INVESTMENTS – TAX PLANNING
A wise investment will not only lessen the tax burden but also give some good returns
As the end of financial year 31-03-2012 is approaches investors, tax payers are suddenly woken up to the existence of Income Tax department. If you haven’t done the tax planning in advance then this is the time to carefully select the investment products to claim deductions under section 80C..
Tax saving instruments permitted under
- ELSS (Equity Linked Saving Scheme)
- PPF
- NSC Subscription to National savings certificates VIIIth issue
- EPF (Employee Provident Fund)
- NABARD Bonds
- Life Insurance premium
- Repayment of House Loan (Principal)
- Children’s Tution Fee
- Contribution for participating in the Unit Linked insurance Plan of UTI
- Contribution for participating in the Unit Linked insurance Plan of LIC MF
- Notified units of Mutual Funds or UTI
- Term deposit with any Scheduled Ba
Life Insurance Premium
- Maximum premium payment deductible is 20% of the sum assured
- Payment made on self, spouse and child is only deductible (Child may be dependent/ Independent or male/ female or minor/ major or married/ unmarried)
- Minimum holding period is 2years
ULIP:
- Minimum period of holding is 5years
- Payment made on self, spouse and child is only deductible (Child may be dependent/ Independent or male/ female or minor/ major or married/ unmarried)
PPF:
- Minimum Contribution is Rs.500 and Maximum Contribution is Rs.70000
- Payment made on self, spouse and child is only deductible (Child may be dependent/ Independent or male/ female or minor/ major or married/ unmarried)
Repayment of House Loan:
- Minimum holding period of House is 5years
- Only Principal payment is allowed as deduction but not Interest
Children’s Tution fee:
- Tution fee paid to University, college, School, Educational Institution located in India.
- Amount paid towards full time education is only allowed as deduction.
- Deduction is allowed only up to Maximum of 2 children
NSC (National Saving Certificate):
- Subscription to NSC (VIII Issue)
- Accrued Interest is also qualified for deduction for first 5years
Contribution towards annuity plans (Sec 80CCC):
- Payment shall be made out of income chargeable to tax.
- Contribution claimed under Sec.80CCC will not be eligible for 80C deduction.
- Applicable to all Individuals irrespective of residential status and citizenship.
Contribution towards approved pension scheme (Sec 80CCD):
- Contribution claimed under Sec.80CCC will not be eligible for 80C deduction.
- Applicable to all individuals
AGGREGATE AMOUNT OF DEDUCTION UNDER SECTIONS 80C, 80CCC AND 80CCD CANNOT EXCEED RS.1,00,000
Deduction available to an assessee for subscription to Long-term Infrastructure
Bonds (Section 80CCF) upto Rs. 20,000
- Applicability: Individual and HUF
- Nature of payment: Subscription to long-term infrastructure bonds notified by the Central Government during the previous year 2010-11. [Notified Bonds- Long term Infrastructure Fund of India Infrastructure Finance Co. Ltd., IFCI, LIC, IDFCI. NBFC is also classified Infrastructure Finance Company by the RBI]
- Amount of deduction: Least of- Amount paid or deposited or Rs.20,000.
