Tax Saving Options

It’s that time of the year where most of us run to save tax, as our organizations ask us to submit proof.

The most popular section for saving tax is Section 80C. Let us look at the various avenues available to us under this section. Remember that this section gives us deduction not only for investments but also expenses. The total amount allowed under this section is Rs. 1,50,000/-. Let us look at the options available:

• Principle amount of Home Loan: If you have been repaying your Home loan EMI’s, the principle amount of the home loan is eligible for deduction. Please note that the interest amount is allowed as a deduction under section 24 against income from house property. The amount of stamp duty and Registration fee is also allowed as deduction if a person has not taken a housing loan.
• Tuition Fee: This is allowed for only the tuition fee paid to any school, college or university for education of children. The maximum allowed is Rs. 1,00,000/- per child. You can claim exemption only for 2 children.
• Life Insurance Premium: Any premium paid for insuring your own life or that of your child or spouse is allowed as deduction. You have to ensure that the premium paid does not exceed 10% of the assured amount.
• PF: In case of salaried employees your own contribution to PF (compulsory or voluntary) is allowed as deduction.
• PPF: Any contribution to PPF is allowed as deduction.
• 5 Year Bank Fixed Deposits: The principle amount invested is allowed as deduction. Interest amount received is taxable.
• 5 year postal time deposit: This is similar to bank fixed deposit. Interest amount received is taxable.
• NSC: There are 2 types available 5 years and 10 years. Any investment is eligible for deduction. Interest amount received is taxable and also can be claimed under section 80C as investment, as interest is treated as reinvested.
• Senior Citizen Saving Scheme: investment in this scheme is allowed as deduction, but this is available only for those above the age of 55. Interest amount received is taxable.
• ELSS: any investment in this is available as deduction.  

Try and plan your tax saving wisely, if after doing any of the above, you exhausts you 80C limit, do not do any other investment under this section unless it is as per your financial goals.

If you have a housing loan, interest paid on housing loan to the extend of Rs. 2,50,000/- is allowed as deduction, under income from house property for self-occupied property.

Premium for health insurance is allowed as deduction under section 80D upto Rs. 15,000/- for self and family and Rs. 20,000/- for Sr. Citizens.

Make use of the options given to you and save tax. Tax saved is money earned.