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Tax saving Instruments Schemes:
If you are looking for short term savings then you can invest your money in post offices , government bonds, mutual funds, and if you are concentrated to long term savings then public provident funds (PPF ), life insurance, long term bank deposits (FDs, RDs) can help you.
Life Insurance Premium – Life policy or endowment policy, Children’s deferred endowment assurance policy, non-commutable deferred annuity
# Payment made by Government employees to the Central Government Employees Insurance Scheme.
# Contribution to Frontier Force Group Insurance Scheme
# Contribution (not being repayment of loan) towards statutory provident fund, recognised provident fund, 15-year public provident fund set up by the Government and approved superannuation fund.
# Any sum deposited in a 10-year or 15-year account under the Post Office Savings Bank (CTD) Rules, 1959.
# Subscription to National Savings Scheme, 1992, National Savings Certificates, VI (interest accrued is treated as amount reinvested in these certificates) VII and VIII issues
# Contribution to unit-linked insurance plan of Unit Trust of India and LIC Mutual Fund (i.e,, Jeevan Dhara / Jeevan Akshay)
# Contribution (upto Rs.10,000) to notified Equity Linked Savings Scheme of a Mutual Fund (notified for the purpose of section 10(23D)) or UTI
Contribution to any notified pension fund set up by a Mutual Fund (notified for the purpose of section 10 (23D) or by the UTI (i.e,, Retirement Benefit Unit Scheme of UTI and Kothari Pioneer Pension Plan set up by Kothari Pioneer Mutual Fund)
Any sum paid as subscription to Home Loan Account Scheme of the National Housing Bank (as per the rule 14 of the Home Loan Account Scheme, interest accrued is treated as reinvested in the Home Loan Account) or notified pension fund of the National Housing Bank.
# Any payment made towards the cost of purchase or construction of new residential house property. The deduction will be allowable in respect of payments made upto Rs. 10,000 during the previous year for the purpose of purchase or construction of residential house
# Any sum paid (w.e.f. assessment year 1992-93) as subscription to a notified deposit scheme (not being a scheme the interest on deposit whereunder qualifies for deduction under section 80L) of
i.Public sector companies engaged in providing long-term finances for construction or purchase of houses in India for residential purposes; or
ii. Any authority constituted in India by or under any law enacted either for the purpose of dealing with and satisfying the need for housing accommodation or for the purpose of planning, development or improvement of cities, towns, villages or for both.
Tax Saver Fixed Deposit
The provision of Section 80C whereby a deduction of up to Rs 100,000 is allowed while computing total income of an individual or HUF in respect of the life insurance premium, contribution to Provident Fund etc has being amended to include fixed deposit with a scheduled bank of a period of not less than five years. Accordingly, an individual or HUF shall now be entitled to deduction of up to Rs 100,000 in case he makes a fixed deposit of the period of five years or more. This exemption shall be part of the Rs 100,000 exemption presently available in respect of life insurance premium, contribution to PF etc.
The salient points of the scheme notification are; (a) Fixed tenure without premature withdrawal. (b) Year is defined as a financial year. (c) Amount limited to Rs. 100 minimum and Rs. 100,000 maximum. (d) Bank will issue a Fixed Deposit Receipt that shall be the basis of claiming tax benefit. (e) Term deposit under this scheme cannot be pledged to secure a loan.
Benefits of tax break u/s 80C of IT Act Benefit
Assume that a customer invests Rs 100,000 in this scheme @ 8% p.a. in fixed deposit for five years. He will get a benefit of Rs 30,600 at 30.6 % on the eligible investment of INR 100,000 assuming that he is in Rs 2,50000 lac to Rs 10,0000 lac tax bracket, thus his effective investment would be Rs 69,400. He would earn Rs 8000 (08 percent on 1 lac) as interest per annum, which would translate to a return of 11.5 percent on the effective investment of Rs 69,400.
Post Office Schemes
It is one of the best Income Tax Saving Scheme. It can be operated by either singly or jointly. In case of minor, with parent/ guardian. It is available throughout the year. There are several types of post office schemes depending upon the type of investment and maturity period. Post office schemes can be divided into following catagories:
Monthly Deposit
Saving Deposit
Time Deposit
Recurring Deposit
Life Insurance Premium Paid
Maximum Investment: 1,00,000
Policy should either be in your name, spouse’s name or children’s name
Contribution to Public Provident Fund
Maximum Investment: 70,000
You can’t add the employer’s contribution to PF under this head.
Investment in NSC (National Savings Certificate)
Maximum Investment: 1,00,000
Post office scheme with guaranteed returns.
Contribution to ULIPs
Maximum Investment: 1,00,000
Do your due diligence before getting into these.
Contribution to ELSS Mutual Funds
Maximum Investment: 1,00,000
Various Pension Fund.
Amount spent on children’s education
Maximum Investment: 1,00,000
For tuition fee only, and a maximum of 2 children
Annual Repayment of Housing Loan
Maximum Investment: 1,00,000
There are a lot of conditions in this that I’m not fully familiar with, so you need to consult an expert before banking on this.
Tax Saving Fixed Deposits
Maximum Investment: 1,00,000
Available in various banks.
Premium Paid Towards Jeevan Suraksha
Maximum Investment: 1,00,000
Pension plan with annuity for life.
Section 80CCF Infrastructure Bonds
Maximum Investment: 20,000
Infrastructure bonds are available through issues of ICICI and IDBI, brought out in the name of ICICI Safety Bonds and IDBI Flexibonds. These provide tax-saving benefits under Section 88 of the Income Tax Act, 1961, for the investor.
These financial plans not only provide you money growth but also provide you with financial security at various steps in your life.It depends on your needs which product suits you best.
If you are looking for short term savings then you can invest your money in post offices , government bonds, mutual funds, and if you are concentrated to long term savings then public provident funds (PPF ), life insurance, long term bank deposits (FDs, RDs) can help you.
Life Insurance Premium – Life policy or endowment policy, Children’s deferred endowment assurance policy, non-commutable deferred annuity
# Payment made by Government employees to the Central Government Employees Insurance Scheme.
# Contribution to Frontier Force Group Insurance Scheme
# Contribution (not being repayment of loan) towards statutory provident fund, recognised provident fund, 15-year public provident fund set up by the Government and approved superannuation fund.
# Any sum deposited in a 10-year or 15-year account under the Post Office Savings Bank (CTD) Rules, 1959.
# Subscription to National Savings Scheme, 1992, National Savings Certificates, VI (interest accrued is treated as amount reinvested in these certificates) VII and VIII issues
# Contribution to unit-linked insurance plan of Unit Trust of India and LIC Mutual Fund (i.e,, Jeevan Dhara / Jeevan Akshay)
# Contribution (upto Rs.10,000) to notified Equity Linked Savings Scheme of a Mutual Fund (notified for the purpose of section 10(23D)) or UTI
Contribution to any notified pension fund set up by a Mutual Fund (notified for the purpose of section 10 (23D) or by the UTI (i.e,, Retirement Benefit Unit Scheme of UTI and Kothari Pioneer Pension Plan set up by Kothari Pioneer Mutual Fund)
Any sum paid as subscription to Home Loan Account Scheme of the National Housing Bank (as per the rule 14 of the Home Loan Account Scheme, interest accrued is treated as reinvested in the Home Loan Account) or notified pension fund of the National Housing Bank.
# Any payment made towards the cost of purchase or construction of new residential house property. The deduction will be allowable in respect of payments made upto Rs. 10,000 during the previous year for the purpose of purchase or construction of residential house
# Any sum paid (w.e.f. assessment year 1992-93) as subscription to a notified deposit scheme (not being a scheme the interest on deposit whereunder qualifies for deduction under section 80L) of
i.Public sector companies engaged in providing long-term finances for construction or purchase of houses in India for residential purposes; or
ii. Any authority constituted in India by or under any law enacted either for the purpose of dealing with and satisfying the need for housing accommodation or for the purpose of planning, development or improvement of cities, towns, villages or for both.
Tax Saver Fixed Deposit
The provision of Section 80C whereby a deduction of up to Rs 100,000 is allowed while computing total income of an individual or HUF in respect of the life insurance premium, contribution to Provident Fund etc has being amended to include fixed deposit with a scheduled bank of a period of not less than five years. Accordingly, an individual or HUF shall now be entitled to deduction of up to Rs 100,000 in case he makes a fixed deposit of the period of five years or more. This exemption shall be part of the Rs 100,000 exemption presently available in respect of life insurance premium, contribution to PF etc.
The salient points of the scheme notification are; (a) Fixed tenure without premature withdrawal. (b) Year is defined as a financial year. (c) Amount limited to Rs. 100 minimum and Rs. 100,000 maximum. (d) Bank will issue a Fixed Deposit Receipt that shall be the basis of claiming tax benefit. (e) Term deposit under this scheme cannot be pledged to secure a loan.
Benefits of tax break u/s 80C of IT Act Benefit
Assume that a customer invests Rs 100,000 in this scheme @ 8% p.a. in fixed deposit for five years. He will get a benefit of Rs 30,600 at 30.6 % on the eligible investment of INR 100,000 assuming that he is in Rs 2,50000 lac to Rs 10,0000 lac tax bracket, thus his effective investment would be Rs 69,400. He would earn Rs 8000 (08 percent on 1 lac) as interest per annum, which would translate to a return of 11.5 percent on the effective investment of Rs 69,400.
Post Office Schemes
It is one of the best Income Tax Saving Scheme. It can be operated by either singly or jointly. In case of minor, with parent/ guardian. It is available throughout the year. There are several types of post office schemes depending upon the type of investment and maturity period. Post office schemes can be divided into following catagories:
Monthly Deposit
Saving Deposit
Time Deposit
Recurring Deposit
Life Insurance Premium Paid
Maximum Investment: 1,00,000
Policy should either be in your name, spouse’s name or children’s name
Contribution to Public Provident Fund
Maximum Investment: 70,000
You can’t add the employer’s contribution to PF under this head.
Investment in NSC (National Savings Certificate)
Maximum Investment: 1,00,000
Post office scheme with guaranteed returns.
Contribution to ULIPs
Maximum Investment: 1,00,000
Do your due diligence before getting into these.
Contribution to ELSS Mutual Funds
Maximum Investment: 1,00,000
Various Pension Fund.
Amount spent on children’s education
Maximum Investment: 1,00,000
For tuition fee only, and a maximum of 2 children
Annual Repayment of Housing Loan
Maximum Investment: 1,00,000
There are a lot of conditions in this that I’m not fully familiar with, so you need to consult an expert before banking on this.
Tax Saving Fixed Deposits
Maximum Investment: 1,00,000
Available in various banks.
Premium Paid Towards Jeevan Suraksha
Maximum Investment: 1,00,000
Pension plan with annuity for life.
Section 80CCF Infrastructure Bonds
Maximum Investment: 20,000
Infrastructure bonds are available through issues of ICICI and IDBI, brought out in the name of ICICI Safety Bonds and IDBI Flexibonds. These provide tax-saving benefits under Section 88 of the Income Tax Act, 1961, for the investor.
These financial plans not only provide you money growth but also provide you with financial security at various steps in your life.It depends on your needs which product suits you best.
