Tax Savings
Q. Which of the following are ways to save taxes?
1) Unit Linked Insurance Plans
2) Home Loans
3) Infrastructure Bonds- Published on 05 Apr 16a. 1, 3
b. 2, 3
c. 1, 2
d. All of the above
ANSWER: All of the above
- Life insurance and pension plans are a good option as premiums paid towards these will reduce your taxable income.
- In order to encourage people to save, the government allows for a variety of investments that are tax-exempt. These investments are categorised under Section 80C of the Income Tax Act. If you are an individual tax payer (or a Hindu Undivided Family for that matter), you are allowed a certain amount of deductions for investments, expenses and payments, from your gross total income under this section of the IT Act.
- Then, there are tax savings you can make under Section 80CCC. This section of the Income Tax act allows for deductions from investments in pension funds. It’s key to remember that the investment limit of Section 80CCC is clubbed with that of Section 80C. This means that the total amount you can deduct for both sections together is Rs 1,50,000.
- To maximise your tax benefits, it’s a good idea to invest in a range of schemes categorised under these two different sections.
- Some schemes are – Public provident Fund, Traditional Insurance Policies (term and endowment), National Pension Scheme, Fixed Deposits, National Savings certificates, Pension Plans, Equity Linked Savings Scheme, Stamp Duty and Registration charges for a home, Sukanya Samriddhi Yojana Account (Girl Child Prosperity Deposit Scheme).
