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Save Tax
1. Save Income Tax: Pay for the medical health insurance of your parents
Individuals who pay for the medical health insurance of their parent or parents would be allowed an additional deduction of up to Rs 15,000 on any payment made for the health insurance for his or her parents under Section 80D. If an individual tax payer parent, who has been medically insured, is a senior citizen, the deduction would be allowed up to Rs 20,000.
2. Save Income Tax with ELSS and ULIP Plans
a) Equity Linked Saving Schemes (ELSS) -
Mutual funds are undoubtedly the easiest way to save taxes as well as do handsome investment. ELSS is an instrument sold by mutual funds. The tax deduction for ELSS is available under section 80C of the Income Tax Act 1961 are eligible for a maximum of Rs.1, 00,000/- deduction from income. A well rated ELSS scheme can provide annual returns of around 20%. However ELSS schemes are highly dependent on performance of underlying equities it has invested in, so all ELSS schemes have their ups and downs. ELSS schemes are also subject to a 3 year lock-in period.
b) ULIP -
Life Insurance Policies have long been the most popular tax saving instruments among tax payers. Unit Linked Insurance Plans or ULIPs are fast emerging as a way to enjoy best of both worlds - Life insurance with the benefits of Equity investments. ULIP for planning long term goals, like regular pensions, children’s education and marriage, invest the premium money in equity market, thereby providing much higher returns in the long run. All ULIP plans provide income tax deductions of up to Rs. 1,00,000 under section 80C.
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