Tax saving investments pending? One month left to beat the taxman!

Just a month for financial year 2018-19 to end. Hope all your tax saving investments are in order by now – if not, no worries, we’ve got you covered. Here’s a quick guide to various tax saving investments you can look at and beat the taxman!

Tax Saving Investments FY 2018-19

Salary based reimbursements / exemptions

Professional Tax

– State government tax payable @ Rs. 200 per month (Rs. 300 in February) ie. Rs. 2,500 per year
– Reduces your taxable income

Standard Deduction

– introduced in Budget 2018, replaces both Conveyance Allowance and Medical Allowance/Reimbursement

House Rent Allowance (HRA)

Percentage of Basic salary. If you are living on rent and getting HRA, tax exemption is the minimum of
– HRA received
– 50% of salary (Basic+DA) in metro cities (40% of salary for non-metros)
– Actual rent paid less 10% of salary (Basic+DA)

Children’s Education Allowance

– Tuition fees up to Rs. 100 per month per child up to a maximum of 2 children
– Can be to a school, college, university, educational institution within India
– Includes payments towards play school and nursery

Leave Travel Allowance (LTA)

– Can be availed of twice in a block of four calendar years
– Current block is from 2014-2017, next block will be from 2018-2021
– Only actual travel cost is exempt; expenses on food, accommodation etc not allowed
– Only domestic travel is exempt, you have to officially be on leave and be among the travellers

Some common deductions allowed under Section 80C

Public Provident Fund (PPF)

– Upto Rs. 1.5 lakhs deduction allowed
– Lock-in period of 15 years
– Interest is tax free (regulated by Govt)
– Proceeds on maturity are tax free

Employee Provident Fund (EPF)

– 12% of Basic salary deducted per month or stipulated minimum
– Matching contribution from employer
– Only employee contribution eligible for tax deduction

Life Insurance Premium, ULIP

– Premium on life insurance policy for self, spouse, children
– If purchased after 01-Apr-12, deduction allowed if premium is less than 10% of sum assured
– More on Life Insurance and ULIPs

Tax Saving Mutual Funds (ELSS)

– Up to Rs 1.5 lakhs deduction allowed
– Lock-in period of 3 years for each investment
– Proceeds on maturity can attract Long Term Capital Gains Tax

Post Office / Bank Tax Saving Deposit Scheme

– Lock-in period of 5 years
– Interest is taxable

National Pension System (NPS)

– Up to Rs 1.5 lakhs deduction allowed
– From FY16, additional deduction of Rs 50,000 allowed u/s 80CCD(1B)
– Contribution and accrual is exempt, proceeds on maturity are taxable
– More on NPS

Sukanya Samriddhi Yojana (SSY)

– Account can be opened for a girl child (from birth till 10 years of age)
– Up to Rs 1.5 lakhs deduction allowed
– Interest rate regulated by Govt
– Deposit, interest, withdrawal all tax-free

Deductions available under some other sections

Section 80D

– Up to Rs 25,000 towards premium for health insurance of self, spouse, dependent children
– Up to Rs 50,000 towards premium for health insurance of self (senior citizens)
– Up to Rs 30,000 towards premium for health insurance for parents
– Up to Rs 50,000 towards premium for health insurance for parents (senior citizens)
– More on Health Insurance

Section 80E

– Deduction for interest on education loan
– No limit on amount of interest that can be claimed as deduction
– Deduction available for 8 years (max) or till interest is paid
– Interest should be paid from income that is chargeable to tax
– More on Education Loan

Section 80GG

If self employed professional or salaried but do not receive HRA, exemption is least of
– Rent paid less 10% of total income
– Rs. 5000/- per month
– 25% of total income

These are some of the more common deductions available – the complete list is on the Income Tax Department’s website.