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Tax Saving/Planning Tips

Planning your taxes means planning your investments in such a way so as to avail maximum possible tax benefits. To save taxes invest wisely.

Ensure that you have availed entire limit of Rs. 150000 under Section 80C. Tax deduction under section 80C  mainly inlcude investment in PPF, NSC, Life Insurance Premium, Equity Linked Savings Schemes (ELSS),House Loan Repayment, tution fee of two children etc.

Tax Implications on individuals of Budget-2016
  • Best option is to own a house first. In case both husband and wife are taxpayer, better option is to purchase house in joint names with joint loan. This will result in tax benefit to both for principal repayment and Interest ( Rs. 2.00 Lac). In other words both the owners will get deduction of Rs. 2.00 Lac for interest i.e. total Rs. 4 lacs in case of self occupied property. 
Click here to know more about benefits of investing in a house property
  • Remember any tax benefits in case of house property are available only after getting the possesion/completion of construction.
  • In our view all tax payers must have Public Provident Fund (PPF)  Account. PPF Account can be opned with SBI, ICICI Bank, few other banks and Post Office. Better option is to open your PPF Account with SBI or ICICI as it is more convenient and you can deposit money online in case you have Savings Bank Account with SBI as well. Benifits of PPF Account include :
    • Minimum contribution of Rs. 500 has to be made each year.
    • Maximum upto Rs. 1.50 Lac can be contributed each year(Maximum limit of Rs. 1.50 lacs is increased from the financial year 2014-15, earlier this limit was Rs. 1.00 lacs)
    • You can contribute 12 times during a year with minimum contribution of Rs. 500 at a time. This gives flexibility to save money as and when available.
    • Period of PPF Account is 15 years which can be extended for further period of 5 years at a time.
    • Tax Free Interest rate @ 8.7% p.a. . In case you are falling under 30% Income Tax Slab your gross return is equivalent to appx. 12.5% p.a
    Click here to know more about Public Provident Fund.
  • Equity Linked Saving Schemes (ELSS) is also a good option specially for young tax payers as it fetches good return in longer period. Saving in ELSS can be done through lump sum investment or through Syatematic Investment Plans (SIP). 
Click here to know more about ELSS.
  • NSCs were very popular tax saving instruments in past but in our view NSCs are not a very good choice for tax savings as there are many other better tax saving options. NSC Interest is taxable however interest is reinvested in units and hence interest is also available as deduction under section 80C. 
Click here to know more about NSC.
  • Tution fee of two children is allowed as deduction under Section 80C. Only tution fee for full time education of two children is allowed. Tution fee will not include development fee, donation or private tution fee. 
  • To promote savings for retirement, an additional deduction of Rs. 50000 has been introduced from financial year 2015-16 for investments in National Pension Scheme(NPS). This deduction of Rs. 50000 is introduced by Finance Act 2015 U/s 80CCD(1B) and is in addition to the above said deduction of Rs. 150000 u/s 80C.
Read in detail about investing in NPS and Section 80CCD(1B)
  • To promote health care and motivate people for medical insurance, Govt has provided deduction under Section 80D of maximum Rs 15,000 (Rs. 20,000 in case of senior citizen) for medical insurance paid by any mode other than cash. Medical insurance can be paid for self, spouse and depedent children. Additional deduction of Rs. 15000 ( Rs. 20,000 in case of senior citizen) is allowed for medical insurance paid for parents. From Financial Year 2012-13 you can also claim Rs. 5000 spent on preventive medical check up within overall limit of Rs. 15000.  
Read in detail about Section 80D
This deduction of Section 80D is in addition to Rs. 150000 deduction of Section 80C.
  • A Deduction U/s 80DDB is also there for expenses incurred on medical treatment of certain specified disease on self or dependent. 
Read in detail about Section 80DDB
  • There is a deduction U/s 80E of the Income Tax Act to promote higher education. The interest on loan taken for higher education of self, spouse or children is eligible for deduction u/s 80E.
Read in detail about Section 80E
  • If you are not in receipt of HRA, there is a tax relief provision for rent paid under Section 80GG, which is known to very few people.
 Read in detail about Section 80GG

Above is a brief discussion about possible tax saving avenues and the maximum possible deduction available from them. Aquaint yourself well about all these and then decide as per your priorities.

Need more guidance in planning your tax saving investments, write to us at arpita@tdsmaster.com or through Contact us


Some Quick Links
How to Donate to Prime Minister Relief Fund
Missed the deadline? file a belated return
Mistakes in original return; you may revise your return
Taxability of gifts in India
TDS on property purchase
Avoid TDS by Form 15G and Form 15H

















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