• Tax saving options

I have gross earnings of Rs 103133 per month. I have an educational loan of 750000 for 15 years period.
I have an LIC of 15000 per annum. What is the best tax saving options for me?
Asked 1 year ago in Income Tax

- Total earnings is Rs.12,37,596/-. If you are a salaried person then standard deduction of Rs.50k is available. You can invest upto Rs.1.50 lacs in 80C, 50k under NPS and Rs.50k in medical insurance. If loan is obtained for higher education then interest would be allowed as deduction u/s 80E on payment basis. such deduction is available for 8 assessment years starting from the assessment year in which you started paying interest.

 

- Please take phone consultation for detailed discussion.

Vivek Kumar Arora
CA, Delhi
4243 Answers
408 Consultations

5.0 on 5.0

Dear Sir,

 

Hope you are doing well !!

 

Broadly/Practically, there are following Income tax sections under which we can claim the tax exemptions - 

 

80C-Section 80C comprises of various investments and expenses that are eligible for tax deductions. A taxpayer can claim maximum tax deductions of Rs 1.5 lakh for a particular financial year (FY) from his/her taxable income through investments made by him/her under section 80C of the Income Tax Act, 1961.

 

 1. NPS

2. PPF

3. LIC

4. ELSS

5. Term deposits

etc.

 

It is advisable to claim maximum tax deductions of Rs 1.5 lakh by investment specified u/s 80C. 

 

80CCD-To encourage the investors to invest for retirement in Nation Pension Scheme, the government allowed addition tax deduction of Rs 50,000 under section 80CCDD.

 

It is over and above Rs. 1.5 lakh limit.

 

80D-Deduction for the premium paid for Medical Insurance up to Rs. 50000 subject to conditions.

 

80G-The various donations specified in u/s 80G are eligible for deduction up to either 100% or 50% with or without restriction as provided in section 80G.

 

80E-Once you avail of an education loan, the interest paid (which is a component of your EMI) on the education loan is allowed as a deduction under Section 80E of the Income Tax Act, 1961. This deduction is available for a maximum of 8 years or till the interest is repaid, whichever is earlier.

 

We may assist you in tax planning.

 

It is advisable to take a phone consultation for detailed discussion.

 

 

 

Thanks & Regards,

Payal Chhajed

 

Payal Chhajed
CA, Mumbai
5132 Answers
191 Consultations

5.0 on 5.0

You can get deduction upto 150000 in a year. You may invest in ELSS scheme, PPF or ULIP. If Provident Fund is deducted it will be covered in 80C. Education Loan interest is covered in 80E.

Ruchi Goel Anchal
CA, Gurgaon
469 Answers
5 Consultations

5.0 on 5.0

Hi, if PF is deducted from your income you can claim that too under 80C. There are investment options available under 80C like MF, FD, Insurance. You can also invest in Rs. 50000 under NPS. However, my suggestion is to invest based on long term goals and risk appetite rather than just for taxation since most of the tax savings instruments have lock-in clause hence liquidity will get stucked

Yash Shah
CA, Mumbai
29 Answers

Not rated

Hi

 

Use up your Rs 1.5 lakh limit under Section 80C

The below mentioned investments/deductions are all subject to a cap of Rs 1.5 lakh. In other words, they are either/or investments and making one type of investment will reduce room for another:

1.Tax-Saver FDs : You can get a tax deduction of up to Rs 1.5 lakh under 5 year tax-saver FDs. The carry a fixed rate of interest currently between 7-8%. The interest on these FDs is taxable

2. PPF (Public Provident Fund): Public Provident Fund is a government established savings scheme with a tenure of 15 years available at most banks and post offices in India. Its rate changes every quarter but is currently 8%. The interest on PPF is tax-free.

3. ELSS Funds: These are mutual funds which invest a minimum of 80% of their assets in equity. They have a lock-in of 3 years. The returns on ELSS funds are subject to Long Term Capital Gains Tax (LTCG) at 10%, over and above an exemption limit of Rs 1 lakh.

4. NSC (National Saving Certificate): A National Savings Certificate has a tenure of 5 years and a fixed rate of interest. The rate is currently 8%. The interest on NSC is also automatically counted towards the Rs 1.5 lakh 80C limit and is tax-deductible if no other investments are using up the limit.

5. Life Insurance Premiums: Premiums for different types of insurance policies including ULIPs, term insurance and endowment policies are tax deductible up to Rs 1.5 lakh. However the insurance cover must be at least 10 times the annual premium.

6. National Pension System (NPS): This deduction is available under Section 80CCD up to Rs 1.5 lakh for contributions to NPS. This is over and above the Rs 50,000 deduction available under Section 80CCD(1B) discussed below.

7. Home Loan Repayment: Repayment of the principal amount on a home loan is tax deductible up to Rs 1.5 lakh per annum.

8. Payment of tuition fees: Payment of tuition fees for your children is tax deductible up to Rs 1.5 lakh per annum.

9. EPF: Under the EPF Act. 12% of the pay of employees in the organised sector is deducted towards Employees Provident Fund. This deduction counts towards the Rs 1.5 lakh limit under Section 80C.

10. Senior Citizens Savings Scheme: Contribution to the SCSS is tax deductible up to Rs 1.5 lakh. SCSS has a tenure of 5 years and is available to those above 60. The rate for SCSS is higher than prevailing FD rates and is currently 8.7% (it is taxable).

11.Sukanya Samriddhi Yojana: Parents of a girl child below the age of 10 can get this deduction. This account has a tenure of 21 years or until the girl marries after turning 18. It has an interest above prevailing rates (currently 8.5%) and the interest is tax-free.

2) Contribute to the National Pension System

This deduction under Section 80CCD(1B) up to Rs 50,000 is only available for contributions to the NPS. The NPS allows you to invest in equity and debt pension funds and build a retirement corpus. You can withdraw it at age 60.

3) Pay Health Insurance Premiums

A deduction up to Rs 25,000 is available for health insurance premiums under Section 80D. This is over and above the deductions listed above. For senior citizens, this limit is increased to Rs 50,000. A person contributing health insurance for himself and senior citizen parents can avail of the combined deduction up to Rs 75,000 per annum.

4) Get a deduction on your rent

You can claim tax deduction on your House Rent Allowance (HRA) if you get HRA. There is no upper limit for this but there are a set of rules that cap the maximum HRA deduction. If you do not get HRA but pay rent, you can claim a deduction under Section 80GG up to Rs 60,000 per annum.

5) Get a deduction on the interest on your home loan

If you have a home loan, the interest payable on it is tax deductible under Section 24 of the Income Tax Act up to Rs 2 lakh per annum. If you give out the house on rent, there is no upper limit. However the total loss that can be claimed on the broader head of income from house property is capped at Rs 2 lakh.

6) Keep some money in your savings account

This is probably the easiest deduction under the Income Tax Act that individuals can claim. Interest on savings accounts is tax free up to Rs 10,000 per year under Section 80TTA. This limit is Rs 50,000 for senior citizens for both FD and savings account interest under Section 80TTB.

7) Contribute to charity

You can get a tax deduction on your charitable donations. There is no upper limit but different rules restrict the tax deduction amount available on your charitable contributions. For most donations to NGOs, the limit is 50% of the donated amount and up to 10% of your adjusted total income. NGOs under this section are required to have an 80G certificate for you to be able to claim this deduction.

 

For more details discussion feel free to call.

Karishma Chhajer
CA, Jodhpur
2439 Answers
27 Consultations

5.0 on 5.0

Hello,

 

Assuming your earnings are from salary income, you would be allowed a standard deduction of Rs. 50,000. Further, you can invest up to Rs. 1,50,000 u/s. 80C, up to Rs. 50,000 in NPS, up to Rs. 50,000 u/s. 80D. Interest on education loan would be allowed u/s. 80E.

I hope this answer satisfies your requirements.

 

Regards,

CA Hunny Badlani

Hunny Badlani
CA, Madhya Pradesh
2584 Answers
12 Consultations

5.0 on 5.0

Hi

 

Available options for tax savings are:

1. 80C: EPF/PPF, LIC, mutual funds, home loan principal repayment etc

2. 80D: Medical insurance for self/ spouse/ parents

3. 80CCD: Contribution to NPS

4. Section 24: Interest paid on home loan

 

Further, please specify your source of income, whether it is a salary income or consultancy income on the basis of which we may advise further. 

Lakshita Bhandari
CA, Mumbai
5572 Answers
661 Consultations

5.0 on 5.0

You can either invest in PPF, ELSS or even take the route of new section i.e. 115BAC if you don't wish to invest.

You can check the comparison here for yourself: https://www.taxontips.com/calculation-sheet-for-comparison-of-tax-payable-under-new-and-old-tax-regime-for-individual-and-huf-115bac/

 

Hope you find the information helpful if you do please rate it 5 and provide your valuable feedback for my improvement.

Thank you.

Naman Maloo
CA, Jaipur
3893 Answers
52 Consultations

5.0 on 5.0

Housing loan best if not owned any one other wise  you have to increase your  insurance amt  can aslo take SIP

Nitin Jain
CA, Jaipur
215 Answers

4.7 on 5.0

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