Investment Options to Help Save Tax

Under this section, the amount paid towards premium for any annuity plan of an insurance company is allowed as a deduction.

Section 80CCD of the Income Tax Act allows for tax deduction benefits for investments made into various pension schemes including NPS and Atal Pension Yojana.

Additional Deduction upto Rs 50,000 is allowed while making contribution to new pension scheme apart from 80C limit of upto Rs 1,50,000/-

Illustration: Mr. Malhotra's Gross Total Income for FY 2022-23 is Rs. 12,50,000. He invests in following instruments: PPF Rs. 45,000, Paid LIP Rs. 15,000, Equity Linked Savings Scheme (ELSS) Rs. 75,000, and Tax Saving FD Rs. 30,000.

Computation of Net Income:

If an individual has availed a housing loan, the EMI payment will be eligible for availing tax benefits. Here are the components:

• Home Loan Principal Repayment: The EMI that you pay every month consists of two components - Principal and Interest.
• The principal component qualifies for deduction Under Section 80C upto Rs. 1,50,000.
• The interest component can save you tax, but under Section 24, under the head "Income from House & Property" upto Rs. 2,00,000.
• Stamp Duty and Registration Charges for a home can be claimed as deduction under section 80C in the year of purchase of the house.

We have tried to separate the chaff from the grain by giving most tax friendly investment options, to help you utilize your earnings better and better your financial health.

You may be entitled to certain applicable tax benefits on your premiums and policy benefits. Please note that all the tax benefits are subject to tax laws prevailing at the time of payment of premium or receipt of benefits by you. Tax benefits are subject to changes in tax laws.