Income Tax Saving Schemes

TAX SAVING INSTRUMENT

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Income Tax Saving Schemes   • • • • • • • • • • • 

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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 :

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– 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

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Scope Premium paid under:

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Medical insurance scheme of The General Insurance Corporation approved by the Central Government, or

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Any other insurer approved by the Insurance Regulatory & Development Authority (IRDA)

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Mode of Payment Any mode of payment is accepted including payments made through credit cards, except cash.

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Deduction

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For non-senior citizens: The amount of mediclaim insurance premium paid or Rs. 15000, which ever is less

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For senior citizens: The amount of mediclaim insurance premium paid or Rs. 20000, whichever is less.

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Scope of Coverage

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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