abhishreshthaa
Abhijeet S
Tax Planning Instruments Available in India
• Public Provident Fund (PPF) Accounts:
• The deposits in PPF accounts are eligible for relief under section 80C of the Income Tax Act.
• The interest earned on deposits in PPF accounts is fully exempted from income tax.
• The interest and principal in a PPF account cannot be attached by a court decree.
• Special Bank Term Deposit Scheme (BTDS):
• The investment under this scheme in banks is eligible for relief under section 80C of the Income Tax Act.
• National Savings Certificates NSCs:
• The investment in NSCs is eligible for relief under section 80C of the Income Tax Act.
• The interest accrued on NSCs, though taxable, is treated as investment for the purpose of section 80C of the Income Tax Act.
• Post Office Time Deposit Scheme:
• The investment under this scheme in Post Offices is eligible for relief under section 80C of the Income Tax Act w.e.f. the financial year 2007-08 i.e. Assessment year 2008-09.
• Post Office Senior Citizen Scheme:
• The investment under this scheme in Post Offices is eligible for relief under section 80C of the Income Tax Act w.e.f. the financial year 2007-08 i.e. Assessment year 2008-09.
• Post Office Retiring Govt. Employees Scheme:
• The interest income on investments made by retiring/retired Central and State Government employees under this scheme is fully exempt from Income Tax under section 10(15)(iv)(i).
• Post Office Scheme for Retired PSU Employees:
• The interest income on investments made by retired employees of Public Sector undertakings under this scheme is fully exempt from Income Tax under section 10(15)(iv)(i).
• Life Inusrance
• The premium paid by an individual for life insurance of self or spouse or any child of such individual and the same by a Hindu Undivided Family for life insurance of any member is eligible for deduction from income under section 80C of the Income Tax Act. The maximum deduction available is upto a maximum of Rs. 100,000/- under Section 80C alongwith other investments under section 80C, 80CCC and 80CCD.
• The sum received (including the bonus) under a life insurance policy (other than any sum received under sub-section (3) of section 80DDA or under a Keyman insurance policy) is totally tax free.
• Health Insurance:
• The investment in health/ medical insurance of self or family members is exempted under Section 80D upto Rs. 20,000/- for senior citizens and upto Rs. 15,000/- for others. An additional relief for health/ medical insurance of parents, Rs. 20,000/- if parents are senior citizen and Rs. 15,000/- for others, is available w.e.f. Assessment Year 2009-10. This relief is in addition to the maximum relief of Rs. 100,000/- available for investments under section 80C, 80CCC and 80CCD.
• House Property:
• The repayment of housing loan upto Rs. 1,00,000/- (inclusive of other investment u/s 80C) qualifies for relief under section 80C of the Income Tax Act.
• A further rebate in the form of deduction on accrued interest upto Rs. 1,50,000/- per annum from the total income is available under Section 24 of the Income Tax Act.
• Educational Loans:
• Deduction is available under section 80E of Income Tax Act for any amount paid in the previous year by an assessee out of his income chargeable to tax, by way of interest on loan taken by him from any financial institution or any approved charitable institution for the purpose of pursuing his higher education or for the purpose of higher education of his relative (spouse and children).
• Mutual Funds:
• The investment in Equity Linked Tax Saving Mutual Funds is eligible for deduction under section 80 C of the Income Tax Act. These funds usually have a lock-in period of minimum three years.
• The income earned on mutual funds is exempted from Income Tax in the hand of the investors.
• Public Provident Fund (PPF) Accounts:
• The deposits in PPF accounts are eligible for relief under section 80C of the Income Tax Act.
• The interest earned on deposits in PPF accounts is fully exempted from income tax.
• The interest and principal in a PPF account cannot be attached by a court decree.
• Special Bank Term Deposit Scheme (BTDS):
• The investment under this scheme in banks is eligible for relief under section 80C of the Income Tax Act.
• National Savings Certificates NSCs:
• The investment in NSCs is eligible for relief under section 80C of the Income Tax Act.
• The interest accrued on NSCs, though taxable, is treated as investment for the purpose of section 80C of the Income Tax Act.
• Post Office Time Deposit Scheme:
• The investment under this scheme in Post Offices is eligible for relief under section 80C of the Income Tax Act w.e.f. the financial year 2007-08 i.e. Assessment year 2008-09.
• Post Office Senior Citizen Scheme:
• The investment under this scheme in Post Offices is eligible for relief under section 80C of the Income Tax Act w.e.f. the financial year 2007-08 i.e. Assessment year 2008-09.
• Post Office Retiring Govt. Employees Scheme:
• The interest income on investments made by retiring/retired Central and State Government employees under this scheme is fully exempt from Income Tax under section 10(15)(iv)(i).
• Post Office Scheme for Retired PSU Employees:
• The interest income on investments made by retired employees of Public Sector undertakings under this scheme is fully exempt from Income Tax under section 10(15)(iv)(i).
• Life Inusrance
• The premium paid by an individual for life insurance of self or spouse or any child of such individual and the same by a Hindu Undivided Family for life insurance of any member is eligible for deduction from income under section 80C of the Income Tax Act. The maximum deduction available is upto a maximum of Rs. 100,000/- under Section 80C alongwith other investments under section 80C, 80CCC and 80CCD.
• The sum received (including the bonus) under a life insurance policy (other than any sum received under sub-section (3) of section 80DDA or under a Keyman insurance policy) is totally tax free.
• Health Insurance:
• The investment in health/ medical insurance of self or family members is exempted under Section 80D upto Rs. 20,000/- for senior citizens and upto Rs. 15,000/- for others. An additional relief for health/ medical insurance of parents, Rs. 20,000/- if parents are senior citizen and Rs. 15,000/- for others, is available w.e.f. Assessment Year 2009-10. This relief is in addition to the maximum relief of Rs. 100,000/- available for investments under section 80C, 80CCC and 80CCD.
• House Property:
• The repayment of housing loan upto Rs. 1,00,000/- (inclusive of other investment u/s 80C) qualifies for relief under section 80C of the Income Tax Act.
• A further rebate in the form of deduction on accrued interest upto Rs. 1,50,000/- per annum from the total income is available under Section 24 of the Income Tax Act.
• Educational Loans:
• Deduction is available under section 80E of Income Tax Act for any amount paid in the previous year by an assessee out of his income chargeable to tax, by way of interest on loan taken by him from any financial institution or any approved charitable institution for the purpose of pursuing his higher education or for the purpose of higher education of his relative (spouse and children).
• Mutual Funds:
• The investment in Equity Linked Tax Saving Mutual Funds is eligible for deduction under section 80 C of the Income Tax Act. These funds usually have a lock-in period of minimum three years.
• The income earned on mutual funds is exempted from Income Tax in the hand of the investors.