TAX SAVING INSTRUMENT

Present ed
by
Income Tax Saving Schemes

 


• Provident Fund
• Public Provident Fund
• Life Insurance Premium
• Unit Linked Insurance Plan (ULIP)
• Equity Linked Savings Schemes of Mutual Funds(ELSS)
• Infrastructure Bonds
• National Savings Certificate
• 5 year deposits in Bank
• Senior Citizens Saving Scheme 2004
• Post Office Term Deposit Account
• Health insurance

 Bank fixed deposit
• Interest-8% - 10% (depending on banks)
• Term-15 days to 5 years and above
• Investments
– Minimum — Rs. 100 (depending on banks).
– Maximum — Unlimited (depending on banks)
• Tax benefits:Investment on bank deposits, along with
other specified incomes, is deduction from taxable
income up to a limit of Rs.1,00, 000/- under Section
80c.


• Other Benefits Safe, as deposits are insured under

the Deposit Insurance & Credit Guarantee Scheme
of India.
• Possible to get loans up to 75- 90% of the deposit
amount from banks against fixed deposit receipts.

 Public Provident Fund
(PPF)
• Interest- 8%
• Term-15 years
• Investments
– Minimum - Rs. 500/-
– Maximum - Rs. 70,000/- in a financial
year
• Tax benefits
– Deduction on investment U/S 80C of I.T.
Act 1961.
– Interest income fully exempted from
income tax
– Balance held in the P.P.F. account is
completely free from wealth Tax.
 National Savings
Certificate (NSC)
• Interest:8% (compounded half yearly)
• Investments :
– Minimum investment Rs. 500/- No maximum
limit.
– Issued in denominations of Rs.100, Rs.500,
Rs.1, 000,
 Rs.5, 000 and Rs.10, 000.
• Tax benefits
– Qualifies for tax rebate or first 5 years under
section 80 C of Income Tax Act.
• Other benefits
– Certificate can be pledged as security
against a loan to banks/ Govt. Institutions.
– Facility of encashment of certificates
 Infrastructure Bonds
• Interest: 5.5% to 5.6%
• Term:3 Years
• Investments:
– Minimum investment Rs. 30, 000/-
– Maximum limit — Rs. 1, 00, 000.
• Tax benefits
– Investments in infrastructure bonds
from various financial institutions
qualify for a tax rebate under
Section 80c of the Income Tax Act
1961.
 Life Insurance Schemes

• Depending on scheme
• Tax benefits
• Investments in insurance schemes
earn rebates under 80C.

 Equity Linked Savings
Scheme (ELSS)
• Lock in period: Three years
• Investments
– Minimum investment Rs. 5, 000/-
– Maximum limit — Rs. 1, 00, 000.
• Tax benefits
– Investments in ELSS earn are eligible for
deduction under 80C.

Unit Linked Insurance Plans
(ULIPS)
• Investments
– Depending on scheme.
 Tax benefits
– Investments qualify under Section
80C of the Income Tax Act. Maturity
proceeds from ULIPs are tax free.
 Health insurance (u/s 80d)
• Eligible Assessees
Individual and Hindu Unified Families (HUF) only
• Scope
Premium paid under:
• Medical insurance scheme of The General Insurance Corporation approved
by the Central Government, or
• Any other insurer approved by the Insurance Regulatory & Development
Authority (IRDA)
• Mode of Payment
Any mode of payment is accepted including payments made through
credit cards, except cash.
• Deduction
• For non-senior citizens: The amount of mediclaim insurance premium
paid or Rs. 15000, which ever is less
• For senior citizens: The amount of mediclaim insurance premium paid or
Rs. 20000, whichever is less.
• Scope of Coverage
• For an individual: Insurance paid on the health of an assessee, spouse,
dependant parents, and dependent children
 WHICH PRODUCT IS
SUITABLE FOR DIFFERENT
AGE ’ S PEOPLE
vAccumulation stage.
vConsolidation stage.
vSpending stage.
vGifting stage.
Accumulation stage