Housing Loan: Under section 80C of the Income Tax Act, you get a deduction for the principal (of the loan) repaid up to Rs 1.5 lakh a year and the interest paid is deductible up to Rs 2 lakh per annum under section 24.
You can also invest in Provident Fund, Sukanya SS…., NSC Senior Citizenship Saving Scheme.
80CCD
We just saw the details of the product which can give you tax exemption under 80C. There is an addition which government has introduced under 80CCD – National Pension Scheme. Let us understand NPS.
The National Pension System (NPS) is a voluntary defined contribution pension system in India. National Pension System, like PPF and EPF is an EEE (Exempt-Exempt-Exempt) instrument in India where the entire corpus escapes tax at maturity and entire pension withdrawal amount is tax-free.
NPS started with the decision of the Government of India to stop defined benefit pensions for all its employees who joined after 1 January 2004. While the scheme was initially designed for government employees only, it was opened for all citizens of India between the age of 18 and 65 in 2009. It is administered and regulated by the Pension Fund Regulatory and Development Authority.
Starting from 2016, an additional tax benefit of Rs 50,000 under Section 80CCD is provided under NPS, which is over the Rs 1.5 lakh exemption of Section 80C. Private fund managers are important parts of NPS. NPS is considered one of the best tax saving instruments.
After the maturity NPS allows to withdraw 60% of the corpus which will be tax exempted and 40% is converted into annuity (pension).
Here before ending I would like to suggest whenever you do a tax planning, invest in tax planning product, do not mix your protection planning even if any of the product comes under 80C bracket.
80 D Total up to Rs 75000 per year is exempted for the premium payment of Mediclaim.
80 G Donations made towards PM Relief Fund or any other Charitable organization which can provide you 80G is exempted from Tax. What % is applicable for exemption will depend on Fund you are donating so do check that before donating…
NEW TAX REGIME
Let us understand the new tax rate for working individual
| Income Slabs | Tax Rate | |
| 1 | Income up to Rs. 2, 50,000 | Nil |
| 2 | Rs. 2,50,001 to Rs. 5,00,000 | 5% |
| 3 | Rs. 5,00,001 to Rs. 7,50,000 | 10% |
| 4 | Rs. 7,50,001 to Rs. 10,00,000 | 15% |
| 5 | Rs. 10,00,001 to Rs. 12,50,000 | 20% |
| 6 | Rs. 12,50,001 to Rs. 15,00,000 | 25% |
| 7 | Above Rs. 15,00,000 | 30% |
The government has not allowed any tax exemption in the new tax regime. However it has given the options of paying the income tax under any of the regime.
So, you require to understand which tax rules suits your financial planning. Preferably consult your tax advisor.
To Conclude
At times we feel saving tax is the ultimate goal while choosing Tax planning instruments but what we forget is : that this is our hard earned money and we must not just always think about saving tax but what if along with saving Tax I can also grow that money? – Nothing can beat that – Tax free, Tax exempted and also beating Inflation in long run…. Now that’s what I call sone pe suhaga.
All the views in the blog are personal of the author not attributing to any one
