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Section 80C: Get to Know the Six Ways How to Avail Tax Privilege

You have a number of options to lower your taxable income if you’re among the large population still filing under the Old Tax Regime. According to the section, payers may reduce their taxable income every year by up to INR 1.5 lakh.

Taxpayers and the industry have been hoping for another increase in the limit for the past two to three years, ideally to INR 2.5 to 3 lakh.

Here are six tax-saving investment strategies that, according to an MSN article published on January 28, 2023, not only lower your tax but also aid in wealth creation while we wait for the announcement.

The Public Provident Fund was created in 1968 with the intention of encouraging small-ticket savings while also offering tax breaks to the individual. The yearly minimum and maximum contributions for this are 500 and 1,50,000 Indian rupees, respectively.

This instrument has a 15-year lock-in period with a 7.1% annual interest rate. However, the annual exemptions are limited to 10% of the sum assured.

If your policy is issued on or after January 4, 2012, it is not eligible for tax benefits if the policy premium is greater than 10% of the sum assured. While policies issued on or before December 3, 2012, are permitted to have deductions of up to 20% on the sum assured.

Equity Linked Savings Plans are among the most popular choices under section 80C. With a three-year lock-in period, it also has one of the shortest lock-in periods under the program.

One becomes eligible for long-term capital gains upon redeeming the investment plus gains made, with no gain being taxable if under INR 1 lakh and 10% on gains exceeding the amount.

The annual investment minimum and maximum are 1,000 and 1,50,000 Indian rupees, respectively. This has a minimum lock-in period of five years.

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