StepStone Asset Services by Pritika Jain

Tax Savings

Tax saving is one of the ways which can help you save on taxes and increase your income. The income tax act provides deductions for various investments, savings and expenditure incurred by the taxpayer in a particular financial year. We will discuss some of the avenues which can help you save taxes.

Ways of saving taxes
  • Make an investment of Rs 1.5 lakh under Sec 80C to reduce your taxable income. Additional deduction of Rs 50,000 can be claimed by investing in NPS under Sec 80CCD (1b)
  • Buy Medical Insurance, maximum deduction allowed is Rs. 1,00,000 (Rs 50,000 for self and family if senior citizen and Rs 50,000 for senior citizen parents) under Section 80D.
  • Claim deduction up to Rs 50,000 on Home Loan Interest under Section 80EE
Equity-Linked Savings Scheme (ELSS) Mutual Funds
g> Investment in this diversified equity fund scheme offers Section 80C tax benefits but this mutual fund scheme comes with a lock-in period of three years, which is lowest among Section 80C investments. The returns from ELSS mutual funds, which invest in a basket of stocks, are market linked. Gains from these tax-saving mutual funds are treated as long-term capital gains. But long-term capital gains from equity investments, including tax-saving mutual funds, are exempt up to ₹ 1 lakh in a financial year.