India Tax Saver Schemes
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Tax saving schemes is a great way to lessen the Tax burden of people, especially of middle class who undergo the heat of paying heavy taxes and intensified tax structure. Hence, the earner needs to be calculative enough to save his tax in many ways by following some simple steps mentioned below:
House Rent Allowance
House Rent Allowance is applicable if a fraction of your income is allocated as HRA or if you are paying your house rent. The maximum deduction is done on the basis of the lesser amount which is selected from either the total amount of rent paid or the amount allocated as HRA in your income slip, provided your HRA does not exceed 50% of your income (if you are residing in metro cities) and 40% of your income (if you are residing in other cities)
Section 80C Deductions
The provision under Section 80C of the Income Tax Act permits specific investments and expenses to be tax free.
The upper limit under Section 80 C is ` 1, 00,000 (Rupees One lakh) which is applicable if the contribution is made to Provident Fund or investment in National Savings Certificate/ imbursement of Life insurance premium/ monetary investments in pension schemes/ investment in ELSS/ investment in public infrastructure instruments/ payment towards reimbursement of house loans. All these investment can be made from any source.
Section 80 D Deductions
Medical Insurance
Deductions in Medical Insurance under Section 80D are valid if the amount of premium is paid on the medical insurance of the policy holder, parents, kids or next of kin. The maximum limit of the amount deducted is ` 20,000 for elderly people and ` 30,000 for other in addition to the savings up to ` 1, 00, 000.
Life Insurance Scheme
An earner should have a Life Insurance Policy to enjoy the tax benefit that the policy offers. The total amount of money invested and the expenditure from the life insurance policy is tax-exempt. Opt for a policy which is best suited for you, do not purchase new policy every year and in case if you want to invest again then opt for ULIP schemes.
Home Loans
Deduction in Home Loans under Section 80 D is valid if the earner has applied for home loan from any financial institution, public or private. The home loan should be either in the borrower's name or in the name of his spouse or kids. The benefit of house loans is that principle reimbursement will be tax exempt. However, the tax deduction on interest generally depends upon whether the home is on lease or is self occupied, as this provision is categorized under section 24.
Education Loans
Deduction in Education Loans under Section 80 D is valid if the earner has applied for education loan from any financial institution, public or private. The home loan should be either in the borrower's name or in the name of his spouse or kids. The benefit of education loans is that principle reimbursement will be tax exempt and the interest paid will fall under tax deduction.
Tax Deductions on Investment
House Rent Allowance is applicable if a fraction of your income is allocated as HRA or if you are paying your house rent. The maximum deduction is done on the basis of the lesser amount which is selected from either the total amount of rent paid or the amount allocated as HRA in your income slip, provided your HRA does not exceed 50% of your income (if you are residing in metro cities) and 40% of your income (if you are residing in other cities)
Section 80C Deductions
The provision under Section 80C of the Income Tax Act permits specific investments and expenses to be tax free.
The upper limit under Section 80 C is ` 1, 00,000 (Rupees One lakh) which is applicable if the contribution is made to Provident Fund or investment in National Savings Certificate/ imbursement of Life insurance premium/ monetary investments in pension schemes/ investment in ELSS/ investment in public infrastructure instruments/ payment towards reimbursement of house loans. All these investment can be made from any source.
Section 80 D Deductions
Medical Insurance
Deductions in Medical Insurance under Section 80D are valid if the amount of premium is paid on the medical insurance of the policy holder, parents, kids or next of kin. The maximum limit of the amount deducted is ` 20,000 for elderly people and ` 30,000 for other in addition to the savings up to ` 1, 00, 000.
Life Insurance Scheme
An earner should have a Life Insurance Policy to enjoy the tax benefit that the policy offers. The total amount of money invested and the expenditure from the life insurance policy is tax-exempt. Opt for a policy which is best suited for you, do not purchase new policy every year and in case if you want to invest again then opt for ULIP schemes.
Home Loans
Deduction in Home Loans under Section 80 D is valid if the earner has applied for home loan from any financial institution, public or private. The home loan should be either in the borrower's name or in the name of his spouse or kids. The benefit of house loans is that principle reimbursement will be tax exempt. However, the tax deduction on interest generally depends upon whether the home is on lease or is self occupied, as this provision is categorized under section 24.
Education Loans
Deduction in Education Loans under Section 80 D is valid if the earner has applied for education loan from any financial institution, public or private. The home loan should be either in the borrower's name or in the name of his spouse or kids. The benefit of education loans is that principle reimbursement will be tax exempt and the interest paid will fall under tax deduction.
Tax Deductions on Investment
- Investment made under post office monthly income plan
- Investment made in Debentures or Bonds of a private or public institution
- Investment in bank schemes
- Investments under plans like recurring deposit schemes, national saving schemes, time deposit schemes, etc. which are acknowledged by the government
- Investment in mutual funds falling under section 10(23D) of the Income Tax Act.
- Investment in planning and development authorities
- Investment in schemes like National Deposit Schemes which are acknowledged by the Central Government
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