You can invest between ₹500 to ₹1.5 lakh every year in PPF and avail tax benefits. Tuition fees of two offspring are also tax exempted. Under section 80E, one can also avail tax deduction on interest on education loan.
The salaried employees are well aware of the magical section 80C of the Income Tax act. It allows exemptions on various investments or spending and is an easy and convenient tool to make tax saving.
But, if you want to make substantial savings then here are the tips to avail best maximum benefits from section 80C.
1. Enhance you provident fund contribution.
2. Avail public provident fund (PPF) for more tax exemptions. You can invest between ₹500 to ₹1.5 lakh every year.
3. Get life insurance policy for self, spouse, and children to avail exemption on life insurance premiums.
4. Section 80C also allows an exemption on principal component of housing loan taken from Specified institutions or departments.
5. Exemptions on investment in National Savings Certificates (NSC) schemes.
6. Contribution to Unit-linked Insurance Plan availed for self, spouse and children are also tax exempted under section 80C.
7. Also, avail tax exemptions on 5-year term deposit made in a bank under some notified scheme or on deposit made in the post office.
8. Tuition fees of two offspring are also tax exempted.
9. If you have daughter/s (limited to two girl child), you can invest up to ₹1.5 lakh in a year under Sukanya Samriddhi Account created in your daughter’s name.
Beyond section 80C:
Apart from the 80C exemptions there are also few others means to ensure a considerable amount of saving on annual income:
1. New Pension Scheme (NPS): Employees can contribute up to 10%, and a self-employed person can contribute up to 20% annually on their gross total income on this scheme and get tax savings.
2. Home loan interest: Tax exemption up to ₹2 lakh is also available for self-occupied property the acquisition or construction of which has been completed within the period of 5 years since the end of financial year in which the loan was taken.
3. Education loan interest: Under section 80E, one can also avail tax deduction on interest on education loan, and there is no limit just like on home loan interest.
4. Interest on savings bank and post office account: Up to ₹10000 tax exemption is available on interest on saving bank and post office accounts including NRO savings account. Note that no exemption is available on interest received on fixed deposit on the savings account.
5. Donations: Subject to conditions, donors can avail exemption on 100% or 50% on the total donated amount. However, no tax deductions on cash donation made over ₹2000.
6. Medical insurance premiums: Exemption up to ₹25,000 is available on medical insurance premiums that cover self, spouse, dependent children. This exemption amount is ₹30000 if the insurance is for a person above 60-years of age or the spouse who is above 60-years.
Also, an additional 25% deduction is available on insurance one avails for their parents, and this deduction is 30% for getting insurance for parents who are above 60-years of age.
7. Treatment for certain illness: For treatment expense of certain diseases that includes malignant cancer or AIDS of self or dependents, is also tax deductable. One can avail up to ₹40000 or ₹60000 if above 60 years or ₹80000 if above 80 years tax deductions.
8. Disability-related tax benefits: For the expenses on rehabilitation, treatment, training, of self, dependent spouse, offspring, parent or siblings can avail ₹75000 tax deduction. This amount will be for ₹1,25,000 for severe disability.
