Saturday, November 3, 2012

Guide on how to save income tax in India

If you are thinking of how to save income tax in India, there are a number of investment options and keys to help you. Section 80C enables you to save up to a total of Rs. 100,000 in tax annually if you invest in a number of instruments. These instruments include life insurance premium, provident fund contribution, home loan principal repayment, Equity Linked Savings Schemes in mutual fund firms, National Savings Certificates, Infrastructure Bonds, children’s tuition fee, fixed deposits in banks and even Public Provident Fund with maximum Rs. 70,000 annually.

Section 80D of Indian income tax enables you to save money on your health insurance premium. It would enable Rs. 15,000 deduction from your taxable income for paying health insurance premium. In the case of senior citizens, it is Rs. 20,000. When considering these options, make sure to get the help of a professional and experienced tax guru.

Next, you can seek the help of Section 80E of Indian income tax that would enable you to get deduction on the interest that you pay on educational loans. The loan may be availed for you own education, your children’s or even your spouse’s education. In this case, there is no limitation to the total deduction amount that you can claim.

When availing deduction under Section 80E, it is important to have proper tax planning. It would enable you to get deduction against a loan that has been taken for higher education, such as a graduation or post-graduation program in medicine, engineering, management, applied sciences or pure sciences.