6 Ways To Save Tax: All You Need To Know

Thursday, July 20th, 2017 Amritesh one response

Tax Planning

Tax Planning is the evaluation of individual’s financial position from the tax point of view so as to optimize the Finances in the most efficient way. It helps to make optimal use of the tax benefits available in order to reduce the tax liability during the financial year. Tax Planning is the best method of reduce Tax Liability and utilize the tax exemptions provided on the Income.

Tax Planning is the ethical mean to reduce the tax liability through proper tax exemptions channels available to the Tax Payers. Most of the Individuals are aware of the Tax Deductions available U/S 80C up to the maximum limit of Rs 1,50,000/-.

However, Individuals are eligible to avail additional deductions under some of the other Sections of the Income Tax Act which has been discussed below.

Edelweiss brings to you 6 ways by which Individuals can save tax in the Current Financial Year. Some of the tax saving tips and investment plans are shared below.

Deduction U/S 80 C: Equity Linked Savings Scheme (ELSS)

Deduction Under Section 80C is available up to Rs 1,50,000/- in any Financial Year. Although, Individuals have numerous Tax Planning options under Section 80C, the one which is strongly recommended is the Investment in Equity Linked Savings Scheme (ELSS).

ELSS Mutual Funds is a viable investment option as it provides market linked returns which is comparatively higher than the Fixed return instruments. The investment does carry moderate risk but history suggests that the returns are commendable if one is patient with the investment.

Please refer to the link shared for more inputs.

ELSS: Investment plus Tax Saving Scheme

ELSS: Reasons to Invest

DEDUCTIONS U/S 80 CCD (1b): National Pension Scheme (NPS)/ Atal Pension Yojana (APY)

Investment up to Rs 50,000/- is eligible for deduction up and over the deduction available U/S Section 80C on Contribution made to National Pension Scheme (NPS) and Atal Pension Yojana (APY).

Individuals may invest in both the schemes and avail cumulative deduction up to Rs 50,000/- on the investment.

National Pension Scheme (NPS)

Atal Pension Yojana (APY)

DEDUCTIONS U/S 80D: Health Insurance Plans

Further deductions up and above the Deductions availed U/S 80C & 80CCD (1b) is available U/S 80D on payment made towards Health Insurance Premium. It covers the premium paid on the Health Insurance cover for self and family. Deduction of Rs 25,000/- can be availed for the premium paid for Self, Spouse and dependent children. Additional deductions of Rs 30,000/- is available on premium paid towards the Mediclaim Insurance of parents (Senior Citizens).

Health Insurance

DEDUCTIONS U/S 80E: Exemption for Interest Paid on Education Loan

Deduction is also available on the education loan for higher studies (Graduation or Post Graduation) in the fields of Medicine, Engineering, Management, or Science. The deduction is available from the 1st year and subsequently for next 7 years. Deduction available is Rs 40,000/- p.a on the EMI paid as principal cum interest.

DEDUCTIONS U/S 80G: Donation To Notified Institutions

Deductions are also available for the donations made to notified NGO’s, Charitable Institutions are eligible for 50% or 100% deduction as provided under the act. However the maximum limit to the deduction claimed is 10% of the Adjusted Gross Total Income after claiming other deductions.

Some of the Prescribed Notable Institutions where 100% Deduction is available without qualifying limit:

National Defence Fund

Prime Minister Relief Fund

Swacch Bharat Kosh

National Sports Fund

National Children’s Fund

Clean Ganga Fund and many more….

DEDUCTIONS U/S 80GG: House Rent Paid

Deduction available in respect of House Rent Paid, the least of the following:

Rent paid less 10% of the total income.

Rs. 5000/- per month. (Maximum Deduction available is 60,000/-)

25% of total income, provided that

Assessee or his spouse or minor child should not own residential accommodation at the place of employment, or anywhere else and is not in receipt of House Rent Allowance. The deduction is available provided the Individual, does not receive any benefit of deduction U/S 10 (13A) for House Rent Allowance.

DEDUCTIONS U/S 24(b): Interest on House Loan

Deductions up to Rs 2,00,000/- is available on the interest paid on the Loan availed for purchase/construction of self occupied House Property. However the acquisition and construction of such house property should be completed within 3 years from the end of Financial year in which Home Loan was taken. The sum should be borrowed on or after 01/04/1999 to be eligible for deduction.

Additional Deduction of Rs 50,000/- is available for 1st time home buyers on loans up to 35 lacs, provided the value of house does not exceed 50 lacs.

Rajiv Gandhi Equity Savings Scheme (RGESS) Under Section 80CCG has been discontinued from the current Financial Year 2017-18.


Note: This Blog is sponsored by the respective Business House.

Amritesh is an experienced professional in the field of HR, Finance and Compliance. He is currently working in the IT Industry with an US based firm. He took up Blogging as a hobby which eventually turned into passion. He primarily focuses on topics related to Personal Finance, HR, Compliance and Technology.

All the opinions/suggestions/views expressed on this blog are just for sharing information. Readers are requested to consult their respective financial advisers and experts before taking any decision. Views shared through post or comments are personal opinion meant for reference of the readers. These should not be considered as Investment Advice or Legal Opinion. The Blog or the Author does not take any responsibility regarding any such action taken by any Individual.
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1 Comment on "6 Ways To Save Tax: All You Need To Know"

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Thanks for sharing informative post. Keep Posting.