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As the famous saying goes ‘ A penny saved is a penny earned ‘. Tax planning is one of the ways which can help you save on taxes and increase your income. The income tax act provides deductions for various investments, savings and expenditure incurred by the taxpayer in a particular financial year. We will discuss some of the avenues which can help you save taxes.
Make an investment of Rs 1.5 lakh under Sec 80C to reduce your taxable income. Additional deduction of Rs 50,000 can be claimed by investing in NPS under 80CCD (1b)
Buy Medical Insurance, maximum deduction allowed is Rs. 1,00,000 (Rs 50,000 for self and family if senior citizen and Rs 50,000 for senior citizen parents) under Section 80D.
Claim deduction up to Rs 50,000 on Home Loan Interest under Section 80EE
The most popular tax-saving options available to individuals and HUFs in India are under Section 80C of the Income Tax Act, Section 80C includes various investments and expenses you can claim deductions on – up to the limit of Rs. 1.5 lakh in a financial year.
| Investment | Returns | Lock-in Period |
|---|---|---|
| 5-Year Bank Fixed Deposit | 6% to 7% | 5 years |
| Public Provident Fund (PPF) | 7% to 8% | 15 years |
| National Savings Certificate | 7% to 8% | 5 years |
| National Pension System (NPS) | 12% to 14% | Till Retirement |
| ELSS Funds | 15% to 18% | 3 years |
| Unit Linked Insurance Plan (ULIP) | Varies with Plan Chosen | 5 years |
| Sukanya Samriddhi Yojana (SSY) | 7.60% | N/A |
| Senior Citizen Saving Scheme (SCSS) | 7.40% | 5 years |
80D- for medical insurance premium for self, spouse & dependent parents.
Section 80EE – Deduction for interest payment of home loan for first home owners
Section 24- Interest deduction for housing loan upto Rs 2 lakh
Section 80EEB- interest deduction for vehicle loan for purchase of electric vehicle
80G- donations to charitable institutions.
80GG-if your income does not include HRA component, you can claim rent deduction under 80GG
Section 80TTA- deduction upto Rs 10,000 for interest received in saving bank account.
Section 54 -54F – Capital gain exemption for capital gains.
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