Save tax: Must read this checklist of tax exemption options

It is that time of the year when we start updating our financial planning portfolio, mainly to save our yearly income form the tax-axe.

Updated: Jan 11, 2016, 16:41 PM IST
Save tax: Must read this checklist of tax exemption options

Zee Media Bureau

New Delhi: It is that time of the year when we start updating our financial planning portfolio, mainly to save our yearly income form the tax-axe.

How about going through the checklist to see if you are utilising from the wide variety of tax instruments available under Section 80C of Income Tax Act.

Tax deductions are available on the following with the investment limit of up to Rs 1.5 lakh per annum

1)Home loan principal repaid

2)Stamp duty Registration charges of a new house

3)Tution fee of two children

4)Life Insurance

5)EPF contribution

6)ELSS or Equity Linked Saving Schemes: Though you would like to be wary of investing through this instrument with a volatile stock market outlook

7)National Pension Scheme

8)PF

9)Tax saving post office deposits

 

Other investments:

1)Education loan interest – no limit

2)Home loan interest- Deduction available up to Rs 2 lakh if self-occupied; no limit if given on rent

3)Medical insurance premium- Up to Rs 25, 000 premium paid for self, spouse and children under Sec 80DD.

Additional Rs 25,000 for insurance of parents( Rs 30,000 for parents if they are senior citizens)

4)Medical check-up- Eligible for deduction up to 5000 paid for medical check up of self, spouse and children under 80DD. Overall deduction can't exceed Rs 25,000( Rs 30,000 for senior citizens)

5)Disability of self or dependent- Eligible for Rs 75,000 deduction under Sec 80DD, and Rs 1.25 lakh for severe disability.

6)Specified illness- Rs 40,000 deduction available under Section 80DDB for below 60 years. Rs 60,000 for over 60 years, and 80,000 for over 80 years

7)Donations. Tax deductions are available under 80 G of Income Tax Act. Total deductions cannot exceed 10 percent of the gross total income.

8)Investment on minor- If you invest in a minor child's name, the income is clubbed with that of the parent who earns more. However, there is a small Rs 1,500 exemption per child per year from such investments. You can avail of this for a maximum of two children.

9)Parents can help- Your parents can also help you avoid the tax net. If any or both of your parents do not have a high income, while you are in the highest 30% tax slab, you can invest in their name to earn tax-free income. Such income is not clubbed.