As residents, the premium that you pay for a life insurance plan is exempted from taxation under Section 80C. Therefore, you can avail a total of Rs. 1,50,000 as deduction under Section 80C.
Also, the death claims that your beneficiary will receive in the event of your untimely demise are exempted from taxation under Section 10 (10D).
ULIPs or Unit-Linked Investment Plans offer the dual benefit of insurance and investment. Therefore, the premium that you contribute towards a ULIP policy is partially invested in money market instruments, equity or debt by the insurance company.
You may choose either Unit Linked Insurance Plans (ULIPs) or traditional life insurance plans to avail tax exemptions under Section 80C.
Term plans are one of the best tax saving instruments available today. If you are an Indian resident and are looking to avail tax exemptions, purchasing term plans can get you exemptions up to Rs. 1,50,000 under Section 80C along with tax-free maturity and death benefits under Section 10(10D) of the Income Tax Act 1961.
Premium payments made up to Rs. 1,50,000 for retirement plans are tax exempted under Section 80CCC (This maximum limit; however, is the aggregate deduction that you may claim under sections 80C, 80CCC and 80CCD.).
Moreover, the withdrawals are subject to taxation and only one-third of the maturity sum that you will receive at the time of retirement will be tax-free.
Indian residents can claim tax deductions for their child’s tuition/education fees under section 80C of the Income Tax Act. Therefore, you can avail up to Rs 1.5 lakh as tax deductions (combining deductions for insurance, provident fund, pension).
Also, you can purchase child insurance to secure your child’s future further. This plan is a combination of insurance and investment, which offers benefits such as life cover, together with a lump sum payment and flexible payouts to celebrate significant milestones of your child’s education.
Indian residents can now invest into a Public Provident Fund to claim tax deductions while saving for their retirement. The premium amount, which can vary from Rs 500 (minimum) to Rs. 1,50,000 (maximum), is subject to tax deductions under Section 80C of the Income Tax Act 1961.
Issued by the Post Offices, NSC is a relatively safer tax-saving investment option for Indian residents. It offers guaranteed interest and complete capital protection.
Initially, the scheme offered two types of certificates - NSC VIII Issue and NSC IX Issue. In December 2015, the Government decided to discontinue the NSC IX Issue, while continuing the NSC VIII Issue.
National Pension Scheme is a voluntary contribution pension scheme that aims to provide financial security to policyholders post-retirement. NPS is regulated by the Pension Fund Regulatory and Development Authority or PFRDA.
Sukanya Samriddhi Yojana or SSY is a small deposit scheme Introduced by the government of India. The plan, which is launched under the 'Beti Bachao Beti Padhao' campaign, aims to protect the financial future of the girl child.
Residents can claim a tax deduction up to Rs. 25,000 per financial year under Section 80D for the medical insurance premiums they pay. However, the medical premium contribution should be made in favour of your spouse, children and yourself.
For the insured who are ageing 60 years or more, the deduction limit is up to Rs. 50, 000. The breakdown of the tax savings for health plans is given below:
In addition to Section 80C, there are several other tax saving investments available under Section 80 of the Income Tax Act 1961. The complete list is given below:
|Tax Saving Investments||Sections||Exemption Limit|
|Expenses on a handicapped dependent||80DD||
For Disability up to 80%, you are entitled to receive an exemption of Rs.75,000 (fixed);
For severe disabilities, you may receive an exemption of Rs.1.25 lakhs (fixed);
|Treatment of specified illnesses||80DDB||
Age up to 60 years – exemptions up to Rs.40,000
Age 60-80 years – exemptions up to Rs.60,000
Age above 80 years – exemptions up to Rs.80,000
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Section 80C of the Income Tax Act provides provisions for tax deductions to an individual or HUF from the total income. Taxpayers can claim a maximum deduction up to Rs.1.5 lakhs per year. Some of the most popular investments that are eligible under this section are:
Section 80GG: Rent paid for accommodation - If you do not receive House Rent Allowance (HRA) as part of your salary, or if you are not a salaried employee, only then can you claim this deduction. It is available for the rent paid by the taxpayer for his own accommodation in a financial year as per prescribed Limits
You can contribute additional amount up to Rs.50,000, to the National Pension Scheme if cash flow permits and claim deduction under Section 80CCD (1B) of the I.T. Act.
The section 80E allows you to claim the interest amount being paid on education loan availed for self, children or spouse or the student for whom the individual is the legal guardian. There is no limit on the amount, but the deductions are valid until 8 years from the year of the first interest paid.
Sections 80U allows deduction of Rs.75,000 if you are suffering from a disability (40% disability). In case of severe disability (80% disability), the amount of deduction will be Rs.1,25,000. However, the section covers only the taxpayer but not the dependents.