Different ways of Investments that can save taxes in India

Tax planning is an important aspect of financial management. It involves choosing the right investments and strategies to minimize your tax liability and maximize your returns. There are various tax-saving instruments available in India that can help you achieve your financial goals and save taxes at the same time.

Here are ways of investments that can save taxes in India:

1. Section 80C: This is the most popular section for tax-saving investments in India. It allows you to claim a deduction of up to Rs. 1.5 lakh per year from your taxable income for investing in certain instruments such as Public Provident Fund (PPF), National Savings Certificate (NSC), Equity Linked Savings Scheme (ELSS), Sukanya Samriddhi Yojana (SSY), Senior Citizens Savings Scheme (SCSS), etc. These investments have different lock-in periods, interest rates and tax treatments, so you should choose them according to your risk appetite and time horizon.
2. Section 80D: This section allows you to claim a deduction of up to Rs. 25,000 per year from your taxable income for paying health insurance premiums for yourself, your spouse and your dependent children. If you are a senior citizen (above 60 years), you can claim up to Rs. 50,000 per year. You can also claim an additional deduction of up to Rs. 25,000 per year for paying health insurance premiums for your parents (Rs. 50,000 if they are senior citizens).
3. Section 80CCD(1B): This section allows you to claim a deduction of up to Rs. 50,000 per year from your taxable income for investing in the National Pension System (NPS). NPS is a voluntary retirement scheme that allows you to build a corpus for your post-retirement needs. You can choose from different asset classes and fund managers to invest your money. The maturity amount and the annuity income from NPS are partially taxable.
4. Section 80CCD(2): This section allows you to claim a deduction of up to 10% of your salary (14% if you are a central government employee) from your taxable income for the employer’s contribution to NPS on your behalf. This is over and above the deduction under section 80CCD(1B).
5. Section 80E: This section allows you to claim a deduction of the interest paid on an education loan taken for yourself, your spouse or your children for pursuing higher education in India or abroad. There is no limit on the amount of deduction and the duration of the loan.
6. Section 80G: This section allows you to claim a deduction of up to 100% or 50% of the amount donated to certain specified funds and charitable institutions from your taxable income. The deduction is subject to certain conditions and limits depending on the nature and mode of donation.
7. Section 80GG: This section allows you to claim a deduction of up to Rs. 60,000 per year from your taxable income for paying rent for a house if you do not receive any house rent allowance (HRA) from your employer or if you are self-employed. The deduction is subject to certain conditions and limits based on your income and rent paid.
8. Section 80TTA: This section allows you to claim a deduction of up to Rs. 10,000 per year from your taxable income for the interest earned on savings bank accounts held with banks, co-operative banks or post offices. The deduction is not applicable for interest earned on fixed deposits, recurring deposits or any other time deposits.
9. Section 80TTB: This section allows senior citizens (above 60 years) to claim a deduction of up to Rs. 50,000 per year from their taxable income for the interest earned on deposits held with banks, co-operative banks or post offices. The deduction is applicable for interest earned on savings accounts, fixed deposits, recurring deposits and any other time deposits.
10. Section 24(b): This section allows you to claim a deduction of up to Rs. 2 lakh per year from your taxable income for the interest paid on a home loan taken for buying or constructing a house property. The deduction is applicable only if the construction or acquisition is completed within five years from the end of the financial year in which the loan was taken.
11. Section 80EE: This section allows first-time home buyers to claim an additional deduction of up to Rs. 50,000 per year from their taxable income for the interest paid on a home loan taken from a financial institution. The deduction is applicable only if the loan amount does not exceed Rs. 35 lakh and the value of the house property does not exceed Rs. 50 lakh. This section was introduced in the Finance Act, 2016 to provide relief to the middle-class segment of the society who aspire to own their first house. The deduction under this section is over and above the deduction of Rs. 2 lakh allowed under section 24 for the interest paid on a home loan. However, to avail this benefit, the home buyer should not own any other residential property on the date of sanction of the loan. The deduction under this section is available for a maximum period of five years starting from the financial year in which the loan is sanctioned.