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 policies are also attractive ones that help ones to save tax up to Rs 1 lakh under Sec 80C. Here some handy tips to save income tax in India by investing in different plans.
Handy tips to save Income tax in India
Many of us have done this 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 the early months, say April itself? It will help us in making systematic and planned moves and getting free from the cash flow in the January and February months. That way, you will not only be saving your income but also maximizing the gain. Here are a few tips about how one can plan out.
1] Investing in PPF (Public Provident 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 the 5th of every month, you get the annual interest return of 8%. So next time, even if you are depositing cheque in Your PPF A/C, make sure that it gets realizes by the 5th of the month.
2] NPS or National Pension Scheme
Under this scheme, you can invest upto 50,000 every year. It is open to employees from the public, private, and even the unorganized sectors. After retirement, the investor will get a monthly amount from this money.
3] Investing in Health Insurance
Usually, every employee is covered under the 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. The 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. You can save your tax up to 15K
4] Investment in House property
Many people invest in House property and take housing Loans to avail of 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 property, this can fetch a higher exemption if the housing loan repayment is made from the 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 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 a senior citizen, the limit is upto 20K.
- Sec 80DD: The maximum amount is 50K to 100K for treating the maintenance of a dependent family member with a severe disability.
- Sec 80E: Tax relief is on Interest payment on the educational loan for higher studies of self, spouse, or children.
- Sec 80G: 50% or 100% of the donation amount to Charitable institutions is exempted up to an overall ceiling of 10% of your total gross 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 the comments.