Rajkotupdates.News: Tax Saving PF FD and Insurance Tax Relief

Tax saving PF FD and insurance tax relief are two important ways to reduce your taxable income. Here’s how they work: 

A) PF FDs: If you invest in a public provident fund (PPF), the amount you invest is exempt from taxation. The interest you earn on the PPF is also exempt from taxation, provided it has been accrued for a period of five years or more. 

B) Insurance Tax Relief: Premiums paid for life insurance policies, critical illness policies and personal accident policies are deductible from taxable income. In addition, the proceeds of these policies are typically tax-free. 

By taking advantage of both of these tax savings opportunities, you can significantly reduce your taxable income and keep more money.

Tax Exemption for LIC Premium, PPF:

The Life Insurance Corporation of India (LIC) offers a variety of insurance products that can be beneficial for tax saving. Some of the most popular LIC policies for tax saving are:

1) LIC Jeevan Anand: This is a traditional endowment life insurance policy that provides financial protection in the event of death. The policy also provides for a lump sum payment in the event that the policyholder survives the policy term.

2) LIC Jeevan Saral: This is a Unit Linked Life Insurance Plan (ULIP) that offers both life insurance and investment benefits. Under this policy, a portion of the premium is invested in equity or debt markets, depending on the policyholder’s risk appetite.

3) LIC New Jeevan Anand: This is a modified version of the traditional Jeevan Anand policy. It provides for additional benefits, such as an accident benefit rider and a critical illness rider.

4) LIC Amulya Jeevan: This is a term insurance policy that offers life insurance coverage for a fixed term. The policy does not have any maturity benefits.

Premiums paid for any of these LIC policies are eligible for tax exemption under Section 80C of the Income Tax Act. In addition, the proceeds of these policies are also tax-free.

The PPF is another popular investment avenue for tax saving. Under the PPF scheme, the investor can claim deduction for the amount invested, up to a maximum of Rs. 1.5 lakh per annum. The interest earned on the PPF is also tax-free.

Tax Exemption for Health Insurance Premium:

Health insurance premiums are eligible for tax exemption under Section 80D of the Income Tax Act. In addition, the proceeds from health insurance policies are also tax-free.

Thus, by taking advantage of these tax saving opportunities, you can significantly reduce your taxable income and keep more money.

Tax Exemption for EPF:

The Employees’ Provident Fund (EPF) is a retirement savings scheme that is managed by the Employees’ Provident Fund Organisation (EPFO). Under this scheme, employees contribute a certain percentage of their salary towards their retirement fund. The employer also contributes an equal amount to the fund.

The EPF is eligible for deduction under Section 80C of the Income Tax Act. In addition, the interest earned on the EPF is also tax-free.

Thus, by investing in the EPF, you can reduce your taxable income and save money for retirement.

Tax Exemption for NPS:

The National Pension System (NPS) is a retirement savings scheme that is managed by the Pension Fund Regulatory and Development Authority (PFRDA). Under this scheme, investors can choose from a variety of investment options, depending on their risk appetite.

The NPS is eligible for deduction under Section 80C of the Income Tax Act. In addition, the interest earned on the NPS is also tax-free.

Tax Exemptions On ELSS:

Thus, by investing in the NPS, you can reduce your taxable income and save money for retirement.

ELSS is a type of mutual fund that offers the benefit of tax exemption under Section 80C of the Income Tax Act. ELSS funds invest in a variety of equity and debt instruments.

ELSS funds have a lock-in period of 3 years, after which the investor can withdraw the money. However, the withdrawals are subject to capital gains tax.

Thus, by investing in ELSS funds, you can reduce your taxable income and save money for the long term.

Tax Exemptions for Savings FDs

Savings FDs are bank deposits that offer the benefit of tax exemption under Section 80C of the Income Tax Act. The interest earned on savings FDs is also tax-free.

However, savings FDs have a lock-in period of 5 years, after which the money can be withdrawn.

Thus, by investing in savings FDs, you can reduce your taxable income and save money for the long term.

Tax Exemptions for Sukanya Samriddhi Yojana (SSY)

The Sukanya Samriddhi Yojana (SSY) is a government-sponsored savings scheme for the girl child. Under this scheme, parents can open an account in the name of their daughter and make deposits into the account.

The interest earned on the SSY account is tax-free. In addition, the deposits made into the account are eligible for deduction under Section 80C of the Income Tax Act.

Thus, by investing in the SSY, you can reduce your taxable income and save money for the future of your daughter.

Final Words

There are a variety of tax saving options available for taxpayers. By taking advantage of these opportunities, you can reduce your taxable income and keep more money.

However, it is important to remember that each option has its own set of rules and conditions. Therefore, it is advisable to consult a financial advisor before making any investment.