How to save tax?

The various options for saving tax are

1. Five-Year Bank Deposits

Lock-in period: Minimum 5 years
Safety: High
Instrument: Fixed return
Annual return: Depends on market interest rates
Limit: None

2. Public Provident Fund

Lock-in period: 15 years
Safety: Highest
Instrument: Fixed return
Annual return: 8%
Limit: Rs 500 (min) to Rs 70,000 (max) per FY

3. National Savings Certificate

Lock-in period: 6 years
Safety: Highest
Instrument: Fixed return
Annual return: 8%
Limit: Rs 100 onwards. No upper limit

4. LIC premium payment

Non ULIP Policies

Lock-in period: Period of policy
Safety: High
Instrument: Almost Fixed return in terms of annual bonus paid by LIC
Annual return: 6%-10%
Limit: None

ULIP Policy

Lock-in period: 3 years minimum
Safety: Market Dependent
Instrument: Market oriented instrument
Annual return: Inline with market benchmark indices of the policy
Limit: monthly 1000

5. Pension Plans

Mutual Fund Pension Plans

Lock-in period: 3 years minimum
Safety: Market Dependent. It is a balanced fund.
Instrument: Market oriented instrument.
Annual return: Moderate return dependent on market performance.
Limit: monthly 500

Insurance Pension ULIP Plans

Lock-in period: 3 years minimum
Safety: Market Dependent. It is a balanced fund.
Instrument: Market oriented instrument.
Annual return: Moderate return dependent on market performance.
Limit: monthly 1000

6. Mediclaim premium paid upto Rs 20,000 is tax exempted.

7. Conveyance Allowance - Rs 9,600

8. HRA

9. Housing Loan

Principal - Upto 1,00,000

Interest - Upto 1,50,000

Interest on 2nd house loan - Entire Interest paid is tax exempt.


So utilize all the available options and save tax and earn more!

Tags: Tax