Tax-saving Options Under Sections 80C and 80D

When making an investment, it is of utmost importance that you devote time to researching on ways to ensure a profitable decision. In doing so, one of the important to consider is the degree of tax savings which can be done. You will be surprised to know that you can invest in various options and simultaneously take advantage of tax benefits. This article is aimed at educating aspiring investors about the various tax saving instruments that they can avail.

 

Section 80C

 

It will do you good to know that under the section 80C of the Income Tax Act, 1961, you can claim deductions of up to Rs 1.5 Lakh. The various avenues that fall under the purview of Section 80C include:  Tax Saving FDs (Fixed Deposits), PPF (Public Provident Fund), EPF (Employee Provident Fund), NPS (National Pension Scheme), ULIP (Unit Linked Insurance Plans), Sukanya Smariddhi Yojana, Life Insurance Premium and Principal Repayment on Home Loan.

 

Section 80D

 

Section 80D of the Income Tax Act, 1961, deals with medical insurance premiums paid for self, family (spouse and children) and parents. The limit for deduction is Rs. 25,000 for self and family. This limit increases to Rs. 50,000 due to an additional 25,000 when paying for medical insurance coverage for parents as well. In case of senior citizen parents, the total limit increases to Rs. 75,000 (including self + family). The total deduction limit would be Rs. 1,00,000 in case the individual paying the premium is a senior citizen along with senior citizen parents. What’s more? You can even avail an additional tax benefit of up to Rs. 5,000 for preventive health check-ups.

 

Other options that you can explore

 

It is possible for you to go beyond the tax saving schemes of section 80C and 80D and explore other options. These include:

• You can claim for tax deduction on interest paid on home loans under Section 24 (b) of the Income Tax Act, 1961. The limit for this deduction is Rs. 2,00,000. In case you are first time home buyer, you can claim an additional Rs. 50,000 under Section 80EE.
• Invest in ULIPs that not only help you save tax under Section 80C but your returns on maturity are also exempt from tax under Section 10D of the Income Tax Act, 1961. If you live in a rented house then you can claim for tax deduction on rent paid under Section 80GG.
• The interest on your child’s education loan is also exempt from tax under Section 80E.

It must be understood that there is always a time within which you must finish the process of tax planning. The best time to start with planning your tax saving schemes is at the very beginning of the financial year. It is often a common practice to procrastinate till the last quarter of the year and this is one of the most erroneous habits that can lead to reduced benefits. Sometimes decisions are often made in a hurry whereas if you indulge in tax planning at the beginning of the year, it can serve you the purpose of making investments that can do justice to your long-term goals.

 

How to plan tax savings?

 

It is necessary that you maintain a certain degree of discipline in making plans for tax savings every year and some of the pointers that you should follow in doing so have been discussed below:

• Check the expenses that you have already made and can successfully claim for tax saving.
• Deduct the amount you get from rupees one and half lakh so as to figure out the amount that you can invest. In case your expenses are covering it, the entire amount does not have to be invested.
• You can also choose certain tax-saving investments that are based purely on your financial goals as also financial profile. Some of the popular options to do so are ELSS funds, ULIPs, NPS, fixed deposits and so on.

These methods can help you figure out the amount you need to invest in order to be able to make savings on your taxes. Begin during the first quarter of the year so that you can spread out your investment throughout the course of the year and you will also not feel burdened by the end of the year. Bajaj Markets is your one-stop-shop solution that offers a variety of insurance, home loans and investment products for you to choose from. It can not only help you save on tax but also ensure that you maximize your wealth creation goals.

It can not only help you save on tax but also ensure that you maximize your wealth creation goals.

Learn How to file Income Tax Returns here.