12 Best Tax Saving Investments To Get Income Tax Exemption

Tax Saving Investments: If possible, to reduce the income tax burden, investment in various savings and investment projects should be started from April 1 as soon as the financial year begins. However, this is not possible for a long time, but it is seen that when the new calendar year starts in January, many people start working for this. The current 2021-22 financial year will end on March 31, 2022.

Tax Saving Investments
Tax Saving Investments

tax saver investment options

Everything needs to be done to reduce the tax burden on the income of this financial year as the last investment of the current financial year has come to an end. So let’s understand the details of savings and investment to get an income tax exemption.

The details of tax-saving exemptions available under Sections 80C to 80U of the Income-tax Act have to be filled. Then all these exemptions can be claimed from the income before the income tax is imposed. In this case most

Section 80C is discussed. Section 80C of the Income Tax Act allows exemption up to Rs 1.5 lakh. Under it, individuals can invest in various savings schemes to claim a discount on their taxable income.

This basically allows for some expenses and investments to be exempted from income tax. If you plan your investments well and spread them to different sectors like PPF, NSC, ELSS, etc., you can all collect a total deduction of up to Rs 1.5 lakh from your income, which will reduce your tax liability. Let’s take a look at where to invest if you want to take a discount on this section.

India income tax saving options

Employees Provident Fund (EPF)

Tax Saving Investments
Tax Saving Investments

Employees Provident Fund is automatically deducted from your monthly salary. An employee’s contribution to the EPF is eligible for exemption under Section 80C of the Income-tax Act. It is called Voluntary Provident Fund or VPF when the employees are allowed to contribute more voluntarily to the EPF account if they want and it is also eligible for exemption from income under Section 80C of the Income Tax Act. It is the Best tax savings plan.

Public Provident Fund (PPF)

Public Provident Fund is a popular tax savings options instrument because it provides guaranteed returns. You can contribute a minimum of Rs.500 / – per annum to PPF and up to a maximum of Rs.1.5 lakh / – per annum. This is very attractive to taxpayers, especially those who earn a high income and do not run out of cash to take advantage of tax exemptions, as PPF interest is not taxable.

Public Provident Fund
Tax savings options

Life Insurance Premium Payment: If you have purchased a life insurance policy for yourself, your children, or your spouse, the premiums you pay are tax-deductible under Section 80C of the Income Tax Act. If you have multiple life insurance policies from different insurance providers, you can deposit all the premiums and claim a rebate of up to Rs 1.5 lakh in total.

Equity Linked Savings Scheme (ELSS)

Tax saving investments: Certain mutual fund schemes are designed for tax savings. These are commonly called equity-linked savings schemes. Investing in it allows investors to claim a rebate of up to Rs 1.5 lakh under Section 80C of the Income Tax Act. If you invest in it, there is a chance to make a good profit and the risk is also high.

National Savings Certificate

The National Savings Certificate or National Savings Certificate (NSC) is one of the most popular tax saving plans for Indian citizens. The interest in this scheme is compounded semi-annually. The minimum amount you can invest in this certificate is Rs.100 and there is no maximum limit.

India income tax saving options
India income tax saving options

However, under Section 80C of the Income Tax Act, if you invest a maximum of Rs 1.5 lakh per financial year in a National Savings Certificate, it is eligible for exemption from income. The special feature of this scheme is that the interest accrued from it is eligible for exemption under 80C. This is why the project is attractive to taxpayers who have cash problems.

Sukanya Samrudhi Scheme

A person can open a Sukanya Samrudhi account for his daughter from the date of her birth till the age of ten years.

Sukanya Samrudhi Scheme
Tax saving plan

The minimum amount you can invest in Sukanya Samridhi Scheme is Rs.250 and up to a maximum of Rs.1.5 lakh for income tax exemption in a financial year. The interest on this account is calculated on an annual basis and is also compounded on an annual basis. The money invested through this scheme is exempt from income under section 80C of the Income-tax Act and the interest received is not taxable.

Unit Linked Insurance Plan (ULIP)

ULIP is a combination of investment and insurance. In this tax saving plan, the policyholder can make annual or monthly premium payments. A portion of the premium amount is used to cover life insurance and the remaining money is invested. The result is that it provides a substantial income in the long run. One of the main reasons why these schemes have become so popular in recent times is that they not only help to save money, but also provide exemptions under Section 80C of the Income Tax Act. It provides a discount of up to a maximum of Rs 1.5 lakh.

Repayment of the principal amount of the home loan

The Principal amount of your home loan or the amount in monthly installments or EMI for the actual repayment is eligible for tax deduction under 80C of the Income Tax Act. In the case of home loan repayments, there are two components to the installment – the principal amount and the interest. Although the interest portion of the repayment cannot be claimed as a deduction from income under Section 80C of the Income-tax Act, the principal debt must be repaid. However, the interest portion of the EMI paid for the year can be claimed under Section 24 of the Income-tax Act as a rebate from your total income up to a maximum of Rs two lakh.

Registration Charge and Stamp Duty for a Home / Property

If you purchase a home or property and pay for stamp duty and registration, these amounts may be claimed for deduction from income under Section 80C of the Income Tax Act.

Senior Citizen Savings Scheme

Senior Citizen Savings Scheme

The Senior Citizen Savings Scheme is the best investment scheme possible for senior citizens. Returns are relatively profitable compared to other schemes and interest is paid on a quarterly basis. People above 60 years of age can invest in this scheme and a maximum of Rs 15 lakh and the government can change its interest rate. However, under Section 80C of the Income Tax Act, you can claim exemption from income up to Rs 1.5 lakh.

Tax Savings Fixed Deposit

Under 80C of the Income Tax Act, a fixed deposit can be made in a bank for five years and you can claim a rebate of up to Rs 1.5 lakh. However, at the moment the bank’s interest rate has come down a lot.

Let’s take a look at the benefits of investing in various savings schemes under Section 80C of the Income Tax Act.

National Pension Scheme (NPS)

The National Pension Scheme has the benefit of exemption under 80 CCD of Income Tax. An additional discount of Rs 50,000 is available for NPS (Tier-1) investment under Section 80CCD (1B). So with the benefit of 80C, a person can claim a rebate from a total income of two lakh rupees in a financial year. Then again, if the employer contributes to the NPS on your behalf, 10 percent of your basic salary or the employer’s contribution whichever is less can be claimed as an additional discount. This exemption may be claimed under section 80CCD (2).

Discounts on health insurance etc

Under section 80D, a maximum of Rs. If he is a senior citizen, he gets a discount of Rs 50,000. Also, an individual can claim a discount of Rs 5,000 for a preventive health check-up. It falls within the overall range allowed under Section 80D. The total amount given for preventive health examination for oneself and parents cannot be more than Rs.5000. However, in the case of senior citizen parents, a maximum discount of Rs 50,000 is available for the health insurance premium paid. If you are not a senior citizen, the discount is Rs 25,000.

tax savings options

Expenses incurred for the care of persons with disabilities may be claimed as a rebate under Section 80DD. Dependent persons for whom exemption can be claimed under this section include spouse, any child (son/daughter), parents (excluding in-laws), and siblings (brother/sister). The amount of maximum discount available depends on the nature of the disability. If the dependent has a 40 percent disability, you can claim up to Rs 75,000 as a discount.

India income tax saving options
India income tax saving options

On the other hand, if the dependent has at least 80 percent severe disability, the maximum discount is Rs 1.25 lakh. However, if a disabled person wants to claim the waiver himself, such waiver can be claimed under section 80U. However, if this waiver is claimed, no other person can claim a waiver on your behalf under section 80DD.

Section 80 DDB covers the cost of treatment of certain diseases for oneself or dependents (husband, wife, son, daughter, brother, sister, mother-father). The maximum exemption allowed under this section depends on the age of the person for whose treatment the money is being spent. A maximum discount of Rs 40,000 can be claimed. In the case of senior citizens, a maximum discount of Rs one lakh is given.

Note that when claiming a discount under section 80 DDB, the number of medical expenses received from the employer or insurance company must be deducted from the maximum discount.

Section 80E: Loans are taken for higher education are eligible for interest waiver under section 80E. There is no limit to the maximum amount claimed as a discount. This discount is available for 8 years from the year the loan repayment with interest started until it is repaid in full. This discount can be claimed for education loans taken for the higher education of oneself, wife, or children.

Section 80EE Home Loan Interest Payment: An additional Rs. 50,000 discount can be claimed under Section 80EE if certain conditions are met:

A) The loan you took was approved between 1st April 2016 and 31st March 2017.

B) The amount of the home loans is not more than 35 lakh rupees.

C) The value of the house is not more than 50 lakh rupees.

D) The house for which the loan has been taken in your first house.

Similarly, if the following conditions are met, the individual can claim an additional rebate of Rs 1.5 lakh under section 80EEA:

A) If the loan has been sanctioned between 1st April 2019 to 31st March 2020.
B) The value of house stamp duty is not more than Rs. 45 lakhs.
C) The person was no longer the owner of any residential property on the date of loan approval.
D) Not eligible for exemption under 80EE.

Section 80 EEB: Discount for purchase of an electric car.

Discounts are available on interest paid for loans taken to buy an electric car. An individual can claim a maximum discount of Rs 1.5 lakh in a financial year. To be eligible to claim this discount, the loan must be approved between 1 April 2019, and 31 March 2023.

Section 80G: Match discount if you donate to eligible funds, charitable funds, etc. Grants made to certain funds and/or institutions advertised by the Income-tax Department are eligible for exemption from income under section 80G. Remember, the amount of discount that can be claimed by you will depend on which organization or fund you have given your grant to because in some cases 100 percent discount and in some cases 50 percent discount. If you donate in cash, then You can claim a maximum discount of Rs 2,000.

Section 80 TTA: Interest earned on your savings account balance at a bank or post office is taxable. However, you can claim a discount of up to Rs 10,000 on interest earned from your Savings Bank Account or Post Office Savings Account, or both. This discount can only be claimed by people under the age of 60.

Section 80 TTB: Interest earned on deposits at banks or post offices for senior citizens can claim a rebate of up to Rs 50,000 under Section 80 TTB. The interest covered under this section includes interest earned from bank savings accounts, fixed deposits, and post office schemes such as senior citizens savings schemes, post office savings accounts, etc. All these discounts are applicable only to those taxpayers who are opting for the old tax system.

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