As the time draws near for Filing tax returns for the previous year, one tends to realize things that could have be done to lower tax liability. But as they say, there is no gain in crying over spilt milk
However, even though if you can’t do anything about the tax you paid on 31st March or tax that you have to pay now along with interests, there’s still time to plan your taxes for the current year and be a smart tax payer.
Before you fret and fume at the complexity of rules and regulations of tax laws in this country, have a glance at what the Income Tax Act, 1961 itself provides to help you save on your tax flows but also pave a way for a secure future by way of greater savings through greater investment.
Good news for persons having Gross Total Income below Rs. 5 Lakhs is that one gets a relief upto Rs.2000 against their total tax payable.
With about 10 months to go for the financial year end, here are a set of tips that can help you plan your money to generate growth and reduce outflows.
|
Sr. No.
|
Investment
|
Section under which Relief is there under Income Tax Act
|
Tenure
|
Type
|
Remarks
|
|
1.
|
Public Provident Fund,
|
80C
|
15 years
|
Liquidity
: Moderate.Income: Tax-free.
|
8.5% Interest announced for FY 2012-13. Suitable for Risk-averse investors, self-employed professionals and those not covered by the EPF.
|
|
2.
|
Equity Linked Saving Schemes of mutual funds
|
80C
|
3 years
|
Returns:
Market-linked. (4% in past three years.)Income: Dividends and capital gains are tax-free
|
Suitable for:
Investors willing to take calculated risks.
|
|
3.
|
National Saving Certificate and Fixed Deposit in Banks
|
80C
|
5 years and 10 years for NSC/5 years for FDs
|
Liquidity:
Moderate.Income: Fully taxable at normal rates.
|
Suitable for:
Risk-averse investors looking for short-term options, senior citizens and those in low tax bracket.
|
|
4.
|
Senior Citizens Saving Scheme
|
80C
|
5 years
|
9.3% Interest, Liquidity: High.Income: Fully taxable at normal rate.
|
Suitable for
Retirees looking for regular stream of income.
|
|
5.
|
Life Insurance Policy
|
80C
|
Any tenure as per policy
|
Premium allowable upto maximum of 10% of Capital Sum assured.
|
|
|
6.
|
Rajiv Gandhi Equity Savings Scheme
|
80C
|
3 years
|
Liquidity:
High.Income: Dividends and capital gains are tax-free.
|
Suitable for:
First-time investors who want to save more tax.
|
|
7.
|
Principal on Home Loan
|
80 C
|
Rs.1.5 Lakh for existing loan takers/Rs.2.5 Lakhs for new Loans subject to conditions mentioned below in Note 2.
|
||
|
8.
|
Certain Pension Funds
|
80CCC
|
|||
|
9.
|
New Pension Scheme (Refer note 3)
|
80CCD
|
10% of salary
|
Applicable for both salaried and non salaried Individuals
|
|
|
10.
|
Medical Insurance Premium
|
80D
|
Any tenure as per policy
|
On the health of self/spouse/dependent children/parent(s), maximum exemption amount Rs.15000,
Rs.20000 in case of Senior Citizen being a person above age 60. |
|
|
11.
|
Payment in relation to Preventive Medical Check-up of self or dependent family members
|
80D
|
Upto Rs.5000 payment whether in cash or any other mode of payment.
|
Upto Rs.5000
|
|
|
12.
|
Interest Component of Home Loan
|
24(b)
|
As per Repayment Schedule
|
Upto Rs.1,50,000
|
Note 1: Please Note contribution even to a Voluntary Provident Fund, provided it is recognized is allowable as deduction 80 C.
Note 2: However this exemption is allowed only under the following conditions.
This increase in exemption limit does not apply to existing home loan takers. It is only for the loan sanctioned by the financial institutions during 1st April 2013 to 31st March 2014.
The loan is taken for your first home i.e., you as a taxpayer do not already own a residential property on that date.
The value of the property does not exceed ₹ 40 lakhs.
The loan amount does not exceed ₹ 25 lakh.
Note 3: CONTRIBUTION TO NEW PENSION SCHEME (TREATMENT
UNDER INCOME TAX ACT, 1961)
Note 4: In case of Capital Gains, exemptions can be availed as per Sections 54, 54B, 54EC,54F,54G,54GB
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