Tax Saving Schemes

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• Amount withdrawn before 5 years period, tax will have to be paid on the withdrawn amount treating it as the income of that year.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• After 15 years entire balance can be withdrawn.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.

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.

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.

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).

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)

LIFE INSURANCE POLICIES

NATIONAL SAVING SCHEMES

Life insurance premium paid for Parents (Fatheri Motheriboth) or in-laws is not eligible for deduction uls 80C.

If premiums are paid for more than one insurance policy, all the premiums can be included. Insurance premium paid for self, spouse or children is allowed as deduction uls 80C of 1.T. Act

Children for the definition includes dependant as well as independent, married as well as bachelor.

It is not necessary to have the insurance policy from UC - even insurance bought from private players can also be considered here.