The dream of every salaried individual is to reduce their taxable income with the help of tax-saving investment. But you have to know the exact tax provisions and the cap for the claim amount. So, here are some investment options that you can opt for along with the eligible tax provisions.
You can choose to invest in financial tools that give you tax benefit under Section 80C. It has a maximum limit of INR 1,50,000 per financial year.
PPF is a 15-year government scheme with a maximum investment amount of INR 1,50,000 and minimum of INR 500. The amount invested towards the scheme can be claimed for tax deductions under Section 80C. And the corpus received on maturity can also be availed as tax-free.
ELSS is a mutual fund scheme where the majority of the money gets invested in equity. It has a lock-in period of 3 years, giving lucrative returns in the future. The amount invested in Equity-Linked Savings Scheme can be claimed under Section 80C.
National Savings Certificate is a post-office saving scheme with a lock-in period of 5 years. You can avail the scheme at any Indian post office. The contributions made towards NSC can be claimed under Section 80C for tax deductions.
Life insurance provides you with a life cover and enables you to fulfil long-term savings plans. Along with this, you can get tax benefits on the premiums as well as the death benefit. The premiums paid for term insurance plan can be claimed for deductions under Section 80C. And the death benefit or maturity benefit received can be claimed for tax deductions under Section 10(10D).
A health insurance plan secures you from future medical expenses and protects your family during emergencies. With a health plan, you are eligible to claim deductions under Section 80D. A maximum deduction of INR 25,000 can be claimed for a health plan bought for you, your spouse and children. An additional amount of INR 50,000 can be claimed for insurance bought for your parents above the age of 60. But if your parents are below the age of 60, an amount of INR 25,000 can be claimed.
The interest earned on the funds in your savings account can be claimed under Section 80TTA. A maximum tax deduction that can be claimed is INR 10,000 per financial year. The interest can be listed as an income from other sources while filing your Income Tax Returns (ITR). But this is not applicable to interest earned from a fixed deposit.
If you have taken an education loan for your spouse or children, the interest levied on the loan amount can be claimed under Section 80E. But the tax deduction is only applicable for the interest and not the principal amount of the education loan itself.