Tax deduction schemes are investment opportunities that offer tax benefits to investors. These schemes are designed to encourage individuals to save and invest, while also reducing their tax liability. Tax deduction schemes are offered by various financial institutions, including mutual funds, insurance companies, and banks. In this blog post, we will explore tax deduction schemes and how they can help you maximize your returns.
Employee Provident Fund (EPF): Contributions made by an individual towards their EPF account are eligible for tax deduction under Section 80C of the Income Tax Act. The maximum amount that can be claimed as a deduction is Rs. 1.5 lakh per year.
Public Provident Fund (PPF): Investments made in a PPF account are also eligible for tax deduction under Section 80C of the Income Tax Act. The maximum amount that can be claimed as a deduction is Rs. 1.5 lakh per year.
National Pension Scheme (NPS): Contributions made towards the National Pension Scheme are eligible for tax deduction under Section 80CCD(1) of the Income Tax Act. An additional deduction of up to Rs. 50,000 can be claimed under Section 80CCD(1B).
Equity-Linked Savings Scheme (ELSS): ELSS is a mutual fund scheme that invests primarily in equities and is eligible for tax deduction under Section 80C of the Income Tax Act. The maximum amount that can be claimed as a deduction is Rs. 1.5 lakh per year.
Tax-saving Fixed Deposits (FD): Tax-saving FDs are special fixed deposit schemes offered by banks that come with a lock-in period of five years. Investments made in these schemes are eligible for tax deduction under Section 80C of the Income Tax Act.
Sukanya Samriddhi Yojana (SSY): This is a government-backed savings scheme for the girl child and contributions made towards it are eligible for tax deduction under Section 80C of the Income Tax Act.
It is important to note that the maximum limit for tax deduction under Section 80C of the Income Tax Act is Rs.1.5 lakh per year.