Tax planning is a key component of a financial plan. Whenever we make investments, one of the thoughts in our mind is "Will it be eligible for tax benefits? This article is an attempt to make the readers identify some popular tax friendly investme
There are various investment options under section 80C, 80CCC and 80CCD of Income Tax Act that allow deductions from our total income (up to Rs. 150,000). When you utilize these provisions, the net taxable income reduces resulting in lowering tax liabilities. A gist of the various forms of investments is given below:
Disclaimer:
In Unit Linked Policies, the investment Risk in the investment portfolio is borne by the policyholder.
Written by
Abhishek Chakravarti
BFSI Writer
Abhishek is a financial writer with over 6 years of experience in the BFSI sector. Prior to his current stint with Axis Max Life Insurance, he has worked with leading fintech startups. He specializes in writing about taxation and various investment products like ULIPs, retirement plans, guaranteed investment plans, mutual funds etc.
Reviewed by
Sahil Rawal
BFSI Expert
Sahil Rawal is a digital & brand management specialist with over 10 years of experience in Financial Services Industry. Life insurance professional with expertise in digital marketing strategy, website content marketing and brand communication designed to increase brand awareness, drive engagement & sales.
Under this section, the amount paid towards premium for any annuity plan of an insurance company is allowed as a deduction.
Section 80CCD of the Income Tax Act allows for tax deduction benefits for investments made into various pension schemes including NPS and Atal Pension Yojana.
Additional Deduction upto Rs 50,000 is allowed while making contribution to new pension scheme apart from 80C limit of upto Rs 1,50,000/-
Illustration: Mr. Malhotra's Gross Total Income for FY 2022-23 is Rs. 12,50,000. He invests in following instruments: PPF Rs. 45,000, Paid LIP Rs. 15,000, Equity Linked Savings Scheme (ELSS) Rs. 75,000, and Tax Saving FD Rs. 30,000.
Computation of Net Income:
| Gross Total Income | Rs. 12,50,000 | ||
| Less: Deductions us 80C | PPF | Rs. 45,000 | |
| LIP | Rs. 15,000 | ||
| ELSS | Rs. 75,000 | ||
| FD | Rs. 30,000 | ||
| Total | Rs. 1,65,000 | ||
| Maximum deduction allowed | Rs. 1,50,000 | ||
| Total Income/Net Income | Rs. 11,00,000 | ||
If an individual has availed a housing loan, the EMI payment will be eligible for availing tax benefits. Here are the components:
We have tried to separate the chaff from the grain by giving most tax friendly investment options, to help you utilize your earnings better and better your financial health.
You may be entitled to certain applicable tax benefits on your premiums and policy benefits. Please note that all the tax benefits are subject to tax laws prevailing at the time of payment of premium or receipt of benefits by you. Tax benefits are subject to changes in tax laws.
ARN:- Jan23/Bg/03G
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