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Tips & Techniques For Tax Savings In India


Are you looking for some useful tips & online resources which can help you to save your hard earned money. There are different ways to save your tax and save a lot of money. There are lots of financial schemes available in India which provides you guaranteed returns, high interest rates, tax savings under various sections of Indian Income Tax Act. India government gives different types of tax discounts and there are different type of popular tax savings options for the people of India such as funds, saving bonds and life insurance etc. It is better to take right steps at the beginning of year to save tax. Proper planning and implementation is required so that you can save significant amount of money.

If you are looking for short term savings then you can invest your money in post offices , government bonds, mutual funds, and if you are concentrated to long term savings then public provident funds (PPF), life insurance, long term bank deposits (FDs, RDs) can help you.



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Section 80D : Medical Insurance Premium

Health insurance, popularly known as Mediclaim Policies, provides a deduction of upto Rs. 35,000.

  • Rs. 15,000 for premium payments towards policies on self, spouse and children.
  • Rs. 20,000 for premium payment towards senior citizen dependent(person above 65 years as on March 31,2011)
  • This deduction is in addition to Rs. 1,00,000 savings under IT deductions clause 80C.
Exemption for Home Loan

You can get tax rebate on your principal amount of housing loan if it is borrowed from a recognized lender such as bank, financial institute or from your company where you are employed. Claim can be made for principal amount and expenses such as registration fee; stamp duty etc. from the financial year in which events like purchase, reconstruction, completion etc. happened. However you will not be eligible for tax relief, if principal amount is repaid before construction of your house. If you paid after completion of construction, you can claim maximum of Rs 1lakhs in a year to deduct from your taxable income.

Deduction on Interest Paid : You can avail tax relief for interest paid along with your monthly EMI. You can claim your interest deduction up to Rs 1, 50,000/-. However, you need to either acquire or complete construction of property within three years from the end of the financial year in which loan is taken. Tax relief can be enjoyed if you could not occupy the house due to your business or employment and your house is not let out during the year.

Section 80E : Exemption for Education Loan

The amount of interest paid is eligible for deduction under section 80E. You can deduct the entire interest amount from your taxable income. However there is no benefit available on the repayment of principal amount of the loan. i.e. Only Interest paid to the Bank will come under Exemption.

  • Deductions on education loan can only be claimed if the loan has been taken in your own name.
  • Deduction shall be allowed in computing the total income in respect of the initial assessment year* and seven assessment years immediately succeeding the initial assessment year or until the interest is paid by the assessee in full, whichever is earlier.
Exemption for Physically Handicapped (80 U) or Dependents Physically Handicapped(80 DD)

The deduction allowed is Rs. 50,000 / Rs. 75,000 depending on the extent of the disability of your dependent. A deduction of Rs. 50,000 is allowed if you have a disabled dependent. Whereas a deduction of Rs. 75,000 is allowed if your dependent has severe disability.

The income tax that you can save would depend on the tax bracket that you fall into.

Exemptions for persons with disability and families:

There are special tax concessions in the Income Tax Act for disabled persons. Section 80 U allows an exception of Rupees 40,000 from the income of the assessee with disability. (Apart from 80DD benifits to parents)

Investment Under 80 C & Infrastructure Bonds 80 CCF

Popular Investment Options

  • PPF (with post offices/banks), statutory Provident fund (deducted and paid by the employees).
  • Life insurance premium (with the LIC or other private insurers).
  • Unit-linked insurance (UTI & ULIPS)
  • Equity-linked saving schemes(ELSS Mutual Funds)
  • National Saving Certificates.
  • Infrastructure bonds (Investment Under 80CCF)
  • Monthly Income Scheme(MIS)
  • Kisan Vikas Patra

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