IT'S that time of the year when most of us wake-up to realize that we need to plan quickly to save on income-tax. There are many sections in the Income-Tax Act, that can be used to minimize one's tax liabilities.
Section 80 C: The most popular section allows deduction of up to Rs 1,00,000 from your taxable income.
To know your tax liability, calculate your contribution in non-financial transactions, such as tuition fees including admission fees or college fees paid for full-time education of any two children, and repayment of your housing loan (principal). For salaried, calculate your contribution towards employee provident fund. Add the payment towards the three and subtract it from Rs 1,00,000.
Whatever is the gap is the amount you need to invest in various instruments such as life insurance, pension plans of insurance companies, contribution to public provident fund (PPF), National Savings Scheme (NSE), equity linked saving schemes (
ELSS), five-year term deposits with banks or post offices, interest accrued in respect of NSC VIII issue, New Pension Scheme and Rajiv Gandhi Tax Saving Scheme.
An assessee can claim deduction of the interest payment up to Rs 1.5 lakh on home loans under Section 24 (i).
While investing in various tax-saving instruments, consider your risk profile, the risk inherent in the saving instrument, lock-in period, the time horizon you have for reaching your financial goals and the returns that the product offers.
So if you have the ability to take risk and your financial goals are 10-15 years away, invest in ELSS. But do not invest a lump sum in ELSS when the market is high. Instead, invest through a systematic investment plans (SIPs) that will help in rupee cost averaging. In case you are risk averse, select PPF, or a combination of ELSS and PPF.
Section 80 GG: You can claim deduction in case you are staying in a rented house. The amount of deduction under 80 GG should be lower of Rs 2,000 per month or amount of rent paid in excess of 10 per cent of total income or 25 per cent of the total income.
Section 80 E: This section provides a tax deduction on an education loan interest that you are paying. There is no cap on the deduction amount.
Section 80D: Investments made towards payment of health insurance premiums for yourself or family members, qualify for a tax deduction under Section 80D. For those below 65 years, one can use up to Rs 15,000 of health insurance premium paid. A further deduction of Rs 15,000 could be claimed for buying health insurance policy for your parents (Rs 20,000 if either of your parents is a senior citizen).
Section 80 DDB: This section provides tax deductions for costs incurred for treatment of yourself and family members for illnesses such as malignant cancers, AIDS, chronic renal failure, hemophilia, thalassaemia and neurological diseases. For individuals less than 65 years, a deduction limit of Rs 40,000 is applicable. For a senior citizen, the limit is of Rs 60,000.
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Invest in Tax Saving Mutual Funds ( ELSS Mutual Funds ) to upto Rs 1 lakh and Save tax under Section 80C.
Invest Tax Saving Mutual Funds Online
Tax Saving Mutual Funds Online
These links can be used to Purchase Mutual Funds Online that are regular also (Investment, non-tax saving)
Download Tax Saving Mutual Fund Application Forms from all AMCs
Download Tax Saving Mutual Fund Applications
These Application Forms can be used for buying regular mutual funds also
Some of the best Tax Saving Mutual Funds available ( ELSS Mutual Funds )
- ICICI Prudential Tax Plan Invest Online
- HDFC TaxSaver Invest Online
- DSP BlackRock Tax Saver Fund Invest Online
- Reliance Tax Saver (ELSS) Fund Invest Online
- Birla Sun Life Tax Relief '96 Invest Online
- IDFC Tax Advantage (ELSS) Fund Invest Online
- SBI Magnum Tax Gain Scheme 1993 Invest Online
- Sundaram Tax Saver Invest Online
- Edelweiss ELSS Invest Online
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