Savings are very crucial for everyone to have a secure future. Here are some benefits that help us to save tax and enjoy the benefits of the policy provided by the government of India.
1. Senior citizen saving scheme
SCSS or Senior citizen saving scheme is a savings scheme made especially for people above the age of 60 years delivering fairly significant returns and is a reliable and dependable source of income for their post-retirement era.
Section 80C of the Income Tax Act of 1961 permits standard deduction for principle deposits made into SCSS accounts up to a maximum of Rs. 1.5 lakh. This benefit, however, is only valid under the current tax laws. It is not permitted if a person decides to file tax returns using the new approach outlined in the Union Budget 2020.
However, the interest is subject to taxes according to the payer’s appropriate tax bracket.
2. Life insurance
It is a crucial component of a person’s financial plan since it provides protection to the person’s family in the event of an untimely death. The primary duty is to secure the family’s financial future and rests with the earner.
Traditional life insurance and market-linked life insurance (ULIP) both provide tax advantages to policyholders on the money paid.
Life insurance products provide policyholders with tax advantages regardless of their nature.
Section 80C of the Income Tax Act covers life insurance premiums limited to a total of Rs. 1.5 lakhs. Under Section 10, gains on death or maturity are tax-free (D). Exemptions are applied to income and taxed appropriately if the policy is cancelled within five years.
- Plans for the long term
- Planned endowments
3. Health insurance
The costs associated with an accident or hospitalization are covered by health insurance, or Mediclaim as it is more often called. In accordance with the promised sum, Mediclaim also covers pre and post-hospitalization costs.
Section 80D of the tax code provides advantages for health insurance. Tax benefits are available on insurance premiums up to Rs 20,000 for older persons and Rs 15,000 for everyone else. The insurer can claim a tax credit of Rs 35,000 (Rs 15,000 + 20,000) if he pays Rs 15,000 for his personal insurance and Rs 20,000 for his elder parent’s coverage. For amounts received under critical illness insurance plans, the maturity value is tax-free.
5. New Pension Scheme
The Pension Funds Regulatory and Development Authority, or PFRDA, oversees the NPS, or New Pension Scheme. It is open to all Indian citizens between the ages of 18 and 60. Due to the minimal fund management fees, it is very cost-effective for the public. Equity (E), Corporate Bonds (C), and G Government Securities are the three independent accounts that which the fund managers manage the money (G). Investors have the option of actively managing their portfolios or passively (auto choice).
Under Section 80CCD of the Income Tax Act, contributions made to the NPS are tax-deductible. Together with Sections 80C and 80CCC, this section’s combined deduction cap cannot exceed Rs 1.5 lakhs.