Tax saving investments

Tax Saving Investments

Tax saving under section 25 and section 80 of the Income Tax Act provides taxpayers ways to save money when filing their Income Tax Returns (ITRs). There are many investment options available to a taxpayer – Public Provident Funds (PPFs), Employees Provident Fund (EPFs), National Pension Scheme (NSS), Unit Linked Insurance Plan (ULIPs), National Savings Certificate (NSCs) as well as other tax deduction options like savings on real estate (repayment of housing loans), tax saving mutual funds and equity linked savings schemes.

A list of some deductions:

• Deduction in respect of life insurance premia, deferred annuity contributions to provident fund, subscription to certain equity shares or debentures, etc [Sec 80C]
• Deduction in respect of National Savings Scheme [Sec 80CCA]
• Deduction in respect of contribution to pension fund [Sec 80CCC]
• Deduction in respect of contribution to National Pension System (NPS) [Sec 80CCD]

Intricacies

Steps in computation of deduction under section 80 include calculating the gross qualifying amount and then calculating the amount of deduction. Both steps have their own due processes. It may be noted that aggregate amount of deduction under sections 80C, 80CCC and 80CCD(1) cannot exceed 1,50,000 rupees.