Top 10 tax saving options before you file I-T returns

Top 10 tax saving options before you file I-T returns
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Top 10 tax saving options before you file I-T returns
  • 
	Employees Provident Fund (EPF)

	What is it: This scheme offers a total yearly exemption of INR. 100, 000 as mentioned in the Income Tax Act Section 80 C. In this fund, 10 % to 12 % of a person's basic salary gets deducted and the other 12 % is contributed by the employer.

	Average returns: 9.5%

	Maturity period: One can withdraw the entire amount in instances of leaving job, retirement after 58 years of age or taking VRS. Partial withdrawal can be done for home, medical or marriage related expenses though.

	 

    Employees Provident Fund (EPF) What is it: This scheme offers a total yearly exemption of INR. 100, 000 as mentioned in the Income Tax Act Section 80 C. In this fund, 10 % to 12 % of a person's basic salary gets deducted and the other 12 % is contributed by the employer. Average returns: 9.5% Maturity period: One can withdraw the entire amount in instances of leaving job, retirement after 58 years of age or taking VRS. Partial withdrawal can be done for home, medical or marriage related expenses though.  

  • 
	Public Provident Fund (PPF)

	What is it: It is a long-term, statutory scheme of the government. This tax saving option falls within the Section 80 C of the Income Tax Act in India.

	Average returns: 8.6% compounded annually

	Maturity period: 15 years

	Available at: State Bank of India or some of the nationalised banks or at designated post office branches.

	Income Taxable?:  No

	Limitations: This long-term scheme is for 15 years; hence if your investment horizon is short-term in nature, PPF is not meant for you as it locks your liquidity for a relatively long period of time.

	 

    Public Provident Fund (PPF) What is it: It is a long-term, statutory scheme of the government. This tax saving option falls within the Section 80 C of the Income Tax Act in India. Average returns: 8.6% compounded annually Maturity period: 15 years Available at: State Bank of India or some of the nationalised banks or at designated post office branches. Income Taxable?:  No Limitations: This long-term scheme is for 15 years; hence if your investment horizon is short-term in nature, PPF is not meant for you as it locks your liquidity for a relatively long period of time.  

  • 
	National Savings Certificate (NSC)

	What is it: This tax saving scheme falls under the Section 80 C of the Income Tax Act of India. Annual interest earned is deemed to be reinvested and qualifies for tax rebate for first 5 years.

	Average returns: 8% compounded half yearly

	Maturity period: Usually 5-10 years.

	Available at: Banks, post office or any broker.

	Income Taxable: Interest income is taxable but no TDS.

    National Savings Certificate (NSC) What is it: This tax saving scheme falls under the Section 80 C of the Income Tax Act of India. Annual interest earned is deemed to be reinvested and qualifies for tax rebate for first 5 years. Average returns: 8% compounded half yearly Maturity period: Usually 5-10 years. Available at: Banks, post office or any broker. Income Taxable: Interest income is taxable but no TDS.

  • 
	Equity Linked Savings Schemes (ELSS)

	 What is it:  ELSS is mutual funds that help you save taxes under Section 80C as well as generate decent long-term returns from the equity markets. ELSS is not much different in composition from a typical equity MF scheme. It has the potential to deliver good returns and at the same time save tax.

	Average returns: As per market situation

	Maturity period: Lock in period of only three years but one can remain invested for long.

	Available at: Any MF house, broker or through demat account.

	 

    Equity Linked Savings Schemes (ELSS)  What is it:  ELSS is mutual funds that help you save taxes under Section 80C as well as generate decent long-term returns from the equity markets. ELSS is not much different in composition from a typical equity MF scheme. It has the potential to deliver good returns and at the same time save tax. Average returns: As per market situation Maturity period: Lock in period of only three years but one can remain invested for long. Available at: Any MF house, broker or through demat account.  

  • 
	Unit-linked Insurance Plans (ULIPs)

	What is it: Covered by the Income Tax Act's Section 80 C, it is a unique blend of investment and insurance. The premium, which is being paid by a customer, gets deducted with initial charges while the rest of the amount is invested. 

	It may be of these mixture:
	*Aggressive ULIPs where one can invest 80 % to 100 % in equities. The rest can be        invested in debt instruments though.
	*Balanced ULIPs where an individual can invest 40 % to 60 % in equities
	*Conservative ULIPs, which allows one to invest up to 20 % in equities

	Average returns: As per market situation

	Lock-in period: 5 years

    Unit-linked Insurance Plans (ULIPs) What is it: Covered by the Income Tax Act's Section 80 C, it is a unique blend of investment and insurance. The premium, which is being paid by a customer, gets deducted with initial charges while the rest of the amount is invested.  It may be of these mixture: *Aggressive ULIPs where one can invest 80 % to 100 % in equities. The rest can be        invested in debt instruments though. *Balanced ULIPs where an individual can invest 40 % to 60 % in equities *Conservative ULIPs, which allows one to invest up to 20 % in equities Average returns: As per market situation Lock-in period: 5 years

  • 
	Tax Saving 5 year-Bank Fixed Deposit scheme
	 

	What is it: Investment up to Rs 1 lakh in these special tax saving bank fixed deposits also entails an investor tax deduction under Section 80C. This scheme neither allows the encashment of the money prior to completion of the 5 years term nor can this be used as the security against any loan.

	Average returns: 9-9.5% annually. Rate of interest varies from one bank or post office to another.

	Available at: Bank or post office.

	Lock-in period: 5 years

	Income Taxable: Interest income taxability upon maturity.

    Tax Saving 5 year-Bank Fixed Deposit scheme   What is it: Investment up to Rs 1 lakh in these special tax saving bank fixed deposits also entails an investor tax deduction under Section 80C. This scheme neither allows the encashment of the money prior to completion of the 5 years term nor can this be used as the security against any loan. Average returns: 9-9.5% annually. Rate of interest varies from one bank or post office to another. Available at: Bank or post office. Lock-in period: 5 years Income Taxable: Interest income taxability upon maturity.

  • 
	Infrastructure Bonds

	What is it: Over and above the deduction allowed by the Section 80 C, one can save income tax on a maximum amount of Rs 20, 000, by investing in different infrastructure bonds. Covered by the Section 80 CCF of the Indian I-T Act, this bond has become very popular with schemes like L&T, REC, IDFC among others.

	Maximum deduction: Rs 20,000

	Average returns: The rate of interest  varies from 8 % to 8.7%.

	Maturity period: 5 to 10 years.

	Available at: Company, broker, demat account.
	 

    Infrastructure Bonds What is it: Over and above the deduction allowed by the Section 80 C, one can save income tax on a maximum amount of Rs 20, 000, by investing in different infrastructure bonds. Covered by the Section 80 CCF of the Indian I-T Act, this bond has become very popular with schemes like L&T, REC, IDFC among others. Maximum deduction: Rs 20,000 Average returns: The rate of interest  varies from 8 % to 8.7%. Maturity period: 5 to 10 years. Available at: Company, broker, demat account.  

  • 
	Life Insurance Premium

	What is it: Any premium payable by an investor to provide cover to his life is eligible for deduction under Section 80C.

	Average returns: 6-7% annual. Apart from that, this helps one plan for the unforeseen events in his or her life.

	Maturity period: Depends upon length of policy.

	Income taxable? Tax benefit for the premium is restricted to 20 % of the initial amount of the capital invested.

	 

    Life Insurance Premium What is it: Any premium payable by an investor to provide cover to his life is eligible for deduction under Section 80C. Average returns: 6-7% annual. Apart from that, this helps one plan for the unforeseen events in his or her life. Maturity period: Depends upon length of policy. Income taxable? Tax benefit for the premium is restricted to 20 % of the initial amount of the capital invested.  

  • 
	Health Insurance Premiums

	Popular as Mediclaim Policies, which are a form of health insurance, comes within the Section 80 D of the country's Income Tax Act. Applicable even on the proprietor firm's cheques, these policies offers a maximum deduction of Rs 35, 000. This deduction is calculated in addition to any other tax saving done as per the Section 80 C.

	 

    Health Insurance Premiums Popular as Mediclaim Policies, which are a form of health insurance, comes within the Section 80 D of the country's Income Tax Act. Applicable even on the proprietor firm's cheques, these policies offers a maximum deduction of Rs 35, 000. This deduction is calculated in addition to any other tax saving done as per the Section 80 C.  

  • 
	Post Office Saving Options

	Under the Section 80 C of the Income Tax Act of India, one can invest in any of the different tax saving options provided by the post offices.

	Average returns: Interest rate as well as the tenure of the investment varies from one scheme to another.

	Maximum deduction: Rs 100, 000.

	 

    Post Office Saving Options Under the Section 80 C of the Income Tax Act of India, one can invest in any of the different tax saving options provided by the post offices. Average returns: Interest rate as well as the tenure of the investment varies from one scheme to another. Maximum deduction: Rs 100, 000.  

  • 
	Employees Provident Fund (EPF)

	What is it: This scheme offers a total yearly exemption of INR. 100, 000 as mentioned in the Income Tax Act Section 80 C. In this fund, 10 % to 12 % of a person's basic salary gets deducted and the other 12 % is contributed by the employer.

	Average returns: 9.5%

	Maturity period: One can withdraw the entire amount in instances of leaving job, retirement after 58 years of age or taking VRS. Partial withdrawal can be done for home, medical or marriage related expenses though.

	 
  • 
	Public Provident Fund (PPF)

	What is it: It is a long-term, statutory scheme of the government. This tax saving option falls within the Section 80 C of the Income Tax Act in India.

	Average returns: 8.6% compounded annually

	Maturity period: 15 years

	Available at: State Bank of India or some of the nationalised banks or at designated post office branches.

	Income Taxable?:  No

	Limitations: This long-term scheme is for 15 years; hence if your investment horizon is short-term in nature, PPF is not meant for you as it locks your liquidity for a relatively long period of time.

	 
  • 
	National Savings Certificate (NSC)

	What is it: This tax saving scheme falls under the Section 80 C of the Income Tax Act of India. Annual interest earned is deemed to be reinvested and qualifies for tax rebate for first 5 years.

	Average returns: 8% compounded half yearly

	Maturity period: Usually 5-10 years.

	Available at: Banks, post office or any broker.

	Income Taxable: Interest income is taxable but no TDS.
  • 
	Equity Linked Savings Schemes (ELSS)

	 What is it:  ELSS is mutual funds that help you save taxes under Section 80C as well as generate decent long-term returns from the equity markets. ELSS is not much different in composition from a typical equity MF scheme. It has the potential to deliver good returns and at the same time save tax.

	Average returns: As per market situation

	Maturity period: Lock in period of only three years but one can remain invested for long.

	Available at: Any MF house, broker or through demat account.

	 
  • 
	Unit-linked Insurance Plans (ULIPs)

	What is it: Covered by the Income Tax Act's Section 80 C, it is a unique blend of investment and insurance. The premium, which is being paid by a customer, gets deducted with initial charges while the rest of the amount is invested. 

	It may be of these mixture:
	*Aggressive ULIPs where one can invest 80 % to 100 % in equities. The rest can be        invested in debt instruments though.
	*Balanced ULIPs where an individual can invest 40 % to 60 % in equities
	*Conservative ULIPs, which allows one to invest up to 20 % in equities

	Average returns: As per market situation

	Lock-in period: 5 years
  • 
	Tax Saving 5 year-Bank Fixed Deposit scheme
	 

	What is it: Investment up to Rs 1 lakh in these special tax saving bank fixed deposits also entails an investor tax deduction under Section 80C. This scheme neither allows the encashment of the money prior to completion of the 5 years term nor can this be used as the security against any loan.

	Average returns: 9-9.5% annually. Rate of interest varies from one bank or post office to another.

	Available at: Bank or post office.

	Lock-in period: 5 years

	Income Taxable: Interest income taxability upon maturity.
  • 
	Infrastructure Bonds

	What is it: Over and above the deduction allowed by the Section 80 C, one can save income tax on a maximum amount of Rs 20, 000, by investing in different infrastructure bonds. Covered by the Section 80 CCF of the Indian I-T Act, this bond has become very popular with schemes like L&T, REC, IDFC among others.

	Maximum deduction: Rs 20,000

	Average returns: The rate of interest  varies from 8 % to 8.7%.

	Maturity period: 5 to 10 years.

	Available at: Company, broker, demat account.
	 
  • 
	Life Insurance Premium

	What is it: Any premium payable by an investor to provide cover to his life is eligible for deduction under Section 80C.

	Average returns: 6-7% annual. Apart from that, this helps one plan for the unforeseen events in his or her life.

	Maturity period: Depends upon length of policy.

	Income taxable? Tax benefit for the premium is restricted to 20 % of the initial amount of the capital invested.

	 
  • 
	Health Insurance Premiums

	Popular as Mediclaim Policies, which are a form of health insurance, comes within the Section 80 D of the country's Income Tax Act. Applicable even on the proprietor firm's cheques, these policies offers a maximum deduction of Rs 35, 000. This deduction is calculated in addition to any other tax saving done as per the Section 80 C.

	 
  • 
	Post Office Saving Options

	Under the Section 80 C of the Income Tax Act of India, one can invest in any of the different tax saving options provided by the post offices.

	Average returns: Interest rate as well as the tenure of the investment varies from one scheme to another.

	Maximum deduction: Rs 100, 000.

	 

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