If you have not made any investments in this financial year (2017-18), there are still a few more days to do so. As there are ten more days before the financial year draws to a close, you can invest in any of the notified schemes mentioned under section 80C of the Income Tax (I-T) Act to save some money by slashing the tax outgo. Any investments that you have made in the current financial year will entitle you for tax exemption in this year.
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Even if you have paid income tax as your share of TDS (tax deducted at source) via your employer, you will be eligible for a refund from the income tax department after the filing of income tax returns. Over and above of the Rs. 1.50 lakh deduction allowed under section 80C of the Income Tax Act, 1961, one can claim an extra exemption of Rs. 50,000 by making investments in the National Pension System (NPS). A tax payer can claim thus claim exemption of up to Rs. 2 lakh on the total taxable income by investing in NPS.
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By making investments of up to Rs. 1.5 lakh, one can save tax, depending on the tax slab one falls under. In case one falls under the bracket of 5% per cent, his/her tax saving would be Rs. 7,500. In case of the 20 per cent tax bracket, the tax saving would be Rs. 30,000.
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In case of the 30 per cent tax bracket, tax saving would be 30 per cent of Rs. 1,50,000, which is Rs. 45,000. One can add to it the saving on 4 per cent cess that will lead to further savings.
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Exemptions Under Section 80C of the I-T Act include, but are not limited to:
1. Investment in public provident fund (PPF): Employee’s share of PF contribution.
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2. National saving certificates (NSCs)
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3. Life Insurance Premium payment
4. ULIPS (united linked insurance plan)
5. ELSS (equity linked saving schemes)
6. Sum paid to purchase deferred annuity
7. Five year deposit scheme
8. Senior Citizens savings scheme
9. Subscription to notified securities/notified deposits sche
10. Contribution to notified Pension Fund set up by Mutual Fund or UTI.