also offer help in filing returns. However, for the salaried class, here are a few things that can be done to minimise the tax burden and maximise returns in the long run :-
Section 80C of the Income Tax Act: This section in the I-T Act provides tax breaks for investing in certain financial products. This was provided for by the government to encourage savings in the country. Section 80C investments include life insurance policy, Public Provident Fund (PPF), provident fund (PF), equity-linked savings scheme, home loan principal repayment, New Pension Scheme (NPS), pension products, mutual funds and tuition fee for up to two children. The section offers deduction up to Rs 1 lakh for the taxpayers. Under PPF alone, you are allowed to invest up to Rs 1 lakh per annum. Many experts are of the view that the PPF is one of the best options available for tax planning. This is because, not only the investment in the PPF is tax free, the interest earned is also tax free.
The New Pension Scheme (NPS) is also, what tax experts say, a “fantastic” avenue to put in your money for tax saving purpose as up to 10 per cent of an employee’s basic salary put in the NPS is tax deductible. However, you can avail of the benefit only if the employer has included this benefit in the CTC (cost to company).
Aggarwal says that people often ignore the tuition fee component while working on their tax saving plans. “Those who don’t have enough cash to invest in 80C schemes can easily use this if they have children studying. There is no ceiling on the fee. It is allowed up to Rs 1 lakh”. The benefit is available for maximum of two children. The principal repayment on a home loan is eligible for a deduction of up to Rs 1 lakh per annum.
Medical claims: Under Section 80D, if you have a medical insurance, a deduction of Rs 15,000 per annum on premium is allowed while an additional deduction of up to Rs 15,000 per annum is allowed for