Investments tips for income tax saving

Tips for income tax saving investments
Each year, with the budget announced by the government, the most common expectation an Indian citizen has is falling under the profit tax slab so as to do maximum tax saving. But is this the only way to pay minimum taxation? Well, in our opinion, there are multiple ways through which a taxpayer can save the taxation and be morally correct at the same time. There are certain sections of the Income Tax Act which allow for deductions and has the provisions for tax saving. Let us be very clear that we are not suggesting any malpractices but this is a legal way through which one can save tax and do some real time good investments. In a nutshell, these investments include:

Investment under Section 80C which opens the Rs 1.50 lakh tax-saving window:

  • 1. Section 80C of Income Tax Act allows exemption of investment or spending from income tax. But here’s how you can maximise your savings by making some common investments like
  • 2. Provident Fund contribution,
  • 3. Principal component of your housing loan from prescribed institutions,
  • 4. investing Rs 500 to Rs 1.5 lakh every year in a Public Provident Fund (PPF) account,
  • 5. Tuition fees of two children,
  • 6. Life insurance premiums for self, spouse, and kids,
  • 7. Contribution to Unit-linked Insurance Plan for self, spouse, and kids,
  • 8. Invest in National Savings Certificates (NSC) schemes (through post offices),
  • 9. A 5-year term deposit with a bank under a notified scheme or a post office,
  • 10. Investing up to Rs 1.5 lakh a year in Sukanya Samriddhi Account in the name of your daughter (limited to two children) etc. It is to be noted that If your basic salary is over 1 lakh a month, most of your 80C limit will be used up by Provident Fund contribution alone if you have opted to contribute to the provident fund.

To do Savings beyond Section 80C, one can invest in the following:

  • 1. New Pension Scheme (NPS)
  • 2. Home loan interest
  • 3. Educational loan interest
  • 4. Interest earned on savings bank account with a bank or post office
  • 5. Medical insurance premiums to cover self, spouse and dependent children
  • 6. Donations
  • 7. Treatment for certain diseases such as AIDS, or malignant cancers for self and dependents Disability-related tax benefits
  • 8. Rs 85,500 over and above Section 80C
  • However, follow the guidelines of the act to ascertain the extent of exemption allowed for all of the aforementioned investments.
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