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Tax Saving Plans

Tax-saving investments help you reach your financial goals while lowering your tax payments. These plans provide a tax deduction on invested sums and tax exemption on withdrawals or maturity. You can build a large corpus while investing for long-term goals. Using the best tax-saving investments you can claim tax exemptions on the corpus and tax deductions under sections 80C and 80D.

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Annual Income (In Lacs)

What are Tax saving Plans?

What are Tax saving Plans?

Tax-saving plans are products where in the investor can claim benefits for the amount invested as per the tax laws. Under the Sections 80C and 80D of the Indian Income Tax Act, an individual can claim a deduction on the premium payment made or the investment done. These investments can consist of funds such as Equity Linked Saving Scheme, Life Insurance Plans, Public Provident Funds, Fixed Deposits, and Bonds. To reduce the income tax burden of taxpayers in the country, Indian tax laws allow specific ways to save tax, and making tax saving investments and claiming deductions for the same are among the most popular ways.

You must file your annual income tax return to claim the tax deductions. Most tax-saving investments will reduce your gross total income. Individuals, HUF and NRI taxpayers can use tax-saving investment plans eligible under section 80C to save direct income tax.

Tax Saving Plans

iSelect Guaranteed Future

SAVINGS PLAN

5 plan options to choose from to protect your loved ones

Pay premiums for 5,7, or 10 years as per your financial goals

Payor Premium Protection Cover to secure your family’s future

Tax benefits may be available as per prevailing Tax Laws

TERM Insurance PLAN

TERM Insurance PLAN

Life Cover till 99 years of age

Option to Block the premium rate and increase cover by upto 100% at the blocked rate

Option to avail monthly income post attaining 60 years of age

Option to receive total premiums paid in case of no claim

Tax Benefits as per applicable laws

ULIP PLAN

Unit Linked Insurance Plan

8 funds and 4 portfolio strategies to invest

Loyalty additions and wealth booster

Return of Mortality Charge is available on Maturity under all three cover Options

Flexibility of switching between the fund options to take benefits of market movements or change in risk preference

Guaranteed Savings Plan

Guaranteed Savings Plan

Guaranteed maturity value

Guaranteed bonus additions for long-term investors

Option to protect your goal from your early death

Customise the premium payment and policy term as per your goal

Save tax on investment and tax-free maturity value

Guaranteed Income4Life Plan

Guaranteed Income4Life

Option to receive guaranteed income till the age of 99

Guaranteed loyalty additions of more than 10 times the annual premium

Option of single or regular premium payments

Enhanced income pay out for higher premiums

Premium protection option to safeguard the goal in case of your early demise

Health First Plan

Health First Plan

Cover against minor conditions of Cancer or Heart Ailments

Adequate cover to take care of high treatment costs

Increasing cover to keep up with the rising medical & living costs

Income security to your family in the case of a major claim

Option to receive all premiums back in case of no claims within the policy period

Why should you Invest in Tax Saving Plans?

infographics

Why should you Invest in Tax Saving Plans?

On the income that is earned, we are required to pay taxes if this income exceeds a prescribed threshold limit. Tax planning can help reduce the burden of taxes that falls on an individual and maximize their savings. There are many financial instruments that help in saving taxes. A good investment provides tax saving, safety of investments, returns and liquidity. An ideal financial instrument will help you save taxes at the same time as it reaps benefits in the form of decent returns and the flexibility to withdraw funds. By investing in tax saving plans, individuals also inculcate a habit of saving over time.

How to Save Tax with Saving Plans?

There are various other provisions in the Income Tax Act 1961 as well, which provide for more deductions.

Section 80C, 80CCC and 80CCD(1) allow an aggregate deduction upto Rs 1.5 lakh in a year. These sections cover a wide variety of investment options, ranging from a simple life insurance plan to a hybrid ULIP among others.

Similarly, under Section 80E, you are allowed a deduction to the extent of the interest paid on an education loan.

Section 80G provides for tax deduction on the amounts paid by you as donations to charities, social organisations, relief funds etc.

You can plan to save taxes using tax saving financial instruments with the following steps:

  1. Avoid last-minute decisions and plan your tax saving at the start of the financial year.
  2. The earlier you start, the more time you allow your tax-saving investments to grow and help fulfil your goals.
  3. Decide on the goal which you want to achieve through your investment.
  4. Make a note of your current expenses that are eligible for tax deductions. The payments applicable under section 80C include
    • Children’s school fees
    • EPF contribution
    • Loan payment
    • Premium payment for life insurance
  5. After assessing the current deductions, take into account the risks involved and the risk that you can take.
  6. After considering both the goal and the risk you can take, choose the investment. For example, if you want that your funds remain safe for retirement you can opt for NPS or a savings plan.

Income Tax Investments Under Section 80C

Section 80C of the Income Tax Act 1961 allows you a tax deduction of up to Rs 1.5 lakh on various investments.

Most of the investments such as NPS, PPF, Sukanya Samriddhi Yojana, Equity Linked Savings Scheme, (ELSS), and Unit Linked Insurance Plans (ULIP) are covered under section 80C.

INVESTMENTS RETURNS LOCK-IN PERIOD
ELSS Mutual Funds Depends on Equity Market 3 years
National Pension Scheme (NPS) 9% to 12% Till Retirement
Unit Linked Insurance Plan (ULIP) Depends on Fund Choices 5 years
Public Provident Fund (PPF) 7.1% (w.e.f. 1 April 2020) 15 years
Sukanya Samriddhi Yojana 7.60% 21 years
National Savings Certificate 6.80% 5 years
Senior Citizen Saving Scheme 7.40% 5 years
Bank FDs 5.5% to 7.75% 5 years
Insurance Guaranteed benefits + Bonus 3 years
Pension Plans 6 – 8% p.a. (depending on the type of plan) 3 years

Equity-Linked Saving Scheme (ELSS)

An ELSS is a tax-saving, open-ended mutual fund scheme that invests at least 80% of its assets in equity. It is one of the best tax-saving investments for investors with a high-risk appetite. The main incentive in an ELSS fund is the possibility of a high return due to heavy investment in equity. Depending upon the tax slab of your income, ELSS can help you save up to Rs 46,800* in taxes.

National Pension Scheme (NPS)

National Pension Scheme (NPS) or New Pension System is a modern and market-linked retirement savings scheme. It is one of the best tax saving schemes for investors saving for retirement. Upon retirement, you can withdraw up to 60% of the corpus immediately and convert at least 40% of it to an annuity. NPS offers two tax-saving options:

  • The accountholder/employee’s contribution is eligible for a tax deduction under Section 80CCD(1) of the Income Tax Act. The maximum deduction that can be claimed is 10% of the salary (basic plus DA). If the investor is self-employed, deductions can be claimed for contributions up to 20% of the gross income.
  • Employer’s contribution of up to 10% of salary (Basic Salary +DA) to your NPS account is exempt from your taxable income under section 80CCD (2). As per the Union Budget 2020, the amount of employer contribution to PF, NPS and superannuation fund in aggregate has been proposed to cap up to Rs. 7.5 lakh.

*Tax saving of Rs 46,800 is calculated at the highest tax slab of 31.2% (including 4% Cess) for an individual assessee on a life insurance premium of Rs.1.5 lakh, who is having taxable income up to Rs. 50 lakhs.

The aggregate amount of deductions under section 80C, section 80CCC and 80CCD (1) shall not, in any case, exceed ₹ 1.5 lakhs.

In addition to this, you can avail of a deduction for an additional contribution of up to Rs. 50,000 in NPS under section 80CCD(1B) of the Income Tax Act, 1961. This deduction is available to both salaried and self-employed investors.

However, no deduction under this sub-section shall be allowed in respect of the amount on which a deduction has been already claimed and allowed under 80CCD(1).

Unit Linked Insurance Plan (ULIP)

ULIPs are a combination of insurance and investment. This means that the premium paid towards the policy goes partly towards life insurance and the rest is invested in diversified funds. You can invest in equity, debt, or money market funds, as per your risk appetite. These are one of the best tax-saving investments allowing you the flexibility of:

  • Managing your portfolio
  • Switching between funds
  • Partial withdrawals
  • Bonus additions

Such investments are covered under Section 80C. So, premiums up to Rs 1.5 lakh are deductible from your taxable income. The pay outs from ULIP, including the death benefits and partial withdrawals, are exempt from tax under Section 10(10D).

Public Provident Fund (PPF)

PPF is the best tax-saving investment with a sovereign guarantee on returns. You can borrow from the fund balance starting from the third financial year of the account. After five continuous financial years of investment, you also have the option of partial withdrawals.

The tax-saving under PPF extends to both the returns as well as the interest earned on the deposits. PPF falls under the Exempt-Exempt-Exempt category. Interest and maturity value are also tax-free. Thus, PPF accounts are one of the best tax-saving plans as the account also has no maximum age for maturity.

Sukanya Samriddhi Yojana

Sukanya Samriddhi Yojanais a small savings scheme, backed and promoted by the government. As parents of a girl child, you can open the Suknya Sammriddhi account in a post office or bank in the name of the child.

The scheme aims to encourage parents to save for the education of their girl child from an early age. It also offers tax benefits in the form of the EEE status (Exempt-Exempt-Exempt). The investments made into the scheme are eligible for deductions under Section 80C up to Rs 1.5 lakhs. The interest earned and maturity values are also tax-free for the parent or daughter.

National Savings Certificate (NSC)

National Savings Certificate is a fixed-income investment scheme backed by the government. NSC is one of the best tax-saving options if you want to invest a lump sum amount. It is a fixed income instrument as the rate of return is provided in the beginning and remains fixed until maturity. The instrument does not have a maximum investment limit. So, you can invest Rs 1.5 lakhs in NSCs for five continuous years and create an income stream for yourself. Interest earned up to Rs 6.5 lakhs on NSC deposits will continue to keep your tax liability at zero.

Senior Citizen Saving Scheme

Senior Citizens Savings Scheme (SCSS) another government-backed savings instrument for Indian citizens above the age of 60 years. Aimed at providing a reliable source of regular income to senior citizens after retirement, the scheme offers quarterly interest payments.

The investments made towards SCSS can be claimed as a deduction under section 80C of the Income Tax Act. The Interest under SCSS is taxable and bank/post offices will deduct tax @10% under section 194A if annual interest exceeds Rs. 50,000. However, where the person has income below the minimum threshold limit and provides form 15H, interest can be received without a TDS deduction.

5-Year Bank Fixed Deposit

Banks and post-office provide a 5-year tax-saving fixed deposit. As per Section 194A of the Income Tax Act of 1961, the interest earned on these FDs is taxable if it crosses Rs. 5,000 (Rs. 10,000 for senior citizens) mark. Often, tax is deducted at the source for the same.

However, senior citizens can use these FDs to create tax-free pension income of up to Rs 6.5 lakhs a year.

Life Insurance Policy

Life insurance plans are perhaps the best tax-saving investment options with guaranteed benefits. At the same time, the life cover enhances the financial safety of the family while you are still earning money.

The premium you pay for a life insurance plan is eligible for a deduction under Section 80C, up to Rs 1.5 lakh. The amount received on maturity or the death of the policyholder is also exempt from tax in the hands of the beneficiaries.

Pension Plans

Pension plans are annuity plans which help senior citizens and retiring investors invest their retirement corpus for a reliable income stream. Such plans act as a financial safeguard for individuals post-retirement. Since investment into pension plans also qualifies for tax deduction these are also the best tax-saving investments for retired investors or those close to retirement.

Pension plans from life insurers also provide pension security for your spouse with a life cover. Alternatively, you can also purchase a joint life pension plan with guaranteed pension income for life.

Income Tax Investments Under Section 80D

Section Deduction Limit Amount in Rs
80D When health insurance is for insured below 60 years 25,000
When health insurance is for insured 60 years or above 50,000
Total for self and family and senior parents 75,000
80DD When the taxpayer or dependent suffers from at least severity of 40% disability 75,000
When the taxpayer or dependent suffers from at least severity of 80% disability 1,25,000
80DDD Patients below 60 years of age 40,000
Patients of age 60 years and above 1,00,000

Health Insurance

It is crucial to have a health insurance in your financial portfolio because medical emergencies have the ability to impair your financial stability. But the benefits of a health insurance policy are not just limited to this purpose. Under Section 80D of the Income Tax Act, 1961, a deduction of up to Rs 25,000 is allowed in a year in terms of the premium paid towards a health insurance policy of self, spouse, children.

Deduction on Preventive Healthcare Check-ups

Preventive healthcare check-ups refer to the pre-emptive measures taken to keep diseases and ailments at bay.

Deduction up to Rs. 5,000 is allowed for preventive health check-ups for self, spouse, children or parents which is a part of the overall deduction one can claim under Section 80D.

Deductions on Health Insurance Premium Paid for Parents

An individual can claim a deduction of up to Rs. 25,000 for insurance of self, spouse, and dependent children. Additionally, a deduction is allowed on the insurance of your parents as well. If parents are below 60 years of age, the deduction is capped at Rs. 25,000, whereas in case of parents aged 60 or more, the cap is at Rs. 50,000.

Deduction for Rehabilitation of Handicapped Dependent Relative

Section 80DD covers expenditure on medical treatment, rehabilitation, and training of disabled dependents. The section provides for a deduction up to Rs. 75,000 for a disability that is classified in 40%-80% range. If such dependant is a person with severe disability, deduction amount can be claimed up to Rs. 125,000.

Deduction for Medical Expenditure on Self or Dependent Relative for the Treatment of Specified Diseases under Section 80DDB

This is to be seen separately for each case.

In case of individuals and HUFs below age 60, the deduction is capped at Rs. 40,000. The amount being the expenses incurred towards the treatment of specified medical diseases or ailments for the individual or any of their dependents. For a HUF, such a deduction is available with respect to medical expenses incurred towards these prescribed ailments for any of the HUF members.

In case of senior citizens and super senior citizens, deduction of up to Rs. 1 lakh can be claimed. In case of reimbursement by an insurer or employer reduces the deduction claim. Proper prescriptions and proofs should be furnished.

Income Tax Saving Tips

The goal of tax planning is to maximise tax savings. Since there are multiple investment options for the same tax-saving provision, it is important to build the investment portfolio in a way that makes use of all the available tax exemptions.

Income Tax Saving Investments for Young Unmarried Tax-Payers

As a youngster in your 20s and early 30s, and unmarried you can make great use of aggressive tax-saving schemes to grow your wealth. Additionally, you need to focus on building a good financial safety net for your family and parents. There are several tax-saving investment plans for you in this category:

  • Term Insurance Cover with a sum assured equal to 10 to 15 times your annual income.
  • Health insurance and Mediclaim insurance cover equal to your annual income for yourself and your parents.
  • Public Provident Fund, an instrument that provides EEE or triple exemption benefits.
  • Allocate a part of your annual income to equity-based tax-saving investment options like Unit Linked Insurance Plans (ULIPs) or Equity Linked Savings Schemes (ELSS).
  • Invest in National Pension Scheme (NPS) to save an additional Rs. 50,000 or more.

Income Tax Saving Investments for Single Income Couples

If you are married, have a child and only one of the partners are earning, your investment preferences must change to suit your financial goals and family needs. Using the following tax-saving investments will go a long way in preparing you for the future:

  • Buy a term insurance cover with accidental and critical illness benefits. Increase the life cover of your existing term plan.
  • Public Provident Fund, an instrument that provides EEE or triple exemption benefits.
  • Invest up to 50% of your total savings in aggressive tax-saving investment plans like Unit Linked Insurance Plans (ULIPs) or Equity Linked Savings Schemes (ELSS).
  • Invest in National Pension Scheme (NPS) to save an additional Rs. 50,000.
  • You can also claim a deduction under 80C for your child’s tuition fee.
  • You can also claim a deduction under 80C for your child’s tuition fee.
  • Invest in a house property for an additional tax saving on interest amount up to Rs. 2 lakh.

Income Tax Saving Options for Double Income Couples

If you are married and both you and your spouse earn, you can jointly claim deductions with the right investments:

  • Save up to Rs. 3 lakh combined under Section 80C
  • Make sure to have joint or individual term insurance covers
  • Invest in Public Provident Fund (PPF), an instrument that provides EEE or triple exemption benefits.
  • Invest up to 50% of your savings in aggressive tax saving plans like Unit Linked Insurance Plans or Equity Linked Savings Schemes (ELSS).
  • Invest in a pension fund like National Pension Scheme to save additional Rs. 50,000 every year.

Tax Saving Investment Options for Senior Citizens

Nearing retirement, we must shift our focus towards ensuring financial stability and especially towards maximizing savings. Your savings during your employed years get you financial freedom during your retired years.

Invest in the following tax-saving options to continue your stress-free retired life:

  • Invest in annuity plans, which not only provide regular income but also help save on taxes, like the Senior Citizen Saving Scheme or life insurance pension plans.
  • Special annuity products by insurance companies also help provide a regular income post-retirement.
  • Unit Linked Insurance Plans also make a good tool for retirement fund creation and offer tax benefits Section 80C, with tax-free proceeds on maturity.

Tax Saving Options for Family Business Owners

Family-run businesses and enterprises are liable to pay income tax on their revenues generated, which can be a considerable sum. They must therefore take benefit of deductions and exemptions available to minimise their tax liability as a company:

  • Form an HUF to reduce the overall tax outgo on the company income
  • Premiums up to Rs 25,000 paid towards medical/ health insurance can be claimed for tax deductions under Section 80D.
  • Donating money also gives you tax benefits.

What is the Maximum Amount you can Save in Tax?

The Income Tax Act has various sections and sub-sections that allow you to invest in tax-saving options and reduce tax liability. Popular sections to find your tax saving investments are Section 80C, 80D, 80CCD (1B), and 24 (b).

However, each of these sections has a maximum investment limit on the amount of tax you can save under each ultimately depends on your income bracket.

The following table lists the limits under these sections for investments and expenses that a taxpayer can voluntarily incur:

Deductions Max Amount (Rs.)
Standard deduction 50,000
Section 80C* 150,000
Section 80D 25,000
Section 80CCD(1B) NPS 50,000
Section 24(b) 200,000
Total 4,75,000

*The total deduction amount in aggregate under sections 80C, 80CCC and 80CCD (1) cannot exceed Rs 1.5 lakh

Shubham is a Digital Manager in a reputed firm and has a gross income of Rs 10 lakhs for FY 2021-22 (AY 2022-23). He has also reported TDS payments on this income to the tune of Rs 55,000 in the financial year. His tax payable on this income will be:

  • Rs 45,500 + cess payable as income tax if he uses minimum tax deduction investments
  • Rs 55,000 receivable as an income tax refund if he utilises maximum tax saving investments
Without Tax Saving Investments
Without Tax Saving Investments
Gross Total Income (after TDS & HRA deduction) 100000
Less: Standard Deduction -50,000
Less: Tax Saving Investments U/S 80C 0
Less: Tax Saving Investments U/S 80CCD(1B) 0
Less: Tax Saving Investments U/S 80D (for family & parents) 0
Less: Tax Saving Investments U/S 80TTA -10,000
Less: Tax Saving Investments U/S Sec 24B 0
Net Taxable Income 9,40,000
Tax Liability
Add: For income up to Rs 2.5 lakhs 0
Add: For income above Rs 2.5 lakhs but below 5 lakhs 12,500
Add: For income above Rs 5 lakhs 88,000
Total Tax on Income (cess extra) 1,00,500
Less: Rebate under section 87A (for taxable income below 5 lakhs) 0
Less: TDS deductions 55,000
Less: TDS deductions 45,500
With Tax Saving Investments
With Tax Saving Investments
Gross Total Income (after TDS & HRA deduction) 10,00,000
Less: Standard Deduction -50,000
Less: Tax Saving Investments U/S 80C -1,50,000
Less: Tax Saving Investments U/S 80CCD(1B) -50,0000
Less: Tax Saving Investments U/S 80D (for family & parents) -75,000
Less: Tax Saving Investments U/S 80TTA -10,000
Less: Tax Saving Investments U/S Sec 24B -2,00,000
Net Taxable Income 4,65,000
Tax Liability
Add: For income up to Rs 2.5 lakhs 0
Add: For income above Rs 2.5 lakhs but below 5 lakhs 10,750
Add: For income above Rs 5 lakhs 88,000
Total Tax on Income (cess extra) 10,750
Less: Rebate under section 87A (for taxable income below 5 lakhs) -10,750
Less: TDS deductions 55,000
Less: TDS deductions -55,000

Tax Saving Investments – FAQs

First of all, your gross total income is taken into account and all applicable deductions/exemptions are deducted out of it, the resultant amount is the net income, upon which the Income Tax is calculated, on the basis of income tax slabs that are announced each year in the Union Budget.

How much tax you can save depends on your financial portfolio and profile. The most common avenue for tax-saving is Section 80C, which allows you deductions up to Rs 1.5 lakh in your taxable income. The implication is that you can save up to Rs 46,800*in taxes in a year, depending upon the income tax slab you belong to. Similarly, other avenues like interest on loans, health insurance etc also provide deductions capped at a certain amount.

*Tax saving of Rs.46,800/- is calculated at the highest tax slab of 31.2% (including 4% Cess) for an individual assessee on life insurance premium of Rs.1.5 lakh, who is having taxable income upto Rs.50 lakhs.

The best tax-saving investment would be an investment which offers the flexibility of investments, withdrawals and asset allocation as per your risk appetite. ULIPs, Guaranteed Saving Plans, ELSS, PPF, etc, are some of the best tax-saving options in India you can invest in.

If the interest earned or maturity value of your investment is tax-free you may not need to pay a tax on your investment. However, many tax-saving investments under section 80C do not offer tax exemption on accrued interest or maturity. Thus, you can choose the tax saving investments where accrued interest, partial withdrawals and maturity are tax-free.

You can choose investments that are tax-exempt: not an exhaustive list, but includes Equity Linked Saving Scheme (ELSS), Public Provident Fund (PPF), life insurance plans, Unit Linked Insurance Plans (ULIPs), Sukanya Samriddhi Yojana, Senior Citizens Savings Scheme (SCSS), National Pension Scheme (NPS), Bank Fixed Deposits.

You can claim almost any tax deduction under sections 80C and 80D without showing or submitting a receipt. However, you should keep the receipts safe until your income tax return has been accepted by the income tax department. In the case of other tax-saving deductions, you may need to show receipts and other documents with your ITR.

There is no limit to the number of tax-exempt investments one can have in a financial portfolio. However, it is important to note that there is a limit to how useful any instrument can be for the purpose. This is because the amount of deduction that can be claimed for specific instruments is capped at a maximum value. At the same time, keep your financial portfolio balanced so that it also provides safety, returns and liquidity.

The maximum limit of investment that will reap the benefits of deduction from taxable income under Section 80C is Rs 1.5 lakh.

Investing in a health insurance plan for family and parents, and investing an additional Rs 50,000 into an NPS Tier-I account are a few ways you can save tax beyond Rs 1.5 lakhs. Other tax-saving options include buying or constructing a house with a home loan. You can claim an additional deduction of up to Rs 2 lakhs on the interest paid for the loan.

Apart from Section 80C, various deductions and exemptions has been provided under the provision of Income Tax Act, 1961 like deduction under section 80D can be claimed for the payment of health insurance, deduction upto Rs 50,000 on home loan interest under Section 80EE. Any donations you make to charitable institutions are also allowed as deduction under Section 80G, subject to condition prescribed therein.

You can easily lower your tax on income by investing in tax-saving investment plans. A few great tax saving options are ULIP and life insurance plans, NPS tier-I account, PPF, Senior Citizen Saving Scheme, etc.

This way, you can reduce the amount of your taxable income. Besides, you can claim deductions on your taxable income on account of expenses such as repayment of home loan principal, child’s education fee, expenses during home purchase etc. You should start learning about tax-saving options in India. Tax-saving investments and expenses can reduce your total tax liability every year.

You can reduce your tax liability to zero if you utilise the common tax saving investments and sections such as section 80C, 80D, 80CCD and 24B deductions to the limits. Additionally, complete deduction requires you to claim both 24B and HRA simultaneously. This is only possible if you are paying both rent and home loan EMIs. If you are in this situation, your tax liability can go down to zero.

While looking for tax-saving options for this income you should consider present as well as future income tax. Thus, investing in EEE plans like NPS, ULIP, etc will make sense. You can also invest in ELSS plans where you can avoid long-term capital gains tax if the gain is less than Rs 1 lakh.

First of all, make investment of Rs 1.5 lakh in investments instruments covered under Sections 80C to reduce your taxable income. Claim deductions for the interests paid on home loan and/or education loan if any. Get a health insurance policy and claim for other medical expenditure like preventive medical healthcare check-up, expenditure on rehabilitation of handicapped dependent relative, among others. Mainly, the idea should be finding out which tax saving avenues fit well with your larger financial goals and invest in them!

FD interest or fixed deposit interest income gets taxed as per the income slab rates of individual taxpayer. Banks or post offices deduct tax or TDS when the aggregate interest income on all fixed deposits exceeds Rs 40,000 per financial year. The limit is Rs 50,000 in case of senior citizens.

First of all, make use of the Rs 1.5 lakh deduction allowed under Section 80C. This can be done by making investments in life insurance premium, Equity Linked Saving Scheme (ELSS), Public Provident Fund (PPF), Unit Linked Insurance Plans (ULIPs), Sukanya Samriddhi Yojana, Senior citizens Savings scheme, National Pension Scheme (NPS), among others.

Second, make use of the deductions available in respect of health insurance and other medical expenses. Under Section 80D of the Income Tax Act, 1961, a deduction of up to Rs 25,000 is allowed in a year in terms of the premium paid towards a health insurance policy of Self and your family i.e., Spouse and children. This can include preventive healthcare check-ups too upto Rs 5000/-. Under section 80D you can also claim additional deduction upto Rs. 25000/- (Rs. 50000 in case of senior Citizen) for health insurance of your parents.

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