Save Tax in A.Y.2019-20 by Investing Efficiently

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With the Budget 2018 implemented in the country, who doesn’t wants to reduce their payment of tax? “No one” is the straightforward answer to this question. In present economy where inflation rules the country, everyone wants to have more money in their pockets and safe custodies so that they can use it in future. Payment of tax has become a matter of worry in such an economy and everyone wants to pay the least tax so that they can have more money with them. But, tax saving is not everyone’s cup of tea. Only a small number of individuals succeed in saving tax at the end of a financial year. This happens because maximum people are unaware of Section 80C of the Income Tax Act.

Use the Benefit of Sec.80C

In Section 80C of the Income Tax Act government allows multiple tax saving options to individuals. There is a list of investment options which helps every individual to save some part of their taxable income under Section 80C. The list contains some very friendly investments like Provident Fund, Public Provident Fund, National Savings Certificate, 5-year Fixed Deposit and time deposit in Bank and Post Office respectively, Life Insurance Premium, Pension fund, Tuition fees and NHB Term Deposit scheme.

Which schemes includes in Sec.80C and how to invest in these schemes efficiently?

  1. Starting with Provident fund (PF), it is helpful to salaried personnel whose employer deducts PF from salary before paying. The amount of PF deducted is considered under Section 80C.
  2. Public Provident Fund (PPF) helps both, self-employed and salaried individuals in saving tax. Although it is a long term scheme, usually 15 years, however people go for it because it offers assured returns. Individuals are free to contribute any amount between Rs 500 and Rs 150,000 per year and interest of 7.6%  1 is allowed which is free from being taxed.
  3. Bank’s Fixed Deposit scheme having tenure of 5 years or more can be a tax saving option. It is different from general fixed deposits and requires depositor’s certain sacrifices. Depositor needs to mention the words “Tax Saver Fixed Deposit” at the time of depositing the amount. Bank’s official puts a stamp on FD receipt which ensures 5 year lock-in and depositor cannot avail facilities such as premature withdrawal, auto-renewal facility or loan against fixed deposit.
  4. Time Deposit scheme of post office is completely similar to bank’s term deposit.
  5. Life Insurance for taxpayer, taxpayer’s spouse and children are considered and only the premium amount i.e. 10% of total amount for insurance is tax free.
  6. National Saving Certificates (NSC) VII & IX Issue
  7. National Saving Time Deposits
  8. National Saving Monthly Inocme Accounts
  9. Sukanya Samridhi Account
  10. RBI Saving Taxable Bonds 2018 & 2003
  11. Senior Citizens Saving Schems
  12. Mutual Fund Schemes

Use other tax deduction sections also!

Apart from above mentioned tax saving options, there are some more available options under Section 80C. Individuals can also choose other options such as 80D, 80DD, 80G, 80E, etc to save some part of tax.  Amount of tax saved can be maximized by choosing the tax saving options efficiently which is only possible after knowing each of the options completely. Thus, anyone who is looking forward to save tax in financial year 2015-16 should choose the most suitable option from the list of options mentioned above and invest in the best suited one.

 

  1. w.e.f1.1.2018 to 31.3.2018 vide notification no. F.No. 1-4-2016 NS dt January 2018.
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1 thought on “Save Tax in A.Y.2019-20 by Investing Efficiently

  1. As a retired army person I am getting pension of approxRs. 10 lakhs per annum + I have some FDRs which give me interest upto Rs.5 lakhs per annum, can U pl suggest any method by which I can reduce tax apart from Rs 1.5 lakhs u/s 80c. Thanking you.

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