Under the Indian Income Tax Act, an individual is eligible to claim certain tax deductions up to a limit. Let us read in detail about tax saving investment options:
Investment options under Section 80CUnder Section 80C of Indian income tax act, tax deduction up to the limit of Rs 1.5 lakh is allowed in a single financial year. These tax-free investment options are available to individuals and HUFs in India.
Equity-linked saving scheme.These are mutual funds linked to equities. The main objective of ELSS is to aim for high returns by investing a part of the portfolio in equities. The lock-in period is of 3 years. Returns and other gains on ELSS are tax-free under Section 80 C of the income tax act.
5-year Fixed depositsIt is one of the best as well as the safest tax saving investment option under Section 80C. It comes with a lock-in period of 5 years. However, the interest rate is higher than the regular FDs.
Public provident fundPPF is ideal for those who want to save funds for a secure life post-retirement. Investment in PPF can be claimed as a tax deduction under Section 80 C. Moreover, the interest earned is PPF is also Tax-free.
ULIPsULIP is a combination of insurance and investment which is also available for tax exemption under Section 80C.
Insurance plansLife insurance policies offer the dual benefit of financial protection against uncertainties in life as well as tax benefit on the payment of the premium amount. To claim tax benefit under this investment option, you have to have the policy for at least two years.
Other avenues beyond Section 80 C
Other than Section 80 C, there are a few clauses under Section 80D that allow you to claim tax benefits such as:
• Under Section 80D, investment in medical insurance can be claimed for tax deduction up to the limit of Rs 25000 (Rs 50,000 for senior citizens)
• Under Section 80 EE of Indian Income tax act, an individual can claim a tax deduction of Rs 50,000 on the amount of the home loan interest.
Click here to visit our personalized online advisor that gives you the financial expertise you need.
The information contained herein is generic in nature and is meant for educational purposes only. Nothing here is to be construed as an investment or financial or taxation advice nor to be considered as an invitation or solicitation or advertisement for any financial product. Readers are advised to exercise discretion and should seek independent professional advice prior to making any investment decision in relation to any financial product. Aditya Birla Capital Group is not liable for any decision arising out of the use of this information.
Disadvantages of Early Retirement - What Happens When You're Not Working?
Early retirement seems to be good, many people enjoy life without working especially with extra earnings. But they are not aware about the cons. Lets explore the disadvantages of retiring early to save your retirement life.
5 Benefits of Health Insurance that Makes it a Must Have Cover
Here are the 5 benefits of health insurance that makes it a must to cover
When Should You Withdraw Money from a Mutual Fund?
In case of a sudden change in fund strategy or an underperformance scheme for more than 3-4 years, it makes sense to withdraw money.
How To Apply For Personal Loan
Applying for a personal loan has become extremely easy these days. With the increase in applicants, banks and other financial institutions have made the process very simple.