Its time of the year when our spouse, brother or father (and ofcourse few among us) will be planing to do investments that reduce tax burden. Since we all are so meticulous with our house budgets, how about giving them a tip or two about tax planning.
Well, I know the chances are that when you utter words like “tax saving options” you will not be taken seriously. In that cause you should take a cue from the woman in the commercial (as above), who, while serving up warm paranthas, rolls up a lesson on tax saving mutual funds at the breakfast table.
So brace yourself with these 5 tax saving tips as you serve up a nicely cooked meal or serve breakfast.
The Section 80C of the income tax act lists out investments and expenditures of up to 1.5 lakh, can reduce our total taxable income. That home loan principal repayment, public provident fund, insurance and certain mutual fund schemes fall under the section 80C list is commonly known, so i am going to tell you about not so known heads of Section 80C which I am sure they wouldn’t have thought of.
1. School Tuition Fees: Its being paid out in lakhs isnt it? And it increases every year by atleast 10%. School or college tuition fees has been under the 80C limit for a long time but we hardly paid attention as the amount never used to cover up the limit of Rs 1 lakh (as it was till last year) deduction. Well before you jump on to make a big noise to your spouse, you better know that the devil is in the details.
a. Deduction is available to both husband and wife provided both have paid the fees from their respective bank accounts. If your husband is paying housing loan and insurance etc, then you need not make investments just for tax saving purpose. Instead the wife can pay the fees and claim deduction for the same.
b. Deduction can be claimed for two kids each by husband and wife, so in all four kids.
c. Only tuition or terms fees of schools or college education institution is allowed. No other payment such as transport fees, uniform, library facility fees is eligible for deduction under this head
2. Contributions to National Pension Scheme (NPS): Chances are that your spouse may have heard about it. Still you can tell about this scheme in detail as its nothing but a forced saving that just helps in creating tidy sum for retirement.
It is a voluntary pension scheme administered by government and is managed by private financial companies (See list here). You contribute specific amount towards this scheme every year. You chose the investment plan and the pension fund manager. On retirement you start getting monthly pension out of the amount so accumulated. But it doesn’t guarantee returns.
However the deductions for pension plans and other such plans is capped at Rs 1 lakh only. So if you contribute Rs 1 lakh towards such schemes then the remaining amount you can claim under Section 80C will be Rs 50,000. You still think you need to know more about this scheme before you give gyan, then you can get more details about this scheme
3. Stamp Duty and registration fee for the house: If you purchased a house after April 1 2014, then the stamp duty and registration charges paid for such purchase (to the extent of Rs 1.5 lakh) can also reduce your taxable income
4. Mediclaim Policy for Parents: In addition to the Rs 15000 deduction allowed for mediclaim policy of the taxpayer, an additional rs 15000 is allowed if the policy is taken for parents of the tax payer. So for instance if you are a single working woman, you get upto Rs 15000 for a mediclaim policy that covers your dependent children. If you take another policy for your parents, then you get additional Rs 15,000 deduction also. In both cases the limit increases to Rs 20000 if a senior citizen is also part of the policy.
5. A 5-year Fixed Deposit: Not all fixed deposits but only the ones that specify that they are tax saving deposits qualify for a deduction under Section 80C. So you need to look out for the tenure of the deposit.
Still think you need to arm yourself with more detailed tips on tax saving. Here are few more articles which appeared as your Great Gruhini was writing this post.