Karo Invest, Save Tax ft. Navya

For Navya, money was very intuitive. Having a keen interest in business, even as a kid, it was almost natural for her to be an investment banker. She enjoyed the long hours with spreadsheets and the open bar parties that came with the job. ????

Her team had just closed a huge deal and awaited a big bonus. Tanya (her building friend) had been bugging her for a party for a while, and finally, she agreed. 

As they waited for their order to be served, Tanya asked, "So Navya, what are you planning to do with all the money?" ??

Navya smiled and adjusted her hair behind her ears. "Well, with great money also comes great problems. (Navya is a big Spiderman fan ??) First, I have to pay a substantial tax (at 30%). Then I was thinking of getting insurance ? and investing some amount for the future." ??

Tanya chuckled, "Oh, look at you, all grown up, talking like an adult! Though I think your investments can help you save some tax too. Let me confirm with Sanchit."

Sanchit as always was happy to get the call. He confirmed that certain investments and insurance premium payments help you save taxes under Section 80C.

Well, this is a long section with lots of benefits. We are sharing it below in a point-wise format.

Details of the benefits available

The following payments qualify for a deduction under Section 80C of the Income-tax Act:

1. Life insurance premium ? for the individual, spouse and any child

2. Investment: ??

a) Subscription to any units of any notified [u/s 10(23D)] Mutual Fund or the UTI (Equity Linked Saving Scheme, 2005)

b) Term deposits for a fixed period of not less than 5 years with a scheduled bank, which is in accordance with a scheme framed and notified.

c) 5-year term deposit in an account under the Post Office Time Deposit Rules, 1981 (subject to certain conditions)

3. Annuity ??????

a) Sum paid under a contract for a deferred annuity for the individual, spouse and any child of the individual (contract should not contain an option to receive a cash payment in lieu of annuity)

b) Sum paid towards notified annuity plan of LIC or other insurers

4. Provident Fund/Pension: ??

a) contributions by the individual under the Employees’ Provident Fund Scheme

b) contribution to the Public Provident Fund Account in the name of the individual, spouse or any child

c) Contribution by an employee to a recognized provident fund or an approved superannuation fund

d) Contribution to any pension fund set up by any mutual fund which is referred to in section 10(23D) or by the UTI (UTI Retirement Benefit Pension Fund)

5. Deposits under Notified Schemes: ??

a) Any sum deposited during the year in Sukanya Samriddhi Account in the name of the girl child (own/as legal guardian).

b) Subscription to notified savings certificates [National Savings Certificates (VIII Issue)]

c) Contribution for participation in unit-linked Insurance Plan of UTI/LIC Mutual Fund in the name of the individual, his spouse or any child of such individual

d) Subscription to notified deposit scheme or notified pension fund set up by National Housing Bank

e) Deposit in an account under the Senior Citizen Savings Scheme Rules, 2004 (subject to certain conditions)

f) Subscription to notified bonds issued by the NABARD.

6. Tuition fees (excluding development fees, donations, etc.) paid to any university, college, school or other educational institution situated in India, for full-time education of any 2 of his/her children (Related: Save tax on Education Loan) ??

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Uff... That was a lot (a lot of benefits, so it's okay). Ruhi & Tanya will be back next week. To save more on taxes and earn more on investments, follow these adventures by subscribing to this Newsletter.

Till next week,

Happy Wealth Creation ??

Disclaimer: Educational content, not financial/taxation advice. Please consult your financial advisor/tax consultant before deciding based on this content.