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Tax Saving Schemes for Employees-Instant Guide for A.Y. 2015-2016

 
11. NATIONAL SAVINGS CERTIFICATES U/S 80C

SENIOR CITIZENS SAVINGS SCHEME

• Individual above 60 years (VRS persons 55 and above) can invest.


• Duration 5 years. Can be extended for further 3 years.


• Multiple/Joint accounts are allowed.


• Maximum Limit 15 Lakh.

 

• Lock-in period 1 year. Premature closure allowed with penal interest.

 

• Interest @ 9.2% p.a. payable Qly.

 

• 1.5 Iakh invested earns Rs. 3450 per Qtr.

 

• Interest earned is taxable.

 

• Tax Exemption: Eligible for exemption U/s 80C for overall Invest. upto Rs. 1.5 lakh. Int. earned is taxable.

 

 

POST OFFICE TIME DEPOSIT ACCOUNT

• An individual can open only one account besides his GPF account.

• Option to pay each contribution in one Iumpsum p.a. or in 12 installments.

• Period: 15 yrs.(Min. 16 annual contributions). Can be contd. Further every 5 yrs.

• Any individual can open an account singly or jointly.

• More than one account can be opened without any limit.

• Account can be opened for 1,2,3 and 5 years.

• Interest for 5 years deposit is 8.4%

• Premature withdrawal after 1 year attracts 2% penalty on interest applicable.

• Amount withdrawn before 5 years period, tax will have to be paid on the withdrawn amount treating it as the income of that year.

• Tax Exemption: Only 5 years term deposit with a Max. Investment of Rs. 1.5 Iakh eligible u/s 80C.

PUBLIC PROVIDENT FUND (PPF)

• Option to continue after maturity for every 5 years.

• Investment: Mm. 500; Max : 1.5 lac p.a.

• Int. @ 8.7% compounded annually.

• Can withdraw 50% of the balance from 7th year onwards.

• An amount equal to withdrawal can be invested from current year’s income to make the account a self sustaining one.

• Loan upto 25% of balance available (2 years ago) is allowed upto the end of 5th year.

• Second loan is given after clearing the first loan.

• No loan is given after 6 years from the date of first subscription.

• After 15 years entire balance can be withdrawn.

• Interest earned is totally exempt u/s 10(11).

• Tax Exemption : lnvest uptoRs.1,50,000 qualifies for deduction u/s 80C.

BANK DEPOSITS

• A term Deposit to be opened with a scheduled Bank in the prescribed form.

• Mi Investment Rs. 100/-Max. 1 Lakh.

• The Term will be 5 Years.

• Premature encashment not permitted.

• Income-tax benefit amount of term deposit invested along with PPF/LIC/ NSC/ULIP, etc upto a max. of Rs.1.5 Lakh eligible for deduction u/s 80C.

• interest earned on the deposit is taxable.

UNIT LINKED INSURANCE PLAN (ULIP)

• Can be invested Singly/Jointly.
• Duration: 10 or 15 years.
• ULIP can be taken in the name of spouse & children - majorlminor.
• Provides Life Insurance, Accident Insurance coverage and also reinvestment of dividend in units.
• Target amount: Minimum - Rs. 15,000. Maximum - Rs. 5 lakh.
• Personal Accident cover upto Rs. 50,000.
• On maturity, NAV+Bonus @ 5% for 10 yrs & 7.5% for 15 yrs term (cash equivalent of units will be paid).
• Can remain in the plan to participate in further growth (0.5% additional maturity bonus).
• Tax exemption : Investment upto Rs.1.5 lakh is eligible for taxexemption U/s 80C. Dividend declared is fully exempt U/s 10(35). Maturity bonus is taxable in the year of maturity.

LIFE INSURANCE POLICIES (LIC)

• Variety of Plans available.
• Major Benefit: Life Risk Cover.

• Encourages to save compulsorily.

• Besides covering life risk, gets tax benefit both at entry (premiums paid) & exit point (Maturity + Bonus).

• Asset is created without having one.

Tax Exemption: Eligible u/s 80C for overall Investment upto Rs.1.5 lakh & maturity amount (Investment + Bonus) is totally exempt u/s 10(100). For policies taken on or after 1.4.2003, prem. exceeding 20% of the S. A. & policies taken on or after 1.4.2012 prem. exceeding 10% of the S.A. in any year, will not enjoy tax free returns uls 10 (10 D) or benefit u/s 80C.

LIC’S JEEVAN AKSHAY VI

• Immediate Pension Plan for individual between 30 & 85 years.
• Mi Investment: Rs. 1,00,000.
• e.g. Investment of Rs. 10 lakh forage at entry 40 will give monthly pension of Rs. 5892.
• Tax Exemption : Eligible for exemption uls BOC for overall Investment upto Rs. 1.5 lakh.

PENSION PLANS

• Any individual between 18 & 70 years can take a policy.
• Investment: Mm. Premium - Rs. 2,500 p.a.; Rs. 10,000 for Single Premium; Max. - No Limit.
• Minimum pension starting age is 50 years & maximum is 79 years.
• Guaranteed Pension either for 5,10,15, 20 years or for life time.
• Option to commute 25% of Pension.
• Tax Exemption : Premium paid upto Rs. 1.5 Lakh pa., either under Single Premium or regular Policy is totally exempt u/s 8OCCC (Under 80C)

EQUITY LINKED SAVINGS SCHEME (ELSS)

• Most favourite investment

• Open ended. Lock-in 3 period years.
• Many of the Funds have given excellent returns during recent past. Max. tax benefit plus max. returns.
• Tax Exemption/Benefit: Eligible for exemption u/s 80C for overall Investment upto Rs. 1.5 Iakh.
• Dividend earned is exempt u/s 10(33).

NATIONAL SAVINGS CERTIFICATES

• Can buy Single / Jointly.
• Duration 6 years / 10 years..
• Inrerest rate is 8.5% p.a. for 5 years. & 8.8% for 10 years..
• Interest accrued between 1st. & 5th. year is deemed to have been reinvested.
• Investment & deemed reinvestement upto Rs. 1,50,000 is eligible U/s 80C..

NATIONAL SAVINGS SCHEMES ELIGIBLE U/S 80C

Saving Instrument

Rate of Int. p.a.

Lock-in Period
( in Yrs.)

Aggregate Tax Exemption Limit U/s 80C

Bank Depsoit-Tax Saving

8 - 9 %

5

1.5 Lakh

Equity Linked ( ELSS) Fund Scheme Market Defined 3 1.5 Lakh
Nationa Saving Certificate (NSC) 8.50% 5 1.5 Lakh
Post Time Depsot Account ( 5 Yrs.) 8.50% 5 1.5 Lakh
Public Provedent Fund (PPF) 8.70% 15 1.5 Lakh
Unit Linked Insurance Plan ( ULIPs) Market defined variable 1.5 Lakh
Prem. paid on Life Insurance Policies including Pension Plan 5% - 7% 3 1.5 Lakh
Senior Citizen Saving Scheme 9.20% 5 1.5 Lakh

 
 
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