A sound financial plan with a long term vision ensures you accomplish your financial needs & goals however, it is often neglected & leads to the dependency on last minute tax saving investments. Planning your taxes in advance certainly gives you an upper hand but in case you have not planned in advance do consider factors such as age, risk-return profile, liabilities and dependents before you invest at the last minute.
Depending on these factors choose instruments from across various assets class to not only save on tax but also to build a strong portfolio. Section 80 C of the Income Tax Act allows investments of upto Rs. 1,00,000 into varied saving schemes as eligible for deduction from your gross total income.
The following saving instruments can help you avail the tax benefits under Section 80 C & accomplish your other financial objectives:
DEBT INSTRUMENTS:
• Public Provident Fund: Investments in PPF upto Rs. 1 lakh is eligible for deduction. As of now it yields a return of 8.8% wef from 1st April 2012 with a lock in period of 15-years.
• National Saving Certificates: Another tax saving option having two instruments with maturity of 5 years and 10 years with interest rates of 8.6 per cent and 8.9 per cent, respectively. However, the interest accrued is taxable
• Senior Citizens Savings Scheme: Individuals who are 60 years of age and above can invest in this scheme yielding return of 9.30% and avail the tax benefits.
• Fixed Deposits: You can also consider investing in 5-year fixed deposits. The interest accrued is taxable.
EQUITY INSTRUMENTS:
• Equity-linked savings scheme: Investment in Equity-linked savings schemes of Mutual Fund is eligible for deduction under Section 80C. The lock-in period for ELSS investments is 3 years & hence there is no capital gains tax during redemption of the investment.
• Ulips: Investments up to Rs 1 lakh in Ulips can be claimed for deductions under Section 80C. Maturity proceeds of an Ulips are tax-free.
Apart from these your expenses can also avail you tax benefits as under:
• Life insurance: Deductions under Section 80 C is available for the premium paid for a policy that covers you, your spouse and dependent children.
• Tuition fees: You can claim deduction up to Rs 1 lakh under 80C for tuition fees paid for two children.
• Pension Fund Contribution: Contribution to the pension fund is eligible for deduction under Section 80 CCC. However, the redemption amount & employer’s contribution is taxable.
• Health insurance: Section 80 D allows deduction up to Rs 15,000 (& Rs.20,000 in case of senior citizens) for premium paid on health insurance for self, spouse, children & parents.
• Medical treatment for specified diseases: Amount paid to the extent of Rs. 40,000 (& Rs. 60,000 in case of senior citizens) for medical treatment of self or relatives suffering from specified disease is exempt under Section 80 DDB
• Education loan: The interest paid on the education loan for you, your spouse or children gets you a deduction under Section 80E.
• Donations: 100% or 50% of the amount of donation made to charitable institution enlisted in the specified 19 entities is eligible for deduction under Section 80E
• For Rent paid: Maximum Rs. 2000 paid as rent by those who don’t get House Rent Allowance can be claimed as deduction under Section 80 GG.
All these and various other benefits are available for you to achieve your financial goals through wise investment options.
Know how you can reap the maximum benefits out of all these tax saving schemes & build a strong portfolio through our customized portfolio management services.
Depending on these factors choose instruments from across various assets class to not only save on tax but also to build a strong portfolio. Section 80 C of the Income Tax Act allows investments of upto Rs. 1,00,000 into varied saving schemes as eligible for deduction from your gross total income.
The following saving instruments can help you avail the tax benefits under Section 80 C & accomplish your other financial objectives:
DEBT INSTRUMENTS:
• Public Provident Fund: Investments in PPF upto Rs. 1 lakh is eligible for deduction. As of now it yields a return of 8.8% wef from 1st April 2012 with a lock in period of 15-years.
• National Saving Certificates: Another tax saving option having two instruments with maturity of 5 years and 10 years with interest rates of 8.6 per cent and 8.9 per cent, respectively. However, the interest accrued is taxable
• Senior Citizens Savings Scheme: Individuals who are 60 years of age and above can invest in this scheme yielding return of 9.30% and avail the tax benefits.
• Fixed Deposits: You can also consider investing in 5-year fixed deposits. The interest accrued is taxable.
EQUITY INSTRUMENTS:
• Equity-linked savings scheme: Investment in Equity-linked savings schemes of Mutual Fund is eligible for deduction under Section 80C. The lock-in period for ELSS investments is 3 years & hence there is no capital gains tax during redemption of the investment.
• Ulips: Investments up to Rs 1 lakh in Ulips can be claimed for deductions under Section 80C. Maturity proceeds of an Ulips are tax-free.
Apart from these your expenses can also avail you tax benefits as under:
• Life insurance: Deductions under Section 80 C is available for the premium paid for a policy that covers you, your spouse and dependent children.
• Tuition fees: You can claim deduction up to Rs 1 lakh under 80C for tuition fees paid for two children.
• Pension Fund Contribution: Contribution to the pension fund is eligible for deduction under Section 80 CCC. However, the redemption amount & employer’s contribution is taxable.
• Health insurance: Section 80 D allows deduction up to Rs 15,000 (& Rs.20,000 in case of senior citizens) for premium paid on health insurance for self, spouse, children & parents.
• Medical treatment for specified diseases: Amount paid to the extent of Rs. 40,000 (& Rs. 60,000 in case of senior citizens) for medical treatment of self or relatives suffering from specified disease is exempt under Section 80 DDB
• Education loan: The interest paid on the education loan for you, your spouse or children gets you a deduction under Section 80E.
• Donations: 100% or 50% of the amount of donation made to charitable institution enlisted in the specified 19 entities is eligible for deduction under Section 80E
• For Rent paid: Maximum Rs. 2000 paid as rent by those who don’t get House Rent Allowance can be claimed as deduction under Section 80 GG.
All these and various other benefits are available for you to achieve your financial goals through wise investment options.
Know how you can reap the maximum benefits out of all these tax saving schemes & build a strong portfolio through our customized portfolio management services.
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