CA Sagar Khubchandani

Act before March-end, so that you don’t have to regret in July! So many clients put their palms on their head, when it is the time to pay taxes and file return, in July. Taxes have already fired at them, they have done nothing to save themselves against the tax shots.

They could have saved pretty good amount of taxes, but their lethargy proved to be costly for them. Now is the time! Financial year is about to end, build up your weapons. If you make appropriate investments, you can save a lot of tax.

Section 80C:

This section is your strongest weapon. It gives you maximum deduction of Rs 1,50,000 in combination with Section 80CCC and Section 80CCD, if invested in specified instruments. Most popular of those specified instruments are:

  • Provident Funds and Voluntary Provident Funds: PF is deducted from your salary as your contribution and your employer’s contribution. Your contribution is allowed as a deduction under Section 80C.
  • Public Provident Fund: You can contribute from Rs 500 to maximum Rs 1,50,000
  • Equity Linked Savings SchemeThese are mutual fund schemes specially made for tax savings. If you make an investment I mutual funds, make sure you invest in ELSS mutual funds to save taxes.
  • Life Insurance Premium: Life insurance premium paid for self, your spouse, or your children is allowed as deduction under this section. Premium paid for parents or in-laws is not allowed.
  • National Savings Certificate (NSC)NSC has a maturity period of 5 years and 10 years. Minimum investment amount is Rs 100 and there is no upper limit. But, just don’t forget that maximum deduction allowed under section 80C is Rs 1,50,000 only, irrespective of amount deposited in NSC.
  • Pension Funds: An investment in pension fund is also allowed under section 80CCC.
  • 5-year Fixed Deposits: FDs with lock-in period of 5-years can also get you deduction under this section.
  • Sukanya Samridhi Account: Sukanya Samridhi account can be opened at any time during the birth of a girl child till she is 10 years older. Minimum deposit is Rs 250 and maximum is Rs 1,50,000 during a year. Parents can open this account for maximum up to 2 girls.
  • Home Loan Principal: If you have paid EMI on a home loan, ‘principal’ component is allowed as a deduction under this section. Interest component is allowed under section 24 of the Income Tax Act.
  • Unit Linked Insurance Plan:  Unit Linked Insurance Plans not only provide insurance cover, but are also a decent form of investment. The money invested in ULIPs is put into shares and customers are at liberty to choose how much of their funds must be invested in shares.
  • Senior Citizens Saving Scheme: This scheme is meant for senior citizens who have attained the age of 60 years. No age limit for retired defense personnel if they fulfill certain conditions.

The above bullet aginst taxes can be further strengthened under section 80CCD. An additional deduction of Rs 50,000 is allowed under this for investment in National Pension Scheme.

Tax Time

Section 80D:

This is your weapon that not only attacks the taxes, but also protects your health. This is deduction for mediclaim premium. The quantum of deduction of section 80D are as under:

  • In case of the individual, Rs. 25,000 for himself and his family
  • If individual or spouse is 60 years old or more the deduction available is Rs 50,000
  • An additional deduction for insurance of parents (father or mother or both, whether dependent or not) is available to the extent of Rs. 25,000 if less than 60 years old and Rs 50,000 if parents are 60 years old or more.
  • For uninsured super senior citizens (80 years old or more) medical expenditure incurred up to Rs 50,000 shall be allowed
  • A deduction of Rs. 5000 will be allowed under this section for payment of preventive health check-up of either the individual himself or his family members which includes spouse, parents and dependent children.This deduction is NOT in addition to the deduction of Rs.25000/50000 stated above, but is included in the above deduction.

Section 80DD

Section 80DD is for disabled persons. Persons can claim up to Rs 75,000 for spending on medical treatments of your dependents (spouse, parents, kids or siblings) who have 40% disability. The tax deduction limit of upto Rs 1.25 lakh in case of severe disability (i.e. disability of 80% or above) can be availed.

To claim this deduction, you have to submit Form no 10-IA.

Section 80E:

Interest paid for education loan of himself, spouse or children or the student of whom he is a legal guardian, is allowed under this section. There is no maximum limit for claiming deduction on interest on education loan.

Section 80G:

This section fetches you deduction for donations made. Donation for charity, social or philanthropic motive, or contribution towards National Relief Fund, this donation can be allowed under this section.

But, do remember, for cash payment, deduction only till Rs 10,000 is allowed. For deductions over Rs 10k, donations have to be made through cheque.

These investments need to be made before March 31, so that you can avail benefits of saving tax. So, build up your defense base against taxes. When taxes start firing at you, shoot back with these deductions.

Author is an owner at Moneyम्जी for any help. For any queries, mail at [email protected].

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One Comment

  1. Motilal H Agrawal says:

    Sir- Good day. Sir I am a permanent Resident of India want to purchase a flat in Dubai further I wanted to give it on Rent , the sources for purchase of this are of my own and partly I am taking loan in Dubai from the Banks. In this case whether my Rent income will be taxed in Dubai or in India itself or it shall be taxed in both the countries. Secondly the Interest paid for purchase of this property can be claimed as expenditure against its income. Please clarify for which I shall be thankful

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May 2021