Tax Savings is an effective measure to ensure that people save some of their tax liability in a legal way. There are many investment options which provide deductions to the assessee and some of them are listed below. The tax saving schemes are the one of the part of tax planning. Tax planning is legal and everyone should do it to increase wealth.
Public Provident Fund (PPF)
Public Provident Fund or the PPF is one of the most attractive ways where one can reduce their tax liability. This tax saving scheme is open for all the employees who belong to the public or the private sector. A minimum of Rs. 500 to a maximum of Rs. 1,50,000 can be invested in this section. Additionally, Government also pays an interest rate of 8% on these investments (which is also exempted from the purview of taxation). For this purpose, an assessee can go to any public sector bank and avail the option.
Note: Rs.1,00,000 raised from Rs.70,000 vide Notification F.No.1/9/11 dt.25.10.11. Now, the limit is raised to Rs. 1,50,000 for A.Y.2015-16.
National Saving Certificate (NSC)
NSC refers to National Savings Certificate where an assessee can invest an amount staring form Rs. 100 and enjoy the same interest rate as in PPF. The exemption applies to 100% in such context and moreover, an assessee can avail the offer of PPF and NSC both at the same time. NSC is the best option to save tax. NSC is the popular tax scheme among tax payers.
The Post Office Scheme or the POS still stands as one of the most attractive tax benefit offers for people at large today. Any amount invested in this section is also eligible for full deduction.
Life Insurance Premium (LIP)
The sector of Life Insurance serves dual benefit for people as it not only acts as a cushion for people at the time of uncertain sad events but also helps them to save a regular amount by way of tax deductions. A person can make investment in LIC policies either on his own life or on his dependents such as children and wife to avail this benefit.
Mutual funds are the most commonly used medium of tax deductions units. Investment in mutual funds. Investment in mutual funds ensures high level of safety in investment along with steady return.
ULIP refers to Unit-Linked Insurance plans where people can claim their deduction u/s 80 C. People who find investment as a long term phenomenon should necessarily invest in the same as recently, the threshold limit has been increased from 3 years to 5 years as per the rules of IRDA.
Other Tax Saving schemes for 2014-15 (A.Y.2015-16)
There are also some other schemes which can also which can help a person to save some tax deductions in form of:
However, it shall be noted that most of the above mentioned tax saving schemes directly fall under the deductions category of section 80C, where the maximum permissible limit is upto [Rs. 1, 50, 000 (A.Y. 2015-16)] [Rs.1,00,000 (A.Y.2014-15)] and henceforth, the total amount as a collective of all the available schemes would be taken into consideration. Still one can use medical expenses and other similar expenses to avail further deductions u/s 80D.