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Income Tax Ready Reckoner - Part IV

 

 

Here's a ready reckoner on how to calculate your tax dues so that you can plan your investments accordingly

 

C. Existing Sec. 80C commitments

  • Renewal premiums Renewal premiums towards life insurance policies—be it term insurance plans, endowments, Ulip plans—also qualify for tax benefit.
  • Home loan principal Principal portion of the home loan EMI qualifies for deduction under Section 80C.
    Tip Keep repaying principal in your loan on a regular basis without increasing the EMI. It reduces interest burden and tenure.
  • Employees' Provident Fund 12 per cent of your salary is deducted every month and an equal amount is contributed by your employer and put into a fund maintained by the government or your company's trust. The contribution currently earns a tax-free return of 8.5 per cent. Only your contribution towards the fund is eligible for deduction from taxable income of the basic salary towards EPF.
    Tip You may increase contribution up to 100 per cent
  • Tuition fees Parents can also claim a deduction for tuition fees for a maximum of two children. The maximum limit allowed for exemption is Rs 1 lakh under Section 80C. However, any payment towards any development fees or donation to institutions is excluded.
  • Public provident fund Anyone can open an PPF account in a bank or post office. Fifteen-year investment with a tax-free interest rate that is currently 8 per cent per annum. Can be extended in blocks of  five years. Rate of interest subject to change every April. Need to pay any amount between Rs 500 and Rs 70,000 to keep account active.
    Tip Better to invest Rs 70,000 each year even if tax break is not available on full amount.

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