Income tax department with a view to encourage savings and investments amongst the taxpayers have provided various deductions from the taxable income under chapter VI A deductions. 80C being the most famous, there are other deductions which are beneficial for the taxpayers to reduce their tax liability.
ELSS means Equity Linked Savings Scheme. Simply put, it is a mutual fund investment that offers you a dual advantage of wealth creation and tax benefits. It is a type of mutual fund scheme that primarily invests in equity and is eligible for tax deduction under Section 80C.
The NPS scheme holds immense value for anyone who works in the private sector and requires a regular pension after retirement. The scheme is portable across jobs and locations, with tax benefits under Section 80C and Section 80CCD.
Unit Linked Insurance Plans (ULIPs) are a type of life insurance plan that combines insurance coverage with investment options. ULIPs allow you to invest in a variety of asset classes, such as equity, debt, and money market funds, depending on your risk appetite and investment goals.
Tax saving FD
A tax-saving fixed deposit (FD) account is a type of fixed deposit account that offers a tax deduction under Section 80C of the Income Tax Act, 1961. Any investor can claim a deduction of a maximum of Rs. 1.5 lakh per annum by investing in a tax-saving fixed deposit account.
Investors use the PPF as a tool to build a corpus for their retirement by putting aside sums of money regularly, over long periods of time (PPF has a 15-year maturity, and the facility to extend the tenure). With its attractive interest rates and tax benefits, the PPF is a big favourite with a small saver.
Senior citizen savings scheme
SCSS accounts offer several benefits to senior citizens, including tax-free interest of up to Rs. 50,000 earned on quarterly payments. Deposits of up to Rs. 15 lakhs can be made in the account, which matures after five years. Please note that any unpaid quarterly interest will not accrue additional interest.
National Savings Certificate
NSC or National Savings Certificate is a fixed-income investment scheme backed by the Government of India. The savings bond is suitable for small and medium-income investors to save tax while earning returns. This is a secure and low-risk product.
Sukanya Samriddhi Yojana
Sukanya Samriddhi Yojana is a small deposit scheme of the Government of India meant exclusively for a girl child and is launched as a part of Beti Bachao Beti Padhao Campaign. The scheme is meant to meet the education and marriage expenses of a girl child. Since SSY is a government-backed scheme, it provides guaranteed returns. Tax Benefit- SSY provides tax deduction benefits under Section 80C up to Rs. 1.5 Lakh annually. Flexible Investment- One can make a minimum deposit of Rs. 250 in a year and a maximum deposit of Rs. 1.5 Lakh in a financial year. You have to invest at least the minimum amount every year for up to 15 years from the date of account opening.
Life & Health Insurance premium payments
Premium on life insurance policy can be claimed as deduction under section 80C.In case of an individual, deduction is available in respect of policy taken in the name of taxpayer or his/her spouse or his/her children. In case of a HUF, deduction is available in respect of policy taken in the name of karta.
Also tax benefit can be claimed under Section 80D of the Income Tax Act. Taxpayers can claim a deduction on the premiums paid towards their health insurance policies for themselves, spouse, dependent children, and parents. The deduction amount varies based on the age of the insured and the type of policy. Individuals can claim a deduction of up to Rs. 25,000 for the premium paid for themselves, their spouse, and dependent children, and an additional deduction of up to Rs. 25,000 for the premium paid for their parents who are below 60 years of age. For individuals above the age of 60, the deduction limit is increased to Rs. 50,000.
Section 80G of the Income Tax Act, 1961, allows taxpayers to save tax by donating money to eligible charitable institutions. By donating to eligible institutions and organisations, taxpayers can claim deductions ranging from 50% to 100% of the amount donated.