January has always been the month for fighting to plan tax related investment schemes. The most popular ones are PPF, NSC, and equity linked saving schemes. Even bank deposits and life insurance polices are also the attractive ones which help ones to save tax up to Rs 1 lakh under Sec 80C.
Many of us have done this just to save our income from tax. They are not planned or organized. When we know that we will have to pay tax why not plan it from early months say April itself? This will help us in making systematic and planned moves and getting free from the cash flow in the January and February months. This will help us not only in saving your income but also maximizing the gain.Here are few tips how one can plan out :
Investing in PPF ( Public Providend Fund ) – Regular investment or rather monthly investments in PPF A/C should be followed. Many of us don’t know but if you invest within 5th of every month you get the annual interest return of 8%. So next times even if you are depositing cheque in your PPF A/C make sure that it get realizes by 5th of the month.
Investing in Health Insurance– Normally every employee is covered under group Insurance policy of the Co upto a max limit of 2Lacs to 5 Lacs as per the Grade of the employee. So one Should not feel like doing a separate policy. But this can be essential in case of Job loss , Transition period in case of switching of Job or In case of retirement. You can Opt for a family floater policy for dependants or parents. This can save your tax up to 15K
Investment in House property – Many people invest in House property and take housing Loan to avail interest benefit . Interest repayment up to 1.5 Lacs annually is exempted under present Income Tax rule to an individual. In case of joint ownership of a property this can fetch a higher exemption if housing loan repayment is been done from joint account.
Ready reckoner on various sections of Income tax under which different investments can be claimed for Tax exemption.
- Sec 80C / 80CC : Investment up to Rs 1Lac in NSC, 5 Yrs tax saving bonds, EPF , PPF,ELSS,LIC,ULIP premium, pension, annuity plan, Registration fee for Purchase of House, Principal repayment of Home Loan,5-Yrs post office time deposit, Children’s tuition Fees are exempted under this section.
- Sec 24 : Maximum amount can be claimed is 1.5 Lacs under this section and in case of joint ownership the limit is caped till 3 Lacs
- Sec 80D : A maximum limit of 15K under mediclaim or health insurance offered by Life insurance Cos. An additional limit 15K is covered for coverage of dependent parents. For senior citizen limit is upto 20K.
- Sec 80DD: The maximum amount is 50K to 100K for treating maintenance of a dependent family member with severe disability.
- Sec 80E : Tax relief is on Interest payment on educational loan for higher studies of self, spouse or children.
- Sec 80G: 50% or 100% of Donation amount to Charitable institutions is exempted up to a overall celling of 10% of your gross total income.
These are few ways through which you can save tax but I do believe there are many more you also must be knowing. Do let us know in comments.