Section 80C Exemptions | To persuade citizens to invest in various ways, the government allows 

exemptions during the calculation of income tax. The most popular ones fall under Section 80C. 

Here is a guide.

 A person's total income is calculated by adding the income he earns from different sources. Excluding names is a specific expense that can be deducted from the total income.

The main purpose of granting tax exemptions is to reduce a person's tax liability. In addition, certain discounts are provided to encourage one to save and invest more. This national exemption is provided under section 80C.

You may also, like- Automated Income Tax Preparation Excel Based Software for the Bihar State Government Employees for the F.Y.2021-22 as per Budget 2021[This Excel utility can prepare at a time your Income Tax Computed Sheet + Individual Salary Sheet + Individual Salary Structure as per the Bihar State Govt Employee’s Salary Pattern + Automated House Rent Exemption Calculation U/s 10(13A) + Automated Income Tax Form 16 Part A&B and Part B for the F.Y.2021-22]

Section 80C 

Section 80C of the Income-tax Act, 91 includes a wide range of items eligible for exemption. Most of these items relate to what anyone can invest in.

The maximum amount of exemption that can be claimed under section 80C is Rs. 1,50,000.

Exemption under 80C 

Now that we have a brief idea about the sub-categories, let’s look at their details. But let us make it clear that the benefits under this section can only be taken by individuals and Hindu Undivided Families (HUFs). Here are some of them:

 

Life insurance premium

Life insurance is one of the most important tools you are looking for. This section provides for concession in case of any premium paid in the life insurance policy. The policy can be for self, wife, dependents, children, etc.

You may also, like- Automated Income Tax Preparation Excel Based Software for the Non-Government Employees for the F.Y.2021-22 as per Budget 2021[This Excel utility can prepare at a time your Income Tax Computed Sheet + Individual Salary Sheet + Individual Salary Structure as per the Private Concern’s  Salary Pattern + Automated House Rent Exemption Calculation U/s 10(13A) + Automated Form 12 BA +  Automated Income Tax Form 16 Part A&B and Part B for the F.Y.2021-22] 

Unit Combined Insurance Plan (ULIPs)

Interest rate: 8% -10%

Lock-in period: 5 years.

If you are not already aware, ULIPs are a modified and improved version of the endowment plan. ULIPs initially faced some criticism but are now preferred over term life insurance policies.

 

Tax-saving F.D

Interest rate: 7% -8%

Lock-in period: 5 years.

This is a special project provided by banks and post offices. It is noteworthy that, although the contribution for this project is exempt, the income received attracts tax liability.

 

Save National Savings Certificate (NSC)

Interest rate: 8 6.8%

Lock-in period: 5 years

The Government of India supports it as well as one of the safest ways to invest. The best part about this is that investors receive only a discount of Rs 1,50,000 but the interest earned is not subject to TDS.

You may also, like- Automated Income Tax Preparation Excel Based Software for the West Bengal State Government Employees for the F.Y.2021-22 as per Budget 2021[This Excel utility can prepare at a time your Income Tax Computed Sheet + Individual Salary Sheet + Individual Salary Structure as per the West Bengal State Govt Employee’s Salary Pattern + Automated House Rent Exemption Calculation U/s 10(13A) + Automated Income Tax Form 16 Part A&B and Part B for the F.Y.2021-22]

 

How can you invest? Well, investment in National Savings Certificate (NSC) should be done through post offices. A resident Indian can visit any post office, fill up the required application, buy the certificate and post certain documents.

Bonus - Loans can be taken against their NSC certificate.

 

Equity Linked Savings Scheme (ELSS)

 Interest rate: 12% -15%

 Lock-in period: 3 years

As the name implies, it involves some ratio of equity and so the returns of this scheme fluctuate with changes in the market. ELSS is the only type of mutual fund which is covered under Section0 So if you want to invest in a mutual fund but also want to get duty free, ELSS must not be avoided.

You may also, like- Automated Income Tax Preparation Excel Based Software for the Andhra Pradesh State Government Employees for the F.Y.2021-22 as per Budget 2021[This Excel utility can prepare at a time your Income Tax Computed Sheet + Individual Salary Sheet + Individual Salary Structure as per the Andhra Pradesh State Govt Employee’s Salary Pattern + Automated House Rent Exemption Calculation U/s 10(13A) + Automated Income Tax Form 16 Part A&B and Part B for the F.Y.2021-22] 

Home loan

If you have a housing loan as part of your balance sheet obligations, this section provides relief for principal repayments. The interest payable is not included, though. Feeling vague? No worries! Section 80C provides clear instructions on the amount eligible for the discount.

 

1. To get this exemption you have to finish the construction of the house.

 

2. The property in question must not be transferred within five years of possession of the property.

 

3. If the property is transferred after five years of the prescribed period, any amount claimed as a tax deduction will attract a tax liability in the year of such national transfer.

You may also, like- Automated Income Tax Preparation Excel Based Software for the Jharkhand State Government Employees for the F.Y.2021-22 as per Budget 2021[This Excel utility can prepare at a time your Income Tax Computed Sheet + Individual Salary Sheet + Individual Salary Structure as per the Jharkhand State Govt Employee’s Salary Pattern + Automated House Rent Exemption Calculation U/s 10(13A) + Automated Income Tax Form 16 Part A&B and Part B for the F.Y.2021-22]

 

Public Provident Fund (PPF) 

Interest rate: 7.9%

Lock-in period: 15 years

For all Indian citizens in their own name or on behalf of minors, contributions to the PPF are eligible for exemption under Section 80. If one opens two accounts, one in their own name and the other on behalf of the minor, the approved combined discount will be Rs.1,50,000.

 

• Senior Citizens Savings Scheme

Interest rate: 7.40%

Lock-in period: 5 years.

With the help of the government, this senior citizen savings scheme can be availed by a senior citizen with an investment of a minimum of Rs.1000/-

Conclusion-

Exemptions, even in general, make income tax law is quite complicated because it can meet the needs of a huge population. Understanding the complications is good and good. Otherwise, it is advisable to consult with a professional who can help you manage your taxes better.

Download Automated Income Tax Preparation Excel Based Software for the Government & Non-Government Employees for the F.Y.2021-22 as per Budget 2021 

Feature of this Excel Utility-

#This Excel utility can prepare at a time your Income Tax Computed Sheet

 

# Individual Salary Sheet

 

# Individual Salary Structure as per the Govt & Non-Govt Employee’s Salary Pattern

 

# Automated House Rent Exemption Calculation U/s 10(13A)

 

# Automated Income Tax Arrears Relief Calculation U/s 89(1) with Form 10 E for F.Y.2021-22

 

 

# Automated Income Tax Form 16 Part A&B and Part B for the F.Y.2021-22]

On July 22, 2021 by www.taxexcel.net

Share It

No Comments

Read More

 ELSS vs. ULIP - Which tax-saving option is better? The most popular and beneficial tax saving 

the method adopted by individuals is the use of exemptions approved under section 80C. Section 80C 

allows a rebate of up to Rs 1.5 lakh per person per annum is invested in certain financial instruments. 

There are various financial instruments approved for this purpose and investments made in any one of them can be claimed as a discount under Section 80C.

You may also, like- Automated Income Tax Preparation Software All in One in Excel for the Andhra Pradesh State Employees for the F.Y.2021-22[This Excel Utility can prepare at a time your Income Tax Computed Sheet + Individual Salary Structure + Individual Salary Sheet + Automated Income Tax House Rent Exemption Calculation U/s 10(13A) + Automated Income Tax Revised Form 16 Part A&B and Part B for as per Budget 2021] 

Some investment gives a return on investment when others give the different type of money return. The most popular investment gives a fixed return like fixed deposits and PPF accounts but also gives a lot of money from the  ELSS Mutual Fund and ULIP.

 

Apart from these, a person can also claim a waiver for the registration charges paid for the purchase of property and insurance premiums paid for a life insurance policy.

 

However, in this article, we will mainly discuss ELSS Mutual Funds and ULIPs and which of these 2 is better.

 

ELSS Mutual Fund

An ELSS Mutual Fund means Equity Linked Savings Scheme Mutual Fund and these funds are basically investments in this fund that can be claimed as a discount under Section 80C

 

In other words, investments made in other types of mutual funds cannot be claimed as discounts under section 80C and investments made only in ELSS tax saving mutual funds can only be claimed as a maximum of Rs. 1.5 lakh per year.

These ELSS tax savings mutual funds have a mandatory lock-in of 3 years and an investor cannot prematurely invest in these funds before 3 years. In addition, the ELSS fund must invest 65% of its total assets in the stock market.

You may also, like- Automated Income Tax Preparation Software All in One in Excel for the Jharkhand State Employees for the F.Y.2021-22[This Excel Utility can prepare at a time your Income Tax Computed Sheet + Individual Salary Structure + Individual Salary Sheet + Automated Income Tax House Rent Exemption Calculation U/s 10(13A) + Automated Income Tax Revised Form 16 Part A&B and Part B for as per Budget 2021] 

ULIP's an investment plan and invested money also deduction U/s 18 C maximum Rs. 1.5 lakh

 

ULIPs are an investment and insurance plans in the sense that they give you the dual benefit of returning the invested capital and provide an insurance cover to the investor. ULIP has a longer lock-in period than ELSS with a lock-in period of only 3 years. This means that no investor can redeem his investment before 5 years from the date of investment.

 

ELSS Mutual Fund vs. ULIP – Which is better?

 

Both ELSS are mutual funds, as well as ULIP money invested in the stock market and the proceeds from such investments are shared with investors.

 

However, along with the return on investment, ULIP's offer of insurance is that it looks like a lucrative deal for investors and this is why investors are sometimes tempted towards ULIPs compared to ELSS mutual funds.

You may also, like- Automated Income Tax Preparation Software All in One in Excel for the Bihar State Employees for the F.Y.2021-22[This Excel Utility can prepare at a time your Income Tax Computed Sheet + Individual Salary Structure + Individual Salary Sheet + Automated Income Tax House Rent Exemption Calculation U/s 10(13A) + Automated Income Tax Revised Form 16 Part A&B and Part B for as per Budget 2021] 

However, the truth of the matter is that the returns generated by ELSS mutual funds are much better than the returns generated by ULIP. This is not a one-sided case and in all cases, it has been observed that the returns generated by ELSS mutual funds are much better than those of ULIP.

 

Some investors believe this is true because ULIPs also offer insurance benefits and are therefore willing to compromise on the return on investment. While this is somewhat true, since investors are also receiving insurance benefits, the returns from ULIPs are not too small for any investor to consider investing.

You may also, like- Automated Income Tax Preparation Software All in One in Excel for the West Bengal State Employees for the F.Y.2021-22[This Excel Utility can prepare at a time your Income Tax Computed Sheet + Individual Salary Structure + Individual Salary Sheet + Automated Income Tax House Rent Exemption Calculation U/s 10(13A) + Automated Income Tax Revised Form 16 Part A&B and Part B for as per Budget 2021] 

And so instead of investing in ULIPs, if the same investor puts some money into ELSS and balances the purchase of term insurance - he will not only get a better return on his investment but also a higher cover insurance policy.

 

For an example: -

 Case 1: Invest Rs100 in ULIPs

 

 Case 2: Invest Rs 90 in ELSS Mutual Fund and the balance is Rs 10/- In Term Insurance

 

In the 2nd case, the returns generated will be much higher than in the 1st case and the sum insured will also be higher. In both cases, the amount of investment is the same i.e. Rs. 100 but in the 2nd case - the income is expected to be higher. In both cases, the duty will remain the same till the exemption as term insurance can also be claimed as exemption.

You may also, like- Automated Income Tax Preparation Software All in One in Excel for the Non-Govt(Private) Employees for the F.Y.2021-22[This Excel Utility can prepare at a time your Income Tax Computed Sheet + Individual Salary Structure + Individual Salary Sheet + Automated Income Tax House Rent Exemption Calculation U/s 10(13A) + Automated Income Tax Form 12 B.A. + Automated Income Tax Revised Form 16 Part A&B and Part B for as per Budget 2021] 

The higher returns generated in 2 cases have been observed and observed in almost all cases in the past and will continue in the future due to the innate nature of ULIP.

 

 

A very large proportion of the money collected as commissions is paid to ULPs and hence the amount they have for investment is less. ELSS Mutual Funds do not pay such high commissions and the amount they have after paying the commission is much higher and hence the income generated by the investors is also higher.

 

Since the commissions paid by ULIP are very high, most bankers will try to sell you ULIP by showing you pink pictures. They will try to show and prove that ULIPs are better than ELSS but it is true that ELSS + term insurance is always much better than ULIPs.

You may also, like- Automated Income Tax Preparation Software All in One in Excel for the Govt & Non-Govt(Private) Employees for the F.Y.2021-22

Main Feature of this Excel Utility-

# This Excel Utility can prepare at a time your Income Tax Computed Sheet

# Individual Salary Structure

# Individual Salary Sheet

# Automated Income Tax Arrears Relief Calculation U/s 89(1) with Form 10 E for F.Y.2021-22

# Automated Income Tax House Rent Exemption Calculation U/s 10(13A)

# Automated Income Tax Revised Form 16 Part A&B as per Budget 2021]

# Automated Income Tax Revised Form 16 Part B as per Budget 2021]

 

On July 20, 2021 by www.taxexcel.net

Share It

No Comments

Read More