Decent Work Check

Investments & Means to Save Tax- ( Part I )

A) Assesses eligible for deduction u/s 80C are –

An Individual; or
A Hindu Undivided Family (HUF)

B) The above assesses shall be entitled to a deduction of whole of the amount paid or deposited in the previous year , being the aggregate of sum referred to below , upto a maximum of Rs.1,00,000/-

The various avenues to invest and save on taxes are:-

1. Any sum paid by an individual to effect or to keep in force insurance on the life of:

An individual himself
His/her spouse and
Any child of such individual.

The children may be married/unmarried, dependent/non dependent on the individual.

In case of Hindu Undivided Family the premium should be paid on the life of any member of the family.

The premium or other payment paid on any insurance policy other than a contract for a deferred annuity shall be eligible for deduction to the maximum extent of 20% of the actual capital sum assured. In other words, if the premium paid exceeds 20% of the capital sum assured, the amount eligible for deduction u/s 80C in respect of the premium shall be limited to 20% of the actual capital sum assured.

2. Any payment made by an individual to effect or keep in force a contract of a non-commutable deferred annuity (other than mentioned in clause(10) below) on the life of : (a)an individual himself , (b)his/her spouse and (c) any child of such individual.

3. Any sum deducted in accordance with the conditions of services from the salary payable by or on behalf of the Government to any individual for the purpose of securing to him a deferred annuity or making provision for his spouse or children. The sum deducted should not exceed 1/5th of the salary.

4. Any contribution by the employee towards a statutory provident fund or recognised provident fund. The deduction in this respect is allowable to an individual only.

5. Any contribution to a Public Provident Fund (PPF) by an individual or HUF. The contribution may be made to an account standing in the name of any person mentioned under clause (1) above.

6. Any contribution by an employee to an approved superannuation fund.

7. Any subscription by an individual or HUF to any notified security or any notified deposit scheme (National Savings Scheme, 1992).

8. Any subscription by an individual or HUF to National Savings Certificates (NSC) – VIII Issue. Any interest accrued on these certificates which is deemed to be reinvested also qualifies for deduction.

9. Any contribution by an individual or HUF for participation in the Unit Linked Insurance Plan (ULIP). The contribution may be made in the name of any person mentioned under clause (1) above.

10. Payment made by an individual or HUF to effect or keep in force a contract for notified annuity plan of the Life Insurance Corporation or any other insurer.

11. Any subscription by an individual or HUF to notified units of a Mutual Fund under the Equity Linked Savings Scheme (ELSS Fund). ELSS funds have a lock-in period of 3 years and primarily invest in equities.

(Conclusion of Part 1)

- Rittique Phukan (CA)