– — The SWS Team
Tax planning is a critical aspect of financial management, understanding the nuances of the applicable tax regime ensures individuals can make informed decisions tailored to their unique financial situations.
Section 80C of the Income-tax Act, 1961 stands out as a widely utilized avenue for tax deductions, offering individuals the opportunity to reduce their taxable income by up to Rs 1.5 lakh in each financial year.
To leverage the benefits of Section 80C, it is imperative to make investments in various financial products before March 31, 2024.
Here’s a breakdown of qualifying financial instruments eligible for Section 80C benefits:
- Life Insurance Premium Payment: Individuals can claim deductions on the premium payments made towards life insurance policies.
- Tax-Saving Fixed Deposit Investment: Investments in tax-saving fixed deposits with specified lock-in periods can be considered for deductions.
- Public Provident Fund Contribution: Contributions made to the Public Provident Fund (PPF) are eligible for deductions under Section 80C.
- Post Office Time Deposits (Lock-in Period of Five Years): Locking in funds in post office time deposits for a minimum period of five years qualifies for Section 80C benefits.
- National Savings Certificate Investments: Investing in National Savings Certificates (NSC) is another avenue for individuals seeking deductions.
- Equity-Linked Savings Scheme (ELSS): ELSS investments in the equity market are eligible for deductions under Section 80C.
- Pension Plans or Deferred Annuity Plans: Contributions made towards pension plans or deferred annuity plans can be claimed as deductions.
- Sukanya Samriddhi Yojana Investments: Investments in the Sukanya Samriddhi Yojana for the benefit of the girl child are eligible for Section 80C deductions.
- Contribution towards EPF: Individuals contributing to the Employee Provident Fund (EPF) can avail deductions under this section.
- Tuition Fees for Up to Two Children: Deductions can be claimed for tuition fees paid for up to two children in any educational institution within India, including universities, colleges, and schools.
NPS contributions can offer an additional deduction of up to Rs 50,000
If you invest in the National Pension System (NPS), you can claim an additional deduction of Rs 50,000 under Section 80CCD (1B) of the Income-tax Act, 1961. It is over and above the overall limit of Rs 1.5 lakh under Section 80C.
So, if you have exhausted the limit of Rs 1.5 lakh under Section 80C by investing in other financial instruments that are eligible for deduction under the mentioned section,you can contribute to NPS and claim the additional deduction of Rs 50,000 under Section 80CCD(1B).
The tax deduction benefit discussed is accessible to all individuals, regardless of their income levels. It’s important to note, however, that the Section 80C deduction is applicable exclusively under the old income tax regime.
By strategically utilizing these investment options, individuals can not only optimize their tax liability but also make prudent financial decisions aligned with their long-term goals.
–– For any information / assistance required contact Mr. Vikrant Rathod: +91 75078 84477 @ SWS.
