakh in a financial Year|
Fixed deposits are a high-interest-yielding Term deposit offered by banks in India. The most popular form of Term deposits are Fixed Deposits, while other forms of term Deposits are Recurring Deposit and Flexi Fixed Deposits (the latter is actually a combination of Demand deposit and Fixed deposit).
Tax benefit is given up to Rs.1 Lakh only if it is fixed deposited for at least 5 years and the owner of this FD can’t terminate this before the completion of Tenure
Buy National Savings Certificates (NSCs) every month for Five years – Re-invest on maturity and relax - On retirement it will fetch you monthly pension as the NSC matures.
|Tenure||15 years||6 years||3 years|
|Returns||(Compounded Annually) 8.80%||(Compounded half-yearly) 8.60 to 8.9%||Not assured dividends/ returns|
|Maximum investments||Rs.1,00,000||No limit*||No limit*|
|Deduction under Section 80C||Rs.1,00,000||Rs 1,00,000||Rs 1,00,000|
|Taxation for interest||Tax free||Taxable||Dividends and capital gain tax free|