The Direct Taxes in India are levied on the following:
1. Income from salaries
2. Income from business or profession
3. Income from property
4. Income from other sources
The Income Tax Department also administers the following Indirect Taxes:
1. Customs duty
2. Central excise duty
3. Service tax
4. Value Added Tax (VAT)
The Income Tax Department is headed by the Central Board of Direct Taxes (CBDT) and is under the overall supervision of the Finance Ministry.
Taxe on Income from Salaries
What Is Investment:
An investment is an asset or item that is purchased with the hope that it will generate income or appreciate in value at some point in the future. In an economic sense, an investment is the purchase of goods that are not consumed today but are used in the future to create wealth. In finance, an investment is a monetary asset purchased with the expectation that the asset will provide income in the future or appreciate and be sold at a higher price.
What Is Section 80C under Income Tax?
Section 80C of the Income Tax Act provides for deduction in respect of certain investments and expenses. The deduction is available for investment in specified instruments and for specified expenses. The maximum deduction that can be claimed under section 80C is Rs.1,50,000/-.
What are the most popular 80C Investment Option?
In India there are various investment options available that offer income tax reduction benefits. Some of the most popular options include investing in PPF, ELSS, Life Insurance, Medical Insurance, Education Loan, and Housing Loan.
So here we are discussing about each of the above popular Investment option in detail with it’s exclusive features-
Table of Contents:
1. PPF
2. ELSS
3. Insurance
4. Medical Insurance
5. Education Loan
6. Housing Loan
1. PPF – The Public Provident Fund (PPF) is a long-term savings scheme offered by the Government of India. It is a voluntary savings scheme wherein any individual can open an account and make regular contributions. The PPF account can be opened with any scheduled bank or a post office.
The PPF account has a minimum tenure of 15 years and a maximum tenure of 30 years. The interest rate on PPF is determined by the Government of India and is revised on a quarterly basis.
2. ELSS – Equity-Linked Savings Scheme (ELSS) is a type of mutual fund scheme that offers tax deduction under Section 80C of the Income Tax Act. ELSS funds invest predominantly in equity and equity-related instruments of companies.
3.Life Insurance – Life Insurance is a contract between an insurer and a policyholder in which the insurer agrees to pay a sum of money in the event of the death of the policyholder or on maturity of investment depending on the type of life Insurance Scheme opted.
Or we can say Life Insurance is a contract, represented by a policy, in which an individual or entity receives financial protection or reimbursement against losses from an insurance company. The company pools clients’ risks to make payments more affordable for the insured.
4. Medical Insurance – Medical insurance is a type of insurance that covers the medical and surgical expenses of the policyholder. It is a contract between an insurer and a policyholder in which the insurer agrees to pay the medical expenses of the policyholder.Medical insurance can be purchased for individuals, families, or businesses.
5. Education Loan – An education loan is a type of loan availed by students to finance their education. Education loans can be availed for various purposes like tuition fees, living expenses, books and equipment. Education loans are available from various banks and financial institutions.
6. Housing Loan – A housing loan is a type of loan availed by individuals to finance the purchase or construction of a house. Housing loans are available from banks and financial institutions. The interest rate on housing loans is determined by the Reserve Bank of India.
Above investment has shown good results by generating return in long term horizon and are very popular choice among salaried class population of the Indian who trust them any time to get dual advantage by investing in these instructions like savings Taxes upfront and generation good returns by stay invested for long term in above mentioned 80C investment options.
Income Tax Investment Options Other Than 80C
Yes, there are some more provision in income tax act to save income tax beyond the limit of Rs.1,50,000/- in 80C.
Now as a bonus to the above explanation of Income Tax Act Section 80C ,we are explaining two more Section of Income Tax Act which can be very useful to save some more tax when you are already exhausted your 80C limit of investment or if you are willing to opt for these two super tax saver option to reduce the tax assessment on you salaried,self employed income.
Let’s have a look on Section 80D and Section 80 CCD 1(B) of Income Tax Act.
Section 80D
Section 80D of the Income Tax Act provides for deduction in respect of medical insurance premium paid. The deduction is available for premium paid for health insurance policy taken for self, spouse, children or parents. The maximum deduction that can be claimed under section 80D is Rs 25,000.
section 80 CCD 1(B) – Additional NPS – The National Pension Scheme (NPS) is a defined contribution pension scheme introduced by the Government of India. NPS is open to all Indian citizens between the ages of 18 and 60. NPS offers an investment choice between various asset classes like equity, debt and government securities.
Under Voluntary Contribution: Employee can voluntarily invest an additional amount of Rs. 50,000 (or more) to the NPS Tier I account and claim tax deduction on the same under section 80 CCD 1(B), subject to a maximum of Rs. 50,000.
Important terminology related to Income Tax
Income Tax Investment Proof: 80C, PPF, ELSS, Insurance, Medical Insurance 80D, Education Loan, NPS, Housing Loan.