Earlier Central Government has to view collection of Tax
any way from Taxpayee and thus the Taxpayee always search how to save
large tax without or with minimum savings. Thus, in order to encourage
savings, the government gives tax breaks on certain financial products
under Section 80C of the Income Tax Act. Investments made under such
schemes are referred to as 80C investments. Under this section, you can
invest a maximum of Rs. l lakh and if you are in the highest tax bracket
of 30%, you save a tax of Rs. 30,000. The various investment options
under this section include :
Provident Fund & Voluntary Provident Fund :
Provident
Fund is deducted directly from your salary by your employer. The
deducted amount goes into a retirement account along with your
employer’s contribution. While employer’s contribution is exempt from
tax, your contribution (i.e., employee’s contribution) is counted
towards section 80C investments. You can also contribute additional
amount through voluntary contributions (VPF). The current rate of
interest is 8.5% per annum and interest earned is tax-free.
Public Provident Fund :
An
account can be opened with a nationalized bank or Post office. The
current rate of interest is 8%, which is tax-free and the maturity
period is 15 years. The minimum amount of contribution is Rs 500 and the
maximum is Rs 70,000.
National Savings Certificate :
These
are 6-year small-savings instrument, where the rate of interest is 8%
and is compounded half-yearly. The interest accrued every year is liable
to tax but the interest is also deemed to be reinvested and thus
eligible for section 80C deduction.
Equity-Linked Savings Scheme :
Mutual
funds offer you specially-created tax saving funds called ELSS. These
schemes invest your money in equities and hence, return is not
guaranteed. Money invested here is locked for a period of three years.
Life Insurance Premiums :
Any
amount that you pay towards life insurance premium for yourself, your
spouse or your children can be included in section 80C deduction. If you
are paying premium for more than one insurance policy, all the premiums
can be included. Besides this, investments in unit-linked insurance
plans (ULIPs) that offer life insurance with benefits of equity
investments are also eligible for deduction under Section 80C.
Home Loan Principal Repayment :
Your
EMI consists of two components, namely principal and interest. The
principal component of the EMI qualifies for deduction under Section
80C.
Stamp Duty and Registration Charges For Home :
The
amount you pay as stamp duty when you buy a house, and the amount you
pay for the registration of the documents of the house can be claimed as
deduction under section 80C. However, this can be done only in the year
in the year of purchase of the house.
Five-Year Bank fixed deposits :
Tax-saving fixed deposits (FDs) of scheduled banks with a tenure of five years are also entitled for section 80C deduction.
Others:
Apart
from the above, things like children’s education expenses that can be
claimed as deductions under Section 80C. However, you need receipts to
claim the same.
0 comments:
Post a Comment