Tax Saving Options
|Tax Rate||Individual Below 60||Senior Citizens
Between 60-80 years
|Super Senior Citizens
Above 80 years
|0%||Income up to Rs 2,50,000||Income up to Rs 3,00,000||Income up to Rs 5,00,000|
|5%||Income from Rs 2,50,000 – Rs 5,00,000||Income from Rs 3,00,000 – Rs 5,00,000||–|
|20%||Income from Rs 5,00,000 – 10,00,000||Income from Rs 5,00,000 – 10,00,000||Income from Rs 5,00,000 – 10,00,000|
|30%||Income more than Rs 10,00,000||Income more than Rs 10,00,000||Income more than Rs 10,00,000|
|Standard Deduction||Rs 40,000 for salaried taxpayers and pensioners|
|Surcharge||10% of tax where total income exceeds Rs. 50 lakh
15% of tax where total income exceeds Rs. 1 crore
|Cess||4% of tax plus surcharge|
|Rebate||Tax rebate of up to Rs 2,500 for a taxable income up to Rs 3.5 lakh.|
|Individual Below 60||Senior Citizens
Between 60-80 years
|Super Senior Citizens
Above 80 years
|Source||Taxation and Deductions|
|Salary||Taxed at slab rates|
|Capital Gains||Equity shares / Mutual funds|
|Section 80 C||Investment in PPF
Employee’s share of PF contribution
Life Insurance Premium payment
Children’s Tuition Fee
Principal Repayment of home loan
Investment in Sukanya Samridhi Account
Sum paid to purchase deferred annuity
Five year tax saver deposit scheme
Senior Citizens savings scheme
Subscription to notified securities/notified deposits scheme
Contribution to notified Pension Fund set up by Mutual Fund or UTI.
Subscription to Home Loan Account
Contribution to notified annuity Plan of LIC
|Section 80CCC||Deduction for Premium Paid for Annuity Plan of LIC or Another Insurer||Deduction is for any amount paid or deposited in any annuity plan of LIC or any other insurer|
|Section 80CCD||Deduction for Contribution to Pension Account||Maximum deduction allowed is 20% of salary (in case the taxpayer is an employee) or 10% of gross total income (in case the taxpayer being self-employed) or Rs 1,50,000, whichever is less.|
|Section 80CCD (1B)||Deduction for self-contribution to NPS||Additional deduction of up to Rs 50,000 for the amount deposited by a taxpayer to their NPS account.|
|Section 80 TTA||Deduction for Interest on Savings Bank Account||10,000|
|Section 80GG:||Deduction for House Rent Paid Diff for Metro and Non Metro cities||Deduction available is the minimum of:
1) Rent paid minus 10% of total income
2) Rs 5000/- per month
3) 25% of total income
|Section 80E||Deduction for Interest on Education Loan for Higher Studies||No limit|
|Section 80D||Deduction for premium paid for Medical Insurance||Deduction up to 25,000
If aged more than 60, exemption rises to Rs 50,000
Deduction for insurance of parents: If aged < 60, 25,000; > 60, 50,000
For uninsured super senior citizens, medical expenditure incurred up to Rs 30,000 also allowed
Within the existing limit, deduction of up to Rs. 5,000 for preventive health check-up
|Section 80DD||Deduction for Rehabilitation of Handicapped Dependent Relative||Expenditure incurred on medical treatment
Payment for maintenance of dependent handicapped relative
a) Where disability is 40% or more but less than 80% – fixed deduction of Rs 75,000
b) Where there is severe disability, fixed deduction of Rs 1,25,000
|Section 80DDB||Deduction for Medical Expenditure on Self or Dependent Relative( critical illness)||A deduction of Rs. 40,000/- or the amount actually paid
For senior citizens, the deduction can be claimed up to Rs 1,00,000.
|Section 80TTA||Deduction on Interest on Bank savings deposit||Up to Rs 10,000 is tax free for all taxpayers.|
|Section 80U||Deduction for Person suffering from Physical Disability||Deduction of Rs. 75,000/- to a resident individual who suffers from a physical disability
In case of severe disability, deduction of Rs. 1,25,000 can be claimed
|Section 80G||Deduction for donations towards Social Causes|| Deduction ranging from 50- 100% if not done by cash
Limit is 10% of Gross Income
|Tax Saving option||Scheme Features||Max allowed for tax deduction
U/S 80 C
|Current Rate of return||Special Note|
|1. Equity Linked Savings Scheme (ELSS) Funds||Pure equity mutual funds locked in for 3 years.||Within the overall Rs. 1.5 lakh u/s 80 C||Based on market conditions||Long term gains over Rs 1,00,000 are taxable when sold – rate of 10%|
|2. Unit Linked Insurance Plan (ULIP)||A product offering life insurance as well as equity investment benefits.
ULIP permits investing the premium in a mix of debt and equity funds in varying proportions, allowing inter-fund transfers through switches.
Minimum lock-in period of five years and partial withdrawal is only possible after this.
|Within the overall Rs. 1.5 lakh u/s 80 C||Based on market conditions||Deduction amount is capped @ 10% of sum assured.
Death benefit paid under the ULIP is completely tax free.
All maturity proceeds fromULIP are tax-free.
Partial withdrawal, if it doesn’t exceed 20% of fund value, is tax free.
|3. National Pension Scheme (NPS)||Subscribers can invest in three asset classes’ funds; equities, corporate bonds and government securities funds.
Some restrictions on premature withdrawals of Tier 1 contributions.
Minimum 40% of corpus has to be mandatorily invested in an annuity on retirement. Rest can be withdrawn as lumpsum.
|Within the overall Rs. 1.5 lakh u/s 80 C||Based on market conditions||Additional investment of Rs. 50,000 will be eligible for tax deduction under section 80CCD
If employer puts up to 10% of basic salary of the individual in the NPS, that amount will not be taxable.
Income from the annuity is taxed at normal rates
Amount partially withdrawn (up to 25% of contribution) is exempt from tax.
After the age of 60, upto 40% of the corpus withdrawn in lump sum is exempt from tax.
|4. Public Provident Fund (PPF)||Total amount contributed can be claimed for deduction.
No premature closure and withdrawals only partially permitted after 7 years.
Lock in of 15 years.
|Within the overall Rs. 1.5 lakh u/s 80 C||7.60%||The interest on PPF is currently tax-free (compounded yearly) and the maturity period is 15 years.|
|5. Employee Provident Fund (EPF) and Voluntary Provident Fund (VPF)||12% of salary is contributed with equal contribution from employer in EPF and this full amount can be claimed as deduction.
VPF is the additional amount contributed to the PF account and is also eligible for deduction.
Only employee contribution is withdrawable before retirement and this is permissible after 5 years of working.
|Within the overall Rs. 1.5 lakh u/s 80 C||8.65%||Interest earned above 9.5% is taxable in the hands of the employee.
If the contribution by the employer is more than 12 %, then the excess is taxable for employee.
If withdrawn prematurely, taxed at tax bracket.
|8. Senior citizen saving scheme||Investment by anyone over 60 or those who have availed VRS aged between 55-60.
Can invest up to Rs 15 lakh or money received as retirement benefits, whichever is lower.
5-year lock in period.
|Within the overall Rs. 1.5 lakh u/s 80 C||7.90%||Interest is paid out quarterly and rates are reset each quarter.
Premature closure is possible with penalty.
|9. Bank Tax Saver Fixed Deposits||Lock-in period of 5 years.
No premature withdrawal permitted.
The interest earned can be reinvested or paid out on a monthly/quarterly basis.
|Within the overall Rs. 1.5 lakh u/s 80 C||Varies based on bank.
Ranges between 6.5% to 7.7%.
|The total interest earned under an FD is taxable under “income from other sources”.
A person can avoid TDS deduction on the interest earned by submitting Form 15G (or Form 15H for senior citizens) to the bank.
|10. Pension Plans||Depending on their risk profiles, investors can choose different combinations of equity and debt, although portfolios are generally debt oriented.
No partial withdrawal is allowed during the accumulation phase
|Within the overall Rs. 1.5 lakh u/s 80 C||Based on market conditions||Only 1/3 lumpsum is tax free
Annuity is taxable at normal rates
|11. Life Insurance Policies||Deduction is available for premiums of life insurance policies which are less than 10% of sum assured.||Within the overall Rs. 1.5 lakh u/s 80 C||Based on market conditions||Returns on insurance products are tax free
Surrendered policies are taxed at normal rates
|13. National Savings Certificate (NSC)|| The NSC is a small savings scheme offering guaranteed interest for lock-in period of 5 years.
Premature encashment is possible after three years or in case of death of the certificate holder.
|Within the overall Rs. 1.5 lakh u/s 80 C||7.60%||Interest is taxable on receipt, although accrued interest will qualify for deduction u/s 80 C.|
|14. Sukanya Samriddhi Scheme||Open for parents of daughters below 10 years, deposits have to be made until daughter turns 21.
The entire invested amount along with the interest earned is tax-free.
|Within the overall Rs. 1.5 lakh u/s 80 C||8.10%|| 50% of the amount can be withdrawn after girl turns 18.
Full withdrawal allowed for marriage of daughter.
25 Feb 2018