The last quarter of the financial year 2020-21 has started. If you are salaried, your employer will be sending you reminder emails frequently to submit proof of investment in tax saving instruments. In the beginning of the financial year i.e. April, we give Investment Declaration to the company, then you do not have to submit proof, but in most places you have to submit investment proof by January.
If you submit the Investment Proof Submission, the tax deducted at source from your next three months salary will be deducted in the same proportion, or more will be deducted. That is, not giving the proof of investment in Tax Saving Investments to your employer will affect your take home salary for the next three months.
So, if you have invested and do not delay in submitting investment proof, then we are telling you what to do in the next one week and can save your huge amount from being deducted as TDS.
Exemption under 80C
Under Section 80C of the Income Tax Act, the government exempts tax on investments up to Rs 1,50,000. There are many investment options involved. Know about those options below —
1. Tax exemption on the principal of the home loan
If you have taken a home loan to buy or build a house and are paying it in EMI, then you will get benefit in tax saving. This is because the principal amount in the home loan is tax free under the 80C section.
2. Tax exemption on children’s education
The tuition fees paid under the tuition fees of the children are subject to tax saving under Section 80C of the Income Tax. These discounts are available only on tuition fees deposited in government or private school, college or institute. This exemption is limited to two children studying for full time regular courses only.
3. Public Provident Fund (PPF)
Public Provident Fund (PPF) is a popular long-term investment option. It is not only considered a safe investment, but also gets better interest. Also, the entire investment made in it is tax free. The PPF account earns an interest of 7.6 per cent on an annual basis. The interest received is also tax free. The amount received at maturity is also completely tax free.
4. Employees Provident Fund (EPF)
Employees who are getting salary are already investing in this option. Every month 12% of the basic of salary you get is deposited in your EPF account. You can also contribute more voluntarily if you want.
5. Can invest in ELSS
There are plans to invest in ELSS mutual funds. Its main objective is to save tax and provide good returns. Despite imposing a long-term capital gains tax on returns from April 1, 2018, this investment is good in terms of returns. Only profit of more than one lakh from ELSS will be taxable under LTCG tax.
6. Senior Citizen Saving Scheme
The Senior Citizen Saving Scheme (SCSS) Income Tax is a better scheme for senior citizens. The Senior Citizen Saving Scheme is currently receiving interest at the rate of 8.7 per cent. The investment made in this scheme is subject to tax exemption under Section 80C of the Income Tax Act, 1961.
7. Five-year FD in bank
The Fixed Deposit Scheme (FD) is the oldest and safest investment scheme to save income tax under Section 80C of Income Tax. Banks are currently paying interest between 4.5% and 7.5% per annum on this. Interest on FD is taxable. If you are investing in FD to save tax, then you have to invest for a lock-in period of 5 years. You will not be able to avail tax exemption on short-term investment. Many banks provide online facility for tax saving FD. After maturity, the amount gets directly into your bank account.
8. Insurance Premium
One can avail tax exemption under section 80C on the premium paid on life insurance or insurance policy. You do not have to get a new plan every year to get tax benefits under section 80C. One can get tax rebate on the premium paid every year.
9. Sukanya Samriddhi Yojana
This scheme, launched under the Beti Bachao-Beti Padhao scheme of the Central Government, is a good option for creating a large fund for daughters. If your daughter is under 10 years of age then you can open this account. This account will be matured when your daughter is 21 years old. One can also avail tax exemption on this.
10. Term Life Insurance
You can get the benefit of tax exemption under Section 80C of the Income Tax Act on the amount of premium paid for term life insurance. An insurance plan is actually an opportunity to buy a much higher life insurance cover at a very nominal premium.
11. Can also take advantage of stamp duty
Tax rebate of up to Rs 1.5 lakh can also be taken under Section 80C on stamp duty and registration charge for buying a house. Then, whether you have bought a house with a loan or with your own money. This rebate can be availed in the same year. If someone has bought a property at the joint, both buyers can claim tax exemption on stamp duty and registration charge according to their respective shareholdings. However, in this case too, only 1.5 lakh rupees will be availed.
Now we know about such investments which do not come in 80C but are very helpful in saving tax. You can save additional tax of one and a half lakhs by investing or spending in them.
1. Invest in NPS and get 50000 more discount
Tax is also exempt from investing in NPS i.e. National Pension System. Under Section 80 CCD (1B) of the Income Tax, a taxpayer can claim tax exemption on investments up to Rs 50,000. That is, you are getting a rebate on investment of Rs 1.5 lakh under 80C and if you also invest in NPS, then you can claim tax deduction on Rs 2 lakh.
2. There is also a discount on education loan
The interest paid on education loan for the graduation and post graduation level is tax free. This provision is under section 80E of the Income Tax Act and applies to any loan taken in any amount.
3. Discount on health insurance
The cost of treatment in the country is increasing rapidly. In such a situation, it has become necessary for everyone to get health insurance. You can not only avoid financial burden at the time of illness but also get exemption from income tax by taking health insurance. Under Section 80D of the Income Tax Act, 1961, you can get tax exemption of up to Rs 25,000 on all health insurance premiums given for yourself, your spouse and children. You can claim income tax exemption up to Rs 25,000 separately on the premium of the health policy purchased for parents below 60 years. If your parents are senior citizens, then you can claim a rebate of up to Rs 50,000 on this item.
4. Health checkup discount
The advantages of having a preventive health check-up are the advantages. While you can be alerted about many diseases in advance by having regular health checkup, tax can also be saved. Bills up to Rs 5 thousand for preventive health check-up are tax exempt.
5. Relief on treatment of disability
If there is a disability in the family, then income tax exemption can be claimed on the amount of medical expenses. Tax exemption can be claimed on expenses up to Rs 75,000 under Section 80DD. At the same time, tax exemption can be claimed for expenses of up to Rs 1,25,000 for the treatment of severely disabled people.
6. Claim of tax exemption on HRA
If you are in a job and get an HRA from the employer, you can claim tax exemption on that amount. If the salary from the employer does not include HRA and you stay on rent, then you can claim this amount for tax exemption under Section 80GG of Income Tax Act. To claim tax exemption on HRA, you have to declare in Form 10BA.
7. Discount is available on home loan interest
According to section 24 of the income tax, you get a rebate on the interest to be paid on the home loan. The maximum discount on home loan interest is Rs 2 lakh.