rajkotupdates.news : tax saving pf fd and insurance tax relief – Tax Saving Scheme

There are numerous tax-saving schemes in India, each with unique features and benefits. Let’s explore some of the most popular ones:

1. Public Provident Fund (PPF): This long-term investment option offers a high-interest rate, and returns are fully exempt from tax. Investments made into a PPF account are eligible for deductions under Section 80C up to Rs. 1.5 lakh in a financial year.

2. Life Insurance Corporation (LIC) Premium: Premiums paid towards LIC policies are eligible for tax deductions under Section 80C up to a limit of Rs. 1.5 lakh per year. The maturity amount is also tax-free under Section 10(10D), subject to certain conditions.

3. Employee Provident Fund (EPF): In EPF, both employer and employee contributions are made. The employee’s contribution towards EPF is eligible for deduction under Section 80C up to Rs. 1.5 lakh. The government decides the interest rate every year, and the interest earned is tax-free.

4. Equity Linked Saving Scheme (ELSS): This type of mutual fund invests most of its corpus in equities. The amount invested in ELSS is eligible for deduction under Section 80C up to Rs. 1.5 lakh. However, the returns are subject to Long Term Capital Gains (LTCG) tax if the gain exceeds Rs. 1 lakh in a financial year.

5. Fixed Deposits (FD): 5-year tax-saving fixed deposits with banks are also eligible for deduction under Section 80C. However, the interest earned on these FDs is fully taxable.

6. National Pension Scheme (NPS): This voluntary defined contribution pension system. Investments up to Rs 1.5 lakh in NPS can be claimed for tax deductions under Section 80C. An additional Rs 50,000 can be claimed as a deduction under the exclusive Section 80CCD(1B).

Each tax-saving scheme has advantages and limitations, and you should choose based on your financial goals, risk appetite, and liquidity needs. Always consult a tax advisor or financial consultant to understand these schemes better and make an informed decision.

rajkotupdates.news : tax saving pf fd and insurance tax relief – Features of Tax Saving Fixed deposit India

Fixed Deposits (FDs) are a common form of investment in India, especially tax-saving fixed deposits, due to their safety and guaranteed returns. Here are the key features of Tax Saving Fixed Deposits in India:

Tax Benefit:

Tax-saving FDs offer tax deductions on the amount invested up to Rs. 1.5 lakh in a financial year under Section 80C of the Income Tax Act.

Lock-In Period:

These FDs have a mandatory lock-in period of 5 years, which means you cannot withdraw the money before the completion of 5 years.

Tenure:

The tenure of tax-saving FDs can range from a minimum of 5 years to a maximum of 10 years, depending on the bank.

Interest Rates:

The interest rates on tax-saving FDs vary from bank to bank but are generally competitive. Senior citizens usually get a higher interest rate.

Interest Payout:

The interest can be paid out monthly, quarterly, half-yearly, or yearly, depending on the terms of the FD. It can also be reinvested.

Premature Withdrawal:

Premature withdrawal and loan against the FD are prohibited during the lock-in period.

Joint Accounts:

Joint accounts can be opened, but the tax benefit will only be available to the first holder.

Interest Taxation:

The interest earned on these FDs is fully taxable. The bank deducts TDS (Tax Deducted at Source) if the interest income from a bank’s FD exceeds Rs. 40,000 (Rs. 50,000 for senior citizens) in a year.

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