Tax Benefit Schemes

Saving Tax is an idea in every Indian s mind.Tax Saving/Planning in India is an application to reduce tax liability through the finest use of all accessible allowances, exclusions, deductions, exemptions, etc, to reduce income and/or capital profits.

Individuals who are salaried in India are planning should know/aware the Tax Planning/Saving Exercise.Without knowing/aware of the Tax Planning People made instruments in the Final minute of Tax Filing & yields negative effect on investment Instrument.

Tax-planning tips that can assist salaried people to reduce their tax accountability in India.Section 80-C is most popular one in India s Tax Planning.Under Section 80 C,Rs.one lakh as maximum reduction for an Individual whose salary is Rs.2.5 lakh or more PA .

If a Person invests more than 1 lakh as investment also,Tax reduction will be given to 1 Lakh Only.

Tax Saving Instruments

There are plenty Tax saving instruments available under Section 80 C

• Public Provident Fund

• National Savings Certificate

• Equity Linked Savings Schemes in Mutual Fund

• 5 Years Fixed Deposits Under Banks & Post Office

• Insurance Premium

• Rajiv Gandhi Equity Saving Scheme(RGESS)

Public Provident Fund

Public Provident Fund(PPF),Ideal investment option for both salaried as well as self employed classes.From 1.4.2013,Interest rates are 8.70%per annum (compounded yearly).

Maturity period is 15 years but the same can be extended within one year of maturity for further 5 years and so on.

Minimum Deposit of INR 500/- in a financial year 

Maximum  Deposit of INR 1,00,000/- in a financial year.

Deposits qualify for deduction from income under Sec. 80C of IT Act.

Interest is completely tax-free.

Withdrawal is permissible every year from 7th financial year from the year of opening account.Loan facility available from 3rd financial year.Premature closure is not allowed before 15 years.

In an Investment Objective,its good Long Term Investment Instrument for Every One.One more Positive Thing is Interest is Totally Tax Free.

National Savings Certificate(NSC)

National Savings Scheme(NSC) is specially designed for Government employees, Businessmen and other salaried classes who are Income Tax assesses. A single holder type certificate can be purchased by, an adult for himself or on behalf of a minor or by a minor.There are two Types of Schemes according to their Tenure of Investments.

Five Year National Savings Certificate

Ten Year National Savings Certificate.

NSC Deposits qualify for tax rebate under Sec. 80C of IT Act. The interest accruing annually but deemed to be reinvested under Section 80C of IT Act.Five Year National Savings Certificate Interest rate is 8.50% as on 01.04.2013.For 10 Years Scheme Interest rate is 8.8% compounded annually.

Maturity value of a certificate of INR.1000/- purchased on or after 1.4.2012 shall be INR. 1510.62 After 5 years.In 10 Years Scheme,INR. 1000/- grows to INR 2340.35 after 10 years.

No maximum limit for investment. No Tax deduction at source. Certificates can be kept as collateral security to get loan from banks. Investment up to INR 1, 00, 000/- per annum qualifies for IT Rebate under section 80C of Income Tax Act. 

To Further,Tax Benefit Schemes -Part II