As an earning individual, you must have chosen to invest in certain financial instruments just to avoid taxes in the past. But paying fewer taxes should not be the only concern when there are lucrative choices available in today’s day and age. So, here are some investment options that enable you to claim tax deductions as well as fulfil long-term savings goal.
Tax Savings Investment Options
Eligible Deductions under Section 80C
Here are some investment options that you can claim under Section 80C which has a maximum cap of INR 1,50,000 per financial year.
Public Provident Fund (PPF)
PPF is a government investment scheme that has a lock-in period of 15 years. The maximum amount that can be invested per year is INR 1,50,000 and minimum INR 500. The amount invested every year can be claimed for tax deductions under Section 80C. Also, the corpus received after maturity is deemed as tax-free and no charges are levied.
Equity-Linked Savings Scheme (ELSS)
ELSS is a diversified mutual fund scheme where your money gets invested in equity giving handsome returns in the future. You can claim the amount invested in Equity-Linked Savings Scheme under Section 80C per year.
National Savings Certificate (NSC)
NSC is a post-office saving scheme having a lock-in period of 5 years. It was initiated by the government of India and can be availed at any Indian Postal office. The contributions made towards National Savings Certificate can also be claimed under Section 80C.
Contributions made towards securing a term insurance plan makes you eligible for deductions under Section 80C. Also, the maturity benefit or death benefit received through the policy can be claimed for tax deductions under Section 10(10D).
Deduction under Section 80D
If you have a health insurance plan, you are eligible to claim tax deduction under Section 80D. You can claim a maximum deduction of INR 25,000 for a health plan bought for you, your spouse and children. An additional amount of INR 50,000 can be claimed for insurance bought for your parents above the age of 60. But if your parents are below the age of 60, an amount of INR 25,000 can be claimed per financial.
Deduction under Section 80TTA
The interest earned from your savings account can be claimed under Section 80TTA. You can claim a maximum deduction of INR 10,000 per financial year. The interest earned can be listed as your income from other sources while filing your Income Tax Returns (ITR). But this does not apply to interest from a fixed deposit.
Deductions under Section 80E
In case you have an education loan to your name taken for your spouse or your children, the interest on the loan can be claimed under Section 80E. Only the interest is eligible for deduction and the principal amount of the education loan cannot be claimed.
It is vital to make certain wise investment choices of which term insurance and health plan are some of them. Due to the uncertainties in life, an insurance policy and a health plan can go a long way to secure your loved ones and yourself.