The financial year 2020-21 has begun. If you have a salary, your employer will often mail you a tax declaration. At the beginning of the financial year, which is April, we will announce an investment to the company. Here we tell you where and how you can offer tax savings options to a company.
Exemption under 80C
The government exempts tax on investments up to Rs 1,50,000 under section 80C of the Income Tax Act. There are many investment options. Learn about those options below —
1. Tax deduction on home loan principal
If you take out a home loan to buy or build a home and pay it off on EMI, you will benefit from tax savings. This is because the principal amount in the home loan is tax free under the principal amount Section 80C.
2. Tax exemption on child education
Tuition fees paid under child tuition are subject to the tax savings limit under Section 80C of the Income Tax. These discounts are only available on tuition fees deposited in a government or private school, college or institution. This exemption is limited to two children studying for full-time regular courses.
3. Public Futures Fund (PPF)
The Public Futures Fund (PPF) is a popular long-term investment option. Not only is this considered a safe investment, but also in the best interest. Also, the entire investment made in it is tax free. The PPF account earns 7.1 per cent interest on an annual basis. Interest earned is also tax free. The amount received at the time of expiration is completely tax-free.
4. Employee Provident Fund (EPF)
Salaried employees are already investing in this option. 12% of the salary you receive each month is credited to your EPF account. You can cooperate more voluntarily if you wish.
5. Can invest in ELSS
There are plans to invest in ELSS mutual funds. Its main purpose is to provide tax savings and good returns. Although the long-term capital gains tax is imposed on earnings from April 1, 2018, this investment is good in terms of income. Under the LTCG tax, only a profit of more than one lakh is taxed by the ELSS.
6. Senior Citizens Savings Plan
Senior Citizens Savings Scheme (SCSS) Income Tax is a good plan for senior citizens. The Senior Citizens Savings Scheme is currently receiving interest at the rate of 8.7 per cent. Investments made under this scheme are tax deductible under Section 80C of the Income Tax Act, 1961.
7. Five-year FD in the bank
The Fixed Deposit Plan (FD) is the oldest and safest investment plan to save income tax under Section 80C of the Income Tax. Currently, banks pay interest between 4.5% and 7.5% per annum. Interest received from the FD is payable. If you are investing in FD to save tax, you need to invest in a lock-in period of 5 years. You will not be able to claim tax deduction on short-term investments. Many banks offer an online facility for tax savings FDs. Upon closing, the amount goes directly into your bank account.
8. Insurance Premium
Tax deduction under Section 80C on premium paid on life insurance or insurance policy. You do not need to get a new plan every year to claim tax benefits under Section 80C. You can get a tax deduction for the premium paid each year.
9. Sukanya Prosperity Project
Launched under the central government’s Beti Bachao-Beti Padao scheme, the scheme is a great option for women to create a larger fund. You can open this account if your daughter is under 10 years of age. This account matures when your daughter is 21 years old. You can also get a tax deduction on this.
10. Term Life Insurance
You can take advantage of the tax deduction under Section 80C of the Income Tax Act on the premium paid for Term Life Insurance. An insurance plan is actually an opportunity to buy more life insurance coverage at a nominal premium.
11. You can also take advantage of stamp duty
Tax deduction up to Rs. 1.5 Lakh under Section 80C on stamp duty and registration fees for buying a home. Then, have you bought a home with a loan or with your own money. This discount can be obtained in the same year. If someone buys property jointly, both buyers can claim a tax deduction on stamp duty and registration fees according to their respective shareholders. But in this case only Rs 1.5 lakh will be collected.
We now know about investments that do not come in 80C but are very useful for tax savings. You can save up to one and a half lakh extra tax by investing in them or spending them.
1. Invest in NPS and get a higher discount of Rs
Investing in NPS is tax exempt, ie, the National Pension System. Under Section 80 CCD (1B) of Income Tax, taxpayers can claim tax exemption on investments up to Rs 50,000. This means that you are getting a discount of Rs 1.5 lakh under 80C and if you invest in NPS, you can get tax deduction of Rs 2 lakh.
2. There is also a discount on the education loan
Interest paid on graduate and postgraduate education loans is tax-free. This provision applies to any debt taken under section 80E of the Income Tax Act and in any amount.
3. Discount on health insurance
The cost of seeking treatment in the country is rising rapidly. In such a situation, it is necessary for everyone to get health insurance. During illness you can not only avoid financial burden but also be exempt from income tax by taking health insurance. Under Section 80D of the Income Tax Act, 1961, you can claim a tax deduction of up to Rs. You can claim an income tax deduction of up to Rs. If your parents are senior citizens, you can get a discount of up to Rs 50,000 on this item.
4. Discount on health checks
Advantages of preventive health checkups. Getting regular health inspections can save you a lot of tax, though you can warn about many diseases in advance. Bills are tax deductible up to Rs 5,000 for preventive health checks.
5. Relief on Disability Treatment
If there is a disability in the family, you can claim income tax deduction on the cost of treatment. Tax deduction under Section 80DD for expenses up to Rs 75,000. At the same time, the treatment of severely disabled people can be tax deductible up to Rs 1,25,000.
6. Tax deduction on HRA
If you are employed and have an HRA from an employer, you may be tax deductible on that amount. If the HRA is not included in the employer’s paycheck and you live in rent, you can claim this amount for tax deduction under Section 80G of the Income Tax Act. To get a tax deduction on the HRA, you must declare on Form 10B.
7. Discount available for home loan interest
Under Section 24 of the Income Tax, you get a discount for interest paid on a home loan. The maximum discount for home loan interest is Rs 2 lakh.
SBI Warning – Do not empty your account due to online FD!
