Income Tax Saving Investments & Deductions

There are many deductions available in Income Tax Act through which you can save your Tax. 

Here we will look at all those deductions and respective tax saving Investments details : 

1. Housing Loan Interest and Principal Repayment 

One of the best tax saving options available under Income Tax is of Housing Loan Interest and Principal repayment. Those who are looking to buy new house or construct, repair or renovate the house should avail this opportunity to save tax through housing loan. 

The interest paid on housing loan is deductible u/s 24(b) upto a limit of Rs.200000/- per annum and the principal repayment is also deductible u/s 80C upto a maximum limit of Rs.150000/- (cumulative benefit available with other deductions u/s 80C. 

Thus housing loan is a very good opportunity to reduce your tax liability. 

2. Investments under section 80C 

There is adeduction available under section 80C of the Income Tax Act upto a maximum limit of Rs.150000/- by choosing to invest in various schemes notified under that section. 

Some of the schemes available for investment under section 80C are as under : 

 

1. Life Insurance Premium 

Any investment made under Life insurance premium qualifies for deduction u/s 80C upto a limit of Rs.150000 during the year. However there is one condition which is necessary to be fulfilled i.e. the premium amount should not exceed 10% of total sum assured. Investment in any life insurance plan of any company i.e. LIC or any other Pvt. insurance companies will qualify for this deduction. Further the investment can be made in the name of Self, Wife or any child. However the person who is paying the premium will only get the deduction. 

2. Post Office Schemes such as PPF, NSC, Senior Citizen Scheme or Sukanya Samriddhi Scheme

There are four types of schemes available for deduction u/s 80C in respect of Post office schemes.

 

These are :

(a) Public Provident Fund 

(b) National Saving Certificate

(c) Senior Citizen Scheme 

(d) Sukanya Samriddhi Scheme

These four schemes qualifies for deduction u/s 80C. There is an lock in period in each of these schemes which is different for different schemes. The total deduction available under these schemes is Rs.150000 during a particular year. 

3. Provident Fund  

Any deduction made by employer in respect of payments made to Provident Fund will also qualify for deduction u/s 80C. The whole of the amount deducted from employee will qualify for this. The employer share will not qualify for this deduction as the same is already exempt from tax. 

4. Equity linked saving Scheme of Mutual Funds (ELSS) 

Any investment made in Equity linked saving Scheme of Mutual Funds which is specifically made for this deduction will qualify under this category. The schemes are specifically formulated by mutual funds for this deduction and before investing in these schemes it has to be ensured that these qualify for deduction. 

These schemes comes with a lock in period of 3 years. 

5. Tax Saver FDR at Scheduled Banks

There are specific tax saver FDRs available in Scheduled Banks wherein deduction u/s 80C is available. These FDRs come with a lock in period of 5 years and no loan etc. can be taken against these FDRs. 

3. Deduction under Section 80CCC and 80CCD

1. Pension Plan  - 80CCC

Any investment made under Pension Plan will also qualify for deduction u/s 80CCC. The pension plan can be taken from any source. However the total deduction u/s 80C & 80CCC shall not exceed Rs.150000. 

2. National Pension Scheme - 80CCD

Under this scheme, the deduction  is available in following ways : 

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